Friday, 17 October 2008

A Place in the Auvergne, Thursday, 16th October 2008


Hunger eclipsed by financial crisis on World Food Day
Thursday, October 16, 2008
By Phil Stewart
The world's leading crusaders against hunger voiced frustration on World Food Day on Thursday that the global financial crisis had overshadowed a food crisis tipping millions towards starvation.
The World Bank predicts that high food and fuel prices will increase the number of malnourished people in the world by 44 million this year to reach a total of 967 million.
Economists have also warned that the world's poor would be the most vulnerable to a global economic downturn.
"The media have highlighted the financial crisis at the expense of the food crisis," said Jacques Diouf, head of the U.N.'s Food and Agriculture Organisation in Rome. The World Food Programme's Executive Director Josette Sheeran acknowledged that even citizens of wealthy countries had been affected by high food prices and the financial crisis.
"But for those who live on less than a dollar a day, it's a matter of life and death," Sheeran said.
Proponents of more urgent measures questioned why the world's richest nations could not show the same urgency to save people from starvation as they did when rushing to rescue banks.
"My position is that the financial crisis is a serious one, and deserves urgent attention and focus, but so is the question of hunger, and millions (are) likely to die. Is that any less urgent?," asked former U.N. Secretary-General Kofi Annan.
Pope Benedict said the blame for hunger could be directed at "boundless speculation" in markets, partly blamed for high food and fuel prices. But he also pointed to "selfishness" by the world's rich and a poor distribution of resources.
A Senegal-based NGO said the fading attention to the food crisis showed a "problem of justice, of equity and solidarity."
"If they are able to raise funds for the banking system, they can also find ways to reduce poverty in the world," Vore Gana Seck, President of Dakar-based CONGAD (Council of NGOs Supporting Development) told Reuters in the Senegalese capital.
"I think it's a problem of priority."
Prices of wheat, rice, maize and other staples in the developing world have all risen dramatically this year, although they have fallen from their peaks in recent months.
In Somalia, wheat prices have risen by 300 percent in the 15 months to April. Maize prices in southern Africa have risen by anywhere between 40 and 65 percent, crippling the ability of the poor to feed themselves, said aid group Oxfam.
"It is shocking that the international community has failed to organise itself to respond adequately" to the food and energy crisis, said Barbara Stocking, the head of Oxfam.
"We need to see one coordinated international response, led by the United Nations, which channels funds urgently to those in need, and leads on implementation of the longer-term reforms."
Diouf said the world has the know-how to end hunger, even if the population climbs to a forecast 9 billion people by 2050.
But he complained that his U.N. agency lacked resources and said that it only received 10 percent of the $22 billion (12.8 billion pounds) pledged in June, following food riots in some of the affected countries.
"We have a serious shortfall in the financial resources needed to fulfill the expectations," Diouf said.
"In spite of the passionate speeches and financial commitments made by many countries, only a tiny proportion of what was promised in June has been delivered."
Development economist Jeffrey Sachs told reporters he was pessimistic about the future, given the lack of progress even when the food crisis had made headlines earlier this year.
"There are reasons to believe that on the current business-as-usual trajectory things will get worse.. because of rises in population, more climate shocks, more environmental degradation, and lack of ability of the very poor places to respond adequately," he said.
(Additional reporting by Megan Rowling and Jonathan Saul in Dublin, Pascal Fletcher in Dakar, Luke Baker in London; Editing by Angus MacSwan)

Oxfam calls for global action to combat food crisis
Thursday, October 16, 2008
LONDON: Rising food prices have left nearly one billion people hungry, aid group Oxfam said on Thursday as it called for the world to fight poverty and hunger with the same determination it is tackling the financial crisis.
"The sharp rise in global food prices has banished 119 million more people to hunger, taking the global total to 967 million," the British-based group said in a report released to coincide with World Food Day.
"Higher food prices mean people are eating less and lower quality food, children are being taken out of school and farmers are being forced to migrate to live in slums."
Rather than higher prices boosting the income of farmers in poorer, agricultural countries, they had merely increased the profits of major food-producing conglomerates and left more people hungry, the organisation said.
"Misguided or inadequate national agricultural policies, coupled with unfair trade rules and poor economic advice, has created a situation where big traders and supermarkets are gaining from price rises, and small farmers and consumers are losing out," said Barbara Stocking, the head of Oxfam.
Prices of wheat, rice, maize and other staples in the developing world have all risen dramatically this year, although they have fallen from their peaks in recent months.
In Cambodia, where half the population needs to buy rice for a staple meal, consumption fell as prices doubled in the 15 months to April this year, Oxfam said.
In Somalia, wheat prices have risen by 300 percent in the same period, and maize prices in southern Africa have risen by anywhere between 40 and 65 percent, crippling the ability of the poor, most of whom live on barely $2 a day, to feed themselves.
Oxfam expressed shock at the inability of the world's major institutions to deal with the problem in a coordinated way as they have responded to the global financial crisis, which has wiped billions off the value of major companies such as banks and insurance firms and hit global economic growth.
At an emergency meeting of food donors in Rome earlier this year, $12.3 billion was pledged to the food crisis, but little more than $1 billion has been disbursed so far.
In contrast, more than $2,000 billion has been committed to tackling the financial crisis, either in the form of bank recapitalisations or guarantees for lenders, over the past month in moves coordinated from New York to Brussels and London.
"It is shocking that the international community has failed to organise itself to respond adequately" to the food and energy crisis, Stocking said.
"We need to see one coordinated international response, led by the United Nations, which channels funds urgently to those in need, and leads on implementation of the longer-term reforms."
Oxfam listed 10 measures the developing world needed to adopt to tackle the food crisis, including increases in public spending on agriculture, more investment in social protection programmes, greater contributions to strategic food reserves and better services for women farmers.
"Poverty will increase in many developing countries unless their governments proactively use the crisis to overhaul agricultural, trade and social protection policies," it said.
(Reporting by Luke Baker; Editing by Richard Balmforth)

China holds back announcement on land reforms
By Edward Wong
Thursday, October 16, 2008
BEIJING: Chinese leaders have yet to announce the details of a rural reform policy they said they adopted Sunday, contributing to speculation that Communist Party officials are in disagreement on major aspects of the plan.
Scholars and analysts inside and outside China have been discussing this week why the leaders have remained silent on the issue. When the Communist Party's annual four-day planning session began Oct. 9, officials in attendance began reviewing a draft of a sweeping overhaul of land policy that President Hu Jintao was believed to have been backing.
Scholars and government advisers said the proposed policy centered around two major changes: allowing peasants to engage in the unrestricted trade, purchase and sale of land-use contracts, and extending those contracts to 70 years from 30 years. Senior leaders including Hu intended to push the policy changes through at the session, scholars and advisers said.
But the communiqué issued Sunday night did not mention that particular proposal. Instead, the party said broadly that it was adopting a rural land policy that would double the per-capita disposable income of farmers by 2020. Xinhua, the state news agency, said in general terms that the government planned to "set up a 'strict and normative' land management system in the countryside."
On Monday, the lead editorial in China Daily, the main state-run English-language newspaper, said details of the changes to land policies would be announced within days. But that has not happened.
Some scholars say Hu, also the general secretary of the Communist Party, may have met strong opposition to his proposal at the session and is still fighting to get that particular policy approved. On Sept. 30, to herald the announcement of a new policy, Hu made a high-profile visit to Xiaogang village, in Anhui Province, the scene of an experiment that began in 1978 in which farmers started cultivating their own plots of land, moving away from Mao-era collectivization.
Some families in the village have rented a total of 44 acres, or 18 hectares, of land to a Shanghai company - a model for what Hu evidently hopes his land reform policy will accomplish.
This week, analysts and government advisers have been raising various issues regarding the overhaul of land policies. Xu Xiaoqing, the deputy chief of the department of agriculture at the central government's State Council Development and Research Center, said in The Beijing News, a popular newspaper, that "the land issue is very complicated, and the land policy for China won't be a one-size-fits-all."
He added that "the policy should fit the specific situation in a certain place."
The government might be waiting until the policy receives pro forma approval by the National People's Congress next March before the exact details are announced.
Keliang Zhu, the head of the China research division for the Rural Development Institute, a group based in Seattle that advocates for changes in land laws on behalf of poor people around the world, said in an e-mail message that the Communist Party was expected to issue another document, perhaps in the next two weeks or so, that would spell out the details of the new land policies. "So stay tuned," he said.
Huang Yuanxi contributed research.

China says must share blame for milk scandal H
Thursday, October 16, 2008
HONG KONG: Chinese Premier Wen Jiabao said his government must assume some responsibility for the latest milk powder scandal in which at least four infants have died and tens of thousands fallen ill.
Many Chinese milk companies were implicated and a few of them apologised this week for their involvement in the latest in a grim series of food- and product-safety scandals to blight the "made in China" brand.
China's Health Ministry said 5,824 infants were still being treated and six were in serious condition.
"We feel that although problems occurred at the company, the government also has a responsibility," Wen told the magazine Science.
"The important steps in making milk products -- production of raw milk, collection, transportation, processing and making formula -- all need to have clear standards and testing requirements."
Thousands of children were admitted to hospital with kidney problems months after consuming milk that had been mixed with melamine, a plastic-making compound used to cheat quality tests.
The national quality watchdog's chief inspection official, Xiang Yuzhang, said last month the problem had been brought under control "more or less."
(Reporting by Tan Ee Lyn; Editing by Nick Macfie)
Italy sees high melamine risk in smuggled milk
Thursday, October 16, 2008
MILAN: About a tonne of smuggled Chinese powdered milk seized in the Italian city of Naples is likely to be contaminated with the industrial chemical melamine, Italian authorities said on Thursday.
"About a tonne of milk (contaminated) with melamine coming from China has been seized in Naples," Agriculture Minister Luca Zaia said on a state radio programme.
The Forest Corps, Italy's environmental police, said in a statement there was a "high risk" that the seized milk was contaminated with melamine because it was found in packages which usually contained tainted milk.
But a corps official whose unit impounded the milk in the southern Italian city told Reuters checks were needed to determine if it was in fact contaminated.
The seized powder milk had been smuggled into Italy because its import has been banned, he said.
Dozens of countries consuming products with Chinese dairy ingredients have banned their import, recalled products or imposed strict checks after thousands of Chinese children were made sick from drinking tainted infant milk formula.
Police who have sifted through numerous containers of Asian origin in the Naples port area during "Red Lanterns" raid have seized about 20 tonnes of food products which did not comply to the European Union traceability standards, the statement said.
The products, including Chinese dairy products, would be destroyed, the statement said.
(Reporting by Sara Rossi and Silvia Molteni, writing by Svetlana Kovalyova; editing by Christopher Johnson)

"Big Bang" collider glitch was electrical fault
Thursday, October 16, 2008
GENEVA: The technical problem that forced the shut-down of a huge particle collider built to probe the origins of the universe was a faulty electrical connection between two of the accelerator's magnets, CERN said on Thursday.
The European Organisation for Nuclear Research (CERN) was forced to shut down the biggest scientific experiment ever conducted last month only 10 days after starting up its Large Hadron Collider (LHC) because of a helium leak in its tunnel.
"This incident was unforeseen," CERN Director-General Robert Aymar said in a statement. "But I am now confident that we can make the necessary repairs, ensure that a similar incident can not happen in the future and move forward to achieving our research objectives."
CERN has already said that the collider, built in a tunnel 100 meters (330 feet) below the ground and straddling the Franco-Swiss border on the outskirts of Geneva, will not restart until Spring 2009.
That is because it had to be warmed up from its operating temperature of minus 271.3 degrees Celsius (minus 456.3 degrees Fahrenheit) for the fault to be investigated and any repairs carried out.
By the time it could be cooled down again, CERN would have run into its annual winter maintenance.
CERN confirmed that it had the spare components in hand to ensure the LHC can restart next year, and confirmed that the incident had not put anyone at risk.
When the collider was started on September 10, CERN had to dismiss suggestions the experiment would create tiny black holes of intense gravity that could swallow up the entire planet.
The experiment aims to recreate conditions immediately after the "Big Bang" explosion which cosmologists believe is at the origin of our expanding universe.
It will do this by sending beams of subatomic particles around the 17-mile (27-km) subterranean tunnel to smash into each other at close to the speed of light.
These collisions will explode in a burst of energy and of new and previously unseen particles, whose existence, in some cases, has been predicted by particle physicists.
(For a full summary technical report on the incident at CERN, click on: )
(Reporting by Jonathan Lynn)


Europeans split over goals to cut emissions
By Stephen Castle
Thursday, October 16, 2008
BRUSSELS: Confronted by fears of a sharp economic slowdown, Europe's ambitious climate-change reduction plans were called into question Thursday when several countries threatened to veto proposals unless they are made more affordable.
At an European Union summit meeting dominated by the fallout from the financial crisis, discussions on how to achieve cuts in carbon emissions within the 27-country bloc led to fierce exchanges among European leaders.
Italy and several eastern European countries said that they could not accept current proposals, insisting on the right to veto them. That promises to make the process of agreement the contentious measures more difficult than ever.
At stake is the credibility of the European claim to lead the push to combat global warming. Officials say that a failure to reach a deal in December would be particularly damaging because it would undermine Europe's ability to negotiate with a new administration in the United States, which is expected to be more open to efforts to tackle climate change.
Against a backdrop of mounting economic gloom, an effort by France, which holds the EU presidency, to expedite the climate change plans backfired as countries refused to commit themselves to a French target of striking a deal in December. France insisted that its targets remain in place.
In order to meet a 20 percent target, the legislation would tighten EU emission ceilings on energy and manufacturing companies beginning in 2013. The package would also set renewable-energy targets for individual countries aimed at driving the EU to adopt cleaner power.
"We have to find a solution before January," said President Nicolas Sarkozy of France, the chairman of the two-day summit meeting. "We are not going to hide behind the crisis. Europe must set an example."
But combative exchanges at a dinner for heads of government Wednesday night set the scene for a protracted battle over who will shoulder most of the cost of the goal - the reduction of CO² emissions by 20 percent by 2020.
The EU talks are based on a package of draft laws proposed by the European Commission, which spell out how the 20 percent reduction target would be achieved by each of the 27 countries. Swift agreement is needed because the legislation will have to be approved by the European Parliament which reaches the end of its mandate in June.
Moreover a failure in December would hand the task of clinching agreement to the Czech Republic, which takes over the EU presidency in January and whose governing coalition is divided over climate change.
Prime Minister Silvio Berlusconi of Italy led the assault on the package, saying that he was not in office last year when it was agreed on. "We don't think this is the moment to push forward on our own like Don Quixote," he said. "We have time."
The Italian foreign minister, Franco Frattini, welcomed a concession, implicit in the conclusions of the meeting Thursday, that decisions will be taken by leaders under a rule that requires each country to agree. "The EU will decide by the unanimity rule," Frattini said.
Backed by seven of the newer EU member states, Poland led a concerted move to weaken the text of the summit conclusions that initially stressed the need for a deal in December.
The group of skeptics includes Bulgaria, Hungary, Latvia, Lithuania, Romania and Slovakia. Like Berlusconi, Prime Minister Donald Tusk of Poland also said that the targets had been set before he was in government.
Tusk underlined the problems confronted by Poland's reliance on coal-fired power stations, compared to countries like France that have a bigger nuclear-based component in their energy mix. "We don't say to the French," said Tusk, "that they have to close down their nuclear power industry and build windmills, and nobody can tell us the equivalent."
"We have achieved this veto right in order to use it if there is no other possibility," he said.
Prime Minister Ivars Godmanis of Latvia said that his country would veto the package unless there were more concessions for countries that joined the EU in 2004. And Germany has already made clear its concern about the competitive impact of the EU emissions trading system on energy-intensive industries should other blocs not adopt similar arrangements.
But David Miliband, the British foreign secretary, accused countries of trying to wriggle out of commitments they had made just last year. "There is no setback," Miliband said, emphasizing that he expected an agreement on the current timetable.
"A number of countries have shown buyer's remorse for the agreement in 2007," he said. "There is no going back. No going back on determination to have agreement by the end of the year."
The scale of the backlash against the proposals has caused concern including in Denmark which will host crucial climate change talks next year. "There is not reason to hide the fact that we face some very difficult negotiations up to December," Prime Minister Anders Fogh Rasmussen of Denmark said.
In an effort to assuage concern over the impact of the economic slowdown on industry, Sarkozy called for consideration of a stimulus package for the economy. Sarkozy pointed particularly to the automobile industry, which has asked for a multi-billion euro bailout fund.
"Can you ask the European car industry to provide clean cars, change the whole industrial apparatus, without giving them a helping hand?" he asked.
He said European automakers might need help similar to that being offered by the U.S. government to its auto sector. This weekend Sarkozy and the European Commission president, José Manuel Barroso, will meet with President George W. Bush to discuss proposals to revamp global financial structures.
Sarkozy said there was a need to "recast the capitalist system" and questioned the future of credit-rating agencies which, he said, had failed to prevent the recent financial meltdown.
EU leaders have backed calls for a meeting of economic powers - including China, Russia and India - to plot an overhaul of the financial markets similar to the meeting in Bretton Woods in 1944 that set out the rules of international trade and financial relations.
James Kanter contributed reporting from Brussels.

OPEC calls emergency meeting as oil prices plummet
By Jad Mouawad
Thursday, October 16, 2008
NEW YORK: Oil prices plummeted Thursday, falling below $70 a barrel for the first time in 16 months, prompting the OPEC oil cartel to call for an emergency meeting next week.
The rapid decline in prices had alarmed both petroleum company executives and oil producers, who are becoming increasingly nervous that oil's roller-coaster ride undermines the stability of energy markets.
Oil prices have dropped sharply in recent weeks amid the economic crisis and lower consumption in developed nations. In New York, oil futures fell as much as 8 percent to $68.57 a barrel Thursday, their lowest level since June 2007. Oil has lost half its value since hitting a record $147.27 a barrel in July.
While not quite a rout yet, the precipitous drop undermines the elusive quest for stability that both oil producers and petroleum executives say they need to invest over the long term. The sharp decline Thursday prompted OPEC members to move up an emergency meeting - initially set for Nov. 18 - to next Friday, to look for ways to stem the price decline. Analysts expect the cartel's producers to reduce their production by about 1 million barrels a day.
The surprise announcement came a week after OPEC, the Organization of Petroleum Exporting Countries, which controls about 40 percent of the world's oil exports, said its members would meet in November "amid growing unease over the situation." But some OPEC members have been alarmed at the panic selling in commodity markets and successfully lobbied for an earlier meeting.
The concern now for producers is that the decline in prices could reduce future revenues and possibly crimp investments.
The Iranian oil minister, Gholamhossein Nozari, said in Tehran on Tuesday, "I think the low price is a real damage to the future of production."
The same question is also weighing on the mind of many energy experts. Does a period of lower prices mean the oil industry will repeat the errors of the past and sharply curtail its investments?
Since oil is a cyclical business, some energy analysts fear that today's downturn could set the stage for a new price rally if oil companies cut their exploration spending.
From its inception more than a century ago, the oil industry has gone through countless up and down cycles, and oil companies have often underinvested in periods of falling prices. The price collapse of the 1980s led companies to reduce investments and sparked a wave of mega-mergers through the sector.
But the industry's retrenchment in the face of lower prices left the world scrambling for oil when demand from Asian and Latin American economies soared over the past decade.
Now, after nearly a decade of growth, the economic slowdown means there will be less demand for energy in the foreseeable future.
These concerns were on the minds of petroleum executives who gathered at an industry conference in Venice last weekend. The titans of the oil industry worried that a prolonged recession, tighter credit, and lower energy consumption would mean slower growth in energy supplies in coming years. The credit freeze has already forced some projects to be scaled back, some energy analysts said.
"This is a real test," Jeroen van der Veer, the chief executive of Royal Dutch Shell, said during an interview on the sidelines of the conference. "Some people will be overstretched and there will be some delays in some projects."
The problem is that if companies pared their investments they would set the stage for a new surge in prices when demand eventually picks up, according to J. Robinson West, the chairman of PFC Energy, the consulting company hosting the conference.
Many experts have warned that such a crunch may happen within the next five years, and could once again propel oil prices into triple-digit territory. Over the past decade, the growth in oil consumption has outpaced the ability of producers to boost production.
A senior oil executive said that the industry was determined not to let history repeat itself. Many oil executives do not expect the current crisis to fundamentally alter the fact that developing economies will need more energy in the future. By 2030, more than three-quarters of the world's energy will still be derived from hydrocarbons, including oil, gas and coal.
"Investments in exploration and production are very much linked to the price of oil," said Didier Houssin, the head of oil markets at the International Energy Agency, which advises industrial nations on energy policy. "What we can fear is that the financial crisis leads to delays in many projects."
The drop in prices has already created problems for oil producers, who have become accustomed to high prices. Iran and Venezuela both need oil prices at $95 a barrel to balance their budgets, Russia needs $70 and Saudi Arabia needs $55 a barrel, according to Deutsche Bank estimates. The Algerian oil minister, Chakib Khelil, estimated Thursday that the "ideal" price for crude oil was between $70 and $90 a barrel.
In Russia, which is not part of OPEC, the drop in prices is threatening the country's ability to increase production. The Russian government has reportedly agreed to allocate $9 billion to its four major producers - Lukoil, Gazprom, Rosneft and TNK-BP - to help them cope with investment needs amid the credit crisis.
In the United States, Chesapeake Energy, a gas producer, has recently indicated that it would reduce its capital investments over the next few years in response to falling prices.
Global oil demand is undeniably slowing down, particularly in developed nations. Japanese oil consumption tumbled by 12 percent in August, while in the United States demand fell by 8 percent in September.
Still, consumption is growing in developing nations, albeit at a slower pace than in recent years. The International Energy Agency expects global oil demand to grow by just 400,000 barrels a day this year, to 86.5 million barrels a day. At the beginning of the year, the agency was expecting growth of more than two million barrels for 2008.
"We pretty much know where supplies are going to come from in future years, but today the biggest uncertainty is demand," said Christophe de Margerie, the chief executive of the French oil company Total.


Nuclear agency worries fear will block growth
By James Kanter
Thursday, October 16, 2008
BRUSSELS: Nuclear power could provide up to four times more electricity by midcentury than now if the industry can soothe concerns about its safety and the disposal of radioactive waste, a research group for the industry said Thursday.
The report by the Nuclear Energy Agency, an organization in Paris that advises industrialized countries on nuclear power, said the technology represented a more secure supply of power than oil or gas. But it said that opposition to nuclear power remained strong enough to curtail such an expansion.
The report said that "a significant fraction of public opinion perceives that the risks of nuclear energy outweigh its advantages." The report noted that people were more "concerned about some aspects surrounding nuclear energy (radioactive waste, terrorism and proliferation) than about the actual operation of nuclear power plants."
Nuclear power accounts for about 16 percent of global electricity production. That could rise to as high as 22 percent by 2050 under the scenario outlined by the agency, in which nuclear capacity quadruples even as other sources of power like fossil fuels and renewable energy continue to provide a substantial portion of the energy mix.
China and the United States plan the largest increases in capacity and would be among the largest nuclear power producers by 2020 along with France, Japan, Russia and South Korea.
Renewed interest in nuclear power is being driven by the quest for power sources that produce little or no greenhouse gas emissions, and by the desire of many nations to use fuels like uranium that can be obtained more reliably and securely than fossil fuels at a time when the global demand for electricity is expected to increase by about a factor of 2.5 by 2050.
Uranium "comes from diverse sources and the main suppliers are operating in politically stable countries," the agency said, adding that supplies could exist for "several hundreds of years."
The report - the first of its kind by the agency - said that the high density of uranium means transport is less vulnerable to disruption and storage than is the case with fossil fuels. It said that one ton of uranium produces the same energy as between 10,000 tons to 16,000 tons of oil.
The report is being issued amid a flurry of activity across the world in the nuclear sector following years in the doldrums.
Èlectricitè de France agreed last month to take over British Energy with the approval of the British government as part of steps to rebuild the British fleet of aging reactors. Italian government officials have expressed interest in resuming the construction of nuclear plants, having decommissioned them in the wake of the Chernobyl accident in 1986.
The United States also is backing the expansion of the nuclear industry, and has signed an agreement with India to let American nuclear suppliers resume trade with India for the first time in more than three decades, allowing them to compete for contracts to supply the fast-growing Indian economy with its rising energy needs.
Opponents of that deal have accused Washington of making the spread of nuclear weapons more likely.
Skeptics of nuclear power say that expanding the technology would require huge amounts of government subsidies and would be an inefficient use of taxpayers' money, which could be better spent on developing renewable sources of energy like solar, wind and bio-fuels and on increasing energy efficiency.
Perhaps the most serious concern facing the industry is the question of how to handle nuclear waste.
The authorities in Finland are going ahead with plans to build what could be the world's first permanent underground storage facility for highly radioactive waste, but there has been comparatively little progress in other countries, like the United States, where there is strong disagreement over whether to site a storage facility at Yucca Mountain in Nevada.
"The delay and failure thus far of some major disposal programs for high-level radioactive waste continue to have a significant negative impact on the image of nuclear energy," the report said.


Trading Emissions year profit rises 28 percent
Thursday, October 16, 2008
By Michael Szabo
Clean energy project developers Trading Emissions on Thursday reported a 28 percent rise in full-year pretax profit but cut its portfolio of expected carbon credits by 18 percent.
In its results for the year ended June 30, Trading Emissions (TEP) said it expects to receive 49.84 million U.N.-approved certified emissions reduction credits (CERs) by 2012, down from a risk-adjusted forecast total of 60.97 million in 2007.
TEP shares were trading up 12.5 percent at 110 pence.
In an August 18 note, TEP raised its total estimated portfolio to 55.17 million, of which 53.7 million are contracted. TEP had only 42.7 million CERs contracted in June 2007.
"(The portfolio cut) reflects the problems at the (U.N.), and I think it's questionable whether Trading Emissions will be able to grow their portfolio anymore considering the timeframe is shrinking," said Agustin Hochschild, an equity analyst at Mirabaud Securities.
Administrative bottlenecks at the U.N.'s climate change secretariat have dramatically slowed the project registration process, fuelling worries that many projects may be approved shortly before the expiration of the Kyoto Protocol in 2012.
Kyoto's expiration casts uncertainty over the future of U.N. emissions trading schemes under which TEP's business is based.
TEP's net asset value per share was 226.69 pence, up 23 percent from 184.41 pence in its interim results in March, and earnings per share were 70.29 pence.
The company reported a pretax profit of 194 million pounds compared with 151.8 million pounds reported a year ago. Net income was 254.9 million pounds, up from 189.7 million pounds a year earlier.
TEP said it expects to start distribution of cash profits to shareholders next year.
Performance and investment advisory fees jumped 55 percent to 49.4 million pounds, up from 31.9 million pounds in 2007.
"My reservations remain that this company's performance and management costs are expensive compared to others," Hochschild added, referring to competitors EcoSecurities and Camco International .
Trading Emissions holds 3.95 million CERs at the moment, of which 2.12 million are from two lucrative hydrofluorocarbon gas destruction projects in China.
At an average sale price of 18.41 euros, TEP is contracted to deliver 265,000 in December 2008. TEP's average CER cost is around 8 euros each, implying sale profits of 2.76 million euros (2.16 million pounds).
"The Company has aggregated a mature portfolio of carbon credits acquired at appropriate prices with the potential to achieve significant investment returns," Neil Eckert, chairman of Trading Emissions, said in a statement.
Trading Emissions is scheduled to deliver another 1.15 million CERs in December 2009, at which point the company expects to hold over 5 million credits.
The company has forward sold 5.87 million CERs through 2012 at a weighted average price of 21.18 euros. Trading Emissions has also contracted a further 8.9 million CERs post-2012, though due to market uncertainty emanating from the expiry of the Kyoto Protocol the company values these credits at only 7 euros each.
Exchange-traded CERs for December 2008 delivery are currently priced around 19.45 euros a tonne.
(Additional reporting by Srikanth Srinivasa in Bangalore; Editing by Paul Bolding)


Tesla to lay off employees and delay its all-electric Sedan until 2011
By Claire Cain Miller
Thursday, October 16, 2008
SAN FRANCISCO: Tesla Motors, an electric car start-up in Silicon Valley, said Wednesday that it would lay off employees and delay production of its second car, the Model S. Tesla also removed its chief executive, Ze'ev Drori, and appointed Elon Musk, the company's chairman and principal investor, to the position.
Musk posted the changes on Tesla's Web site. He said the company was in a "critical phase" and would have a positive cash flow within nine months.
He blamed the worsening financial crisis and the credit crisis for the upheaval. "It's not an understatement to say that nearly every business will be impacted by what has unfolded in the past weeks," Musk wrote. The cutbacks come after warnings from Silicon Valley venture capitalists that start-ups should slash expenses and reach profitability as quickly as possible to survive the economic downturn.
Tesla, the poster child for the Valley's push into "clean technology," has had a particularly difficult year, with previous layoffs, executive turnover and production delays for its first car, a $109,000 all-electric roadster, as well as the Model S sedan.
Drori, who was the chief executive since November, will remain at Tesla as vice chairman. He replaced Tesla's former chief, Martin Eberhard, a co-founder, who was ousted in August 2007. Musk is the fourth chief executive since the company was founded in 2003.
Musk and Drori declined interview requests. The company does not know how many of its 250 employees will be laid off, said Rachel Konrad, a company spokeswoman. Tesla, based in San Carlos, California, will close its office near Detroit.
The Model S, which is intended to travel 200 miles on a single charge of its lithium-ion battery pack, is expected to sell for around $60,000. It's introduction will now be delayed from 2010 to mid-2011, six months after General Motors is expected to offer its electric Chevrolet Volt.
In September, Tesla announced that it would lease 89 acres in San Jose to build a headquarters and factory.
Tesla is trying to raise $100 million to add to the $146 million it has already raised. Backers include Musk, who made his fortune as a co-founder of PayPal; Jeff Skoll, former president of eBay; and Larry Page and Sergey Brin, co-founders of Google. Tesla is also waiting for a low-interest loan from the Energy Department, which the company cannot use until it passes an environmental review.
In the meantime, Musk said, Tesla will focus its efforts on making the Roadster, which has a one-year waiting list. It will also increase power-train sales to other car companies, a business that Musk said was profitable.
"We are not far from being cash-flow-positive, but, even if that threshold ends up being further than expected, I will do whatever is needed to ensure that Tesla has more than sufficient capital to get there," he said.


Several thousand Papuans march for independence
Thursday, October 16, 2008
JAYAPURA, Indonesia: About 2,000 people rallied in the capital of Indonesia's Papua province on Thursday, calling for independence for the remote, resource-rich area in the far east of the country.
Shouting "freedom," some protesters carried banners saying "Review the act of no choice in 1969," referring to a disputed vote that led to Papua being formally incorporated into Indonesia.
Papua, which occupies the western half of New Guinea island, was under Dutch colonial rule until 1963, when Indonesia took over. Jakarta formalised its rule in 1969 in a vote by community leaders which was widely criticised as flawed.
Protest organisers said the march was timed to coincide with a gathering of parliamentarians in the British capital London on Wednesday in support of self determination for Papua.
About 10 trucks of police sought to block the marchers, although there were no reports of violence.
Separatist groups have stepped up protests in Papua in recent months. There have also been several small bomb blasts, including at an airport in Papua and near a copper mine run by the local unit of U.S. mining firm Freeport McMoRan Copper & Gold Inc.
Police also arrested five people this week after an unidentified group hoisted a banned separatist flag in front of a local government office in Navire.
(Reporting by Oka Barta Daud and John Pakage in Timika; Writing by Ed Davies; Editing by Paul Tait)

Société Générale case hears from options specialist
By Katrin Bennhold
Thursday, October 16, 2008
PARIS: Investigators in the Société Générale trading scandal on Thursday questioned the man who unwound the €50 billion in unauthorized bets a junior trader had accumulated at a net loss of €4.9 billion.
Maxime Kahn, the head of the bank's European options operations, testified that he spent five days in January unraveling the bets of 31-year old Jerome Kerviel, rather than three days as Société Générale had announced at the time, according to lawyers present in the hearing. Kahn also said that difficult market conditions meant he had to sell at low prices.
Kerviel's lawyers have argued that the bank's loss was inflated by the way Kerviel's positions were sold.
"The bank has a considerable responsibility in the enormous loss they blame on Kerviel," said Caroline Wassermann, one of Kerviel's lawyers. She said her team would investigate why the bank "lied" about the length of the period over which the unraveling took place.
Kerviel faces charges that include breach of trust and falsifying documents.

In central Osaka, New York and Paris pass for Japanese
By Norimitsu Onishi
Thursday, October 16, 2008
OSAKA, Japan: A century ago, city builders eyeing undeveloped land here in southern Osaka created a neighborhood that captured Japan's worship of the West and its determination to compete as an equal.
The new neighborhood's southern half was modeled on New York and its northern half on Paris. In the middle, a model of the Eiffel Tower, on top of a copy of the Arc de Triomphe, rose to 246 feet, then an awe-inspiring height. From an observation deck, tourists could look down at the three boulevardlike streets that fanned out from the tower in the elegant French north.
To the south, in the hustle and bustle of the American section, they could see an entertainment district with its own Coney Island, replete with Luna Park, the amusement center that closed down in 1946.
The neighborhood, born in 1912, was called Shin Sekai, meaning the New World.
Shin Sekai went through ups and downs over the decades, including a prolonged slump from which it started recovering in the past few years in the unlikeliest fashion. Nowadays, the neighborhood that embodied foreign glamour has become known, through a mix of circumstances and clever marketing, as a quintessentially old-fashioned Japanese neighborhood and as a slice of the authentic Osaka.
"This is Osaka's Deep South," said Masaaki Nishigami, president of Tsutenkaku, the company that owns the tower (rebuilt after World War II without the Arc de Triomphe base).
Other parts of this city have become too much like Tokyo, Nishigami said, using the most injurious comparison for Osaka, Tokyo's rival. "They may be pretty," he said, "but they have little character left. So that's why Shin Sekai's in the spotlight now."
Shin Sekai's 38 acres are packed with small shops whose owners live in the back or upstairs. It is a place where residents still start conversations with strangers and once fashionable neologisms that have slipped into disuse elsewhere can still be heard, like the word "abekku," which came from the French "avec," or "with," and somehow came to signify an unmarried couple in Japanese.
The neighborhood is also benefiting from a culinary boom of sorts. In recent years, some shrewd businessmen, mostly outsiders, bought up old restaurants specializing in deep-fried skewers of meat and vegetables, the kind of no-nonsense fast-food that is favored in Osaka and fit particularly well with Shin Sekai's image. With the help of some local celebrities, they made Shin Sekai the home of the deep-fried skewers, drawing long lines of tourists on weekends.
So how did a neighborhood symbolizing the New World come to represent the Old World?
Nishigami said Shin Sekai, unlike wealthier areas north of here, had seen little redevelopment since it was rebuilt after World War II. Much of it seems stuck in the 1950s or 1960s.
But the real reason goes back even further. The neighborhood's original developers never succeeded in making this place Osaka's New York and Paris, and never drew the well-heeled crowd they had hoped for, mainly because of the location. The area has long been one of Osaka's poorest. Today, just south of Shin Sekai lies Airin, Japan's largest district for day laborers, and Tobita Shinchi, a red-light district where women wait for customers by kneeling in the entryway of old wood-frame houses.
"This was a place for the working man," said Kojiro Onishi, 57, the owner of a tobacco shop in Shin Sekai's New York half.
Because of the presence of day laborers, Shin Sekai developed a reputation as a "dangerous, dirty and smelly neighborhood," Onishi said at Sennariya, a coffee shop next to his store.
Sennariya's owner, Toyoko Tsunekawa, 65, was bemused that young tourists, even young "abekku" on dates, were now coming to her coffee shop. Perhaps they were drawn to its wood-paneled walls hung with framed posters of French impressionists or the large coffee grinder that preceded Tsunekawa's arrival here as a young bride 50 years ago.
"All our customers used to be drunks," she said with a laugh. "I was shocked at first because I grew up the daughter of a salaryman."
If Shin Sekai's New York half had its rough edges, Paris up north became known for its softer, though very Japanese, side. Until a couple of decades ago, several establishments with geisha lined its streets.
On one of the streets, Ayako Kinugawa, 73, still lives in the two-story bar she operated until the late 1980s. Businessmen or shopowners came to have drinks with geisha in her bar's private rooms, now used as closets.
"I used to be so busy," she said. "Every day around 4 p.m., I'd change into my kimono and start greeting the customers, 'Welcome, welcome!' "
Today, Shin Sekai's tourist boom has mostly benefited its southern New York half, with its high concentration of deep-fried skewer restaurants. Most tourists pass by Paris on their way to New York.
"We call it the North-South civil war," said Tadayoshi Kondo, 71, the chairman of an area street association.
Some shopowners in the Paris quarter said they were content with keeping their old customers. As the geisha establishments began closing, a collection of tiny gay bars took their place.
"There's a sense of freedom here," said Asako Hamasaki, 78, who was chatting with the retired owner of a gay bar outside her beauty salon, Safuran, one afternoon. Geisha once came to her to have their hair done, though her business was now quiet.
She, too, had been able to lead the kind of life she wanted in Shin Sekai. "When I was young, I absolutely wanted to marry a tall and handsome man," she said.
Her first husband, though short, was the handsome leader of a traveling theater group. He eventually disbanded the group and ran off with another woman, Hamasaki said. Her second husband died of cancer in May.
"I was born in Shin Sekai, I grew up in Shin Sekai and I plan to die in Shin Sekai," she said. "There are a lot of people just like me."

Hermès heir charged in attack aboard plane
By William K. Rashbaum
Thursday, October 16, 2008
An heir to the French fashion house Hermès has been charged in a U.S. court with attacking the captain of a passenger jet en route to New York from Paris, grabbing the pilot's crotch and trying to punch him.
According to the charges, Mathias Guerrand-Hermès became so unruly aboard Air France Flight 008, which left Paris on Tuesday, that it took three flight attendants and the captain to restrain him. He was handcuffed, shackled and tied to a seat in first class, officials said.
Guerrand-Hermès, a socialite and polo player who will turn 37 on Sunday, had taken a prescription aspirin-like drug, Propofan, and "quite a bit of alcohol" and started behaving strangely about three hours into the flight, according to a law enforcement official and a criminal complaint. He is charged with one count of interfering with flight crew members, which carries a maximum penalty of 20 years in prison.
Under federal sentencing guidelines, Guerrand-Hermès, if convicted, would face a maximum of six months in prison as long as he had no criminal history.
The complaint says the episode started when he perched on the armrest of a woman's seat in his row in the first-class compartment. She roused her sleeping husband, who told Guerrand-Hermès to move away. Instead, he moved closer.
The crew was notified and asked him to stay in his own seat, but he refused, according to the complaint. The captain came out of the cockpit and approached Guerrand-Hermès, asking him to calm down and offering him another seat.
But Guerrand-Hermès grabbed the captain's crotch, according to the complaint, which was sworn out by Thomas O'Grady, an FBI special agent.
The captain pushed Guerrand-Hermès away and the head flight attendant then ushered him to another seat several rows behind his original one, the complaint said. As he neared his new seat, but before he sat down, the captain asked him to behave.
Guerrand-Hermès responded, "I am not going to behave myself," according to the complaint, and tried to punch the captain. He was tackled by the flight crew and after a brief struggle the captain and three male flight attendants were able to restrain him with handcuffs and shackles, the complaint said. He was then tied to his seat.
Guerrand-Hermès, who lives in New York, was married in 1999 in Paris before more than 450 guests. The event ended five days later in Marrakesh, Morocco, where the guests had been flown by two private planes. His father, Patrick Guerrand-Hermès, is president of the Federation of International Polo.
His lawyer, Craig Warkol, would not comment Wednesday. Guerrand-Hermès, wearing a light blue dress shirt torn under the arm, was arraigned Wednesday in U.S. District Court in Brooklyn before Judge Lois Bloom, who released him on a $50,000 personal recognizance bond.
Representatives of Blue Growth Capital, an investment company that Guerrand-Hermès has listed as an employer, did not return a call seeking comment.
A statement issued Wednesday by the fashion house said that "Mr. Mathias Guerrand" had no role in the company and that it would have no comment.
Sewell Chan contributed reporting.

Sarkozy files complaint against ex-spy chief
The Associated Press
Thursday, October 16, 2008
PARIS: French President Nicolas Sarkozy filed a legal complaint Thursday against a former national intelligence boss, following the publication of diaries packed with alleged details about Sarkozy's personal life.
The complaint, filed with the Paris prosecutor Thursday, charges Yves Bertrand and others with invasion of privacy, malicious accusation, forgery and use of forgery and concealment, Sarkozy's lawyer Thierry Herzog said.
Bertrand was director of the powerful Renseignements Generaux (RG) spy agency for 12 years until 2004. His diaries from this period were seized by judges recently as part of an investigation and extracts were published in Le Point news magazine last week.
Judges asked to see the diaries in the framework of a probe into a campaign to smear Sarkozy before his election as president.
According to the extracts published in Le Point, the diaries reported rumors concerning the state of Sarkozy's marriage to his second wife, Cecilia. The couple divorced last year. They also included details of alleged shady financial dealings involving Sarkozy.
"Yves Bertrand has leaked 'information' concerning the private lives of others, which is an invasion of privacy, and by putting these things in writing in his notebooks, he has fraudulently tampered with the truth with the indisputable intention of harming others," Herzog said.
Bertrand told TF1 television the diaries were not intended for publication, but simply as a record of rumors circulating about senior politicians.
"It's just a rough notebook, it's nothing official. It was stolen, it was taken. It had been sealed and everything, but it's not my fault if someone stole things," he told the television station by telephone.
The Paris prosecutor recommended last week that former Prime Minister Dominique de Villepin stand trial over suspicions he had a hand in the campaign to discredit Sarkozy. Villepin, who has denied the charges, could face up to five years in prison if convicted.
When Sarkozy was still interior minister, he tried to have Bertrand dismissed on several occasions, but ran into strong opposition from then President Jacques Chirac.
This is not the first time Sarkozy has filed a complaint following media reports about his private life.
Earlier this year, he dropped his legal case against a magazine that claimed he tried to win back his ex-wife while planning for his February wedding to model-singer Carla Bruni. Bruni said she had received an apology from the journalist who wrote the story.

Germany approves enlarged Afghan mission
By Judy Dempsey
Thursday, October 16, 2008
BERLIN: Seeking to keep the biggest German peacekeeping mission from becoming an election issue next year, Chancellor Angela Merkel's coalition government won overwhelming approval from Parliament on Thursday to send an extra 1,000 troops to Afghanistan over the next 14 months.
The decision - challenged by the opposition Left Party, which has demanded that Germany end its military involvement in Afghanistan and other missions - means that Germany will eventually have 4,500 troops in the country, the third-largest contingent after the United States and Britain.
The vote was a relief for the government. Despite misgivings by pacifist wings of the Social Democratic Party, which shares power with Merkel's conservative Christian Democrats, the troop reinforcement won 424 votes out of 570.
Merkel, supported by the Defense Ministry, did not want the mission to be used by her political opponents during the federal election campaign next year, particularly since there is growing public opposition to continuing German military involvement in Afghanistan.
Development Minister Heidemarie Wieczorek-Zeul, a Social Democrat, made an impassioned speech Thursday to the lower house of Parliament, the Bundestag, warning that if German troops were brought home now, the risks of an Afghan civil war could increase and any gains made by women and girls, who for the first time in many years can now attend schools, would disappear.
German troops are for the most part based in the northern province of Kunduz, which, compared with the south of the country, has been relatively quiet. But since Germany agreed to take over a special reaction force that will provide emergency assistance to its allies, its troops could be exposed to combat operations, something not envisioned in the parliamentary mandate.
While U.S., British, Canadian and Dutch troops are engaged in heavy fighting with the Taliban and other insurgents in the south of the country, taking the brunt of the casualties, the German and other European parliaments have imposed restrictions on how and where their troops can operate. German troops, for example, are not currently allowed to be deployed in the south or other dangerous areas.
n an interview before the afternoon parliamentary debate, Defense Minister Franz Josef Jung, a Christian Democrat, suggested that German troops should be allowed more flexibility in how they operate.
He said that would be particularly essential in coming months when the countdown begins for presidential elections in Afghanistan.
The U.S. defense secretary, Robert Gates, pleaded with his NATO allies during a meeting in Budapest last week not only to send more troops but also to reduce or lift restrictions on them.
And in a landmark decision for NATO that signaled a shift in strategy, the 26-member military alliance also agreed to target the networks producing drugs. This would include going after the laboratories financed by the Taliban and other warlords who process heroin from poppy crops.
It will, however be left up to individual countries to decide whether they will participate. The German government has yet to give its troops the go-ahead to participate in the drug mission.
Gates said last week that the Taliban's drug revenues, estimated at nearly $100 million a year, helped finance their operations, including the purchase of weapons that have been used against the 38,000-strong NATO force.

5 rebels and 4 Turkish soldiers killed in fighting near Iraq border
The Associated Press

Thursday, October 16, 2008
ANKARA, Turkey: The Turkish military clashed with Kurdish rebels near the Iraqi border in battles it said killed four soldiers and five rebels, while rebels claimed Thursday to have shot down a Turkish helicopter.
Another soldier was killed and 15 security personnel were slightly injured in the helicopter crash, the military said Thursday in a Web site statement.
The four soldiers were killed late Wednesday when rebels from the Kurdistan Workers Party opened fire on the soldiers in the province of Hakkari following an explosion, the statement reported. Hakkari is where the borders of Turkey, Iraq and Iran meet.
The military also said five PKK rebels were killed in two separate clashes in Hakkari and in the neighboring province of Sirnak, which also borders Iraq.
The military said the helicopter crashed due to a technical fault while trying to block the rebels' escape in the Hakkari clash. In Iraq however, the PKK said its fighters had shot down the helicopter.
"The helicopter was brought down by an ambush planned by PKK fighters," PKK spokesman Ahmed Deniz said.
The PKK, considered a terrorist organization by the United States and the European Union, has been fighting for autonomy in southeast Turkey since 1984. Tens of thousands of people have died in the conflict since then.
Turkey has launched several cross-border airstrikes against the PKK in northern Iraq since a rebel attack Oct. 3 killed 17 soldiers.
Kurdish rebels have stepped up attacks since then, killing four policemen and a civilian in an ambush in the Kurdish-dominated southeastern city of Diyarbakir last week. Turkish police also captured a potential Kurdish female suicide bomber who was posing as a pregnant woman in downtown Istanbul.

British soldier killed in Afghan blast
Thursday, October 16, 2008
LONDON: A British soldier has been killed in an explosion while on patrol in Afghanistan, the Ministry of Defence said on Thursday.
The soldier, from D Squadron of the Household Cavalry regiment, died on Wednesday in the blast 14 miles north of a British base in Helmand, a southern province where the Taliban remain strong.
His death raises the number of British troops killed in Afghanistan to 121 since the 2001 U.S.-led invasion. Of those, 94 were killed in combat and the rest died in accidents or from illness.
The majority of Britain's 8,100 troops in Afghanistan are based in Helmand, a large, barren province dominated by the Helmand river whose dense valley is a Taliban refuge.
Violence in Afghanistan has this year reached its highest level since U.S.-led and Afghan forces toppled the Taliban after the September 11, 2001 attacks.
(Reporting by Peter Griffiths; Editing by Steve Addison)

Policeman kills a U.S. soldier in Afghanistan
The Associated Press
Thursday, October 16, 2008
KABUL: An Afghan policeman opened fire and threw a hand grenade at a U.S. military patrol in eastern Afghanistan on Thursday, killing an American soldier and raising fears that insurgents have infiltrated the police force.
The police officer standing on a tower attacked the American foot patrol returning to a base in the Bermel district of eastern Paktika Province on Thursday, the U.S. military said. The troops returned fire, killing the policeman.
It was the second attack on U.S. forces by an Afghan policeman in less than a month. In September, an officer opened fire on U.S. troops at a police station in eastern Afghanistan, killing one American soldier and wounding three. U.S. forces killed the policeman.
Militants in Afghanistan have used police and army uniforms in the past when conducting attacks on Afghan and foreign troops, but these two incidents involved real policemen.
Separately, an airstrike by foreign troops in southern Helmand Province killed several women and children, the provincial police chief, Assadullah Sherzad, said.
NATO said in a statement that it was aware of an airstrike Thursday in the Nad Ali district, but were "unable to confirm any civilian casualties."

U.S. Afghan review to be completed after election
Thursday, October 16, 2008
By Andrew Grey
A U.S. government review of strategy for the war in Afghanistan has been delayed and will likely not be completed until after next month's presidential election, the Pentagon said on Thursday.
Alarmed by rising levels of insurgent violence in Afghanistan, the Bush administration began a review in September of all aspects of its policies in Afghanistan and suggested results could come by the end of this month.
But Pentagon press secretary Geoff Morrell said the review, coordinated by the National Security Council, was taking longer than originally expected.
"This is a major issue. This conflict is becoming increasingly difficult. And we want to make sure that we fashion the best strategy to hand off to a succeeding administration," he said.
The U.S. military's Joint Staff is also reviewing strategy for Afghanistan and Pakistan, as is Gen. David Petraeus, the former U.S. commander in Iraq who soon takes charge of U.S. forces across the Middle East and into Central and South Asia.
Ultimately it will be up to the next U.S. president to take stock of the reviews and decide on an overall policy.
The U.S. presidential election takes place on November 4 and the war in Afghanistan is one of the major foreign policy issues in the contest between Democratic Sen. Barack Obama of Illinois and Republican Sen. John McCain of Arizona.
"That just has taken longer than, I think, originally anticipated," Morrell said of the Bush administration's review. "This will likely not be something that is finalized until after the election."
Violence in Afghanistan is at its highest level since U.S.-led forces toppled hard-line Taliban Islamist rulers after the September 11, 2001, attacks on the United States for harbouring al Qaeda leaders, including Osama bin Laden.
The Taliban and other insurgent groups are particularly strong in the south and east of Afghanistan and enjoy safe havens across the border in Pakistan, officials say.
The Bush administration has announced plans to send an extra Army combat brigade -- some 4,000 soldiers -- to eastern Afghanistan in January to bolster the NATO-led force fighting alongside Afghan troops against insurgents.
The United States has about 32,000 troops in Afghanistan. Approximately 13,000 of them are in the NATO-led force of more than 50,000 troops.
Experts say it will take more than just troop increases to stabilise Afghanistan. Better governance, economic development and new efforts to tackle corruption and the opium trade are all widely seen as necessary.

Attack on Pakistan police station kills 3
Thursday, October 16, 2008
MINGORA, Pakistan: A suicide bomber rammed an explosives-packed vehicle into a police station in Pakistan's northwestern Swat valley Thursday, killing three policemen and wounding 15, officials said.
Suicide bombings and attacks on security forces are becoming increasingly common after the military began offensives in August against al Qaeda militants and Taliban fighters in the northwest, including Swat.
More than 1,100 militants have been killed in the fighting, the military says. There has been no independent confirmation of the military's casualty estimates.
The militants have responded with suicide bomb attacks, including one at a top hotel in the capital, Islamabad, last month that killed 55 people.
In the latest bomb attack, militants fired at least two rocket-propelled grenades at a police station in Mingora, the main town in the Swat valley, before launching a suicide car-bomb attack, said the region's police chief, Idrees Bangash.
The surge in militant violence in Pakistan has alarmed its Western allies, worried about the stability of their nuclear-armed ally whose support is vital in defeating al Qaeda and the Taliban insurgency in Afghanistan.
Pakistan is also grappling with serious economic problems and is seeking billions of dollars in external support.

Suspected U.S. drone attack in Pakistan
Thursday, October 16, 2008
By Hafiz Wazir
A suspected U.S. drone fired a missile on Thursday into Pakistani territory on the Afghan border, killing at least one militant, intelligence agency officials said.
U.S. officials say al Qaeda and Pakistani Taliban militants operate out of safe havens in northwest Pakistan, training for an intensifying insurgency in Afghanistan that has helped make that country deadlier now than Iraq for U.S. troops.
U.S. impatience has been growing over what Washington sees as Pakistan's failure to eliminate the militant threat from their sanctuaries in remote ethnic Pashtun regions.
U.S.-operated pilotless aircraft have stepped up strikes in Pakistan since the beginning of September, firing missiles at suspected militants 11 times and killing dozens of people, most of them militants, Pakistani security officials have said.
On Thursday, at least one missile hit a house in the village of Sam in South Waziristan, in an area known as a stronghold of Baitullah Mehsud, head of Pakistani Taliban militants.
"We have confirmation of one militant dead and two wounded have been retrieved from the debris," said an intelligence official who declined to be identified, adding the death toll could rise.
Another intelligence agency official said five militants had been killed.
"Guests were staying there," said the second intelligence official, using a term commonly used to refer to foreign militants.
Pakistani military spokesmen were not immediately available for comment.
The second intelligence official said two missiles were fired. A resident of Sam said by telephone two big explosions had shaken the village.
The first intelligence official said militants had cordoned off the area and were not letting anyone approach.
Cross-border strikes by U.S. forces, in particular a September 3 raid by U.S. commandos on a Pakistani village, have angered Pakistan and led to calls from opposition politicians for an end to help for the U.S.-led campaign against Islamist militancy.
Pakistan rules out foreign military strikes on its territory, saying they not only violate its sovereignty but are counter-productive, increasing support for militants in a country where many people oppose backing for the United States.
Top U.S. officials have vowed to respect Pakistani sovereignty but have declined to rule out more strikes.
The Pakistani military began offensives in August against al Qaeda militants and Taliban fighters in two parts of the northwest, although not in Waziristan.
More than 1,100 militants have been killed, the military says, although there has been no independent confirmation of its casualty estimates.
The militants have responded with suicide bomb attacks, including one on a top hotel in Islamabad last month that killed 55 people.
The surge in violence has alarmed Pakistan's Western allies, who are worried about stability in their nuclear-armed ally which is grappling with serious economic problems and seeking billions of dollars in external support.
The government, led by the party of assassinated former prime minister Benazir Bhutto, has vowed to root out militancy and stop Pakistan being used as a base for attacks on other countries.
Parliament has been holding a closed session on security this week in an attempt to forge a consensus on policy.
The government has said it is willing to negotiate with militants who lay down their arms and a spokesman for Pakistani Taliban told the BBC this week the Taliban were ready for talks if the government stopped the offensives.
(Additional reporting by Alamgir Bitani)
(Writing by Zeeshan Haider and Robert Birsel; Editing by Paul Tait)


Pakistani police shoot dead four prisoners in riot
Thursday, October 16, 2008
By Imtiaz Shah
Pakistani police shot dead four prisoners and wounded 13 during a riot at an overcrowded prison in the city of Karachi, police said Thursday.
Separately, prisoners including Taliban militants took four guards hostage during a riot sparked by a search for mobile telephones and weapons at a prison in the northwest of the country, a prison official said.
Police in Karachi said the violence began late Wednesday when prisoners attacked police in an attempt to break out through a gate. A wounded prisoner said the trouble began with a protest over harsh conditions.
"The prisoners attacked police and when they replied the prisoners went on to attack offices and burn furniture," said Mohammad Yamin Khan, Inspector General of Jails in the southern province of Sindh.
Khan said there were more than 2,500 inmates in the Malir District Jail, which was built to hold 1,200.
Wounded prisoner Karim Dad said from a hospital bed that the prisoners were protesting against harsh treatment and poor conditions.
It was the second disturbance at a prison in Karachi this week. Prisoners at the city's central jail rioted over conditions Monday.
In the northwestern town of Timergarah, prisoners took four guards hostage as police fired teargas to end a riot that began when authorities conducted a search and found mobile phones and knives.
Prisoners set fire to two prison barracks and four inmates were hurt during the teargas shelling, said the prison's deputy superintendent, Ayub Bacha.
"Some of them were infuriated by our action and then held hostage four of our staff," Bacha told Reuters.
A police official said Taliban militants detained during military operations in nearby Swat Valley were behind the trouble.
"There are about 50 militants and we had reports that some of them had mobile phones and they were contacting militants outside and could have been plotting a violent uprising," said the police officer, who declined to be identified.
Prison authorities had called in troops to seal off the area, the police officer said.
(Additional reporting by Izaz Mohmand; Editing by Bill Tarrant)
(Writing by Aftab Borka; Editing by Robert Birsel)


Release of 17 Guantánamo detainees sputters
By William Glaberson
Thursday, October 16, 2008
An urgent effort by the Bush administration to find a country willing to accept 17 detainees held at Guantánamo Bay, Cuba, has stalled because of a bitter dispute inside the government about whether the men are dangerous.
The administration stepped up its search for a new home for the detainees, members of the Uighur Muslim minority in western China, after a federal judge ordered them to be released inside the United States a week ago.
But because of the dispute within the administration, an American ambassador canceled a trip for international negotiations about the fate of the 17 men that had been scheduled to begin Monday.
People briefed on the issue said that the State Department, which is charged with trying to resettle Guantánamo detainees by coaxing other countries to accept them, argued that the Justice Department compromised diplomatic efforts with a court filing Friday that asserted that the Uighurs should not be released inside the United States. The filing described them as "a danger to the public" and as men who had been trained in insurrection.
"Based on what they were saying in the brief, it made it impossible to conduct negotiations," said an administration official who spoke on the condition of anonymity because he had not been authorized to discuss the dispute.
The State Department has often been at odds with the Justice Department and the Pentagon over detainee issues, at times arguing that those agencies do not take sufficient account of Guantánamo's impact on international relations.
The Uighur detainees have been at the center of a contentious legal confrontation that drew wide attention with a ruling from Judge Ricardo Urbina, on Oct. 7, directing that they be freed in Washington, DC. The ruling that the men were not a danger to the United States was a defeat for the White House and was the first to order the freeing of Guantánamo detainees.
After an emergency filing by the Justice Department the next day, an appeals court temporarily stayed the ruling while it considered whether to grant a longer stay.
Clint Williamson, the State Department's ambassador-at-large for war crimes issues who conducts Guantánamo resettlement talks with other countries, confirmed that he had changed his plans.
"I was scheduled to depart on another round of negotiations early this week," Williamson said. "It was impossible to resolve some concerns we had about going forward at the time. As a result I canceled the trip." He declined to say where he had planned to travel.
A Justice Department spokesman, Dean Boyd, declined to discuss the dispute, saying, "We don't comment on internal deliberations."
The temporary stay of Judge Urbina's ruling had given provided time for renewed diplomatic efforts to resettle the men and to avoid a potential conflict between the judge and the administration.
The appeals court could rule as soon as Friday about whether it will extend the stay on Judge Urbina's ruling or return the case to him. The State Department had been under great pressure inside the administration to find a country willing to accept the Uighurs.
Lawyers for the Uighurs, who were in Afghanistan in 2001, said the men would be persecuted if they were returned to China. The administration agreed that it would not send them there. But it said that since transferring 5 Uighur detainees to Albania in 2006, it had been unable to persuade governments to accept the other 17.
Diplomats say that many governments fear reprisal by China, which considers Uighur separatist groups terrorists.
Lawyers for the men have said that the Justice Department exaggerated its claims against the men in its legal arguments.
The people who have been briefed on the dispute said that the State Department also regarded the language describing the men as inflammatory and impossible to prove.
They said the department viewed efforts to find a country willing to accept the detainees as futile as long as the Justice Department argued that the men were too dangerous to be admitted into the United States.
The Uighur case has become a focus of many critics of the Guantánamo detention center. Jennifer Daskal, a counterterrorism specialist at Human Rights Watch, said that some administration officials appeared determined to block their release.
"The true fear," Daskal said, "is not that they will pose a security threat, but that they will serve as living reminders of the administration's mistakes in setting up Guantánamo."

Sectarian tensions worsen in northern Lebanon
By Robert F. Worth
Thursday, October 16, 2008
TRIPOLI, Lebanon: The crumbling streets of this ancient city are starting to resemble a battleground.
A string of bombings over the past two months has left at least 20 people dead, most of them Lebanese Army soldiers, and scores of wounded. Hard-line Sunni Islamist leaders have gained new followers here, fueling sectarian violence that has scarred the city and its economy. Already, the president of Syria has warned that northern Lebanon has become "a real source of extremism and a danger to Syria."
But this being Lebanon, it is not clear what part of all this is terrorism and what is just election-year politics - or which of those is more dangerous.
Many Lebanese political leaders say Syria and its allies here - including the Shiite militant group Hezbollah, which has little power in northern Lebanon - are trying to win votes in the coming parliamentary elections by smearing their opponents with the image of Al Qaeda. Some openly accuse Syria of orchestrating the bombings.
"The north is the victim of terrorism, not the source of it," said Ahmad Fatfat, a member of Parliament from the northern region of Dunnieh. "Someone is trying to send a message to the people, to make them believe the Sunnis of the north are the real danger in Lebanon."
The absence of clear evidence makes such arguments inevitable. Even when the Lebanese authorities make an arrest - as they did Sunday, accusing a jihadist cell of carrying out the bombings in Tripoli - basic questions persist because foreign powers have so often used such groups as proxies inside Lebanon in the past.
One thing is clear: Much is riding on the elections, scheduled for next spring. Hezbollah and its allies stand to gain a parliamentary majority for the first time. That would be another striking setback for U.S. policy in the region and would probably make Israel view all of Lebanon, not just Hezbollah, as its enemy in future wars.
At the same time, behind the accusations and counteraccusations about the bombings sits an indisputable fact: Sectarian tensions have grown worse in the north, feeding extremist sentiment and prompting more citizens to arm themselves.
The vast bulk of the population is Sunni Arab and supports Saad Hariri, the parliamentary leader of the Western-allied government majority that opposes Hezbollah. Sunnis were deeply angered in May, when Hezbollah briefly took over the capital and destroyed the offices of Hariri's political movement and its media outlets.
After Hezbollah's takeover, a low-level war broke out in Tripoli between two adjacent neighborhoods of the city, one Sunni, the other Alawite, an offshoot of Shiite Islam, and allied with Syria. The fighting ended last month with a truce, but some violence has continued, and army officials say they expect more attacks.
At the same time, hard-line religion has spread among Tripoli's large population of jobless young men, many of them disenchanted with Hariri's secular leadership. The spread of Salafism, a puritanical current within Islam, has become commonplace in the Lebanese press.
"A lot of young people have joined the Salafists since May," said Fakher al-Ayoubi, a journalist from Tripoli and an expert on Islamist movements in the north.
"Some of them don't even know how to pray, but they like the idea of fighting the Alawites and Hezbollah."
There are dozens of militant factions in Tripoli alone, and many have gained new weapons since the neighborhood fighting began in May.
The presence of the Palestinian camps, where Qaeda-style radicalism is known to flourish and where Lebanese security forces are barred from entering, makes it even harder to keep track of militants.
These germs of militancy have burst into violence before. During the summer of 2007, the Lebanese Army battled fighters from the militant group Fatah al Islam, aligned with Al Qaeda, in the Nahr al Bared Palestinian refugee camp. Many believe that the recent attacks on the army are revenge for the 2007 fighting, in which the camp was nearly leveled.
But Islamists in Tripoli say they believe that Syria fostered Fatah al Islam, and they bristle at the suggestion that Lebanese Sunnis would think of attacking the army. There are few families here without a relative in the army, whose troops in the north are themselves mostly Sunni.
"We don't want anyone to attack the army; they are our brothers," said Bilal Daqmaq, a cleric who openly says he admires Osama bin Laden and who served as a mediator between the army and Fatah al Islam during the 2007 battle. "What Fatah al Islam did was criminal and wrong."
Like many other Islamists here, Daqmaq said he also believed that Syria was behind the recent attacks on the army. He said the leader of Fatah al Islam, Shaker al-Absi, had told him that Syria pushed him into a confrontation with the Lebanese government last year. It is well known that Absi, who remains at large, was released from a Syrian prison before becoming the leader of Fatah al Islam, though Syria denies that it had anything to do with him afterward.
Daqmaq and others like him say they have nothing to gain from sowing chaos in their own backyard, or from provoking confrontations with better-armed neighbors.
Since Hezbollah seized control of Beirut in May, a caretaker government was formed in Lebanon, ending its long political crisis, and there have been several high-profile efforts to mend frayed relations between some of the major political parties. Even the Salafists announced an accord with Hezbollah in September, though it quickly collapsed.
But several Islamist leaders here said they were stockpiling weapons to be used for protection against Hezbollah or Syria. Their fears are not irrational: In the mid-1980s Syria invaded northern Lebanon and killed or imprisoned hundreds of Islamists.
Although Syria withdrew from Lebanon in 2005, it retained armed allies here - including the Alawite community in Tripoli - and a network of agents in the Lebanese security services.
The conflict here sometimes resembles a proxy war, with the Sunnis in the north drawing support, directly or indirectly, from Saudi Arabia, which is locked in a bitter diplomatic feud with Syria.
"It's as if there were fire underground here all the time, and in May, it suddenly burst up onto the surface," said Arabi, a 30-year-old Sunni who fought in the Sunni-Alawite battles that raged in Tripoli through the spring and summer, and who goes by one name. His father was killed by the Syrians in 1986, and he believes that his destiny is to continue that struggle, he said.
Whether the fire will flare up from underground again remains to be seen. But the current atmosphere bodes poorly for peaceful elections.
Last month, thousands of Syrian soldiers deployed near the border with northern Lebanon. Syria said they were there to fight crossborder smuggling. In Lebanon, their presence was widely viewed as an effort at intimidation and reasserting control.
Many here say that effort is likely to backfire, further provoking the extremism that Syria would like to control. "In the past, Syria has killed many people here under the pretext of fighting terrorism," said Daqmaq, the cleric. "But the difference now is that there is a big lion called Al Qaeda, and the Syrians fear it."


Israeli soldiers kill third Palestinian in three days
By Isabel Kershner

Thursday, October 16, 2008
JERUSALEM: Israeli troops shot and killed a Palestinian man during a clash in the West Bank before dawn Thursday, the third killing in three days, Palestinian officials said. The Israeli Army asserted that all three were holding or about to throw firebombs when they were shot.
An army spokeswoman said there had been several firebomb attacks on Israeli vehicles in the West Bank, particularly in the Ramallah district, where the three shootings took place. There has been a general rise in tension in the West Bank in the past few weeks, with an increase in violent incidents involving Israeli settlers, the army and Palestinians.
But a senior Palestinian official in Ramallah, Saeb Erekat, condemned Israel's military actions as "absolutely unacceptable and uncalled for" and said they were undermining Palestinian efforts to preserve the peace process and maintain calm.
Erekat said that although the Israeli defense minister, Ehud Barak, has expressed an interest in extending the six-month truce in Gaza that is due to expire in December, he was "not even prepared to discuss" a truce in the West Bank.
The Israeli Army said soldiers entered the Palestinian village of Kufr Malik near Ramallah on Thursday, spotted two Palestinians holding firebombs and shot one of them. Palestinians identified the dead man as Aziz Yousef, 21.
On Wednesday, another Palestinian, Muhammad Ramahi, 21, died from wounds sustained in a clash with Israeli troops at the Jalazoun refugee camp that abuts Ramallah. That confrontation followed the funeral of a Palestinian teenager, Abdel Qader Zeid, 17, also from Jalazoun, who was shot and killed Tuesday outside the Israeli settlement of Beit El.
The military said that Israeli forces shot the youth after laying in ambush, and said he was holding a lighted gasoline bomb at the time. Ten more gasoline bombs were found in the area, it said.
Also before dawn Thursday, Israeli troops raided the Palestinian village of Qabatiya, near Jenin in the northern West Bank, and arrested four Islamic Jihad militants, a military spokeswoman said. She said that during the raid the soldiers found and detonated two roadside bombs weighing about 20 kilograms, or 44 pounds, each.

Spanish judge opens case into Franco's atrocities
The Associated Press
Thursday, October 16, 2008
MADRID: A Spanish judge opened a criminal investigation Thursday into atrocities committed during the Spanish Civil War and the ensuing right-wing dictatorship, beginning the first official investigation into one of the darkest chapters in the nation's history.
Judge Baltasar Garzón of the National Court said in a 68-page writ that he had jurisdiction to investigate the execution or disappearance of tens of thousands of civilians during the 1936-39 war and under the rule of General Francisco Franco.
An estimated 500,000 people died in the civil war and both sides committed atrocities against civilians: supporters of Franco, the general who rose up against an elected, leftist Republican government and ultimately ousted it, and those who backed that government.
Some Spaniards say the move was long overdue and that since Garzón has pursued atrocities by military regimes in Chile and Argentina, he should do so in his own country.
"It's very exciting because I think it's about time this country recognized the suffering of these people and started something that, 70 years later, could be considered as justice," said Emilio Silva, head of the Association for the Recovery of Historic Memory, which exhumes bodies buried in mass graves.
Garzón is famous for bringing terrorism and crimes-against-humanity cases against figures like the late Chilean dictator Augusto Pinochet in 1998 and the Al Qaeda leader Osama bin Laden in 2003.
Then, he acted under Spain's observance of the so-called principle of universal justice, where alleged crimes against humanity can be prosecuted even if committed in another country.
In this case, Garzón argued that there was a systematic campaign by the Franco regime to eliminate his opponents and hide their bodies and that this was ground for a crimes-against-humanity case that he says has no statute of limitations.
Garzón named Franco, now dead, and 34 other deceased wartime generals or members of his government as the instigators of the campaign.
The judge ordered that their death certificates be shown to him so he can certify that, as deceased persons, they cannot be held criminally liable for atrocities.
But he also ordered the Interior Ministry to identify senior members of the Falange Española, the party associated with the Franco regime, to determine if they can be charged or, if deceased, declared no longer criminally liable.
In his writ, Garzón ordered the exhumation of 19 common graves, including one believed to hold the remains of Federico García Lorca, Spain's most widely acclaimed 20th-century poet, executed in the opening days of the war.
Garzón is focusing on people killed by the pro-Franco side in the war.
In his writ, he said the Franco regime did a thorough accounting of pro-Franco civilians killed by the Republican side and gave them proper burials. The British historian Paul Preston, an acknowledged authority on the Spanish Civil War, puts this figure at about 55,000.
Many victims' families want their relatives' remains exhumed to give them a decent burial. But Lorca's niece wants his remains left untouched in a shallow grave near Granada, southern Spain, where they lie alongside those of three other men.
She says that would allow future generations to remember how the author of "Blood Wedding" and "A Poet in New York" was treated.
In his ruling, Garzón cited as evidence an interview Franco gave to Jay Allen, a U.S. journalist, in 1936 in which the general said he would pay any price for victory.
"You'll have to kill half of Spain," Allen said in the interview.
Franco replied: "I said I'd pay any price."

Iran and Iraq to speed up search for war missing
Thursday, October 16, 2008
GENEVA: Iran and Iraq agreed Thursday to work together to clarify the fate of tens of thousands of soldiers still missing from their 1980-1988 war, the International Committee of the Red Cross (ICRC) said.
It was the first time that the two governments agreed to undertake joint efforts with the neutral humanitarian agency to trace soldiers missing in action and prisoners of war (POWs).
"The document establishes a clear framework for collecting information and sharing it between the two countries and for handing over mortal remains," the ICRC said in a statement about the three-way memorandum of understanding.
"Tens of thousands of Iraqi and Iranian members of armed forces, including some who were POWs, remain unaccounted for today," it said.
Twenty years after the end of hostilities, Iraqi and Iranian families await news of their loved ones who never returned from the conflict which killed about one million people.
The new accord paves the way for officials from both sides to work together and exchange information for the first time, with backing from ICRC experts.
The two countries, both run by Sh'ite majorities, maintain that they no longer have prisoners of war.
The ICRC, which visited prisoners of war during the conflict and helped repatriate nearly 100,000 of them afterwards, has worked for decades to determine the fate of the missing.
Iraq signed a bilateral agreement with the ICRC last June to step up efforts, while Iran signed a similar pact in 2004.
Wijdan Michael, Iraq's human rights minister, and Mohammad Ali-Hossein, Iran's deputy foreign minister for legal and international affairs, signed the agreement in Geneva.
(Reporting by Stephanie Nebehay)

Somali immigrant workers test a Nebraska town
By Kirk Semple
Thursday, October 16, 2008
GRAND ISLAND, Nebraska: Like many workers at the meatpacking plant here, Raul García, a Mexican-American, has watched with some discomfort as hundreds of immigrants from Somalia have moved to town in the past couple of years, many of them to fill jobs once held by Latino workers taken away in immigration raids.
García has been particularly troubled by the Somalis' demand that they be allowed special breaks for prayers that are obligatory for devout Muslims. The breaks, he said, would inconvenience everyone else.
"The Latino is very humble," said García, 73, who has worked at the plant, owned by JBS USA Inc., since 1994. "But they are arrogant," he said of the Somali workers. "They act like the United States owes them."
García was among more than 1,000 Latino and other workers who protested a decision in September by the plant's management to cut their work day - and their pay - by 15 minutes to give scores of Somali workers time for evening prayers.
After several days of strikes and disruptions, the plant's management abandoned the plan. But the dispute peeled back a layer of civility in this southern Nebraska city of 47,000, revealing slow-burning racial and ethnic tensions in an unexpected aftermath of the enforcement raids at workplaces by U.S. immigration authorities.
Grand Island is among a half dozen or so cities where discord has arisen with the arrival of Somali workers, many of whom were recruited by employers from elsewhere in the United States after immigration raids devastated their Latino work forces. The Somalis are by and large in this country legally as political refugees and therefore are not singled out by the immigration authorities.
In some of these places, including Grand Island, this newest wave of immigrant workers has had the effect of unifying the other ethnic populations against the Somalis and has also diverted some of the hostility toward Latino immigrants among some native-born residents.
"Every wave of immigrants has had to struggle to get assimilated," said Margaret Hornady, the mayor of Grand Island and a longtime resident of Nebraska. "Right now, it's so volatile."
The U.S. immigration crackdown has hit meat- and poultry-packing plants particularly hard, with more than 2,000 immigrant workers in at least nine locations detained since 2006 in major raids, most on immigration violations.
Struggling to fill the grueling, low-wage jobs that attract few American workers, the plants have placed advertisements in immigrant newspapers and circulated fliers in immigrant neighborhoods.
Some companies, like Swift & Company, which owned the plant in Grand Island until being bought up by the Brazilian conglomerate JBS last year, have made a particular pitch for Somalis because of their legal status. Tens of thousands of Somali refugees fleeing civil war have settled in the United States since the 1990s, with the largest concentration in Minnesota.
But the companies are learning that in trying to solve one problem they have created another.
In early September, about 220 Somali Muslims walked off the job at a JBS meatpacking plant in Greeley, Colorado, saying the company had prevented them from observing their prayer schedule. (More than 100 of the workers were later fired.)
Days later, a poultry company in Minnesota agreed to allow Muslim workers prayer breaks and the right to refuse handling pork products, settling a lawsuit filed by nine Somali workers.
In August, the management of a Tyson chicken plant in Shelbyville, Tennessee, designated a Muslim holy day as a paid holiday, acceding to a demand by Somali workers. The plant had originally agreed to substitute the Muslim holy day for Labor Day, but reinstated Labor Day after a barrage of criticism from non-Muslims.
Nationwide, employment discrimination complaints by Muslim workers have more than doubled in the past decade, to 607 in fiscal year 2007, from 285 in fiscal year 1998, according to the U.S. Equal Employment Opportunity Commission, which has sent representatives to Grand Island to interview Somali workers.
The Civil Rights Act of 1964 forbids employers to discriminate based on religion and says that employers must "reasonably accommodate" religious practices. But the act offers some exceptions, including instances when adjustments would cause "undue hardship" on the company's interests.
The new tensions here extend well beyond the walls of the plant.
Scratch beneath Grand Island's surface and there is resentment, discomfort and mistrust everywhere, some residents say - between the white community and the various immigrant communities; between the older immigrant communities, like the Latinos, and the newer ones, namely the Somalis and the Sudanese, another refugee community that has grown here in recent years; and between the Somalis, who are largely Muslim, and the Sudanese, who are largely Christian.
In dozens of interviews here, white, Latino and other residents seemed mostly bewildered, if not downright suspicious, of the Somalis, very few of whom speak English.
"I kind of admire all the effort they make to follow that religion, but sometimes you have to adapt to the workplace," said Fidencio Sandoval, a plant worker born in Mexico who became a citizen.
"A new culture comes in with their demands and says, 'This is what we want.' This is kind of new for me."
Hornady, the mayor, suggested somewhat apologetically that she had been having difficulty adjusting to the presence of Somalis. She said she found the sight of Somali women, many of whom wear Muslim headdresses, or hijabs, "startling."
"I'm sorry, but after 9/11, it gives some of us a turn," she said.
Not only do the hijabs suggest female subjugation, she said, but the sight of Muslims in town made her think of Osama bin Laden and the attacks on the United States.
"I know that that's horrible and that's prejudice," she said.
"I'm working very hard on it." She added: "Aren't a lot of thoughtful Americans struggling with this?"
For their part, the Somalis say they feel aggrieved and not particularly welcome.
"A lot of people look at you weird - they judge you," said Abdisamad Jama, 22, a Somali who moved to Grand Island two years ago to work as an interpreter at the plant and now freelances. "Or sometimes they will say, 'Go back to your country."'

East Germany's first mosque opens amid protests
Thursday, October 16, 2008
By Madeline Chambers and Josie Cox
About 200 people chanting anti-Muslim slogans demonstrated Thursday at the opening of the first mosque in the formerly communist eastern part of Germany.
Attacks on the site and protests by residents and the far-right National Democratic Party (NPD) have dogged the mosque's construction.
The demonstrators, many of them older people, held banners reading "Stop the Islamisation of Europe" and "Stop the Abuse of Religious Freedom."
A few black-clad young men with shaved heads, a trademark right-wing style, joined the protest but the NPD called off a march.
The protest highlighted difficulties in integrating Germany's 3.2 million Muslims into mainstream society, especially in the former communist east where few have settled.
Supporters say the mosque will foster better ties.
"The mosque will be a hub of social activity, not just for praying," said Ijaz Ahmad, spokeswoman for the Ahmadiyya mosque.
"It will play a role in boosting integration and promoting dialogue with politicians and other religious groups."
The local citizens' group said Ahmadiyya is a sect with racist and discriminatory views.
"We have a big problem with sects that put religion above everything else, allow the beating of women and deny equal rights," the group said on its website.
"Our opposition is directed at this sect's ideas and in particular its ideas about women," it said.
The Ahmadiyya movement, whose slogan is "Love for all, hatred for no one," was founded in India in the 19th century. It defines itself as Muslim but is not recognized by some mainstream Muslim groups because of different beliefs.
Germany's roughly 30,000 Ahmadiyya members aim to have about 100 mosques in the country eventually.
Germany is home to about 2,500 mosque communities and has 2,250 active imams. Most of its Muslims are of Turkish origin.
(Editing by Angus MacSwan)

Gail Collins: Three guys and a table
By Gail Collins
Thursday, October 16, 2008
The last debate! Couldn't help feeling nostalgic Wednesday night.
It was a little like the last bonfire at summer camp.
So many memories. That Republican debate where people had to raise their hands if they didn't believe in evolution. The snowman who asked the question about global warming. The time John Edwards made fun of Hillary Clinton's jacket. Dennis Kucinich. Ron Paul. "That one." And now, the sufferings of Joe the Plumber.
OK, on second thought, perhaps not quite as much fun as summer camp.
For the last two years, dedicated voters have practically lived with Barack Obama and John McCain. We've watched three dozen debates! We've seen them in groups large enough to stage a small invasion, then one-on-one, then at a faux town hall, surrounded by regular people made only slightly irregular by the rule prohibiting any show of emotion.
We've seen them debate standing behind podiums, wandering around the stage, and finally - in a dramatic change of pace - sitting around a table! On swivel chairs!
The staggering McCain campaign virtually closed down this week as everybody attempted to come up with a big debate game-changer that did not require an entirely different pair of candidates.
Once he calmed down and stopped grinning manically, McCain did, indeed, go on the offensive. He not only managed to compare Barack Obama to Herbert Hoover, he told America that the community group Acorn was "maybe destroying the fabric of democracy" with their sloppy voter-registration programs.
Did it work? Was the audience moved by McCain's description of the plight of Joe, the Ohio plumber, who discovered that the Obama program might mean higher taxes for him if his business were to net more than $250,000 a year? Or were they stunned by the idea that anybody still expects to make that much money in the foreseeable future?
For a while, it seemed as if Joe was sitting right there at the table. McCain began addressing him directly through the TV screen ("If you're out there, my friend...").
Then, at one point, Obama joined in the discussion with the phantom plumber, and the two candidates for president of the United States argued over whose health care plan Joe would like the best. By next week, I expect Joe will have his own cable TV show. Or at a minimum, a really fancy blog.
You had to give McCain credit for spunk. It's been, after all, a dreadful couple of weeks. He built his entire Senate career around low taxes, low spending and a war on those earmarks that his peers use to get special funding for their pet projects.
Then suddenly he was in Washington voting to give the secretary of the Treasury $750 billion for what turned out to be a partial-government takeover of the banking system. Not only was he financing a semi-socialist handout to wasteful financiers, the bill was also stuffed with earmarks. Evil, hateful, soul-destroying earmarks!
OK, debates done. We're ready to move on. We've compared the economic recovery plans. We know more about Bill Ayers the ex-Weatherman than his mother does. We have developed a tic when we hear the words "my friends."
We are really, really well acquainted with Barack Obama and John McCain.
Neither, to be honest, is everything we were hoping for when this all began. Back to that summer camp metaphor: Obama is like the coolest, most popular camper. You can't wait to see him again after school starts. Then you discover that back in real life, he's founder of the Model Boat Society and the president of the Safety Club. And McCain is like the head counselor who led all the hikes and who you wished was your older brother. Until you realized that he spent the cold weather hanging out at a biker bar and watching reruns of "Dog the Bounty Hunter."
And they've moved on, too. None of their effort during the debate was for those of us who have been with them since the beginning.
At this point, they only care about the small chunk of undecided voters in swing states. That means a handful of people in Ohio who have managed to avoid noticing that Obama and McCain disagree on virtually every important issue facing the nation and continue to insist that they are torn between them.
Plus, of course, a couple of folks who got picked for a long-running television panel of undecided voters and don't want to admit they've made up their minds because they'll get thrown out.
This is one of the reasons why the last few weeks of a presidential campaign tend to be so awful. The candidates are gearing their remarks to people who have managed to completely ignore nearly two years of news about the 2008 elections.
In the end, it's always all about the ones who play hard to get.

McCain and Obama in their final debate
Thursday, October 16, 2008
When John McCain embarrassed himself last month by declaring that the "fundamentals of our economy are strong," he quickly claimed that he was talking about his belief in the American worker - and darkly implied that anyone who disagreed was less than patriotic.
It's a shame that McCain hasn't come up with policies that would actually help workers. Instead, he's served up the same trickle-down theories and a government-is-wrong, markets-are-right fervor that helped create this economic disaster.
Wednesday night's debate was another chance for McCain to prove that he is ready to lead this country out of its economic crisis. But he stuck to his script and the nasty tone of his campaign.
In one astonishing exchange, McCain acted as though he was the truly aggrieved party. And he insisted that he had repudiated all of the attacks on Obama by surrogates and misguided supporters. McCain didn't mention that his vice-presidential candidate, Sarah Palin, is one the loudest attackers - and he certainly didn't repudiate her absurd, repeated charge that Obama has been "palling around with terrorists." Quite the opposite. McCain again raised Obama's old and meaningless association with William Ayers, a violent, 1960s radical who served with Obama on the board of a charitable foundation.
The overall effect was to make McCain seem angry and desperate, which didn't surprise us much given how badly his campaign has been doing. McCain's biggest problem is that he is desperately short of good ideas for fixing the country's problems. His big speech on the economy this week was replete with bad ideas, starting with a call to cut the already very low capital gains tax in half. That won't rescue the economy. What it would do is dig the government further into debt while making the current tax structure that rewards the rich even more unfair.
McCain made more sense when he said he wants to eliminate income tax on unemployment benefits in 2008 and 2009. But he would have been more credible if he had actually pressed his party earlier this month to help extend expiring unemployment benefits.
Obama has some good ideas for the short term, to respond to the financial crisis; and for the longer term, to put the economy back on track. He supports a 90-day moratorium on foreclosures and more money for states and localities, both of which would quickly bring relief beyond Wall Street.
Obama wants to raise the minimum wage and tie it to inflation. McCain wants to make the Bush tax cuts permanent - a big break for the top 1 percent of society. Obama would cut taxes for low- and moderate-income families and raise them for richer Americans.
It's not that McCain hasn't mentioned jobs. He did, in his big speech on Tuesday. His idea - surprise, surprise - was that "the most effective way a president can do this - with tax cuts that are directed specifically to create jobs."
After the last eight years, that pinched view of government ought to sound depressingly familiar to the millions of Americans who are still waiting for that downward trickle of prosperity.


Transcript of the debate
Thursday, October 16, 2008
Following is a transcript of the third presidential debate between Senators John McCain and Barack Obama in Hempstead, New York, as recorded by CQ Transcriptions
SCHIEFFER: Good evening. And welcome to the third and last presidential debate of 2008, sponsored by the Commission on Presidential Debates. I'm Bob Schieffer of CBS News.
The rules tonight are simple. The subject is domestic policy. I will divide the next hour-and-a-half into nine-minute segments.
I will ask a question at the beginning of each segment. Each candidate will then have two minutes to respond, and then we'll have a discussion.
I'll encourage them to ask follow-up questions of each other. If they do not, I will.
The audience behind me has promised to be quiet, except at this moment, when we welcome Barack Obama and John McCain.
Gentlemen, welcome.
By now, we've heard all the talking points, so let's try to tell the people tonight some things that they -- they haven't heard. Let's get to it.
Another very bad day on Wall Street, as both of you know. Both of you proposed new plans this week to address the economic crisis.
Senator McCain, you proposed a $52 billion plan that includes new tax cuts on capital gains, tax breaks for seniors, write-offs for stock losses, among other things.
Senator Obama, you proposed $60 billion in tax cuts for middle- income and lower-income people, more tax breaks to create jobs, new spending for public works projects to create jobs.
I will ask both of you: Why is your plan better than his?
Senator McCain, you go first.
MCCAIN: Well, let -- let me say, Bob, thank you.
And thanks to Hofstra.
And, by the way, our beloved Nancy Reagan is in the hospital tonight, so our thoughts and prayers are going with you.
It's good to see you again, Senator Obama.
Americans are hurting right now, and they're angry. They're hurting, and they're angry. They're innocent victims of greed and excess on Wall Street and as well as Washington, D.C. And they're angry, and they have every reason to be angry.
And they want this country to go in a new direction. And there are elements of my proposal that you just outlined which I won't repeat.
But we also have to have a short-term fix, in my view, and long- term fixes.
Let me just talk to you about one of the short-term fixes.
The catalyst for this housing crisis was the Fannie and Freddie Mae that caused subprime lending situation that now caused the housing market in America to collapse.
I am convinced that, until we reverse this continued decline in home ownership and put a floor under it, and so that people have not only the hope and belief they can stay in their homes and realize the American dream, but that value will come up.
Now, we have allocated $750 billion. Let's take 300 of that billion and go in and buy those home loan mortgages and negotiate with those people in their homes, 11 million homes or more, so that they can afford to pay the mortgage, stay in their home.
Now, I know the criticism of this.
MCCAIN: Well, what about the citizen that stayed in their homes? That paid their mortgage payments? It doesn't help that person in their home if the next door neighbor's house is abandoned. And so we've got to reverse this. We ought to put the homeowners first. And I am disappointed that Secretary Paulson and others have not made that their first priority.
SCHIEFFER: All right. Senator Obama?
OBAMA: Well, first of all, I want to thank Hofstra University and the people of New York for hosting us tonight and it's wonderful to join Senator McCain again, and thank you, Bob.
I think everybody understands at this point that we are experiencing the worst financial crisis since the Great Depression. And the financial rescue plan that Senator McCain and I supported is an important first step. And I pushed for some core principles: making sure that taxpayer can get their money back if they're putting money up. Making sure that CEOs are not enriching themselves through this process.
And I think that it's going to take some time to work itself out. But what we haven't yet seen is a rescue package for the middle class. Because the fundamentals of the economy were weak even before this latest crisis. So I've proposed four specific things that I think can help.
Number one, let's focus on jobs. I want to end the tax breaks for companies that are shipping jobs overseas and provide a tax credit for every company that's creating a job right here in America.
Number two, let's help families right away by providing them a tax cut -- a middle-class tax cut for people making less than $200,000, and let's allow them to access their IRA accounts without penalty if they're experiencing a crisis.
Now Senator McCain and I agree with your idea that we've got to help homeowners. That's why we included in the financial package a proposal to get homeowners in a position where they can renegotiate their mortgages.
I disagree with Senator McCain in how to do it, because the way Senator McCain has designed his plan, it could be a giveaway to banks if we're buying full price for mortgages that now are worth a lot less. And we don't want to waste taxpayer money. And we've got to get the financial package working much quicker than it has been working.
Last point I want to make, though. We've got some long-term challenges in this economy that have to be dealt with. We've got to fix our energy policy that's giving our wealth away. We've got to fix our health care system and we've got to invest in our education system for every young person to be able to learn.
SCHIEFFER: All right. Would you like to ask him a question?
MCCAIN: No. I would like to mention that a couple days ago Senator Obama was out in Ohio and he had an encounter with a guy who's a plumber, his name is Joe Wurzelbacher.
Joe wants to buy the business that he has been in for all of these years, worked 10, 12 hours a day. And he wanted to buy the business but he looked at your tax plan and he saw that he was going to pay much higher taxes.
You were going to put him in a higher tax bracket which was going to increase his taxes, which was going to cause him not to be able to employ people, which Joe was trying to realize the American dream.
Now Senator Obama talks about the very, very rich. Joe, I want to tell you, I'll not only help you buy that business that you worked your whole life for and be able -- and I'll keep your taxes low and I'll provide available and affordable health care for you and your employees.
And I will not have -- I will not stand for a tax increase on small business income. Fifty percent of small business income taxes are paid by small businesses. That's 16 million jobs in America. And what you want to do to Joe the plumber and millions more like him is have their taxes increased and not be able to realize the American dream of owning their own business.
SCHIEFFER: Is that what you want to do?
MCCAIN: That's what Joe believes.
OBAMA: He has been watching ads of Senator McCain's. Let me tell you what I'm actually going to do. I think tax policy is a major difference between Senator McCain and myself. And we both want to cut taxes, the difference is who we want to cut taxes for.
Now, Senator McCain, the centerpiece of his economic proposal is to provide $200 billion in additional tax breaks to some of the wealthiest corporations in America. Exxon Mobil (NYSE:XOM) , and other oil companies, for example, would get an additional $4 billion in tax breaks.
What I've said is I want to provide a tax cut for 95 percent of working Americans, 95 percent. If you make more -- if you make less than a quarter million dollars a year, then you will not see your income tax go up, your capital gains tax go up, your payroll tax. Not one dime. And 95 percent of working families, 95 percent of you out there, will get a tax cut. In fact, independent studies have looked at our respective plans and have concluded that I provide three times the amount of tax relief to middle-class families than Senator McCain does.
OBAMA: Now, the conversation I had with Joe the plumber, what I essentially said to him was, "Five years ago, when you were in a position to buy your business, you needed a tax cut then."
And what I want to do is to make sure that the plumber, the nurse, the firefighter, the teacher, the young entrepreneur who doesn't yet have money, I want to give them a tax break now. And that requires us to make some important choices.
The last point I'll make about small businesses. Not only do 98 percent of small businesses make less than $250,000, but I also want to give them additional tax breaks, because they are the drivers of the economy. They produce the most jobs.
MCCAIN: You know, when Senator Obama ended up his conversation with Joe the plumber -- we need to spread the wealth around. In other words, we're going to take Joe's money, give it to Senator Obama, and let him spread the wealth around.
I want Joe the plumber to spread that wealth around. You told him you wanted to spread the wealth around.
The whole premise behind Senator Obama's plans are class warfare, let's spread the wealth around. I want small businesses -- and by the way, the small businesses that we're talking about would receive an increase in their taxes right now.
Who -- why would you want to increase anybody's taxes right now? Why would you want to do that, anyone, anyone in America, when we have such a tough time, when these small business people, like Joe the plumber, are going to create jobs, unless you take that money from him and spread the wealth around.
I'm not going to...
OBAMA: OK. Can I...
MCCAIN: We're not going to do that in my administration.
OBAMA: If I can answer the question. Number one, I want to cut taxes for 95 percent of Americans. Now, it is true that my friend and supporter, Warren Buffett, for example, could afford to pay a little more in taxes in order...
MCCAIN: We're talking about Joe the plumber. OBAMA: ... in order to give -- in order to give additional tax cuts to Joe the plumber before he was at the point where he could make $250,000.
Then Exxon Mobil, which made $12 billion, record profits, over the last several quarters, they can afford to pay a little more so that ordinary families who are hurting out there -- they're trying to figure out how they're going to afford food, how they're going to save for their kids' college education, they need a break.
So, look, nobody likes taxes. I would prefer that none of us had to pay taxes, including myself. But ultimately, we've got to pay for the core investments that make this economy strong and somebody's got to do it.
MCCAIN: Nobody likes taxes. Let's not raise anybody's taxes. OK?
OBAMA: Well, I don't mind paying a little more.
MCCAIN: The fact is that businesses in America today are paying the second highest tax rate of anywhere in the world. Our tax rate for business in America is 35 percent. Ireland, it's 11 percent.
Where are companies going to go where they can create jobs and where they can do best in business?
We need to cut the business tax rate in America. We need to encourage business.
Now, of all times in America, we need to cut people's taxes. We need to encourage business, create jobs, not spread the wealth around.
SCHIEFFER: All right. Let's go to another topic. It's related. So if you have other things you want to say, you can get back to that.
This question goes to you first, Senator Obama.
We found out yesterday that this year's deficit will reach an astounding record high $455 billion. Some experts say it could go to $1 trillion next year.
Both of you have said you want to reduce the deficit, but the nonpartisan Committee for a Responsible Federal Budget ran the numbers on both of your proposals and they say the cost of your proposals, even with the savings you claim can be made, each will add more than $200 billion to the deficit.
Aren't you both ignoring reality? Won't some of the programs you are proposing have to be trimmed, postponed, even eliminated?
Give us some specifics on what you're going to cut back.
Senator Obama?
OBAMA: Well, first of all, I think it's important for the American public to understand that the $750 billion rescue package, if it's structured properly, and, as president, I will make sure it's structured properly, means that ultimately taxpayers get their money back, and that's important to understand.
But there is no doubt that we've been living beyond our means and we're going to have to make some adjustments.
Now, what I've done throughout this campaign is to propose a net spending cut. I haven't made a promise about...
SCHIEFFER: But you're going to have to cut some of these programs, certainly.
OBAMA: Absolutely. So let me get to that. What I want to emphasize, though, is that I have been a strong proponent of pay-as- you-go. Every dollar that I've proposed, I've proposed an additional cut so that it matches.
OBAMA: And some of the cuts, just to give you an example, we spend $15 billion a year on subsidies to insurance companies. It doesn't -- under the Medicare plan -- it doesn't help seniors get any better. It's not improving our health care system. It's just a giveaway.
We need to eliminate a whole host of programs that don't work. And I want to go through the federal budget line by line, page by page, programs that don't work, we should cut. Programs that we need, we should make them work better.
Now, what is true is that Senator McCain and I have a difference in terms of the need to invest in America and the American people. I mentioned health care earlier.
If we make investments now so that people have coverage, that we are preventing diseases, that will save on Medicare and Medicaid in the future.
If we invest in a serious energy policy, that will save in the amount of money we're borrowing from China to send to Saudi Arabia.
If we invest now in our young people and their ability to go to college, that will allow them to drive this economy into the 21st century.
But what is absolutely true is that, once we get through this economic crisis and some of the specific proposals to get us out of this slump, that we're not going to be able to go back to our profligate ways.
And we're going to have to embrace a culture and an ethic of responsibility, all of us, corporations, the federal government, and individuals out there who may be living beyond their means.
SCHIEFFER: Time's up.
MCCAIN: Well, thank you, Bob. I just want to get back to this home ownership. During the Depression era, we had a thing called the home ownership loan corporation.
And they went out and bought up these mortgages. And people were able to stay in their homes, and eventually the values of those homes went up, and they actually made money. And, by the way, this was a proposal made by Senator Clinton not too long ago.
So, obviously, if we can start increasing home values, then there will be creation of wealth.
SCHIEFFER: But what...
MCCAIN: But -- OK. All right.
SCHIEFFER: The question was, what are you going to cut?
MCCAIN: Energy -- well, first -- second of all, energy independence. We have to have nuclear power. We have to stop sending $700 billion a year to countries that don't like us very much. It's wind, tide, solar, natural gas, nuclear, off-shore drilling, which Senator Obama has opposed.
And the point is that we become energy independent and we will create millions of jobs -- millions of jobs in America.
OK, what -- what would I cut? I would have, first of all, across-the-board spending freeze, OK? Some people say that's a hatchet. That's a hatchet, and then I would get out a scalpel, OK?
Because we've got -- we have presided over the largest increase -- we've got to have a new direction for this country. We have presided over the largest increase in government since the Great Society.
Government spending has gone completely out of control; $10 trillion dollar debt we're giving to our kids, a half-a-trillion dollars we owe China.
I know how to save billions of dollars in defense spending. I know how to eliminate programs.
SCHIEFFER: Which ones?
MCCAIN: I have fought against -- well, one of them would be the marketing assistance program. Another one would be a number of subsidies for ethanol.
I oppose subsidies for ethanol because I thought it distorted the market and created inflation; Senator Obama supported those subsidies.
I would eliminate the tariff on imported sugarcane-based ethanol from Brazil.
I know how to save billions. I saved the taxpayer $6.8 billion by fighting a deal for a couple of years, as you might recall, that was a sweetheart deal between an aircraft manufacturer, DOD, and people ended up in jail.
But I would fight for a line-item veto, and I would certainly veto every earmark pork-barrel bill. Senator Obama has asked for nearly $1 billion in pork-barrel earmark projects...
SCHIEFFER: Time's up.
MCCAIN: ... including $3 million for an overhead projector in a planetarium in his hometown. That's not the way we cut -- we'll cut out all the pork.
SCHIEFFER: Time's up.
OBAMA: Well, look, I think that we do have a disagreement about an across-the-board spending freeze. It sounds good. It's proposed periodically. It doesn't happen.
And, in fact, an across-the-board spending freeze is a hatchet, and we do need a scalpel, because there are some programs that don't work at all. There are some programs that are underfunded. And I want to make sure that we are focused on those programs that work.
Now, Senator McCain talks a lot about earmarks. That's one of the centerpieces of his campaign.
Earmarks account for 0.5 percent of the total federal budget. There's no doubt that the system needs reform and there are a lot of screwy things that we end up spending money on, and they need to be eliminated. But it's not going to solve the problem.
Now, the last thing I think we have to focus on is a little bit of history, just so that we understand what we're doing going forward.
When President Bush came into office, we had a budget surplus and the national debt was a little over $5 trillion. It has doubled over the last eight years.
OBAMA: And we are now looking at a deficit of well over half a trillion dollars.
So one of the things that I think we have to recognize is pursuing the same kinds of policies that we pursued over the last eight years is not going to bring down the deficit. And, frankly, Senator McCain voted for four out of five of President Bush's budgets.
We've got to take this in a new direction, that's what I propose as president.
SCHIEFFER: Do either of you think you can balance the budget in four years? You have said previously you thought you could, Senator McCain.
MCCAIN: Sure I do. And let me tell you...
SCHIEFFER: You can still do that?
MCCAIN: Yes. Senator Obama, I am not President Bush. If you wanted to run against President Bush, you should have run four years ago. I'm going to give a new direction to this economy in this country.
Senator Obama talks about voting for budgets. He voted twice for a budget resolution that increases the taxes on individuals making $42,000 a year. Of course, we can take a hatchet and a scalpel to this budget. It's completely out of control.
The mayor of New York, Mayor Bloomberg, just imposed an across- the-board spending freeze on New York City. They're doing it all over America because they have to. Because they have to balance their budgets. I will balance our budgets and I will get them and I will...
SCHIEFFER: In four years?
MCCAIN: ... reduce this -- I can -- we can do it with this kind of job creation of energy independence.
Now, look, Americans are hurting tonight and they're angry and I understand that, and they want a new direction. I can bring them in that direction by eliminating spending.
Senator Obama talks about the budgets I voted for. He voted for the last two budgets that had that $24 billion more in spending than the budget that the Bush administration proposed. He voted for the energy bill that was full of goodies for the oil companies that I opposed. So the fact is, let's look at our records, Senator Obama. Let's look at it as graded by the National Taxpayers Union and the Citizens Against Government Waste and the other watchdog organizations.
I have fought against spending. I have fought against special interests. I have fought for reform. You have to tell me one time when you have stood up with the leaders of your party on one single major issue.
OBAMA: Well, there's a lot of stuff that was put out there, so let me try to address it. First of all, in terms of standing up to the leaders of my party, the first major bill that I voted on in the Senate was in support of tort reform, which wasn't very popular with trial lawyers, a major constituency in the Democratic Party. I support...
MCCAIN: An overwhelming vote.
OBAMA: I support charter schools and pay for performance for teachers. Doesn't make me popular with the teachers union. I support clean coal technology. Doesn't make me popular with environmentalists. So I've got a history of reaching across the aisle.
Now with respect to a couple of things Senator McCain said, the notion that I voted for a tax increase for people making $42,000 a year has been disputed by everybody who has looked at this claim that Senator McCain keeps on making.
Even FOX News disputes it, and that doesn't happen very often when it comes to accusations about me. So the fact of the matter is that if I occasionally have mistaken your policies for George Bush's policies, it's because on the core economic issues that matter to the American people, on tax policy, on energy policy, on spending priorities, you have been a vigorous supporter of President Bush.
Now, you've shown independence -- commendable independence, on some key issues like torture, for example, and I give you enormous credit for that. But when it comes to economic policies, essentially what you're proposing is eight more years of the same thing. And it hasn't worked.
And I think the American people understand it hasn't worked. We need to move in a new direction.
SCHIEFFER: All right...
MCCAIN: Let me just say, Bob.
SCHIEFFER: OK. About 30 seconds.
MCCAIN: OK. But it's very clear that I have disagreed with the Bush administration. I have disagreed with leaders of my own party. I've got the scars to prove it.
Whether it be bringing climate change to the floor of the Senate for the first time. Whether it be opposition to spending and earmarks, whether it be the issue of torture, whether it be the conduct of the war in Iraq, which I vigorously opposed. Whether it be on fighting the pharmaceutical companies on Medicare prescription drugs, importation. Whether it be fighting for an HMO patient's bill of rights. Whether it be the establishment of the 9/11 Commission.
I have a long record of reform and fighting through on the floor of the United States Senate.
SCHIEFFER: All right.
MCCAIN: Senator Obama, your argument for standing up to the leadership of your party isn't very convincing.
SCHIEFFER: All right. We're going to move to another question and the topic is leadership in this campaign. Both of you pledged to take the high road in this campaign yet it has turned very nasty.
SCHIEFFER: Senator Obama, your campaign has used words like "erratic," "out of touch," "lie," "angry," "losing his bearings" to describe Senator McCain.
Senator McCain, your commercials have included words like "disrespectful," "dangerous," "dishonorable," "he lied." Your running mate said he "palled around with terrorists."
Are each of you tonight willing to sit at this table and say to each other's face what your campaigns and the people in your campaigns have said about each other?
And, Senator McCain, you're first.
MCCAIN: Well, this has been a tough campaign. It's been a very tough campaign. And I know from my experience in many campaigns that, if Senator Obama had asked -- responded to my urgent request to sit down, and do town hall meetings, and come before the American people, we could have done at least 10 of them by now.
When Senator Obama was first asked, he said, "Any place, any time," the way Barry Goldwater and Jack Kennedy agreed to do, before the intervention of the tragedy at Dallas. So I think the tone of this campaign could have been very different.
And the fact is, it's gotten pretty tough. And I regret some of the negative aspects of both campaigns. But the fact is that it has taken many turns which I think are unacceptable.
One of them happened just the other day, when a man I admire and respect -- I've written about him -- Congressman John Lewis, an American hero, made allegations that Sarah Palin and I were somehow associated with the worst chapter in American history, segregation, deaths of children in church bombings, George Wallace. That, to me, was so hurtful.
And, Senator Obama, you didn't repudiate those remarks. Every time there's been an out-of-bounds remark made by a Republican, no matter where they are, I have repudiated them. I hope that Senator Obama will repudiate those remarks that were made by Congressman John Lewis, very unfair and totally inappropriate.
So I want to tell you, we will run a truthful campaign. This is a tough campaign. And it's a matter of fact that Senator Obama has spent more money on negative ads than any political campaign in history. And I can prove it. And, Senator Obama, when he said -- and he signed a piece of paper that said he would take public financing for his campaign if I did -- that was back when he was a long-shot candidate -- you didn't keep your word.
And when you looked into the camera in a debate with Senator Clinton and said, "I will sit down and negotiate with John McCain about public financing before I make a decision," you didn't tell the American people the truth because you didn't.
And that's -- that's -- that's an unfortunate part. Now we have the highest spending by Senator Obama's campaign than any time since Watergate.
SCHIEFFER: Time's up. All right.
OBAMA: Well, look, you know, I think that we expect presidential campaigns to be tough. I think that, if you look at the record and the impressions of the American people -- Bob, your network just did a poll, showing that two-thirds of the American people think that Senator McCain is running a negative campaign versus one-third of mine.
And 100 percent, John, of your ads -- 100 percent of them have been negative.
MCCAIN: It's not true.
OBAMA: It absolutely is true. And, now, I think the American people are less interested in our hurt feelings during the course of the campaign than addressing the issues that matter to them so deeply.
And there is nothing wrong with us having a vigorous debate like we're having tonight about health care, about energy policy, about tax policy. That's the stuff that campaigns should be made of.
The notion, though, that because we're not doing town hall meetings that justifies some of the ads that have been going up, not just from your own campaign directly, John, but 527s and other organizations that make some pretty tough accusations, well, I don't mind being attacked for the next three weeks.
What the American people can't afford, though, is four more years of failed economic policies. And what they deserve over the next four weeks is that we talk about what's most pressing to them: the economic crisis.
Senator McCain's own campaign said publicly last week that, if we keep on talking about the economic crisis, we lose, so we need to change the subject.
And I would love to see the next three weeks devoted to talking about the economy, devoted to talking about health care, devoted to talking about energy, and figuring out how the American people can send their kids to college. And that is something that I would welcome. But it requires, I think, a recognition that politics as usual, as been practiced over the last several years, is not solving the big problems here in America.
MCCAIN: Well, if you'll turn on the television, as I -- I watched the Arizona Cardinals defeat the Dallas Cowboys on Sunday.
OBAMA: Congratulations.
MCCAIN: Every other ad -- ever other ad was an attack ad on my health care plan. And any objective observer has said it's not true. You're running ads right now that say that I oppose federal funding for stem cell research. I don't.
You're running ads that misportray completely my position on immigration. So the fact is that Senator Obama is spending unprecedented -- unprecedented in the history of American politics, going back to the beginning, amounts of money in negative attack ads on me.
And of course, I've been talking about the economy. Of course, I've talked to people like Joe the plumber and tell him that I'm not going to spread his wealth around. I'm going to let him keep his wealth. And of course, we're talking about positive plan of action to restore this economy and restore jobs in America.
That's what my campaign is all about and that's what it'll continue to be all about.
But again, I did not hear a repudiation of Congressman...
OBAMA: I mean, look, if we want to talk about Congressman Lewis, who is an American hero, he, unprompted by my campaign, without my campaign's awareness, made a statement that he was troubled with what he was hearing at some of the rallies that your running mate was holding, in which all the Republican reports indicated were shouting, when my name came up, things like "terrorist" and "kill him," and that you're running mate didn't mention, didn't stop, didn't say "Hold on a second, that's kind of out of line."
And I think Congressman Lewis' point was that we have to be careful about how we deal with our supporters.
MCCAIN: You've got to read what he said...
OBAMA: Let -- let -- let... MCCAIN: You've got to read what he said.
OBAMA: Let me -- let me complete...
SCHIEFFER: Go ahead.
OBAMA: ... my response. I do think that he inappropriately drew a comparison between what was happening there and what had happened during the civil rights movement, and we immediately put out a statement saying that we don't think that comparison is appropriate.
And, in fact, afterwards, Congressman Lewis put out a similar statement, saying that he had probably gone over the line.
The important point here is, though, the American people have become so cynical about our politics, because all they see is a tit- for-tat and back-and-forth. And what they want is the ability to just focus on some really big challenges that we face right now, and that's what I have been trying to focus on this entire campaign.
MCCAIN: I cannot...
OBAMA: We can have serious differences about our health care policy, for example, John, because we do have a difference on health care policy, but we...
MCCAIN: We do and I hope...
OBAMA: ... talking about it this evening.
OBAMA: But when people suggest that I pal around with terrorists, then we're not talking about issues. What we're talking about...
MCCAIN: Well, let me just say I would...
SCHIEFFER: (inaudible)
MCCAIN: Let me just say categorically I'm proud of the people that come to our rallies. Whenever you get a large rally of 10,000, 15,000, 20,000 people, you're going to have some fringe peoples. You know that. And I've -- and we've always said that that's not appropriate.
But to somehow say that group of young women who said "Military wives for McCain" are somehow saying anything derogatory about you, but anything -- and those veterans that wear those hats that say "World War II, Vietnam, Korea, Iraq," I'm not going to stand for people saying that the people that come to my rallies are anything but the most dedicated, patriotic men and women that are in this nation and they're great citizens.
And I'm not going to stand for somebody saying that because someone yelled something at a rally -- there's a lot of things that have been yelled at your rallies, Senator Obama, that I'm not happy about either.
In fact, some T-shirts that are very...
OBAMA: John, I...
MCCAIN: ... unacceptable. So the point is -- the point is that I have repudiated every time someone's been out of line, whether they've been part of my campaign or not, and I will continue to do that.
But the fact is that we need to absolutely not stand for the kind of things that have been going on. I haven't.
OBAMA: Well, look, Bob, as I said...
SCHIEFFER: I mean, do you take issue with that?
OBAMA: You know, here's what I would say. I mean, we can have a debate back and forth about the merits of each other's campaigns. I suspect we won't agree here tonight.
What I think is most important is that we recognize that to solve the key problems that we're facing, if we're going to solve two wars, the worst financial crisis since the Great Depression, if we can -- if we're going to focus on lifting wages that have declined over the last eight years and create jobs here in America, then Democrats, independents and Republicans, we're going to have to be able to work together.
OBAMA: And what is important is making sure that we disagree without being disagreeable. And it means that we can have tough, vigorous debates around issues. What we can't do, I think, is try to characterize each other as bad people. And that has been a culture in Washington that has been taking place for too long. And I think...
MCCAIN: Well, Bob, you asked me a direct question.
SCHIEFFER: Short answer, yes, short answer.
MCCAIN: Yes, real quick. Mr. Ayers, I don't care about an old washed-up terrorist. But as Senator Clinton said in her debates with you, we need to know the full extent of that relationship.
We need to know the full extent of Senator Obama's relationship with ACORN, who is now on the verge of maybe perpetrating one of the greatest frauds in voter history in this country, maybe destroying the fabric of democracy. The same front outfit organization that your campaign gave $832,000 for "lighting and site selection." So all of these things need to be examined, of course.
SCHIEFFER: All right. I'm going to let you respond and we'll extend this for a moment.
OBAMA: Bob, I think it's going to be important to just -- I'll respond to these two particular allegations that Senator McCain has made and that have gotten a lot of attention.
In fact, Mr. Ayers has become the centerpiece of Senator McCain's campaign over the last two or three weeks. This has been their primary focus. So let's get the record straight. Bill Ayers is a professor of education in Chicago.
Forty years ago, when I was 8 years old, he engaged in despicable acts with a radical domestic group. I have roundly condemned those acts. Ten years ago he served and I served on a school reform board that was funded by one of Ronald Reagan's former ambassadors and close friends, Mr. Annenberg.
Other members on that board were the presidents of the University of Illinois, the president of Northwestern University, who happens to be a Republican, the president of The Chicago Tribune, a Republican- leaning newspaper.
Mr. Ayers is not involved in my campaign. He has never been involved in this campaign. And he will not advise me in the White House. So that's Mr. Ayers.
Now, with respect to ACORN, ACORN is a community organization. Apparently what they've done is they were paying people to go out and register folks, and apparently some of the people who were out there didn't really register people, they just filled out a bunch of names.
It had nothing to do with us. We were not involved. The only involvement I've had with ACORN was I represented them alongside the U.S. Justice Department in making Illinois implement a motor voter law that helped people get registered at DMVs.
Now, the reason I think that it's important to just get these facts out is because the allegation that Senator McCain has continually made is that somehow my associations are troubling.
Let me tell you who I associate with. On economic policy, I associate with Warren Buffett and former Fed Chairman Paul Volcker. If I'm interested in figuring out my foreign policy, I associate myself with my running mate, Joe Biden or with Dick Lugar, the Republican ranking member on the Senate Foreign Relations Committee, or General Jim Jones, the former supreme allied commander of NATO.
Those are the people, Democrats and Republicans, who have shaped my ideas and who will be surrounding me in the White House. And I think the fact that this has become such an important part of your campaign, Senator McCain, says more about your campaign than it says about me.
MCCAIN: Well, again, while you were on the board of the Woods Foundation, you and Mr. Ayers, together, you sent $230,000 to ACORN. So -- and you launched your political campaign in Mr. Ayers' living room.
OBAMA: That's absolutely not true.
MCCAIN: And the facts are facts and records are records.
OBAMA: And that's not the facts.
MCCAIN: And it's not the fact -- it's not the fact that Senator Obama chooses to associate with a guy who in 2001 said that he wished he had have bombed more, and he had a long association with him. It's the fact that all the -- all of the details need to be known about Senator Obama's relationship with them and with ACORN and the American people will make a judgment.
And my campaign is about getting this economy back on track, about creating jobs, about a brighter future for America. And that's what my campaign is about and I'm not going to raise taxes the way Senator Obama wants to raise taxes in a tough economy. And that's really what this campaign is going to be about.
SCHIEFFER: All right. Let's go to the next topic and you -- we may want to get back into some of this during this next discussion. I want to ask both of you about the people that you're going to bring into the government. And our best insight yet is who you have picked as your running mates.
SCHIEFFER: So I'll begin by asking both of you this question, and I'll ask you to answer first, Senator Obama. Why would the country be better off if your running mate became president rather than his running mate?
OBAMA: Well, Joe Biden, I think, is one of the finest public servants that has served in this country. It's not just that he has some of the best foreign policy credentials of anybody. And Democrats and Republicans alike, I think, acknowledge his expertise there.
But it's also that his entire life he has never forgotten where he came from, coming from Scranton, fighting on behalf of working families, remembering what it's like to see his father lose his job and go through a downward spiral economically.
And, as a consequence, his consistent pattern throughout his career is to fight for the little guy. That's what he's done when it comes to economic policies that will help working families get a leg up.
That's what he's done when it comes to, for example, passing the landmark 1994 crime bill, the Violence Against Women's Act. Joe has always made sure that he is fighting on behalf of working families, and I think he shares my core values and my sense of where the country needs to go.
Because after eight years of failed policies, he and I both agree that what we're going to have to do is to reprioritize, make sure that we're investing in the American people, give tax cuts not to the wealthiest corporations, but give them to small businesses and give them to individuals who are struggling right now, make sure that we finally get serious about energy independence, something that has been languishing in Washington for 30 years, and make sure that our kids get a great education and can afford to go to college.
So, on the key issues that are of importance to American families, Joe Biden's always been on the right side, and I think he will make an outstanding president if, heaven forbid, something happened to me.
MCCAIN: Well, Americans have gotten to know Sarah Palin. They know that she's a role model to women and other -- and reformers all over America. She's a reformer. She is -- she took on a governor who was a member of her own party when she ran for governor. When she was the head of their energy and natural resources board, she saw corruption, she resigned and said, "This can't go on."
She's given money back to the taxpayers. She's cut the size of government. She negotiated with the oil companies and faced them down, a $40 billion pipeline of natural gas that's going to relieve the energy needs of the United -- of what they call the lower 48.
She's a reformer through and through. And it's time we had that bresh of freth air (sic) -- breath of fresh air coming into our nation's capital and sweep out the old-boy network and the cronyism that's been so much a part of it that I've fought against for all these years.
She'll be my partner. She understands reform. And, by the way, she also understands special-needs families. She understands that autism is on the rise, that we've got to find out what's causing it, and we've got to reach out to these families, and help them, and give them the help they need as they raise these very special needs children.
She understands that better than almost any American that I know. I'm proud of her.
And she has ignited our party and people all over America that have never been involved in the political process. And I can't tell how proud I am of her and her family.
Her husband's a pretty tough guy, by the way, too.
SCHIEFFER: Do you think she's qualified to be president?
OBAMA: You know, I think it's -- that's going to be up to the American people. I think that, obviously, she's a capable politician who has, I think, excited the -- a base in the Republican Party.
And I think it's very commendable the work she's done on behalf of special needs. I agree with that, John.
I do want to just point out that autism, for example, or other special needs will require some additional funding, if we're going to get serious in terms of research. That is something that every family that advocates on behalf of disabled children talk about.
And if we have an across-the-board spending freeze, we're not going to be able to do it. That's an example of, I think, the kind of use of the scalpel that we want to make sure that we're funding some of those programs.
SCHIEFFER: Do you think Senator Biden is qualified?
MCCAIN: I think that Joe Biden is qualified in many respects. But I do point out that he's been wrong on many foreign policy and national security issues, which is supposed to be his strength.
He voted against the first Gulf War. He voted against it and, obviously, we had to take Saddam Hussein out of Kuwait or it would've threatened the Middle Eastern world supply.
In Iraq, he had this cockamamie idea about dividing Iraq into three countries. We're seeing Iraq united as Iraqis, tough, hard, but we're seeing them. We're now about to have an agreement for status of forces in Iraq coming up.
There are several issues in which, frankly, Joe Biden and I open and honestly disagreed on national security policy, and he's been wrong on a number of the major ones.
But again, I want to come back to, notice every time Senator Obama says, "We need to spend more, we need to spend more, that's the answer" -- why do we always have to spend more?
Why can't we have transparency, accountability, reform of these agencies of government? Maybe that's why he's asked for 860 -- sought and proposed $860 billion worth of new spending and wants to raise people's taxes in a time of incredible challenge and difficulty and heartache for the American families.
SCHIEFFER: Let's go to -- let's go to a new topic. We're running a little behind.
Let's talk about energy and climate control. Every president since Nixon has said what both of you...
MCCAIN: Climate change.
SCHIEFFER: Climate change, yes -- has said what both of you have said, and, that is, we must reduce our dependence on foreign oil.
When Nixon said it, we imported from 17 to 34 percent of our foreign oil. Now, we're importing more than 60 percent.
Would each of you give us a number, a specific number of how much you believe we can reduce our foreign oil imports during your first term?
And I believe the first question goes to you, Senator McCain. MCCAIN: I think we can, for all intents and purposes, eliminate our dependence on Middle Eastern oil and Venezuelan oil. Canadian oil is fine.
By the way, when Senator Obama said he would unilaterally renegotiate the North American Free Trade Agreement, the Canadians said, "Yes, and we'll sell our oil to China."
You don't tell countries you're going to unilaterally renegotiate agreements with them.
We can eliminate our dependence on foreign oil by building 45 new nuclear plants, power plants, right away. We can store and we can reprocess.
Senator Obama will tell you, in the -- as the extreme environmentalists do, it has to be safe.
Look, we've sailed Navy ships around the world for 60 years with nuclear power plants on them. We can store and reprocess spent nuclear fuel, Senator Obama, no problem.
So the point is with nuclear power, with wind, tide, solar, natural gas, with development of flex fuel, hybrid, clean coal technology, clean coal technology is key in the heartland of America that's hurting rather badly.
So I think we can easily, within seven, eight, ten years, if we put our minds to it, we can eliminate our dependence on the places in the world that harm our national security if we don't achieve our independence.
SCHIEFFER: All right. Can we reduce our dependence on foreign oil and by how much in the first term, in four years?
OBAMA: I think that in ten years, we can reduce our dependence so that we no longer have to import oil from the Middle East or Venezuela. I think that's about a realistic timeframe.
And this is the most important issue that our future economy is going to face. Obviously, we've got an immediate crisis right now. But nothing is more important than us no longer borrowing $700 billion or more from China and sending it to Saudi Arabia. It's mortgaging our children's future.
Now, from the start of this campaign, I've identified this as one of my top priorities and here is what I think we have to do.
Number one, we do need to expand domestic production and that means, for example, telling the oil companies the 68 million acres that they currently have leased that they're not drilling, use them or lose them.
And I think that we should look at offshore drilling and implement it in a way that allows us to get some additional oil. But understand, we only have three to four percent of the world's oil reserves and we use 25 percent of the world's oil, which means that we can't drill our way out of the problem.
That's why I've focused on putting resources into solar, wind, biodiesel, geothermal. These have been priorities of mine since I got to the Senate, and it is absolutely critical that we develop a high fuel efficient car that's built not in Japan and not in South Korea, but built here in the United States of America.
We invented the auto industry and the fact that we have fallen so far behind is something that we have to work on.
OBAMA: Now I just want to make one last point because Senator McCain mentioned NAFTA and the issue of trade and that actually bears on this issue. I believe in free trade. But I also believe that for far too long, certainly during the course of the Bush administration with the support of Senator McCain, the attitude has been that any trade agreement is a good trade agreement. And NAFTA doesn't have -- did not have enforceable labor agreements and environmental agreements.
And what I said was we should include those and make them enforceable. In the same way that we should enforce rules against China manipulating its currency to make our exports more expensive and their exports to us cheaper.
And when it comes to South Korea, we've got a trade agreement up right now, they are sending hundreds of thousands of South Korean cars into the United States. That's all good. We can only get 4,000 to 5,000 into South Korea. That is not free trade. We've got to have a president who is going to be advocating on behalf of American businesses and American workers and I make no apology for that.
MCCAIN: Well, you know, I admire so much Senator Obama's eloquence. And you really have to pay attention to words. He said, we will look at offshore drilling. Did you get that? Look at. We can offshore drill now. We've got to do it now. We will reduce the cost of a barrel of oil because we show the world that we have a supply of our own. It's doable. The technology is there and we have to drill now.
Now, on the subject of free trade agreements. I am a free trader. And I need -- we need to have education and training programs for displaced workers that work, going to our community colleges.
But let me give you another example of a free trade agreement that Senator Obama opposes. Right now, because of previous agreements, some made by President Clinton, the goods and products that we send to Colombia, which is our largest agricultural importer of our products, is -- there's a billion dollars that we -- our businesses have paid so far in order to get our goods in there.
Because of previous agreements, their goods and products come into our country for free. So Senator Obama, who has never traveled south of our border, opposes the Colombia Free Trade Agreement. The same country that's helping us try to stop the flow of drugs into our country that's killing young Americans.
And also the country that just freed three Americans that will help us create jobs in America because they will be a market for our goods and products without having to pay -- without us having to pay the billions of dollars -- the billion dollars and more that we've already paid.
Free trade with Colombia is something that's a no-brainer. But maybe you ought to travel down there and visit them and maybe you could understand it a lot better.
OBAMA: Let me respond. Actually, I understand it pretty well. The history in Colombia right now is that labor leaders have been targeted for assassination on a fairly consistent basis and there have not been prosecutions.
And what I have said, because the free trade -- the trade agreement itself does have labor and environmental protections, but we have to stand for human rights and we have to make sure that violence isn't being perpetrated against workers who are just trying to organize for their rights, which is why, for example, I supported the Peruvian Free Trade Agreement which was a well-structured agreement.
But I think that the important point is we've got to have a president who understands the benefits of free trade but also is going to enforce unfair trade agreements and is going to stand up to other countries.
And the last point I'll make, because we started on energy. When I talked about the automakers, they are obviously getting hammered right now. They were already having a tough time because of high gas prices. And now with the financial crisis, car dealerships are closing and people can't get car loans.
That's why I think it's important for us to get loan guarantees to the automakers, but we do have to hold them responsible as well to start producing the highly fuel-efficient cars of the future.
And Detroit had dragged its feet too long in terms of getting that done. It's going to be one of my highest priorities because transportation accounts for about 30 percent of our total energy consumption.
If we can get that right, then we can move in a direction not only of energy independence, but we can create 5 million new jobs all across America, including in the heartland where we can retool some of these plants to make these highly fuel-efficient cars and also to make wind turbines and solar panels, the kinds of clean energy approaches that should be the driver of our economy for the next century.
MCCAIN: Well, let me just said that that this is -- he -- Senator Obama doesn't want a free trade agreement with our best ally in the region but wants to sit down across the table without precondition to -- with Hugo Chavez, the guy who has been helping FARC, the terrorist organization.
Free trade between ourselves and Colombia, I just recited to you the benefits of concluding that agreement, a billion dollars of American dollars that could have gone to creating jobs and businesses in the United States, opening up those markets.
So I don't -- I don't think there's any doubt that Senator Obama wants to restrict trade and he wants to raise taxes. And the last president of the United States that tried that was Herbert Hoover, and we went from a deep recession into a depression.
We're not going to follow that path while I'm -- when I'm president of the United States.
SCHIEFFER: All right, let's go to a new topic, health care. Given the current economic situation, would either of you now favor controlling health care costs over expanding health care coverage? The question is first to Senator Obama.
OBAMA: We've got to do both, and that's exactly what my plan does.
Look, as I travel around the country, this is the issue that will break your heart over and over again. Just yesterday, I was in Toledo shaking some hands in a line. Two women, both of them probably in their mid- to late-50s, had just been laid off of their plant. Neither of them have health insurance.
And they were desperate for some way of getting coverage, because, understandably, they're worried that, if they get sick, they could go bankrupt.
So here's what my plan does. If you have health insurance, then you don't have to do anything. If you've got health insurance through your employer, you can keep your health insurance, keep your choice of doctor, keep your plan.
The only thing we're going to try to do is lower costs so that those cost savings are passed onto you. And we estimate we can cut the average family's premium by about $2,500 per year. If you don't have health insurance, then what we're going to do is to provide you the option of buying into the same kind of federal pool that both Senator McCain and I enjoy as federal employees, which will give you high-quality care, choice of doctors, at lower costs, because so many people are part of this insured group.
We're going to make sure that insurance companies can't discriminate on the basis of pre-existing conditions. We'll negotiate with the drug companies for the cheapest available price on drugs.
We are going to invest in information technology to eliminate bureaucracy and make the system more efficient.
And we are going to make sure that we manage chronic illnesses, like diabetes and heart disease, that cost a huge amount, but could be prevented. We've got to put more money into preventive care.
This will cost some money on the front end, but over the long term this is the only way that not only are we going to make families healthy, but it's also how we're going to save the federal budget, because we can't afford these escalating costs.
SCHIEFFER: All right.
Senator McCain?
MCCAIN: Well, it is a terribly painful situation for Americans. They're seeing their premiums, their co-pays go up. Forty-seven million Americans are without health insurance in America today.
And it really is the cost, the escalating costs of health care that are inflicting such pain on working families and people across this country. And I am convinced we need to do a lot of things.
We need to put health care records online. The V.A. does that. That will -- that will reduce costs. We need to have more community health centers. We need to have walk-in clinics.
The rise of obesity amongst young Americans is one of the most alarming statistics that there is. We should have physical fitness programs and nutrition programs in schools. Every parent should know what's going on there.
We -- we need to have -- we need to have employers reward employees who join health clubs and practice wellness and fitness.
But I want to give every American family a $5,000 refundable tax credit. Take it and get anywhere in America the health care that you wish.
Now, my old buddy, Joe, Joe the plumber, is out there. Now, Joe, Senator Obama's plan, if you're a small business and you are able -- and your -- the guy that sells to you will not have his capital gains tax increase, which Senator Obama wants, if you're out there, my friend, and you've got employees, and you've got kids, if you don't get -- adopt the health care plan that Senator Obama mandates, he's going to fine you.
MCCAIN: Now, Senator Obama, I'd like -- still like to know what that fine is going to be, and I don't think that Joe right now wants to pay a fine when he is seeing such difficult times in America's economy.
Senator Obama wants to set up health care bureaucracies, take over the health care of America through -- as he said, his object is a single payer system.
If you like that, you'll love Canada and England. So the point is...
SCHIEFFER: So that's your objective?
OBAMA: It is not and I didn't describe it...
MCCAIN: No, you stated it.
OBAMA: I just...
MCCAIN: Excuse me.
OBAMA: I just described what my plan is. And I'm happy to talk to you, Joe, too, if you're out there. Here's your fine -- zero. You won't pay a fine, because...
OBAMA: Zero, because as I said in our last debate and I'll repeat, John, I exempt small businesses from the requirement for large businesses that can afford to provide health care to their employees, but are not doing it.
I exempt small businesses from having to pay into a kitty. But large businesses that can afford it, we've got a choice. Either they provide health insurance to their employees or somebody has to.
Right now, what happens is those employees get dumped into either the Medicaid system, which taxpayers pick up, or they're going to the emergency room for uncompensated care, which everybody picks up in their premiums.
The average family is paying an additional $900 a year in higher premiums because of the uninsured.
So here's what we do. We exempt small businesses. In fact, what, Joe, if you want to do the right thing with your employees and you want to provide them health insurance, we'll give you a 50 percent credit so that you will actually be able to afford it.
If you don't have health insurance or you want to buy into a group plan, you will be able to buy into the plan that I just described.
Now, what we haven't talked about is Senator McCain's plan. He says he's going to give you all a $5,000 tax credit. That sounds pretty good. And you can go out and buy your own insurance.
Here's the problem -- that for about 20 million people, you may find yourselves no longer having employer-based health insurance. This is because younger people might be able to get health insurance for $5,000, young and healthy folks.
Older folks, let's healthy folks, what's going to end up happening is that you're going to be the only ones left in your employer-based system, your employers won't be able to afford it.
And once you're out on your own with this $5,000 credit, Senator McCain, for the first time, is going to be taxing the health care benefits that you have from your employer.
And this is your plan, John. For the first time in history, you will be taxing people's health care benefits.
By the way, the average policy costs about $12,000. So if you've got $5,000 and it's going to cost you $12,000, that's a loss for you.
Last point about Senator McCain's plan is that insurers right now, the main restrictions on what they do is primarily state law and, under Senator McCain's plan, those rules would be stripped away and you would start seeing a lot more insurance companies cherry-picking and excluding people from coverage.
That, I think, is a mistake and I think that this is a fundamental difference in our campaign and how we would approach health care.
SCHIEFFER: What about that?
MCCAIN: Hey, Joe, you're rich, congratulations, because what Joe wanted to do was buy the business that he's been working for 10-12 hours a day, seven days a week, and you said that you wanted to spread the wealth, but -- in other words, take Joe's money and then you decide what to do with it.
Now, Joe, you're rich, congratulations, and you will then fall into the category where you'll have to pay a fine if you don't provide health insurance that Senator Obama mandates, not the kind that you think is best for your family, your children, your employees, but the kind that he mandates for you.
That's big government at its best. Now, 95 percent of the people in America will receive more money under my plan because they will receive not only their present benefits, which may be taxed, which will be taxed, but then you add $5,000 onto it, except for those people who have the gold-plated Cadillac insurance policies that have to do with cosmetic surgery and transplants and all of those kinds of things.
And the good thing about this is they'll be able to go across America. The average cost of a health care insurance plan in America today is $5,800. I'm going to give them $5,000 to take with them wherever they want to go, and this will give them affordability.
This will give them availability. This will give them a chance to choose their own futures, not have Senator Obama and government decide that for them.
This really gets down to the fundamental difference in our philosophies. If you notice that in all of this proposal, Senator -- government wants -- Senator Obama wants government to do the job.
Senator Obama wants government to do the job. I want, Joe, you to do the job.
MCCAIN: I want to leave money in your pocket. I want you to be able to choose the health care for you and your family. That's what I'm all about. And we've got too much government and too much spending and the government is -- the size of government has grown by 40 percent in the last eight years.
We can't afford that in the next eight years and Senator Obama, with the Democrats in charge of Congress, things have gotten worse. Have you noticed, they've been in charge the last two years.
SCHIEFFER: All right. A short response.
OBAMA: Very briefly. You all just heard my plan. If you've got an employer-based health care plan, you keep it. Now, under Senator McCain's plan there is a strong risk that people would lose their employer-based health care.
That's the choice you'll have is having your employer no longer provide you health care. And don't take my word for it. The U.S. Chamber of Commerce, which generally doesn't support a lot of Democrats, said that this plan could lead to the unraveling of the employer-based health care system.
All I want to do, if you've already got health care, is lower your costs. That includes you, Joe.
SCHIEFFER: All right. Let's stop there and go to another question. And this one goes to Senator McCain. Senator McCain, you believe Roe v. Wade should be overturned. Senator Obama, you believe it shouldn't.
Could either of you ever nominate someone to the Supreme Court who disagrees with you on this issue? Senator McCain?
MCCAIN: I would never and have never in all the years I've been there imposed a litmus test on any nominee to the court. That's not appropriate to do.
SCHIEFFER: But you don't want Roe v. Wade to be overturned?
MCCAIN: I thought it was a bad decision. I think there were a lot of decisions that were bad. I think that decisions should rest in the hands of the states. I'm a federalist. And I believe strongly that we should have nominees to the United States Supreme Court based on their qualifications rather than any litmus test. Now, let me say that there was a time a few years ago when the United States Senate was about to blow up. Republicans wanted to have just a majority vote to confirm a judge and the Democrats were blocking in an unprecedented fashion.
We got together seven Republicans, seven Democrats. You were offered a chance to join. You chose not to because you were afraid of the appointment of, quote, "conservative judges."
I voted for Justice Breyer and Justice Ginsburg. Not because I agreed with their ideology, but because I thought they were qualified and that elections have consequences when presidents are nominated. This is a very important issue we're talking about.
Senator Obama voted against Justice Breyer and Justice Roberts on the grounds that they didn't meet his ideological standards. That's not the way we should judge these nominees. Elections have consequences. They should be judged on their qualifications. And so that's what I will do.
I will find the best people in the world -- in the United States of America who have a history of strict adherence to the Constitution. And not legislating from the bench.
SCHIEFFER: But even if it was someone -- even someone who had a history of being for abortion rights, you would consider them?
MCCAIN: I would consider anyone in their qualifications. I do not believe that someone who has supported Roe v. Wade that would be part of those qualifications. But I certainly would not impose any litmus test.
SCHIEFFER: All right.
OBAMA: Well, I think it's true that we shouldn't apply a strict litmus test and the most important thing in any judge is their capacity to provide fairness and justice to the American people.
And it is true that this is going to be, I think, one of the most consequential decisions of the next president. It is very likely that one of us will be making at least one and probably more than one appointments and Roe versus Wade probably hangs in the balance.
Now I would not provide a litmus test. But I am somebody who believes that Roe versus Wade was rightly decided. I think that abortion is a very difficult issue and it is a moral issue and one that I think good people on both sides can disagree on.
But what ultimately I believe is that women in consultation with their families, their doctors, their religious advisers, are in the best position to make this decision. And I think that the Constitution has a right to privacy in it that shouldn't be subject to state referendum, any more than our First Amendment rights are subject to state referendum, any more than many of the other rights that we have should be subject to popular vote.
OBAMA: So this is going to be an important issue. I will look for those judges who have an outstanding judicial record, who have the intellect, and who hopefully have a sense of what real-world folks are going through.
I'll just give you one quick example. Senator McCain and I disagreed recently when the Supreme Court made it more difficult for a woman named Lilly Ledbetter to press her claim for pay discrimination.
For years, she had been getting paid less than a man had been paid for doing the exact same job. And when she brought a suit, saying equal pay for equal work, the judges said, well, you know, it's taken you too long to bring this lawsuit, even though she didn't know about it until fairly recently.
We tried to overturn it in the Senate. I supported that effort to provide better guidance to the courts; John McCain opposed it.
I think that it's important for judges to understand that if a woman is out there trying to raise a family, trying to support her family, and is being treated unfairly, then the court has to stand up, if nobody else will. And that's the kind of judge that I want.
SCHIEFFER: Time's up.
MCCAIN: Obviously, that law waved the statute of limitations, which you could have gone back 20 or 30 years. It was a trial lawyer's dream.
Let me talk to you about an important aspect of this issue. We have to change the culture of America. Those of us who are proudly pro-life understand that. And it's got to be courage and compassion that we show to a young woman who's facing this terribly difficult decision.
Senator Obama, as a member of the Illinois State Senate, voted in the Judiciary Committee against a law that would provide immediate medical attention to a child born of a failed abortion. He voted against that.
And then, on the floor of the State Senate, as he did 130 times as a state senator, he voted present.
Then there was another bill before the Senate Judiciary Committee in the state of Illinois not that long ago, where he voted against a ban on partial-birth abortion, one of the late-term abortion, a really -- one of the bad procedures, a terrible. And then, on the floor of the Illinois State Senate, he voted present.
I don't know how you vote "present" on some of that. I don't know how you align yourself with the extreme aspect of the pro- abortion movement in America. And that's his record, and that's a matter of his record.
And he'll say it has something to do with Roe v. Wade, about the Illinois State Senate. It was clear-cut votes that Senator Obama voted, I think, in direct contradiction to the feelings and views of mainstream America.
SCHIEFFER: Response?
OBAMA: Yes, let me respond to this. If it sounds incredible that I would vote to withhold lifesaving treatment from an infant, that's because it's not true. The -- here are the facts.
There was a bill that was put forward before the Illinois Senate that said you have to provide lifesaving treatment and that would have helped to undermine Roe v. Wade. The fact is that there was already a law on the books in Illinois that required providing lifesaving treatment, which is why not only myself but pro-choice Republicans and Democrats voted against it.
And the Illinois Medical Society, the organization of doctors in Illinois, voted against it. Their Hippocratic Oath would have required them to provide care, and there was already a law in the books.
With respect to partial-birth abortion, I am completely supportive of a ban on late-term abortions, partial-birth or otherwise, as long as there's an exception for the mother's health and life, and this did not contain that exception.
And I attempted, as many have in the past, of including that so that it is constitutional. And that was rejected, and that's why I voted present, because I'm willing to support a ban on late-term abortions as long as we have that exception.
The last point I want to make on the issue of abortion. This is an issue that -- look, it divides us. And in some ways, it may be difficult to -- to reconcile the two views.
But there surely is some common ground when both those who believe in choice and those who are opposed to abortion can come together and say, "We should try to prevent unintended pregnancies by providing appropriate education to our youth, communicating that sexuality is sacred and that they should not be engaged in cavalier activity, and providing options for adoption, and helping single mothers if they want to choose to keep the baby."
Those are all things that we put in the Democratic platform for the first time this year, and I think that's where we can find some common ground, because nobody's pro-abortion. I think it's always a tragic situation.
OBAMA: We should try to reduce these circumstances.
SCHIEFFER: Let's give Senator McCain a short response...
MCCAIN: Just again...
SCHIEFFER: ... and then...
MCCAIN: Just again, the example of the eloquence of Senator Obama. He's health for the mother. You know, that's been stretched by the pro-abortion movement in America to mean almost anything.
That's the extreme pro-abortion position, quote, "health." But, look, Cindy and I are adoptive parents. We know what a treasure and joy it is to have an adopted child in our lives. We'll do everything we can to improve adoption in this country.
But that does not mean that we will cease to protect the rights of the unborn. Of course, we have to come together. Of course, we have to work together, and, of course, it's vital that we do so and help these young women who are facing such a difficult decision, with a compassion, that we'll help them with the adoptive services, with the courage to bring that child into this world and we'll help take care of it.
SCHIEFFER: Let's stop there, because I want to get in a question on education and I'm afraid this is going to have to be our last question, gentlemen.
The question is this: the U.S. spends more per capita than any other country on education. Yet, by every international measurement, in math and science competence, from kindergarten through the 12th grade, we trail most of the countries of the world.
The implications of this are clearly obvious. Some even say it poses a threat to our national security.
Do you feel that way and what do you intend to do about it?
The question to Senator Obama first.
OBAMA: This probably has more to do with our economic future than anything and that means it also has a national security implication, because there's never been a nation on earth that saw its economy decline and continued to maintain its primacy as a military power. So we've got to get our education system right. Now, typically, what's happened is that there's been a debate between more money or reform, and I think we need both.
In some cases, we are going to have to invest. Early childhood education, which closes the achievement gap, so that every child is prepared for school, every dollar we invest in that, we end up getting huge benefits with improved reading scores, reduced dropout rates, reduced delinquency rates.
I think it's going to be critically important for us to recruit a generation of new teachers, an army of new teachers, especially in math and science, give them higher pay, give them more professional development and support in exchange for higher standards and accountability.
And I think it's important for us to make college affordable. Right now, I meet young people all across the country who either have decided not to go to college or if they're going to college, they are taking on $20,000, $30,000, $50,000, $60,000 worth of debt, and it's very difficult for them to go into some fields, like basic research in science, for example, thinking to themselves that they're going to have a mortgage before they even buy a house.
And that's why I've proposed a $4,000 tuition credit, every student, every year, in exchange for some form of community service, whether it's military service, whether it's Peace Corps, whether it's working in a community.
If we do those things, then I believe that we can create a better school system.
But there's one last ingredient that I just want to mention, and that's parents. We can't do it just in the schools. Parents are going to have to show more responsibility. They've got to turn off the TV set, put away the video games, and, finally, start instilling that thirst for knowledge that our students need.
SCHIEFFER: Senator McCain?
MCCAIN: Well, it's the civil rights issue of the 21st century. There's no doubt that we have achieved equal access to schools in America after a long and difficult and terrible struggle.
But what is the advantage in a low income area of sending a child to a failed school and that being your only choice?
So choice and competition amongst schools is one of the key elements that's already been proven in places in like New Orleans and New York City and other places, where we have charter schools, where we take good teachers and we reward them and promote them.
And we find bad teachers another line of work. And we have to be able to give parents the same choice, frankly, that Senator Obama and Mrs. Obama had and Cindy and I had to send our kids to the school -- their kids to the school of their choice. Charter schools aren't the only answer, but they're providing competition. They are providing the kind of competitions that have upgraded both schools -- types of schools.
Now, throwing money at the problem is not the answer. You will find that some of the worst school systems in America get the most money per student.
So I believe that we need to reward these good teachers.
MCCAIN: We need to encourage programs such as Teach for America and Troops to Teachers where people, after having served in the military, can go right to teaching and not have to take these examinations which -- or have the certification that some are required in some states.
Look, we must improve education in this country. As far as college education is concerned, we need to make those student loans available. We need to give them a repayment schedule that they can meet. We need to have full student loan program for in-state tuition. And we certainly need to adjust the certain loan eligibility to inflation.
SCHIEFFER: Do you think the federal government should play a larger role in the schools? And I mean, more federal money?
OBAMA: Well, we have a tradition of local control of the schools and that's a tradition that has served us well. But I do think that it is important for the federal government to step up and help local school districts do some of the things they need to do.
Now we tried to do this under President Bush. He put forward No Child Left Behind. Unfortunately, they left the money behind for No Child Left Behind. And local school districts end up having more of a burden, a bunch of unfunded mandates, the same kind of thing that happened with special education where we did the right thing by saying every school should provide education to kids with special needs, but we never followed through on the promise of funding, and that left local school districts very cash-strapped.
So what I want to do is focus on early childhood education, providing teachers higher salaries in exchange for more support. Senator McCain and I actually agree on two things that he just mentioned.
Charter schools, I doubled the number of charter schools in Illinois despite some reservations from teachers unions. I think it's important to foster competition inside the public schools.
And we also agree on the need for making sure that if we have bad teachers that they are swiftly -- after given an opportunity to prove themselves, if they can't hack it, then we need to move on because our kids have to have their best future.
Where we disagree is on the idea that we can somehow give out vouchers -- give vouchers as a way of securing the problems in our education system. And I also have to disagree on Senator McCain's record when it comes to college accessibility and affordability.
Recently his key economic adviser was asked about why he didn't seem to have some specific programs to help young people go to college and the response was, well, you know, we can't give money to every interest group that comes along.
I don't think America's youth are interest groups, I think they're our future. And this is an example of where we are going to have to prioritize. We can't say we're going to do things and then not explain in concrete terms how we're going to pay for it.
And if we're going to do some of the things you mentioned, like lowering loan rates or what have you, somebody has got to pay for it. It's not going to happen on its own.
SCHIEFFER: What about that, Senator?
MCCAIN: Well, sure. I'm sure you're aware, Senator Obama, of the program in the Washington, D.C., school system where vouchers are provided and there's a certain number, I think it's a thousand and some and some 9,000 parents asked to be eligible for that.
Because they wanted to have the same choice that you and I and Cindy and your wife have had. And that is because they wanted to choose the school that they thought was best for their children.
And we all know the state of the Washington, D.C., school system. That was vouchers. That was voucher, Senator Obama. And I'm frankly surprised you didn't pay more attention to that example.
Now as far as the No Child Left Behind is concerned, it was a great first beginning in my view. It had its flaws, it had its problems, the first time we had looked at the issue of education in America from a nationwide perspective. And we need to fix a lot of the problems. We need to sit down and reauthorize it.
But, again, spending more money isn't always the answer. I think the Head Start program is a great program. A lot of people, including me, said, look, it's not doing what it should do. By the third grade many times children who were in the Head Start program aren't any better off than the others.
Let's reform it. Let's reform it and fund it. That was, of course, out-of-bounds by the Democrats. We need to reform these programs. We need to have transparency. We need to have rewards. It's a system that cries out for accountability and transparency and the adequate funding.
And I just said to you earlier, town hall meeting after town hall meeting, parents come with kids, children -- precious children who have autism. Sarah Palin knows about that better than most. And we'll find and we'll spend the money, research, to find the cause of autism. And we'll care for these young children. And all Americans will open their wallets and their hearts to do so.
MCCAIN: But to have a situation, as you mentioned in our earlier comments, that the most expensive education in the world is in the United States of America also means that it cries out for reform, as well.
And I will support those reforms, and I will fund the ones that are reformed. But I'm not going to continue to throw money at a problem. And I've got to tell you that vouchers, where they are requested and where they are agreed to, are a good and workable system. And it's been proven.
OBAMA: I'll just make a quick comment about vouchers in D.C. Senator McCain's absolutely right: The D.C. school system is in terrible shape, and it has been for a very long time. And we've got a wonderful new superintendent there who's working very hard with the young mayor there to try...
MCCAIN: Who supports vouchers.
OBAMA: ... who initiated -- actually, supports charters.
MCCAIN: She supports vouchers, also.
OBAMA: But the -- but here's the thing, is that, even if Senator McCain were to say that vouchers were the way to go -- I disagree with him on this, because the data doesn't show that it actually solves the problem -- the centerpiece of Senator McCain's education policy is to increase the voucher program in D.C. by 2,000 slots.
That leaves all of you who live in the other 50 states without an education reform policy from Senator McCain.
So if we are going to be serious about this issue, we've got to have a president who is going to tackle it head-on. And that's what I intend to do as president.
SCHIEFFER: All right.
MCCAIN: Because there's not enough vouchers; therefore, we shouldn't do it, even though it's working. I got it.
SCHIEFFER: All right.
Gentlemen, we have come to the close. Before I ask both of you for your closing statements tonight, I'd like to invite our viewers and listeners to go to, where you will find this evening's debates and the three that preceded tonight's debate.
Now, for the final statements, by a coin toss, Senator McCain goes first.
MCCAIN: Well, thank you again, Bob.
Thanks to Hofstra.
And it's great to be with you again. I think we've had a very healthy discussion.
My friends, as I said in my opening remarks, these are very difficult times and challenges for America. And they were graphically demonstrated again today.
America needs a new direction. We cannot be satisfied with what we've been doing for the last eight years.
I have a record of reform, and taking on my party, the other party, the special interests, whether it be an HMO Patients' Bill of Rights, or trying to clean up the campaign finance system in -- in this country, or whether it be establishment of a 9/11 Commission, I have a long record of it.
And I've been a careful steward of your tax dollars. We have to make health care affordable and available. We have to make quality education there for all of our citizens, not just the privileged few.
We have to stop the spending. We have to stop the spending, which has mortgaged your children's futures.
All of these things and all the promises and commitments that Senator Obama and I made (inaudible) made to you tonight will base -- will be based on whether you can trust us or not to be careful stewards of your tax dollar, to make sure America is safe and secure and prosperous, to make sure we reform the institutions of government.
That's why I've asked you not only to examine my record, but my proposals for the future of this country.
I've spent my entire life in the service of this nation and putting my country first. As a long line of McCains that have served our country for a long time in war and in peace, it's been the great honor of my life, and I've been proud to serve.
And I hope you'll give me an opportunity to serve again. I'd be honored and humbled.
OBAMA: Well, I want to thank Senator McCain and Bob for moderating.
I think we all know America is going through tough times right now. The policies of the last eight years and -- and Washington's unwillingness to tackle the tough problems for decades has left us in the worst economic crisis since the Great Depression.
And that's why the biggest risk we could take right now is to adopt the same failed policies and the same failed politics that we've seen over the last eight years and somehow expect a different result.
We need fundamental change in this country, and that's what I'd like to bring.
You know, over the last 20 months, you've invited me into your homes. You've shared your stories with me. And you've confirmed once again the fundamental decency and generosity of the American people.
And that's why I'm sure that our brighter days are still ahead.
But we're going to have to invest in the American people again, in tax cuts for the middle class, in health care for all Americans, and college for every young person who wants to go. In businesses that can create the new energy economy of the future. In policies that will lift wages and will grow our middle class.
These are the policies I have fought for my entire career. And these are the policies I want to bring to the White House.
But it's not going to be easy. It's not going to be quick. It is going to be requiring all of us -- Democrats, Republicans, independents -- to come together and to renew a spirit of sacrifice and service and responsibility.
I'm absolutely convinced we can do it. I would ask for your vote, and I promise you that if you give me the extraordinary honor of serving as your president, I will work every single day, tirelessly, on your behalf and on the behalf of the future of our children.
Thank you very much.
SCHIEFFER: Senator Obama, Senator McCain, thank you very much.
This concludes the final debate. I'm Bob Schieffer of CBS News, and I will leave you tonight with what my mother always said -- go vote now. It will make you feel big and strong. Good night, everyone.

Sharp drops in Asian stocks on recession fears
By Bettina Wassener
Thursday, October 16, 2008
HONG KONG: The extreme volatility and risk aversion in global stock markets continued in Asia on Thursday, where sharp falls in the Nikkei 225 and other key indexes all but wiped out the extraordinary relief rally that had swept across the region earlier in the week, raising the pressure for policymakers to do yet more to restore confidence.
The unprecedented global efforts to revitalize the credit markets and haul the world financial system back from the brink of collapse on Monday seemed a dim memory by Thursday, as stock markets focused on economic woes and the fact that interbank lending, all but frozen for weeks, has yet to show signs of thawing.
In Japan, the benchmark Nikkei 225 dropped 11.4 percent, or 1,089 points, to 8,458.45, echoing a similar bludgeoning last week, and erasing most of a massive rebound it staged after U.S. and European efforts to shore up banks and guarantee lending.
The picture was little better elsewhere. Australia closed 6.7 percent lower, Singapore fell 7.3 percent in late trade, India by 7 percent and Hong Kong by 8.8 percent.
The Shanghai Composite Index fell 3.9 percent and the Taiex in Taiwan closed 3.3 percent lower, while the Kospi in South Korea plummeted 9.4 percent, led by the banking sector, which is more exposed to the international financial crisis than most banks elsewhere in the Asia-Pacific region.
The new Japanese prime minister, Taro Aso, who faces opposition calls for early elections as early as next month, on Thursday called on the United States to accelerate its program to bail out financial institutions, saying the stock markets were plunging on the back of concerns that the $250 billion plan was "insufficient."
The mass sell-off followed the biggest one-day percentage fall on Wall Street since 1987. Frightened by the prospect of falling company earnings as U.S. retail statistics provided the latest evidence of an economic slowdown, investors on Wall Street dumped shares Wednesday.
The Dow Jones industrial average fell 7.9 percent, or 733.08 points, to 8,577.91 points, while the broader Standard & Poor's 500-stock index dropped 9 percent.
"The markets are over-reacting, but this has been a now well-established pattern over the last few weeks," said Steve Davies, chief executive of Javelin Wealth Management in Singapore, in an e-mail message.
Although the scenario of a global slowdown has been well known for months, investors were spooked by the latest U.S. retail data out Wednesday that showed a 1.2 percent drop in sales in September - the sharpest decline in years.
It was the third consecutive monthly fall, and is especially painful as it came at the height of the key "back-to-school" shopping season, traditionally the busiest time for retailers outside of the December holidays.
The data demonstrated just how much the housing, banking and stock market turmoil has eroded consumers' willingness to open their wallets, and it dented any hopes that the relief of lower oil prices would help buoy consumer sentiment.
Having spiked up to more than $140 per barrel earlier in the year, the price of oil is now below $75, a 13-month low, as markets expect a drop-off in demand for the raw material as the global economy slows down.
The chairman of the U.S. Federal Reserve, Ben Bernanke, also on Wednesday hammered home the message that the flurry of unprecedented international bank bailouts may have staved off the prospect of a financial system bailout, but that they would not lead to an immediate wider economic turnaround.
"Broader economic recovery will not happen right away," he said in a speech to the Economic Club of New York.
Bernanke's comments, combined with the gloomy economic data, reinforced market expectations that leading central banks, which staged a rare, coordinated cut in interest rates earlier this month, will continue to lower interest rates. The European Central Bank is widely expected to cut the cost of borrowing at its next policy meeting in November, and still further in December or early next year. The Federal Reserve, too, is expected to lower rates again.
Meanwhile, stock markets are also fretting about a lag in the unfreezing of lending between banks despite the international bailout measures.
Interbank lending is key to getting banks to open up lending to companies and consumers, and a virtual freeze of such lending since the collapse of Lehman Brothers last month has impacted the wider economy.
"Interbank spreads returning to normality will help a lot and will be an important (and now widely followed) confidence indicator," Davies said. "Since the details of the bank rescue packages are still being worked out, I suspect it will take weeks, and during this period spreads will narrow only very gradually. In the meantime, the economic numbers are not going to help sentiment."
Slowing consumer and corporate spending in the United States is inevitably filtering through to Asian exporters, which are seeing demand for their products seize up.
"We are not going to avoid the fallout from the recession in the U.S. and Europe," said Joseph Tan, chief economist for Asia at Credit Suisse Private Banking in Singapore. "Asia cannot have their No. 1 and No. 2 trading partners into recession. The equity markets are already pricing that."
It's 3 p.m. on Wall Street. The hungry bear is on the prowl.
By Vikas Bajaj and Louise Story
Thursday, October 16, 2008
It has become the scariest hour on Wall Street.
On Wednesday, in what has become an almost daily occurrence, the stock market lurched at 3 p.m. — this time, down.
What had been a bad day ended as one of the worst in history, with the Dow Jones industrial average plummeting 733 points, or nearly 8 percent.
The late-day move — the Dow shed nearly 400 points in the last 45 minutes of trading — mirrored the market's pattern over much of the last week. On Friday, the Dow plummeted more than 500 points in the last hour of trading. On Monday, it soared about 300 points.
Market experts offered a variety of explanations for the late sell-off on Wednesday. Some pointed to gaping losses at hedge funds, among them the Citadel Investment Group, the big fund run by Kenneth C. Griffin. Others cited margin calls that forced investors and executives to dump shares into a falling market. Still others saw panicky selling by individuals and money managers.
There was also a simpler explanation: the economy is in trouble and the recession may be longer and deeper than initially feared. Those concerns were reinforced on Wednesday morning by a report that showed that retail spending declined in September, and in the afternoon by downbeat comments by the Federal Reserve chairman, Ben Bernanke.
"This sell-off is about the economy and it will be exacerbated by margin calls," said Todd Steinberg, head of global equities and commodity derivatives at BNP Paribas. "The primary reason for the sell-off today is the realization that the impact on the real economy will be greater and longer than people had anticipated."
Whatever the cause, it is clear that this is one of the worst bear markets in postwar history. The Dow Jones industrial closed at 8,577.91, and the broader Standard & Poor's 500-stock index fell 90 points, or 9 percent, to 907.84. It was one of the worst days for both indexes. The last two days have erased most of their 11 percent rally on Monday.
The S&P 500 is now down 42 percent from its Oct. 9, 2007, peak. The downdraft has hit many big investors, including executives and hedge funds. In a letter sent to its investors on Wednesday, Citadel said it lost 16 percent in September alone.
But given the market's moves over the last week, the final hour of trading is coming under scrutiny on Wall Street. Many analysts are asking the same question: Why is the market moving so violently between 3 p.m. and 4 p.m.? While trading often spikes in the last hour, according to a review of stock exchange data, the pattern has been much more pronounced in recent days.
One explanation, analysts say, is that brokers typically demand that clients pay down margin loans by the end of the day. As some of those clients begin to sell to raise money to cover those loans, prices fall further, forcing others who bought on margin investors to sell as well.
"This smells like that sort of forced selling, the margin calls and liquidations, that you get in the midst of a bear market," said Barry Ritholtz, chief executive of Fusion IQ and author of the popular blog the Big Picture.
Evidence is mounting that some executives are being forced to sell stock to meet margin calls.
Bruce Smith, the chief executive of the Tesoro Corp., a oil refiner, disclosed in a securities filing late Tuesday that he had to sell 251,000 shares because of a margin call by Goldman Sachs, the investment bank. Shares of his company fell more than 18 percent after his sale was made public.
Top executives at the Scholastic Corp., the publisher and Boston Scientific, the medical device company, also disclosed forced sales this week.
Still, banking executives said they did not think the margin calls on their own were leading to the drop in stock prices.
Forced selling always increases when the price of stocks and bonds falls, but by and large, they said, the selling was driven by the bearish attitude of investors.
"I have not seen any waves of fund selling because of systematic changes in margin levels," said Alex Ehrlich, global head of prime services for UBS. "It's more like climbing down a ladder, rather than falling down a cliff."
Hedge funds, which control nearly $2 trillion in assets and are big users of borrowed money, were also among those forced to sell, say analysts and industry officials, though it remains unclear how big a role they are playing in the recent sell-off.
Banks like Goldman Sachs and Morgan Stanley had been increasing the rates they charge hedge funds to borrow all year long, but in the last three weeks, Wall Street firms increased those rates aggressively, according to some officials. That was partly because the banks themselves were paying more to borrow money.
For hedge funds, the added pressure could not come at a worst time. Hedge funds are down 17 percent for the year, with most of the losses coming since the end of August, according to Hedge Fund Research. At the same time, investors are withdrawing billions of dollars from the funds, which has also caused managers to sell.
In his letter to Citadel's investors, Griffin said the firm's losses in September could be traced in part to its use of a strategy involving convertible bonds, an approach that requires money managers to short-sell shares they do not own in the hopes of buying them back later at a lower price. Griffin said he began increasing his holdings of convertible bonds in the middle of summer, taking more risk in an area where he has a lot of experience while reducing his positions in "poorly performing strategies."
But the strategy became a big money loser after the Securities and Exchange Commission temporarily banned short-selling in nearly 1,000 shares. The SEC said it put the ban in place temporarily. On Wednesday night, it said it would extend a requirement that big investors disclose their short positions to the agency until August 2009.
"Regretfully, I did not foresee the financial disaster that was to unfold in September," Griffin wrote. "In the weeks to come, I expect we will continue to see significant volatility in our earnings as the world manages through the unfolding crisis."
Citadel is hardly the only troubled hedge fund. Scores of hedge funds have lost money since Lehman Brothers, the investment bank, filed for bankruptcy protection in early September. Greenlight Capital, a fund run by David Einhorn, was down 12 percent in September, and Harbinger Capital Partners, one of the big winners of 2007, was down 18 percent for the month, according to a report by HSBC, the bank.
Many individual investors are also suffering, of course. Edward W. Gjertsen II, a vice president for Mack Investment Securities outside Chicago, said his clients appeared to be more unnerved this week than they were last week, when the market fell day after day without pause.
"I have started to see the first signs of worry today amongst clients relating to both the markets and the economy," he said.
Gjertsen has taken to staying up late to watch trading in Asia and Europe on CNBC and Bloomberg TV. He said he was watching for signs that the market had hit bottom so he could put more of his clients' money into the market. He said he was hopeful a bottom was close but he was not comfortable enough to tell his customers to buy.
"My wife has been asking me, 'What are you doing?' " he said about his market watching. "I say, 'I am absorbing.' "
The sell-off continued in Asia. In early trading Thursday, markets in Japan were down more than 9 percent, and in Australia they were down about 6 percent.
As stocks fell, investors sought safety in government debt. The benchmark 10-year Treasury bill rose 1 2/32, to 100 14/32, and the yield, which moves in the opposite direction from the price, was 3.95 percent, down from 4.08 percent late Tuesday.

Quake hits southern Mexico and Guatemala
The Associated Press
Thursday, October 16, 2008
TUXTLA GUTIERREZ, Mexico: A 6.5-magnitude earthquake has hit the southern Mexican state of Chiapas on Thursday.
The U.S. Geological Survey said the quake struck about 13 miles, or 20 kilometers, from the city of Suchiate, on the Guatemalan border.
Officials say the quake hit Thursday at 1:41 p.m. and was felt in Guatemala City, 200 kilometers away.
Emergency officials in Mexico and Guatemala say there were no immediate reports of damage or injuries, although they were still investigating.
Many people fled homes and businesses.

Erin go broke
By John Banville
Thursday, October 16, 2008
In the ravening years of the Celtic Tiger, we had a dinner-party competition here in Dublin to define the figure most representative of the suddenly prosperous Ireland in which we so bafflingly found ourselves. Someone came up with "a non-tax-paying businessman's trophy wife."
This seemed right, and as time went on we added more and more details. At last count we had arrived at "a non-tax-paying businessman's trophy wife driving her 14-year-old daughter to her drug-rehabilitation session in an SUV at 60 miles an hour down a bus lane while speaking on her cell phone, smoking a cigarette and making a rude gesture at a passing cyclist."
During the past couple of weeks, however, the game has lost its savor. As one dinner guest murmured, "That poor little girl." The old saw "safe as houses" no longer cuts, and money in the bank is no longer "money in the bank." We did not think the system could fail, but late last month government officials, in a dawn announcement, told us that they had been compelled to give a 400-billion-euro guarantee to the banks, which were running out of money. It has been estimated that, if the banks have to call in that guarantee, it will bankrupt the country for the next 37 years. And it will get worse.
In Ireland we live in a 30-year time warp. What for most of the rest of the Western world was "the '60s" did not arrive for us until the 1990s. Indeed, the start of our Age of Aquarius can be dated to that week in Spring 1992 when the news broke in Ireland that a prominent and popular churchman, Bishop Eamonn Casey, had carried on a long affair with an Irish-American woman, and that he had a 17-year-old son by her. It was the first of a series of religio-sexual scandals to be exposed here, each one worse than its predecessor.
The bishop had been a pillar both of church and state - he was a ubiquitous presence during Pope John Paul's 1979 visit to Ireland, but he had also done much to highlight the plight of the urban homeless - and his downfall should have been a disorienting shock to a country that was proud of being 95 percent Catholic. However, all we knew was that the church's centuries-long stranglehold upon our necks had suddenly been loosened.
Freed, we did what all free men like best to do: We started making money and spending it. The '90s and the first half of the 'noughties were our coming-of-age party. Oh, how we roistered!
And now, as Nancy Pelosi observed, the party is over. That "poor little girl" will be far more emblematic of the coming years than her appalling mother was of the past decade and a half.
These are strange days in Ireland, though for once no stranger, it seems, than they are anywhere else in the world. Those of us old enough to have lived through it are reminded of the Cuban missile crisis - that nightmarish sense of being suspended somehow in midair, looking down upon ourselves and our poor, fragile world in wonderment and slow terror. Can this really be happening? Can all that wealth really have vanished so quickly, so comprehensively?
And yet there is, too, a curious trace of wistfulness in the air.
We seem to be asking if it was really so bad in those days before Bishop Casey liberated us. Were we, if not happier, at least more content, when we were poor? Did we not behave more courteously toward each other, did we not more readily forgive each other and ourselves for our failings? Shall we not perhaps regain something of the "real" Ireland when the suddenly toothless tiger is dead and buried?
As our mothers used to say to us children when we had lost something, "You weren't meant to have it." Grim comfort.
One feels most sympathy for the young, who have known only tigerish days. How will they cope with what now seems certain to come? Again the dole queues, the mass emigration, the grind and grayness of life lived from hand to mouth.
Poor little girls, poor little boys.
John Banville, author of the novels "The Book of Evidence," "The Untouchable," "Eclipse" and "The Sea," is a Dublin-based writer.
The ice storm
By Gauti Kristmannsson

Thursday, October 16, 2008
Icelanders have woken up in a new novel by Franz Kafka, in which everybody is guilty by default.
One by one the mighty banks have been seized by the government and Icelanders, aghast, have been told that each and every one of us owes millions of dollars - to whom, we don't know. The earnest faces of the politicians, of bankers and tycoons almost crying, give us the final touch of the surreal.
The situation is comparable only with the fall of the Berlin Wall in 1989 and the 9/11 attacks. Something final and yet beyond one's individual grasp has happened. This time, however, instead of looking on, we are in the middle of it.
The first 500 bankers have lost their jobs in one go. Many others are waiting for the double blow of unemployment and losing their houses as their mortgage payments soar.
When the Reykjavik stock exchange reopened on Tuesday, after three days of suspended trading, its index, dominated by bankrupt financial institutions, had lost 75 percent of its value.
Suddenly there are lines in the bank for foreign currencies, and there is a limit on how much we can get - overseas banks are refusing to accept our freefalling currency, the krona. One of my students, studying in Spain, can't get money from Iceland for her rent.
Importers and exporters can't get currency to conduct business. Icelandic tourists abroad have problems getting cash from ATMs. The British government has applied terrorist laws to freeze the assets of an Icelandic bank. The list goes on, as if it were a script for the nightmare of globalization.
We thought we had friends, in Europe and in the United States. They were sought in the hour of need and found to be busy with their own problems. Only the Scandinavians were prepared to extend a helping hand and then, all of a sudden, Russia. Somehow the world has changed.
The disappointment with our old "friends" is great, and people ask, did we really behave any worse than the others?
People joke about going back to the 1970s, when there were restrictions on how much currency one could take abroad and the government devalued the krona regularly to reduce spending on foreign luxuries. It wasn't all that bad then, they say, apart perhaps from the bellbottoms and high-heeled shoes for men.
But the jokes are not funny, for we did join the party in the 1990s, we did pour money into our apartments, houses, cars, gadgets, stocks. The money was borrowed, too. After an era of deprivation, we were eager to enjoy the newfound freedoms of capitalism and credit cards. We believed everything would add up. Certainly the free-market enthusiasts told us so time and again. And most of us could pay our mortgages and credit cards, at least until last week.
Now that we don't know if we can, the shock is so strong that neither anger nor sorrow has really taken hold.
We thought Iceland was an independent country that could take care of itself without the help of Russia or the International Monetary Fund, that our currency amounted to something, that we could own companies and banks all over the world. We thought we could enjoy our beautiful country and clean air in the backyard of the aluminum smelter.
In many ways we uncritically accepted the capitalist system, which now appears to have been a gigantic casino without an owner. We did in the end believe that we could get "money for nothing," and now we face the fact that we will get nothing for our money. What to do, nobody knows, least of all the politicians, bankers, tycoons.
But, then again, I heard that a new edition of "The Communist Manifesto" will be published here this autumn. Coincidence, of course - but, like everything else, unreal. Kafka's Iceland probably has an ending different from anything that we can possibly imagine.
Gauti Kristmannsson is an associate professor of translation studies at the University of Iceland in Reykjavik.
In gold we trust
By Christoph Peters
Thursday, October 16, 2008
'Some problems may lie in store for us, but I don't foresee a catastrophe," said a woman I know here in Berlin, a business consultant in risk management.
When I asked her to be specific, she referred to the Swedish banking crisis of the early 1990s. It was dealt with pretty successfully, she said, by measures similar to those now being put in place, though of course you can't compare Sweden to the United States.
"This shouldn't surprise you," my octogenarian neighbor, formerly an exemplary comrade in East Germany and still a convinced socialist, smugly remarked. "It's the great crisis inherent in the transition from monopoly capitalism to state monopoly capitalism. In other words, the final stage of your system. Under the Communists, kids learned about this process in school."
Despite the dramatic headlines about the spreading financial crisis, and although it's been clear for some time that the problem is no longer confined to the American real-estate market, Germans are reacting to the situation with remarkable calm. I don't know anyone who has thought seriously about taking his savings out of the bank and stashing them in the fridge.
Unlike professional investors, savers are behaving quite rationally, perhaps because of the continual assertions from all sides that our economy, despite everything, is in fine shape and accordingly stocks will soon be climbing again - or maybe simply because no expert can offer advice that another expert won't denounce as the worst possible approach.
Television viewers accustomed to watching stockbrokers in action on their screens have long suspected that these are people with severe personality disorders, people who exercise their crude mixture of special talent and gambling compulsion in a morality-free zone and couldn't care less about the consequences for the rest of the world.
The idea that such people may soon find themselves, if not in prison, then at least in a soup-kitchen line provides satisfaction to many a German who, in recent years, has had to bear the contempt of clever financial advisers looking down upon him as a timorous fool for passing up the chance to let his money really work for him.
I felt a certain uneasiness last week when Chancellor Angela Merkel and her finance minister, Peer Steinbrück, stood before the cameras and announced that the state would guarantee all the nation's savings accounts, an amount estimated to be at least 1.6 trillion euros. That they considered it necessary to talk the citizenry out of being worried suggested for the first time that there were, in reality, grounds for even greater worries.
I briefly considered whether, with winter coming on, there might still be some possibility of acquiring a piece of land, complete with potatoes and cows, near Berlin. I quickly realized, however, that I know even less about farming than I do about financial markets and concluded that I had better steer clear of both.
I asked my friend the business consultant what she thought about investing in gold, which - although it lacks any practical nutritive value - has been for millenniums a most desirable commodity. She rolled her eyes at my naïveté and explained that the gold market is highly speculative right now.
As soon as confidence in businesses and securities returns, she said, people will dump gold by the ton and the price will be cut in half. Nonetheless, I confess that I've been secretly thinking about converting at least a portion of my next royalties, assuming there are any, into gold coins and stuffing them into a pretty leather bag, like the one Pippi Longstocking keeps in her big wooden chest.
That way at least, when the looming - even though nobody can tell you exactly what it's going to look like - catastrophe arrives, I'll still have something to swap for candy for my daughter.
Christoph Peters is the Berlin-based author of the novel "The Fabric of Night." This article was translated from the German by John Cullen.

In faithful service to Virginia Woolf
Mrs. Woolf and the Servants: An Intimate History of Domestic Life in Bloomsbury
By Alison Light
Illustrated. 376 pages. Bloomsbury Press, $30; £20, Fig Tree.
In July 1934, Virginia Woolf wrote in her diary, "After 18 years I at last got rid of an affectionate domestic tyrant." She was referring to her cook, Nellie Boxall - whose name she persistently spelled "Nelly" - whom she had finally fired after years of emotional tussling between mistress and servant.
Virginia's relationship with Nellie may have been more fraught than those with her other servants, but the doings of the help loomed large throughout her adult life. In "Mrs. Woolf and the Servants," Alison Light informs us that it wasn't until 1929, when Nellie was working, for a time, elsewhere, and the Woolfs hired instead a daily housekeeper, that they first found themselves home alone: "By 3 o'clock the Woolfs were alone - a complete and utter novelty. ... Thus the life of the British modern couple was inaugurated." Virginia Woolf was 47 years old.
Light, a British academic and journalist, has illuminated Woolf's upstairs-downstairs life in a manner intended to exemplify the broader socioeconomic shifts of the first third of the 20th century, deftly spanning the intimate ("Who emptied the sewage was a serious issue among the servants since it affected their earnings and their self-respect"), the socio-historical and the literary. The result is an absorbing and complex portrait of Woolf's particular relation to domestics and domesticity (in her later years, amazingly, she learned to cook), but also an analysis of the shifting mores of the period and, most particularly, of the often forgotten individuals whose faithful service to the Woolfs and to servant-swapping Bloomsbury enabled the creation of much high-modernist art.
The book, broadly chronological, is divided into chapters about several of the Woolfs' most loyal retainers. Sophie Farrell came to work as a cook for Virginia's parents, Julia and Leslie Stephen, in 1886, when Virginia was only 4 years old.
Sophie stayed on with the family after Julia Stephen's early death from rheumatic fever in 1895, and would remain a presence in Virginia's life right up to its end: "Sophie lived long enough to write Virginia's epitaph, to supply the character reference which only she could give." As Light notes, "In a life full of ruptures, Sophie kept the continuity of memory." She "was one of the abiding mother-figures in Virginia's life and represented that maternal care which Virginia always sought." Sophie worked for one or the other of the Stephens until 1914, a total of 28 years of service; and then finished her working life in service to extended family members before finally retiring in 1931. From then on, Virginia sent her a pension of £10 a year, an indication of her concern and feelings of responsibility.
That said, as young adults, Virginia and her sister Vanessa experienced Sophie's devoted service as a burden: "They thought of taking a country house for the summer months, but Sophie seemed 'insuperable' - having no home, she would need to come with them; she was increasingly like an aging parent, a tie." Lottie Hope and Nellie Boxall each merit extended discussion. The two women came together to the Woolf household in 1916, having first worked for Roger Fry, the artist and critic who was also Vanessa's sometime lover. Lottie, in particular, had an intriguing background. "In the great dustheap of late-Victorian Britain," Light writes, "Lottie Hope was at the bottom of the pile." A foundling at the Whitechapel workhouse, she was taken in by an eminent do-gooder, Edith Sichel, who adopted a number of girls and educated them for lives in service. Lottie seems always to have been spirited, full of life, "a glamorous figure with her lipsticked lips and elegant legs, thin as a string bean, 'dancing energetically over her saucepans."' She had a temper, too.
But Lottie always played second fiddle to Nellie, the cook Virginia tried for so long to sack. In retirement, the two women lived together, although not, Light assumes, as lovers: "Lottie remained faithful to Nellie and looked after her in her last illness, till Nellie fell out of bed one day and never recovered. ... Without Nellie, they said, Lottie couldn't cope. She went to pieces; she kept coals in the bath. ... Eventually she went into a home, run by the council," and left this life as penniless and unattached as she had entered it.
Nellie the malcontent looms largest in Light's account. Clearly the relationship between Nellie and her employer was one of mutual disgruntlement and repeated scenes, as consuming as any dysfunctional intimate friendship. But after the single sentence in her diary in which Virginia records Nellie's departure, the cook vanishes from her records forever: "After 1934 Nellie Boxall was expunged, as if she had indeed been murdered on that last day. No more references, no more fleeting glimpses of her as there are of Lottie Hope or Sophie Farrell, only a blank, after 18 years of intimacy. No letters or reminders were kept." This is all the more surprising because, Light makes clear, their paths continued to cross. Nellie went on to work for Charles Laughton and Elsa Lanchester, prominent actors of the day, and led thereafter a far more glamorous life.
Single, childless, each of these servants had a life with its own poignant trajectory and its significant dramas. Sophie Farrell, living with a fellow former servant, spent none of the pension money given her by Virginia, but instead bequeathed it to her niece. Nellie, the youngest of 10 children, ended up owning her own home, and, in 1956, recorded an interview about Virginia in which she told only the good: "Nellie wanted Virginia's goodness remembered but also ... Virginia's need of her." Lottie, bright spark, lived vibrantly and enlivened the lives of others, only to leave little trace behind.
Light grants us, too, glimpses of other members of the unrecorded class of servants who made Bloomsbury possible; and she scrupulously lays bare Virginia's complicated relations to these employees. She and Leonard were infinitely more liberal than their forebears, and yet they were parsimonious. They embraced the Labor Party and politics that promised social change, and yet did not seem to realize that their way of living perpetuated established class divisions. As Light observes, "Virginia's public sympathy with the lives of poor women was always at odds with private recoil."
Light can be surprisingly waspish about Virginia's blindness to her snobberies, which seems, although unattractive, characteristic of the time. But she is quick to acknowledge, too, the mutual dependence of mistress and servant, and Virginia's awareness of that dependence. "If the servant mirrored back to her a loathing of dependence, which her feminism associated with 'the clinging doll heroine' or the submissiveness of the angel in the house," Light writes, "the need to be dependent and to tolerate dependence in oneself and others could not be simply banished."
This played out in Virginia Woolf's life in particular ways, amply documented in this fine book. But as anyone who has been or had a cleaner or a baby sitter knows, the tensions, the concern and responsibility, the emotional involvement, are not unique to Woolf or to Bloomsbury: they are the near-inevitable stuff of women's lives to this day. As readers, we must be grateful that Virginia had the good fortune to have help - she was so emotionally delicate that she would have written little without it - but this reader, at least, can't help wondering what Lottie Hope, too, might have done or created, had she not been consigned to dance over saucepans.
Back to the Blitz
By Andrew O'Hagan
Thursday, October 16, 2008
If one is willing to wait long enough, the looniest books can come to seem like masterpieces of common sense.
For instance, here in London this has been a very good week for Edmund Wilson's 1963 rant "The Cold War and the Income Tax," in which Wilson, the great American stylist and Britain-hater, unloads on those who would use his taxes to build nuclear-bomb shelters.
Only yesterday I saw a man in a three-piece suit reading Wilson's tome rather avidly in Regent's Park.
I swear he was nodding, clearly oblivious to the fact that the book in his hands was barking louder than the dogs at his feet. In London, when people start reading Edmund Wilson's economic opinions in broad daylight, you know that hysteria has suddenly overpowered the rational faculties.
I checked the book when I got home and concluded that the man on the park bench had not been turning purple via the rigors of self-analysis.
"The present image of the United States," it concludes, is "homicidal and menacing And, for all our boasts of wealth and freedom, we are submitting to deprivation and coercion in order to feed and increase it."
London has no very distinguished record of claiming responsibility for its own messes. Therefore this very bad case of black lung at the banks has many a Londoner seething at the subprime-mortgage disaster in America.
In contemplation of the terrible gulf between credit and deposits, Britons are liable to sound like the disillusioned narrator Nick Carraway in "The Great Gatsby" as he assesses the brutal world of Tom and Daisy Buchanan: "They smashed up things and creatures and then retreated back into their money or their vast carelessness or whatever it was that kept them together, and let other people clean up the mess they made."
But it's our own fault too, and everybody knows it. London has been living like a drunken sailor for the past decade, tripping up the High Street in a small delirium of deregulation and fantasy wealth. In the past few years, house prices in tony Primrose Hill have doubled and doubled again as traders on huge bonuses - proud of London's reputation as a center of the new financial universe, with them as its masters - bought $8 million houses and effectively banished most of the rest of us from inner London.
Champagne sales have been through the roof - Britain drinks more of it than the whole of the United States - but last week The Times of London reported that the only product showing a fresh boom in sales was home safes, as people begin to feel that it might be safer to lock up their money at home than to keep it at the bank. Prime Minister Gordon Brown's $87 billion rescue plan for British banks didn't do much for the confidence of anyone I spoke with.
"It might save Brown's reputation," said one of three men staring into the depths of their cappuccinos at the Café 79 on Regent's Park Road, "but the big party's over for everybody else."
The café is only a few doors down from where Friedrich Engels once lived, now marked with a blue plaque. The men in the café were very much at one with the national mood, seeking urgently to punish those fat cats and other greed-driven oligarchs who were pulling us into recession.
"Look," one of them explained, "they might call it 'recapitalization,' but what they are doing is nationalizing the banks. It's beyond belief. I don't know if people really understand what is happening."
"Yeah, it's beyond belief," his friend said. "After all this global-market stuff we've been hearing for years, the government is basically doing what Tony Benn" - a hard-core socialist politician - "was advocating in 1983. Trade is contracting, and it's as if Thatcher had never existed. All that stuff."
"God," his friend said. "Remember it, 'The End of History' and all that?"
"We're back to where we started, with the government bailing out the banks and everybody reusing their teabags."
My friend India Knight, a columnist for The Sunday Times, joined me.
"It's quite nice," she said. "A bit like the Blitz. A bit of decadence in the dark, you know?"
"Socialism is bursting out all over," I said.
"I know," India said. "Greed is not good."
The restaurants in Primrose Hill were looking pretty but empty. The men finished their coffee and shrugged as they left.
"Good luck," one said to the café owner. "Things are going to be very tough."
Andrew O'Hagan, author of three novels and "The Atlantic Ocean: Essays on Britain and America," lives in London.


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