Financial Times Editorial - The nasty taste left by Apple’s options

Financial Times Editorial - The nasty taste left by Apple’s options
Copyright The Financial Times Limited 2006
Published: December 29 2006 22:05 | Last updated: December 29 2006 22:05




Investors in Apple breathed a sigh of relief on Friday when the company largely exonerated Steve Jobs, its chief executive, from blame in the backdating of share options at the company. But the way in which Apple conducted, and disclosed details of, its inquiry leaves a lot to be desired.

Other US chief executives have had to resign because they knew about options backdating at their companies. Options were adjusted in order for the recipients to gain from a lower strike price, while allowing companies favourable tax and accounting treatment. It was a widespread form of deception that reflects badly on US attitudes towards corporate governance.

One of Apple’s priorities, after it uncovered options backdating between 1997 and 2001, was to retain Mr Jobs as its chief executive. More than any other executive involved in options backdating, Mr Jobs personifies his company. He co-founded it and it languished after he was forced out in 1985. Only after he returned in 1997 did it start the recovery culminating in the success of the iPod music player.

The special committee of directors, chaired by Al Gore, the former US vice-president, put the blame on two unnamed former officers of the company. This was announced in October after a three-month inquiry, along with the resignation as a director of Fred Anderson, Apple’s former chief financial officer. Apple also said that Mr Jobs had been “aware” of some options backdating but had not received or benefited from these grants.

That seemed clear enough until on Friday when Apple amended its story in two respects. First, it said that Mr Jobs had been “aware [of] or recommended” some backdating of options that were awarded to others. In other words, he was not simply the passive observer of misconduct by others but an active participant himself. Even if he did not know that this was illegal, it was an error of judgment.

Second, Apple disclosed details of a backdated option grant that Mr Jobs received himself – but never exercised. He got a grant of 7.5m options that was finalised on December 18 2001 but was backdated to October 19. Not only did this happen, but the grant was recorded as having been approved at a special board meeting that never took place. In fact, Apple’s board had provisionally approved Mr Job’s options grant that August.

The get-out clause is that Mr Jobs did not know that his own grant had been backdated. This casts a better light on his behaviour than if he had rewarded himself by amending options, but it leaves questions unanswered. Why, for example, was none of Apple’s directors aware that a board meeting had been made up? At the least, it suggests that they do not read the board minutes very carefully.

It also makes Apple’s October statement seem disingenuous. The company’s options practices are being investigated by the Securities and Exchange Commission and it was making a closely watched statement to investors. So it might have found room in its summary of the “key points” for Mr Jobs’ own backdated grant and that he had recommended some backdating.

It is characteristic of Apple in its every day affairs to guard information closely and to say as little as possible about its products until the time and place of its choosing. Mr Jobs likes to announce everything himself. There is nothing wrong with that, but investors deserve greater openness and timeliness when it comes to Apple’s finances and corporate governance.

The final aspect of the affair that leaves a nasty taste is the singling out of two individuals to take the blame. It may be that they were at fault but Mr Jobs is hardly someone who delegates control easily and the company has admitted that he was actively involved in some option repricing. At other companies, chief executives have had to resign because of their involvement in similar financial abuses.

On the facts disclosed by Apple so far, Mr Jobs can stay. Investors in the company would clearly suffer if he were to resign and he was not found knowingly to have broken the law. But he came close to doing so and the company’s board must now ensure that nothing of the sort is allowed to occur again on his watch, no matter how valuable he happens to be.

Saddam Hussein executed in Baghdad

Saddam Hussein executed in Baghdad
By Demetri Sevastopulo in Washington and Steve Negus, Iraq correspondent
Copyright The Financial Times Limited 2006
Published: December 29 2006 12:04 | Last updated: December 30 2006 09:44



Saddam Hussein, the former Iraqi dictator, was put to death at dawn on Saturday, Baghdad time, just days after an Iraqi appeals court refused to commute his execution.

Before he was taken to the gallows in Baghdad, the former Iraqi president was reportedly handed a “red card” signalling his imminent death - a reminder of the red cards dealt to those he had condemned to death during his time in power.

Iraqi state television said Mr Hussein’s execution was captured in still photographs and on video.

Muaffak al-Rubbaie, the Iraqi national security adviser who witnessed the event, told CNN that Mr Hussein, who declined to wear a hood for his execution, appeared “really, really broken” as he awaited his death and appeared to show no remorse.

Mr Rubbaie added he was “proud” of the way the Iraqi government conducted the execution, saying it conformed with international, Iraqi, and Islamic standards. He said Mr Hussein had been treated with respect before and after the event.

President George W. Bush welcomed his death, saying it came after a “fair trial - the kind of justice he denied the victims of his brutal regime”.

“Saddam Hussein’s execution comes at the end of a difficult year for the Iraqi people and for our troops,” Mr Bush said in a statement. “Bringing Saddam Hussein to justice will not end the violence in Iraq, but it is an important milestone on Iraq’s course to becoming a democracy that can govern, sustain, and defend itself, and be an ally in the war on terror.”

US officials on Friday said they had been unaware of when Mr Hussein would be executed. But a White House spokeswoman later said Stephen Hadley, the White House national security adviser, had informed Mr Bush at 7.15pm Washington time that Mr Hussein was expected to be executed within hours. Mr Hadley received the news from Zalmai Khalilizad, the US ambassador to Iraq, who had been informed of the pending execution by Mr Maliki.

Margaret Beckett, the UK’s foreign secretary, said in a statement she welcomed “the fact that Saddam Hussein has been tried by an Iraqi court for at least some of the appalling crimes he committed against the Iraqi people”.

“He has now been held to account,” Mrs Beckett said. “The British government does not support the use of the death penalty, in Iraq or anywhere else. We advocate an end to the death penalty worldwide, regardless of the individual or the crime. We have made our position very clear to the Iraqi authorities, but we respect their decision as that of a sovereign nation.”

Mr Hussein, who was captured by US forces in December 2003, was sentenced to death last month for ordering the massacre of Iraqi Shia civilians more than two decades ago.

While the execution of the former Iraqi strongman was long expected, it will be an emotional jolt to many Iraqis to hear that the man who dominated their nation’s public life with an iron fist for nearly three decades has finally been put to death.

“It is a moment of remembrance for the victims of Saddam Hussein,” Feisal al-Istrabadi, deputy Iraqi ambassador to the United Nations, told CNN. “This is a man who history will record as responsible for the deaths of two million Iraqis.”

Mr Hussein’s two sons, Uday and Qusay, were killed by US forces in 2003.

US officials on Friday were careful to avoid any appearance that they had played any role in the decision to proceed with his hanging. But the US military was placed on heightened alert ahead of the execution in case his death resulted in more attacks on US troops, or a spike in the sectarian violence that has engulfed Baghdad.

Sunni Arabs may view his hanging as yet another aspect of Iraq’s long national humiliation, even though many did not condone his regime’s excesses. Some Iraqis fear that his execution will set back the chances of a political settlement between Iraq’s Shia-led government and the country’s Sunnis that could undercut support for the country’s insurgency.

But the execution may bolster the government’s standing among militant Shia groups, many of whom suspected that the former dictator might be able to strike a last-minute deal with the Americans to escape the gallows.

President George W. Bush justified the 2003 invasion of Iraq on the basis that Mr Hussein possessed weapons of mass destruction. After US forces failed to find those weapons, the Bush administration argued that the invasion had still been justified because it had removed the dictator from power.

The execution comes as the Bush administration prepares to unveil a new policy to help stop the violence that has claimed the lives of tens of thousands of Iraqis and almost 3,000 US troops.

Iraqis had braced themselves for the execution of their former ruler on Friday following mounting speculation that Mr Hussein would be sent to the gallows before the Muslim holiday of Eid al-Adha, which began on Saturday morning.

Nouri al-Maliki, Iraqi prime minister, on Friday said nothing could overturn the death sentence.

“Our respect for human rights requires us to execute him, and there will be no review or delay in carrying out the sentence,” he said.

Mr Hussein, 69, was sentenced to death by an Iraqi special tribunal on November 5 for his role in a campaign of reprisals ordered against the Shia village of Dujail, where he suffered a 1982 assassination attempt. The campaign led to scores being executed and many others subjected to torture and long-term detention.

His trial was marked by allegations of political interference and procedural errors, and some international organisations had called on the government not to go through with Mr Hussein’s execution.

In Washington late on Friday night, a federal judge rejected a last-ditch petition by lawyers for Mr Hussein to block the US military from handing the former president over to Iraqi officials.

Democratic Senator Edward Kennedy said Mr Hussein had been “a brutal tyrant and murderous dictator”. “Now it is time for the people of Iraq to work to reconcile their differences and to heal the wounds of the past. Only that process will end the violence that has prevented Iraq from moving forward,” he said.

Pete Hoekstra, the outgoing Republican chairman of the House intelligence committee, said: “I do not support the death penalty, but Saddam Hussein’s fate was determined by an Iraqi judicial system that was created by the free Iraqi people. His sentence was delivered swiftly and the pain was minimised - the same cannot be said for his many hundreds of thousands of victims.”

International Herald Tribune Editorial - Under-the-rug oversight

International Herald Tribune Editorial - Under-the-rug oversight
Copyright by The International Herald Tribune
Published: December 29, 2006


The wondrously named Privacy and Civil Liberties Oversight Board conducted its first public hearing the other day on the U.S. National Security Agency's illegal eavesdropping program. If you expected it to discover any truths about the secret program, you can forget it. The board spent its time explaining why it was more important to work from within the administration than to challenge it. Thus wags the tail of a watchdog with neither bark nor bite.

The board was created two years ago by the White House and the Republican Congress as a pale substitute for the independent monitor recommended by the Sept. 11 commission. Its members (four Republicans and one lone Democrat) serve at the pleasure of the administration. It has a paltry budget and no subpoena power, and any requests for documents can be vetoed by the attorney general.

It's so low on the totem pole that it didn't even get a formal briefing on the administration's eavesdropping on American citizens until October — almost a year after the warrantless surveillance program had been uncloaked by the news media.

Right now, the panel is best suited to polishing up the handles on the White House doors. But its members make the point that the board is no more than Congress created it to be. All the more reason to repair the damage as Americans wonder precisely how many liberties they have already sacrificed.

A bill to remake the board as an independent entity with subpoena power and a credible claim to oversight has been submitted by Representatives Carolyn Maloney, Democrat of New York, and Christopher Shays, Republican of Connecticut. It deserves a full and open review — which is more than the American public has been getting from its toothless watchdog.

Euro notes cash in to overtake dollar

Euro notes cash in to overtake dollar
By Ralph Atkins in Frankfurt
Copyright The Financial Times Limited 2006
Published: December 27 2006 22:07 | Last updated: December 27 2006 22:07



The US dollar bill’s standing as the world’s favourite form of cash is being usurped by the five-year-old euro.

The value of euro notes in circulation is this month likely to exceed the value of circulating dollar notes, according to calculations by the Financial Times. Converted at Wednesday’s exchange rates, the euro took the lead in October.

The figures highlight the remarkable growth in euro notes since their launch on January 1 2002, three years after the start of Europe’s monetary union, which in January welcomes its 13th member – Slovenia, the former Yugoslav republic.

“After the launch, we expected growth to stabilise – but it has continued over five years,” Antti Heinonen, head of the European Central Bank’s bank notes directorate, told the Financial Times.

Although the ECB does not deliberately promote the international use of the euro, it has become popular in official foreign exchange reserves – even if it is far from challenging the dollar’s lead as the most popular reserve currency.

News that euro notes are challenging the dollar may cheer eurozone politicians – even if it partly reflects the currency’s strength – but it may have a dark side too. Fast growth in the highest denomination notes, especially the €500 note, has raised suspicions that they are popular among criminals, although the ECB plays down this factor.

By the end of October the $759bn-worth of US dollar notes in circulation was only a fraction ahead of the value of euro notes, converted at exchange rates at that time.

But since October the euro has risen strongly against the dollar and this month the value of euro notes has risen to more than €610bn, or in excess of $800bn at the latest exchange rates. That level is unlikely to have been beaten by the greenback.

US home sales rise more than expected

US home sales rise more than expected
© Reuters Limited
December 27, 2006


Sales of new US homes rose a higher-than-expected 3.4 per cent in November, but they were down 15.3 per cent from a year ago, a government report on Wednesday showed.

New single-family home sales rose to an annualized rate of 1.047m units from an upwardly revised rate of 1.013m units in October, the Commerce Department said.

Analysts polled by Reuters were expecting November sales to rise to 1.018 million rate from the previously reported rate of 1.004 units in October. The department also revised its figure for September sales higher.

After release of the report, stocks were little changed, US treasury bond prices fell and the dollar rose against major currencies.

In November, the median sales price of a new home rose 3.2 per cent to $251,700 from $243,800 in October.

The supply of homes available for sale at the current sales pace fell in November to 6.3 months’ worth from 6.7 months’ worth in October. There was a total of 545,000 homes available for sale at the end of November, down slightly from the 553,000 reported in October.

Some analysts read the new home sales data as a sign of growing health in the housing sector.

“The new home sales report did beat the consensus forecast, and that, I think, provides further evidence to support the view that the worst of the housing downturn may have passed,” said Alex Beuzelin, senior market analyst for Ruesch International in Washington DC.

A separate report on Wednesday showed US mortgage applications fell last week by 14.2 per cent to their lowest level since early August. The Mortgage Bankers Association said demand slipped both for home purchase loans and mortgage refinancings.

In the Northeast, new home sales rose 22.5 per cent. They were up 22.4 per cent in the Midwest, and they gained 19 per cent in the West. Sales fell 9.3 per cent in the South, the biggest region covered in the report.

Other reports suggested retail sales were lackluster in the week ahead of the Christmas holiday.

The International Council of Shopping Centers and UBS Securities said the year-on-year gain in U.S. chain stores sales slipped last week for a second straight time to stand just 1.7 per cent above year-ago levels. It was the weakest year-over-year reading since February 12, 2005.

Separately, Redbook Research said chain store sales were down 1.6 per cent this month through December 23 when compared with the same period in November.

“The Christmas week was on target for most, but no better,” Redbook Research said.

US says food from cloned animals safe

US says food from cloned animals safe
By Clive Cookson in London
Copyright The Financial Times Limit
Published: December 28 2006 17:25 | Last updated: December 28 2006 18:15



The US Food and Drug Administration on Thursday took a big step towards approving the sale of meat and milk from cloned animals and their offspring without special labelling.

A draft FDA risk assessment found that food from clones of cattle, pigs and goats was as safe to eat as food from conventionally bred animals.

However, cloned meat and milk is unlikely to reach the shops before late 2007, at the earliest. Agricultural biotechnology and livestock companies will continue to observe a moratorium on their commercial introduction until the FDA has assessed public comments on the draft assessment and issued a final ruling.

The agency will receive hostile comments from some influential groups, such as the Center for Food Safety and the Consumer Federation of America, which accused the FDA of “imposing these products on a public that opposes cloning technology and does not want to consume cloned foods”.

But the Biotechnology Industry Organisation welcomed the long-awaited FDA assessment. Jim Greenwood, BIO president, said: “Animal cloning is the latest step in a long history of reproductive tools for farmers and ranchers, and can effectively help livestock producers deliver what consumers want: high-quality, safe, abundant and nutritious foods in a conscientious and consistent manner.”

Stephen Sundlof, director of the FDA’s Center for Veterinary Medicine, said: “Based on FDA analysis of hundreds of peer-reviewed publications and other studies on the health and food composition of clones and their offspring, the draft risk assessment has determined that meat and milk from clones and their offspring are as safe as food we eat every day. Cloning poses no unique risks to animal health when compared to other assisted reproductive technologies currently in use in US agriculture.”

If given final approval, the ruling would allow the sale of food from cloned cattle, pigs and goats, but not sheep, for the first time in the United States.

“No unique risks for human food consumption were identified in cattle, swine or goat clones,” the FDA said in a draft risk assessment, which now enters a public comment period before the agency makes its final decision.

Bush silent on Iraq after meeting advisers

Bush silent on Iraq after meeting advisers
By Demetri Sevastopulo in Washington
Copyright The Financial Times Limited 2006
Published: December 28 2006 20:38 | Last updated: December 28 2006 20:38



President George W. Bush gave no details about a change of policy on Iraq, after convening a meeting with his top national security advisers on Thursday, following the recent visit to Baghdad by Robert Gates, his new defence secretary.

After the meeting at his Texas ranch, Mr Bush said nothing concrete about policy. Flanked by Condoleezza Rice, secretary of state, General Peter Pace, the chairman of the joint chiefs, and Vice-President Dick Cheney, he said only that he was “making progress” in developing a new policy.

The president was speaking just days after an Iraqi court rejected an appeal by Saddam Hussein, the former Iraqi leader, to commute his death sentence. The Baghdad government is expected soon to announce when the former dictator will be executed.

Separately, it emerged that Gerald Ford, the former US president who died this week, opposed the Iraq war. In a previously unpublished 2004 interview with the Washington Post, Mr Ford criticised Mr Bush, saying the decision to invade Iraq was contrary to US national interests.

In the face of mounting evidence, Mr Bush this month acknowledged for the first time that the US was “not winning” in Iraq. Next month he will unveil a new Iraq policy in an attempt to halt the violence that has claimed the lives of tens of thousands of Iraqis.

The beleaguered president has come under intense pressure to change course in Iraq since the Democrats routed the Republicans last month in mid-term congressional elections, and as the US military death toll in Iraq approaches 3,000.

A recent CNN poll found that a record 67 per cent of Americans opposed the war.

Mr Bush on Thursday repeated his mantra that success in Iraq was “vital” for the security of Americans. But a recent ABC News/Washington Post poll found that 51 per cent of Americans believed the Iraq war had not contributed to the long-term security of the US.

While the White House insists all options are being considered, Mr Bush is reported to be leaning towards approving an increase in US troop numbers in Iraq. The temporary “surge” could involve as many as 30,000 troops in an attempt to provide more time for action against sectarian death squads.

The Iraq Study Group, the bi-partisan commission led by James Baker, the former secretary of state, recently urged Mr Bush to refocus the US military campaign in Iraq on training local forces to allow most US combat troops to leave by early 2008.

The 10-member group said it would support a surge if recommended by US commanders. But John Abizaid, the top commander in the Middle East, who last week announced he would step down in the spring, opposes an increase. At his year-end press conference last week, Mr Bush sidestepped a question about whether he would endorse a policy that was opposed by his top military commanders.

Colin Powell, the secretary of state during the first four years of Mr Bush’s presidency, took the unusual step of publicly opposing any surge, saying the US military was “about broken”.

International Herald Tribune Editorial - Pulling back from war in the Horn of Africa

International Herald Tribune Editorial - Pulling back from war in the Horn of Africa
Copyright by The International Herald Tribune
Published: December 28, 2006


It is tempting to wink at Ethiopia's stunningly successful offensive in Somalia. It pushed back a hateful Islamic militia that was defying the United Nations, threatening to impose religious tyranny and, according to Washington, harboring international terrorists. The Bush administration quickly succumbed to temptation, lauding Ethiopia's attacks as a legitimate response to "aggression."

But if there's anything we should have learned over the past few sad years, it is that this kind of unilateral pre-emptive attack seldom solves anything, particularly when the country doing the invading is regarded as a longstanding enemy.

Somalia is a familiar kind of mess, with a weak official transitional government composed of a collection of regional clan leaders and warlords, pitted against radical Islamists who control their own militias, who have spread Taliban-like terror among the populace and who recently surrounded the seat of the transitional government at Baidoa. To halt their advance, Ethiopia's armed forces crossed an international border and routed the Islamists, who have largely disappeared from public view.

It's hardly surprising that there was little international outcry. But while moderate forces in Somalia have been appalled by the brutal intolerance of Islamist leaders who have threatened to behead people for not praying five times a day, they are unlikely to embrace Ethiopian soldiers as a good alternative. Ethiopia and Somalia have long been rivals, and went to war in the late 1970s over a land dispute. If the transitional government seems propped up by foreign invaders, it would lose whatever popular support it has now.

America squandered its influence in Somalia by supporting some particularly horrible warlords to challenge the Islamist radicals. But it still has considerable sway over Ethiopia.

Washington should use that influence to push for a swift cessation of hostilities, lest the conflict pull in neighboring countries and explode over the entire region. The resulting chaos would create a refugee crisis and open a new terrorist recruiting hub. The Islamists have threatened suicide attacks and called for help from foreign fighters in a "holy war" that has already drawn thousands of Muslim fighters from Eritrea, Yemen, Libya and Syria.

The United Nations is unhappy about the Ethiopian incursion, but it needs to demonstrate that it has a good alternative. The Security Council must meet urgently to find ways to replace Ethiopian troops with a neutral international force and keep the violence from spreading to other countries.

Rather than trying to marginalize the Islamic militias and the huge clan they represent, the international community should try to harness this moment to push for unity talks while the Islamists are weak and the transitional government has attained a more equal standing.

Saddam's death sentence exposes a rift - Opposition to execution builds in Europe, while U.S. is for it

Saddam's death sentence exposes a rift - Opposition to execution builds in Europe, while U.S. is for it
By Doreen Carvajal
Copyright by The International Herald Tribune
Published: December 28, 2006


PARIS: While Saddam Hussein faced death with a letter of farewell, the former Iraqi dictator's looming execution has exposed a deep divide between the United States and Europe, with opposition building in the Continent's major capitals.

Prime Minister Romano Prodi of Italy deplored the decision to execute Saddam, and Renato Martino, the cardinal who heads the Catholic Church's council for justice and peace, warned that "nobody can give death, not even the state." Opposition has also come from the governments of Britain, Denmark, France, Portugal, Spain and Germany.

But in most cases the criticism is qualified opposition directed at the morality of capital punishment rather than sympathy for Saddam or doubts about the fairness of his trial, an issue raised by groups like Human Rights Watch.

Saddam's chief lawyer on Thursday implored world leaders to prevent the United States from handing him over to the Iraqi authorities for execution, saying he should enjoy protection from his enemies as a "prisoner of war," The Associated Press reported from Baghdad.

"According to the international conventions, it is forbidden to hand a prisoner of war to his adversary," said the lawyer, Khalil al-Dulaimi.

Richard Dicker, director of the international justice program for Human Rights Watch, said he doubted that the opposition would create enough pressure to halt Saddam's sentence.

"I think that the imperative that has been driving the Iraqi leadership to execute Saddam is such that this train has left the station," said Dicker, who noted that the criticism of capital punishment was important "to take into account principled opposition to the death penalty regardless of the individual involved."

In Berlin, the German government rejected the death penalty, which is banned there and in the rest of the European Union. But Chancellor Angela Merkel's deputy spokesman, Thomas Steg, called a legal coming to terms with Iraq's past "necessary," saying that "there are no signs that both the trial and the appeal did not take place in accordance with the country's legal principles and rule of law."

In Italy, politicians from the center- right and left coalition found a rare issue for agreement and were almost unanimous in their opposition to the death sentence.

Marco Pannella, leader of Italy's Radical Party, offered Thursday to head to Baghdad to secure a pardon as he fasted on the third day of a hunger strike to protest the sentencing. A demonstration outside the Iraq Embassy in Rome is also being organized by the Green Party.

On Thursday, Prodi repeated his opposition to capital punishment after his year-end news conference, but denied a report that he intended to lead an international campaign against the sentence.

"The decision to condemn Saddam to death has in itself more risk of negative effects than positive for the stabilization of the country. I don't believe that the execution of Saddam will help even minimally the pacification of the country," said Prodi, who defeated Bush's close ally Silvio Berlusconi last April, and withdrew Italian troops from Iraq. "I don't believe that any solution of this type can resolve the questions of the Middle East."

The Vatican also generally opposes the death penalty, but in this case the church has not issued a formal statement about Saddam's sentence, and a church spokesman, the Reverend Federico Lombardi, said he did not expect one to be forthcoming.

"There are unfortunately many death penalty cases in the world, and the church has over time matured our position, which is in opposition to the death penalty, but it isn't like every time we will intervene," Lombardi said.

Not all of Europe shares the same doubts about capital punishment. In Eastern Europe, President Lech Kaczynski of Poland, who has sought to revive the death penalty in the European Union, has characterized Saddam's execution as the "only possible verdict."

And the Continent's citizens also appear to take a harsher view. In a survey of 12,570 people in six countries by the new French international broadcaster France 24 and Novartis/Harris Interactive, most participants favored the death sentence for Saddam. With the exception of Italians, participants from Britain, France, Germany and Spain supported the execution, as did those from the United States.

That position was strongest in Britain and the United States, where 82 percent of the Americans polled supported the penalty, followed by 69 percent of the British, 58 percent of the French, 53 percent of the Germans and 51 percent of the Spanish.

"I am a bit stupefied," Carla Del Ponte, the United Nations war crimes prosecutor, said on the France 24 program "The Talk of Paris," where the poll results were discussed last week. "I think this comes more out of a spirit of vengeance, as the death penalty is naturally the final word to every story."

Homelessness among U.S. gay youth an “epidemic”

Homelessness among U.S. gay youth an “epidemic”
Copyright by The Associated Press and Gay Chicago Magazine
December 26, 2006

NEW YORK, NY (AP) - When Angelika Santiago was 18 and changing her identity from male to female, her mother issued an ultimatum: Cut her hair and dress as a boy or leave their apartment.

Santiago left their Manhattan home and ended up in a shelter for lesbian, gay, bisexual and transgender, or LGBT, youths.

“She wanted me to be a boy, deny who I was inside,” Santiago recalled.

Santiago eventually gained her independence, landing a receptionist job and renting a room for $165 a week. But after losing the job and the room a few weeks ago, she found herself staying at another shelter.

Santiago, now 20, is part of an “epidemic” of homelessness among LGBT youth, according to a new report released by the National Gay and Lesbian Task Force and the National Coalition for the Homeless.

Up to 42 percent of the 575,000 to 1.6 million youths who are considered homeless or runaway are lesbian, gay or transgender, according to the report, “An Epidemic of Homelessness.”

In New York, no one knows how many homeless youths there are let alone how many of them are LGBT, city officials acknowledged. But the estimate is that there are 30,000 homeless youths, of whom 8,400 are LGBT.

“Now that we have a report that sadly documents how big a problem the issue of homelessness among young LGBT people is,” City Council Speaker Christine Quinn said, “it will make it much more difficult for government to ignore or walk away from that problem.”

Solutions mentioned at the announcement included increasing the number of shelter beds for LGBT young people and expanding services designed for them to help them become self-sufficient.

Quinn and Councilmen Lewis Fidler and Alan Gerson noted that $1.2 million of the $2.6 million set aside in the budget passed this year for beds for at-risk, runaway and homeless youth is for LGBT homeless youth services.

The budget also calls for $50,000 for an independent count and demographic breakdown of the city’s homeless youth population. That count will be conducted in the spring, city officials said.

More than a quarter of the LGBT youth who came out to their parents or guardians were kicked out, and once on the street they’re particularly vulnerable to mental health problems and diseases such as AIDS, said the report, which relies mostly on government statistics and existing studies on that population.

Nicholas Ray, an analyst who authored the report for the task force’s Policy Institute, said Danny, a gay homeless youth he met in Colorado, denied he was engaged in prostitution.

“He said, ‘I go to the library and get on (Internet gay sites) just to find a place to sleep for the night. Not for money. I’d sleep with them just so I had a place to stay,”’ Ray recalled.

In New York, there are three or four shelters specifically for homeless LGBT youth with a total of about 65 beds, and each often has a waiting list, said officials from those shelters, who attended the announcement.

Also, openly gay homeless youth often recount stories of being mistreated, harassed or turned away from other shelters, particularly faith-based ones, city and shelter officials said.

Santiago, who is living in another shelter, is looking for a job. She wants her own place eventually.

“This needs to stop,” Santiago said of homelessness among LGBT youth. “These kids cannot live like this, and they are kids. They can range from 12 and on, and it’s not fair, and it’s not right.”

Ideas for 2007 by Paul Varnell

Ideas for 2007 by Paul Varnel
Copyright by Paul Varnell and The Chicago Free Press

The coming year will provide an all-too-brief respite from all-too-many people’s focus on politics. We do not have to face threats from a GOP Congress, but we aren’t going to get much out of a Democratic Congress since they don’t want to give the GOP ammunition to attack them with in 2008.

Instead it is an opportunity for community building, for attention to promoting social acceptance of gays and heading off future assaults from the religious right. Here are some possibilities. If you don’t like these, create your own.

We need far stronger gay organizations at the state level. Because of America’s federal system, many gay issues are and even more can be determined at the state level—marriage, civil unions, child custody, adoption, non-discrimination, etc. For years the national organizations appealed for funds to fight the GOP hegemony in Congress, starving our state organizations. Now that that threat is absent, it is important to build up state advocacy organizations and community centers, providing for a staff and adequate technical support. This is particularly important in states with a strong conservative presence.

We need a small specialty think tank of gay-supportive theologians to issue counter-arguments when the Catholic bishops or other religious groups condemn gays, gay relationships or gay sex. The religious roundtable of the National Gay and Lesbian Task Force seems to limit itself to issuing feeble press releases praising this or condemning that, but it never offers sustained arguments against whatever conservative religious groups say. Over the years I have tried to respond to the Catholic bishops and other homophobic religious statements (in pieces now posted at the Independent Gay Forum), but I am a journalist, not a theologian, so I undoubtedly overlook many excellent arguments—and I am only one small voice.

We need a study of homelessness among gay adults. A new NGLTF study drew attention to the fact that a disproportionate percentage of homeless kids are gay. But we have little information on the proportion of gays among homeless adults. I was talking recently with a homeless man in his 30s. He said simply, “What about people like me?” I had no answer. I know of no studies of homelessness that indicate the proportion who are gay. Nor do I know what unique issues they face, nor where to suggest they go for help, nor how best to help them.

Many of us have urged gays to come out to more people. Let me be more specific: Come out especially to older friends and relatives. A larger percentage of older Americans vote than any other group. And older Americans are the most likely to be anti-gay. Born in the 1930s, 1940s and 1950s, they grew up when most gays were not open, so they may never have known a gay person when their social and cultural attitudes were formed. Since older Americans are living (and voting) longer, we need to try to remedy those formative impressions.

In states where it is most practical to advocate gay civil unions rather than marriage, we should start using a film clip of President Bush’s statement late in the 2004 campaign that if states want to offer civil unions for gays, “They should be able to do that.” What more effective propaganda could you offer to conservative voters than Bush’s own non-opposition? I do not understand why that clip hasn’t been used repeatedly.

Drop “queer.” The attempt to “reclaim” it has failed utterly. For most of us it sets our teeth on edge. Gabriel Rotello, a former publisher who once promoted “queer,” renounced it in an Advocate opinion piece titled “The Word That Failed.” (The literary allusion is obvious.) Some younger gays all full of youthful rebellion-without-responsibility adopted “queer” for a time, viewing it as “edgy” and “in your face.” But let me tell you, dear ones, gay liberty and equality are not going to be won by being self-indulgently “edgy” and “in your face.” You are just helping our opponents.

We need more heterosexuals to speak out for gay legal equality, but I have no idea how to go about making this happen. The Advocate recently featured comedian and talk show host Bill Maher, who regularly speaks out on behalf of gays, but can we somehow induce 10, 20, 100 people with a national reputation to take up our cause? Most prominent whites began supporting black civil rights only when the level of violence, intimidation, and denial of rights in the South was made crystal clear on television news shows. But how often is a gay-bashing broadcast? Or a child being yanked away from its lesbian mother or gay father? And how can you film a marriage ceremony that doesn’t happen?

Many of Paul Varnell’s previous columns are posted at the Independent Gay Forum (www.indegayforum.org). His e-mail address is pvarnell@aol.com.
Opinion

By Paul Varnell

Chicago Free Press Editorial - Seeking faith, constancy and hope

Chicago Free Press Editorial - Seeking faith, constancy and hope
Copyright by The Chicago Free Press
December 27, 2006

Last weekend seven congregations belonging to the Episcopal Church in the United States voted to leave that church body in order to express their stance against the ordination of gays and women.

It’s a feud that’s been simmering worldwide in recent years in the Anglican Communion, the global parent of the Episcopal Church. Some conservative Anglican churches don’t want women in the clergy and even more emphatically say they are opposed to having gays in the clergy.

That’s put those churches at odds with other Anglican churches in Canada and England and with many Episcopal churches in the United States. The diocese of New Hampshire even elected a gay bishop, Gene Robinson, a move that’s prompted some Anglican churches to cut off ties with the diocese and the U.S. church.

We don’t presume to argue theology with those who are put off by the ordination of women and gays, and we would fight to the end for their right to believe as they please.

But that doesn’t mean that we think they’re right, of course; in fact, we think it’s a sad state of affairs that people who are supposed to be trying to bring a message of faith, hope and charity to the world are instead espousing a message of bigotry and discrimination.

The churches that voted to split say they want to remain a part of the Anglican Communion by aligning themselves with the anti-gay bishop of Nigeria’s Anglican Church, Peter Akinola, who has openly sought to foment revolt among Episcopal churches in the U.S.

Akinola opposes both women and gays in the clergy. He not only opposes gays in the clergy, he opposes gays’ very existence, apparently.

As detailed in the news section of this issue of CFP, Nigeria is considering a law that would ban gays from meeting, from forming organizations, from even speaking out against their repression. Penalties for violating the new law would include execution.

The law is expected to pass because it has powerful supporters in Nigeria, and one of its most powerful backers is Bishop Akinola. This is the man that some American Episcopalians want to follow, emulate and hold up as a model of God’s righteousness.

What they are saying, these people who would align themselves with Bishop Akinola, is that God has a hierarchy—that God believes women and gay people are inferior to heterosexual men when it comes to their ability to express the Godliness of creation and faith.

Heaven help us—how far is that, really, from saying that God believes blacks are inferior human beings who aren’t qualified to represent him to the faithful?

It’s a relevant question. After all, among the churches that voted to split in Virginia are two of the denomination’s most historic congregations, including George Washington’s church. Those churches, and many other Episcopal churches in the South and in the North, once held that blacks were indeed inferior and that it was therefore OK for white men to own them. Their catechism once included a passage telling slaves that God’s command to “love your neighbor as yourself” meant obeying everyone “who has control over me” and to “do as they bid me.”

Bigotry is a singular road, and these churches are free to choose it. But they should do so with their eyes wide open as to where it leads, who they are following and where those leaders would take them. It’s most decidedly not a place of faith, hope and charity.
Editorial

International Herald Tribune Editorial - Meat and the planet

International Herald Tribune Editorial - Meat and the planet
Copyright by The International Herald Tribune
Published: December 27, 2006


When you think about the growth of human population over the last century or so, it is all too easy to imagine it merely as an increase in the number of humans. But as we multiply, so do all the things associated with us, including our livestock. At present, there are about 1.5 billion cattle and domestic buffalo and about 1.7 billion sheep and goats. With pigs and poultry, they form a critical part of our enormous biological footprint upon this planet.

Just how enormous was not really apparent until the publication of a new report, called "Livestock's Long Shadow," by the Food and Agriculture Organization of the United Nations.

Consider these numbers. Global livestock grazing and feed production use "30 percent of the land surface of the planet." Livestock — which consume more food than they yield — also compete directly with humans for water. And the drive to expand grazing land destroys more biologically sensitive terrain, rain forests especially, than anything else.

But what is even more striking, and alarming, is that livestock are responsible for about 18 percent of the global warming effect, more than transportation's contribution. The culprits are methane — the natural result of bovine digestion — and the nitrogen emitted by manure. Deforestation of grazing land adds to the effect.

There are no easy trade-offs when it comes to global warming, and the human passion for meat is certainly not about to end anytime soon. As "Livestock's Long Shadow" makes clear, our health and the health of the planet depend on pushing livestock production in more sustainable directions.

International Herald Tribune Editorial - A test for U.S. lawmakers

International Herald Tribune Editorial - A test for U.S. lawmakers
Copyright by The International Herald Tribune
Published: December 27, 2006


Thanks to America's 2001 tax cut law, over the next four years the U.S. government will forgo $30 billion so America's wealthiest taxpayers can claim bigger write-offs for expenses like dependents and mortgage interest. One-third of those tax cuts kicked in this year, with the rest scheduled to take effect in 2008 and 2010. By then, most of the advantage will go to the top 0.3 percent of Americans — those making more than $1 million a year — who have until now been required to limit the amounts they are allowed to claim for things like the spousal exemption or the mortgage costs on a vacation home.

Over roughly the same period, the government is looking at a $14 billion shortfall in its share of financing for a crucial federal-state program that provides health insurance to poor children, the so-called Schip, or State Children's Health Insurance Program. Without full financing, 1.5 million children will be cut from the program or underserved.

Depriving children of adequate health care while giving the rich tax benefits that were intended for average Americans is flat-out wrong. The new Democrat-controlled Congress must move quickly to prevent that. When it convenes in the new year, Congress should pass a law to freeze the tax write-offs at 2007 levels. That will not cause taxes to rise. But it would free up the money needed for children's health insurance.

It would also be an early sign that the new Congress is more in touch with current economic reality than its Republican-led predecessor. When the bolstered write-offs were enacted in 2001 the United States was still flush with the Clinton-era budget surpluses. And while we never supported the notion that tax cuts for the rich were an appropriate way to use the surplus, those championing the cuts could at least make the argument (quickly proved wrong) that America could afford it.

Since then, the budget surpluses have disappeared, America has gone to war, government services have been cut deeply and the percentage of uninsured children has started to rise again, after declining in every year since 1998. The children urgently need to win this one, and only the new Congress can help them.

U.A.E. to sell dollars for euros

U.A.E. to sell dollars for euros
By Matthew Brown
Copyright by Bloomberg News
Published: December 27, 2006

ABU DHABI: The United Arab Emirates plans to convert 8 percent of its foreign-exchange reserves to euros from dollars before September, the latest sign of growing global disaffection with the weakening U.S. currency.

The U.A.E. has started, "in a limited way," to sell part of its dollar reserves, the governor of the country's central bank, Sultan Bin Nasser al-Suwaidi, said in an interview. "We will accumulate euros each time the market appears to dip" as part of a plan to expand the country's holding of euros to 10 percent of the total from the current 2 percent.

The Gulf state is among oil producers, including Iran, Venezuela and Indonesia, looking to shift their currency reserves into euros or sell their oil, which is now priced in dollars, for euros. The total value of the reserves held by the U.A.E. is $24.9 billion, Suwaidi said.

The dollar has fallen more than 10 percent this year against the euro.

Part of the reason for the decline is the outlook for slower U.S. growth, which makes the dollar a less attractive investment.

But fears that the dollar's level is unsustainable because of the heavy indebtedness of the United States to other countries is also behind the weakness this year, analysts said.

The shift to euros underscores its growing role as a reserve currency nearly eight years after its establishment. Central banks often keep the details about their currency holdings a secret.

The move by the U.A.E. central bank "is hard evidence that diversification is happening," said Shaun Osborne, chief currency strategist at TD Securities in Toronto. "This is negative for the dollar in a broad sense as it reflects falling confidence in the currency."

Central banks in Russia, Switzerland and New Zealand are also diversifying away from the dollar and into yen after the Japanese currency reached a 10- month low against its biggest trading partners in October.

Gulf Arab energy producers will earn as much as $500 billion from oil sales this year, the International Monetary Fund forecasts. The region's central bank reserves represent a fraction of the currency holdings of state-owned investment firms like the Abu Dhabi Investment Authority, which is estimated to have more than $500 billion under management.

But the signal that such a move sends to financial markets is a negative one.

"It is a recognition of the vulnerability of the dollar over the coming year," Simon Williams, an economist with HSBC Holdings, said by phone from Dubai.

The euro rose to $1.3123 from $1.3098 after Suwaidi's comments were published Wednesday.

"This is not confined to the U.A.E. There's a general awareness across the Gulf of the benefits of diversifying currency holdings," Williams said.

The U.S. current account deficit widened to $225.6 billion in the third quarter. Oil producers in the Middle East and Central Asia will run a surplus of $322 billion for all of 2006, according to the International Monetary Fund.

Total foreign holdings of U.S. Treasury securities — which generally support the dollar — increased to a record $2.16 trillion in September, just under half of the $4.34 trillion outstanding.

Harsh treatment

Harsh treatment
By Daniel Wolfe
Copyright by The International Herald Tribune
Published: December 27, 2006


NEW YORK: On Dec. 8, 43 HIV-positive women were killed by a fire in a locked Moscow hospital ward, where they were supposedly being treated for drug addiction. Two nurses also perished. Until governments in Asia and the former Soviet Union stop punishing drug users in the name of treatment, such tragedies are bound to be repeated, and efforts to control both addiction and AIDS will continue to fall tragically short.

In Russia, the locked ward is a legacy of the Soviet era, where medical specialists (or "narcologists") subjected alcoholics and drug addicts to hypnosis, aversion therapy and, when deemed necessary, forced labor.

State power to enact compulsory treatment largely collapsed with the Soviet Union, but in many former Soviet republics the bars on the windows and fire escapes of drug treatment facilities remain in place. So does the attitude that drug users are best treated like drugs — as something to be controlled and contained for the good of society.

Many Russian narcologists offer drug users little more than extreme sedation to mitigate withdrawal from heroin. Drug users' names are added to government registries. Psychological support is minimal or nonexistent. Prescription of the oral medications most effective in reducing heroin injection and HIV risk, such as methadone or buprenorphine, is illegal.

China, spurred by the spread of HIV among injecting drug users, has won well-deserved praise for new programs prescribing methadone to heroin addicts. Less attention, however, has been given to the fact that most Chinese methadone patients receive medication only after spending two terms in compulsory detoxification centers run by the Public Security Bureau, where they are offered such measures as 12 hours of daily, unpaid labor, therapy with electric shocks, and sessions where they chant such slogans as "drugs are bad, I am bad."

In Southeast Asia, drug users are also forced into overcrowded facilities where conditions more closely resemble prisons than treatment centers. Some 35,000 Vietnamese are now detained in rehabilitation centers in Ho Chi Minh City alone.

In Malaysia, an estimated 5,000 drug users are in compulsory rehabilitation centers where they are subjected to boot-camp style drills, and locked at night into barred cells where as many as 40 patients sleep on the floor.

Experts estimate that from 90 percent to 100 percent of drug users subjected to coercive internment in the former Soviet Union and Southeast Asia return to illicit drug use. Bizarrely, this finding has sparked some governments to increase the length of internment rather than to re-examine their approach. In Ho Chi Minh City, detention reportedly can last four years or more.

The cost of these failed approaches can be measured not only in terms of unchecked drug dependence, but also in new HIV infections. In China, Russia, Malaysia and Vietnam, the largest share of all HIV cases are due to injecting drug use.

Outside Africa, the UN now estimates, nearly one in three infections is the result of contaminated needles. For the hundreds of thousands of drug users who are HIV-positive and unlucky enough to find themselves in punitive clinical settings, the problem of ineffective drug treatment is usually compounded by the absence of any HIV treatment at all. Sterile syringes and condoms are also unavailable, even though reports of drug use and sex in compulsory treatment settings are common.

The tragedy in Russia should move national governments and the United Nations to increase monitoring of what for too long has passed for drug treatment, and to speak out against abuses committed in the name of health. Otherwise, we leave millions of drug users in Asia and the former Soviet Union like those young, HIV-positive women: trapped, screaming and with no one to help.

Daniel Wolfe is deputy director of the International Harm Reduction Development Program of the Open Society Institute.

International Herald Tribune Editorial - America, the exam

International Herald Tribune Editorial - America, the exam
Copyright by The International Herald Tribune
Published: December 26, 2006


Name one famous battle from the Revolutionary War. Name one of the major American Indian tribes in the United States. Name one of the things that Abraham Lincoln did.

If you can answer these questions, you may be qualified to become an American citizen. If you can't, you may be one already.

This is one of the oddities exposed by an effort to overhaul the naturalization exam. The U.S. Citizenship and Immigration Services wants to make the test more meaningful at a time when the civics knowledge of native- born Americans is dismal. The aim is to encourage applicants not to memorize trivia, like the colors and number of stripes on the flag, but to understand the basic history and core principles of American democracy.

That goal is sensible, though not everybody is happy about it. Immigrant advocacy groups fear that the new test will be too hard, requiring a competency in English out of the reach of many new arrivals. Some advocates have complained that the cities chosen at random for the experiment are unrepresentative of the immigrant population. The agency somehow missed New York City and all of California, which is ample reason for Asians, especially, to feel left out of the process.

Immigrants are famously rich in gumption; they need it to handle what the bureaucracy throws at them. But if they make it, they will have a credible claim to knowing a lot more about America's history and laws than the average man and woman in the street.

With that in mind, Americans may want to start boning up. Here are the agency's suggested answers for the sample questions above.

1) Lexington and Concord, Trenton, Princeton, Saratoga, Cowpens, Yorktown, Bunker Hill.

2) A partial list: Cherokee, Seminole, Creek, Choctaw, Iroquois, Shawnee, Mohegan, Chippewa, Huron, Oneida, Sioux, Cheyenne, Lakota, Crow, Blackfoot, Teton, Navajo, Apache, Pueblo, Hopi, Inuit.

3) Saved the union; freed the slaves; led the United States during the Civil War.

International Herald Tribune Editorial - A real-world army

International Herald Tribune Editorial - A real-world army
Copyright by The International Herald Tribune
Published: December 26, 2006


Military reality finally broke through the Bush administration's ideological wall last week, with President George W. Bush publicly acknowledging the need to increase the size of the overstretched U.S. Army and Marine Corps.

Larger ground forces are an absolute necessity for the sort of battles America is likely to fight during the coming decades: extended clashes with ground-based insurgents rather than high-technology shootouts with rival superpowers. Bush's belated recognition is welcome, though it comes only after significant damage has been done to the army's morale, recruitment standards and fighting readiness. Given the time required to recruit and train the additional troops, the proposed increase will not make much difference in Iraq's current battles. But over time it will help make America more secure and better prepared to meet future crises.

The need for more troops has for some time been obvious to Americans. They have heard from neighbors or from news reports of tours of duty involuntarily extended, second and even third deployments to Iraq, lowered recruiting standards and members of the National Guard and Reserves vowing to get out. That is the inevitable consequence of trying to squeeze out an additional 160,000 soldiers for Iraq and Afghanistan year after year without significantly increasing overall ground forces.

But it took the departure of Donald Rumsfeld — the author of the failed Iraq policy and the doctrine of going to war with less than the army America needed — for Bush finally to accept this reality.

When the 21st century began, Pentagon planners expected that American forces could essentially coast unchallenged for a few decades, relying on superior air and sea power, while preparing for possible future military competition with an increasingly powerful China. That meant investing in the air force and navy, not the army and Marines.

Then 9/11 changed everything, except the Pentagon mind-set. During the Rumsfeld years, reality was subordinated to a dogma of "transformation," which declared that with a little more technology, the army could do a lot more fighting with fewer soldiers than its senior generals believed necessary.

Every year since 2001 has brought increased demands on America's slimmed-down and dollar-starved ground forces, while billions continued to flow into sustaining the oversized and underused air force and navy, and modernizing their state-of- the-art equipment. As a result, the overall Pentagon budget is larger than it needs to be, while the part going to overtaxed ground forces is too small.

Increasing those ground forces will cost roughly $1.5 billion a year for every 10,000 troops added, as well as tens of billions in one-time recruitment and equipment expenses. But America can afford it and it can be done without any significant increase in the annual military budget.

Over time, bigger ground forces will mean more sustainable troop rotations, fewer overseas deployments of the National Guard and better battlefield ratios of American to enemy fighters. That is the least America owes to the men and women who risk their lives to keep us all more

A market in need of a push - Home buyers and sellers must break stalemate for sector to move beyond post-boom doldrums

A market in need of a push - Home buyers and sellers must break stalemate for sector to move beyond post-boom doldrums
By Mary Umberger, Tribune staff reporter. Tribune wire services contributed to this report
Copyright © 2006, Chicago Tribune
Published December 27, 2006

The housing market isn't dead, it's stuck.

There's a standoff between home buyers and sellers, and the health of the 2007 housing market may depend on who blinks first.

That's according to Chicago-area consumers, real estate agents and analysts who are scratching their heads about how to move housing out of the post-boom doldrums in 2007.

"This situation is unknown to me, and I've been doing this for 26 years," said Stephen Baird, chief executive of Baird & Warner Real Estate in Chicago. "The market is irrational right now."

He's not talking about the so-called irrational exuberance of the long-running real estate boom, which drove prices up nationally by 24 percent in the past three years and began to wind down in fall 2005.

He and others say it's more of an irrational resoluteness, with buyers and sellers staring each other down: Sellers are clinging adamantly to too-high prices, and buyers are equally adamant about getting a bargain.

As that impasse has formed, home sales have hit the brakes.

October home sales in Illinois were down 9.7 percent a year earlier, and when November data are released Thursday, few expect improvement.

The housing thud seems to transcend the usual holiday-period slowdown, analysts say.

Fitch Ratings, for example, recently said housing is in a fairly severe, multiyear contraction--one that isn't based, as previous slowdowns have been, on rising interest rates and a sharply slowing economy. It's being driven by perceptions, the Fitch analysts said.

"A negative buyer psychology seems to have become pervasive," Fitch reported this month. "The expectation or fear is that home prices have peaked and buying now would be a mistake."

Frustrated condo seller David Waters said he buys that.

"I suppose part of it is people are waiting to see if prices drop even further," said Waters, who, with his wife, Joette, has been trying to sell his Edgewater two-bedroom unit since August, without a single offer despite several price reductions and incentive offers.

"Because experts were predicting [the market slowdown], things tended to snowball," Waters said. "People bought into the fear that it's going to be a tough sell. When people start believing it, it makes it real."

Waters, like many others, is banking on housing getting a second wind after the new year. He's weary after five months of marketing the condo, which he thought would have broad market appeal because it overlooks Lake Michigan.

And he may be right. The National Association of Realtors recently announced that "most of the correction in home prices is behind us," and declared that wary buyers were starting to come off the sidelines and would push home sales to livelier levels in the first quarter of 2007.

Others see that as wishful thinking.

"I'm more of a second-quarter, third-quarter guy," said James M. Merrion, regional director of Re/Max Northern Illinois.

"The NAR is a little too optimistic," Merrion said. "We've had too strong a market. When you've had prices go up in Illinois as much as they have in the past five years, people's salaries haven't increased that fast. I think we need to see some price moderation [brought on as sellers lower their prices] in order to get back to a healthy market."

Some aren't expecting many blue skies at all in 2007.

"I think it could take 18 months for the market to normalize," said Naperville real estate agent Eileen Landau, who said the bloated inventory of homes must clear before the market will regain momentum.

That inventory picture may be improving, at least for now.

A survey by ZipRealty found that the number of homes for sale in many cities declined between October and the end of November. The company reported that inventories in the Chicago area in that period fell about 6 percent.

One year ago, about 28,000 single-family homes were listed for sale in the greater Chicago area, a 3.7-month supply, according to Alvin Wagner, president of the Headrick-Wagner Appraisal Group in Naperville. By the end of September, houses for sale had swollen to about 48,000, a 6.8-month supply, he said.

By mid-November, the number had ebbed to about 43,000, or a 6.5-month supply, Wagner said.

Several Chicago real estate experts said they saw a surprising uptick in activity around Thanksgiving, typically a very quiet time.

"We found the post-Thanksgiving market a little stronger than expected," said Merrion. "It is odd. We think it's people getting used to rates and prices."

Or maybe sellers are just giving up for a while.

"I went to show two homes the other day and found they had taken them off" the market, said Coldwell Banker agent Karrie Lange, who said she suspects frustrated sellers are taking a break during the holidays and will be back early next year.

If so, inventory will swell again, as old sellers replant their for-sale signs alongside the new listings that inevitably show up as the traditionally active "spring" market gets under way in January.

Which would bring the market back to the blinking point. Most of the betting is on sellers budging first by cutting prices.

"Sellers are in denial," said Lange, based in La Grange. "I don't think they realize how much inventory is out there. If the buyer doesn't think a house is a value, he will skip it."

But others say it's not necessarily greed causing sellers to stick to their guns; many sellers who bought at or near the top of the market can't afford to bend much.

Area real estate agents said that when sellers do hit the sweet spot on pricing, homes go relatively quickly.

Early in December, Mohammad Mahmood bought a home in southwest suburban Shorewood--after losing out on several other homes because eager buyers had rushed in with higher offers. He had been expecting to bag a bargain, and easily.

"I thought this was a buyer's market, that I would be the one who is deciding the deal," said Mahmood, a Chicago accountant. "It wasn't the case, and trust me, I am a hard bargainer. I don't give in that easily."

Mahmood said he was surprised that the houses that interested him were selling within 1 to 2 points of their asking prices.

But Naperville agent Landau said such numbers, the "list-to-sell ratio," may not paint a true picture of pricing strength in the marketplace.

"Right now, the majority of properties in Naperville, for example, are selling at 96 percent of list price. But that's not accurate because the list-to-sell is based on the latest price," and ferreting out the original asking prices would tell a different story, she said.

And the numbers don't account for the significant amount of houses that aren't selling.

Price predictions for next year vary widely. David Lereah, chief economist for the NAR, predicted that by late 2007, prices will be 1 percent higher than current levels.

That, too, is viewed as optimistic by some. Moody's Economy.com, for example, predicts that the national median price for existing homes will decline 3.6 percent next year, the first full-year decline in U.S. home sales since the Depression.

----------

mumberger@tribune.com

- - -

Predictions include gradual increase, stabilization



Whether the housing glass is half empty or refilling itself is a matter of broad conjecture. A sampling of recent predictions for U.S. residential real estate in 2007 shows:

-The National Association of Realtors expects existing-home sales to rise gradually in 2007 from current levels to a pace that's on par with this year, according to its mid-December forecast.

David Lereah, its chief economist, said the upturn would play out at different speeds around the U.S. "Roughly three-quarters of the country will experience a sluggish expansion in 2007, while the other areas should continue to contract for at least part of the year.

"General gains in value next year will be modest, by historical standards," he said.

-The association expects 2006 new-home sales to drop 17.7 percent, to about 1 million, before sliding an additional 9.4 percent next year, to 957,000.

-The most intense phase of the housing downturn has passed, but the correction isn't complete, according to a forecast from the Securities Industry and Financial Markets Association.

"With home building and permit volumes below sales levels, the market is beginning to clear, although price weakness may continue based on buyer and home builder caution," the group predicts. "The downturn should end within six to 12 months."

The association predicts total housing sales of 7.2 million next year, down from 7.6 million in 2006 and 8.4 million in 2005. Thirty-year fixed-rate mortgages will rise to 6.5 percent by the end of next year, the group said.

-The market correction is about two-thirds complete, and housing should stabilize by the middle of 2007, according to Frank Nothaft, chief economist for Freddie Mac.

"We expect house prices, like housing starts and sales, to trough in the fourth quarter [of 2006], with prices appreciating 3.4 percent in the first half of 2007," Nothaft said in a December forecast.

He predicted existing-home sales would average 6.74 million units in 2006, down 10 percent from the year before. Existing-home sales in 2007 would average 6.22 million, he said.

"While residential investment will almost certainly decline further in the first half of next year, the magnitude of the drag on overall economic expansion should diminish," according to the Mortgage Bankers Association.

"Some encouraging signs already have begun to appear in the housing picture," Doug Duncan, its chief economist, said in a mid-December commentary. "Total single-family-home sales, for example, have remained roughly unchanged over the past four months, and applications for loans to purchase homes, a useful indicator of future home sales, have picked up in recent weeks.

"Our forecast, while revising down expected growth this quarter and next, still anticipates a return to trend-like growth by the second quarter of next year."

-What happens in housing stays in housing and isn't enough to trigger a national recession, according to Edward Leamer, director of the UCLA Anderson Forecast.

"The decline in the housing sector is contributing to job loss in the construction sector, but there are no significant losses to be found on the manufacturing horizon," Leamer said in a December report. "Without the accompanying decline in manufacturing jobs, the losses in construction will not be enough to cause a recession.

"If you are a builder or a broker, it will feel like a deep depression," Leamer predicted, "but the rest of us will hardly notice."

--Mary Umberger

U.S. economy runs too hot and too cold - Is recession or inflation a bigger risk?

U.S. economy runs too hot and too cold - Is recession or inflation a bigger risk?
By Eduardo Porter
Copyright by The International Herald Tribune
Published: December 26, 2006


NEW YORK: Economists have long waxed lyrical about a "Goldilocks economy" — one that is not too hot, not too cold.

In this ideal world, the U.S. economy is running so smoothly that there is little risk of it overheating and pushing inflation higher — something that would force the Federal Reserve to raise interest rates. Nor is the job market weakening, threatening to plunge the economy into the icy bath of a recession.

The "just right" economy is not often achieved, of course, but lately this bedtime story has taken a particularly tricky turn: it is both too hot and too cold.

The U.S. housing market has fallen into a deep freeze; so has the auto industry. Yet on several other fronts, including commercial construction and high-end consumer spending, economic activity appears to be sizzling.

Lombard Street Research, a British economic forecasting firm, recently called the American economy the "anti- Goldilocks economy."

That is making it challenging for both economists and the Fed to decide which risk is greater: that housing will drag down the rest of the economy, pushing the Fed to cut rates, or that inflation will remain above the Fed's comfort zone, forcing it to push up rates instead.

But others say that next year, hot and cold could end up canceling each other out, turning the economy balmy.

For now, though, with home construction entering its second year of a downturn, many economists have aggressively pared back their forecasts for growth in 2007. Some have even started to utter the "R word."

"We've increased the probability of a recession in our forecast to 35 percent," said David Berson, chief economist of Fannie Mae, the leading U.S. source for home mortgage financing.

On the other hand, Charles Dumas, who follows the American economy for Lombard in London, ticked off a list of countervailing forces, from high employment and income growth to robust business investment. "None of that speaks of a slowdown," he said.

The economy looks very different depending on whether you are inside or outside the housing market.

Consider Andrew Palau, who runs Premier Homes & Additions in River Edge, New Jersey. Business has dried up as the slump in the housing market has reduced demand for new master bathrooms and refurbished kitchens.

"Homeowners don't have a clear view in front of them, so they are not investing, because they want to hold on to the money," Palau said.

He managed to hold on to his staff of 10 this year, but he said he probably would have to let some people go next year. "Everything is telling me that next year will be worse," he said.

Virtually every home builder in the United States shares Palau's concern. Yet a look just outside the border of the housing-linked economy provides a starkly different view.

"Our market is as close to capacity as you can get," said Michael Bolen, chairman and chief executive of McCarthy Building in St. Louis, Missouri, a commercial builder of properties ranging from schools and hospitals to casinos and parking lots.

To hear Bolen speak, the job market has the go-go feel of the Internet-driven boom of the late 1990s. "It's as goofy as it's ever been," he said. "We're offering signing bonuses and guaranteed locations to people coming straight out of school."

Bolen said McCarthy expected to increase its hourly work force of 1,800 by 10 percent to 15 percent when the construction season picked up in the spring. This off-kilter performance has allowed for an unusually wide difference of views on the economic outlook for next year.

Ian Shepherdson, chief economist at High Frequency Economics in Valhalla, New York, expects the economy to virtually stall at somewhere between zero and 1 percent growth in 2007. He predicts the Fed will lower its benchmark short- term interest rate to 3.75 percent by the end of the year from 5.25 percent now.

A majority of traders anticipate that the Fed will cut rates next year, starting in the summer, though not by quite so much. According to the market for interest rates futures, the Fed is expected to lower its benchmark rate to 4.75 percent by the end of 2007.

Yet for all the economists taking their cue from Palau's bleak outlook, others look to McCarthy's booming business.

Bruce Kasman, chief economist at J.P. Morgan, forecasts the economy will grow a healthy 3 percent in 2007. Rather than cutting interest rates, the Fed may well have to raise them again to quell inflationary pressures, he said. "The rates market is pricing in weak growth and Fed easing," Kasman said. "If our view is right, there will be a correction."

Economists were taken by surprise by the speed at which the housing market changed from a surging bubble to a sinking stone. Today, there are some signs that the worst has passed: mortgage applications seem to be bottoming out, for instance.

But the number of permits issued to build new houses fell for the 10th straight month in November, and they are down about a third since November of last year. Residential investment plummeted in the second and third quarters of this year.

Employment in construction has fallen; so has the production of construction materials and other items related to housing. In the third quarter, the slowdown in home building subtracted more than a full percentage point from economic growth.

But for all the damage done by the deflating housing balloon, it has so far been narrowly circumscribed.

Today, virtually every economist agrees that the housing recession is likely to continue weighing on economic growth. But the consensus breaks up over how bad that damage will be.

The biggest disagreement is over how intensely the housing recession will ricochet through the rest of the economy and how it will affect consumer spending, which accounts for more than 70 percent of U.S. economic activity.

"I find it very hard to believe that what started in housing ends in housing," said Jan Hatzius, chief U.S. economist at Goldman Sachs, "that you are not going to get any spillovers from a major recession in a sector that accounts for 6 percent of the economy."

U.S. holiday sales rise 3%

U.S. holiday retail sales rose 3 percent from 2005 as a slowing housing market and higher energy costs cut into spending, Bloomberg News reported Tuesday from New York, citing a report from MasterCard Advisors.

The gain was less than the 5.2 percent increase in 2005 and the smallest growth since the survey started in 2003, MasterCard Advisors said. Electronics and luxury goods had the strongest sales, according to a company survey.

Holiday sales slowed this year because of higher interest rates and gasoline and heating fuel prices, said Michael McNamara, vice president for research at MasterCard Advisors. Warmer than normal weather in some regions of the United States hurt apparel sales, he said

Daley mayoral bid challenged - On last day to file disputes, opponent questions petitions

Daley mayoral bid challenged - On last day to file disputes, opponent questions petitions
By Mickey Ciokajlo
Copyright © 2006, Chicago Tribune
Published December 27, 2006

Supporters of mayoral challenger William "Dock" Walls filed objections Tuesday to the nominating petitions of Mayor Richard Daley, the first time since Daley became mayor that his petitions have been called into question.

Daley's campaign said it is confident in the validity of its petitions. But Walls said his supporters found a number of problems with the mayor's petitions, including the names of people not registered to vote and evidence of forgery.

"In most instances, you find that most of these people who are purported to be signers on these petitions were not even registered voters in the city of Chicago," Walls said.

In a statement, Daley's campaign manager, Terry Peterson, said, "We are confident that our signatures will withstand any challenge."

Tuesday was the deadline for filing challenges against the petitions for candidates running in the Feb. 27 election for mayor, city clerk, city treasurer and alderman.

A team of 18 hearing officers--private attorneys retained by the elections board--will review the challenges and make recommendations to the Chicago Board of Election Commissioners. Where the validity of signatures is called into question, voter rolls may be reviewed and handwriting experts asked to testify. The board's decisions can be appealed to Cook County Circuit Court.

Mayoral candidates must file a minimum of 12,500 signatures of registered voters. Daley's campaign said it filed more than 24,000, which was far fewer than in past elections.

Walls said his supporters also filed challenges against candidates Syron Smith and Ziff Anthony Sistrunk for not providing enough signatures. But Walls said he did not challenge Dorothy Brown, the other major candidate in the race against Daley, because he and Brown agreed to leave each other's petitions alone. Walls' petitions were not challenged.

Paul Davis, Brown's campaign manager, said they decided not to file objections although their reviewers found problems with each candidate's petitions.

"We thought that it was in the better interest of our campaign that we focus on the issues ahead," Davis said. "We felt that in the long run that the distraction of a long, protracted fight ... could take away from the focus of our campaign."

Daley's petitions were challenged when he ran for mayor in 1989, but he survived and won the election. No one has challenged his petitions since.

In the other two citywide races, challenges were filed against four of the seven candidates for city clerk and a challenge was filed against Elida Cruz, the sole opponent running against newly installed City Treasurer Stephanie Neely.

In some instances, two or more challenges were filed against a candidate. In the aldermanic races, 192 objections were filed against 141 candidates.

Two hundred and forty-five candidates have filed for the 50 seats on the City Council, a job that will pay $100,971 when the new term begins in May.

Some incumbent aldermen also had their petitions challenged, including Richard Mell (33rd), Carrie Austin (34th) and Daniel Solis (25th).

----------

mciokajlo@tribune.com

In drug war, a surge in heroin - Afghan bumper crop is blamed for rise in high-quality narcotic hitting U.S. streets

In drug war, a surge in heroin - Afghan bumper crop is blamed for rise in high-quality narcotic hitting U.S. streets
By Garrett Therolf
Copyright © 2006, Chicago Tribune
Published December 27, 2006

LOS ANGELES -- The amount of high-quality heroin in America is surging because of an increasing supply from Afghanistan, and with it the fear that record-breaking poppy harvests after the U.S.-led invasion are fueling more addictions and overdose deaths back home.

According to a Drug Enforcement Administration report, Afghanistan's poppy fields have become the fastest-growing source of heroin in the United States. Its share of the U.S. market doubled from 7 percent in 2001, the year U.S.-led forces overthrew the Taliban regime, to 14 percent in 2004, the latest year studied.

Another DEA report, released in October, said the amount could be significantly higher than 14 percent.

Not only is more heroin being produced from Afghan poppies coming into the United States, it is also the purest in the world, according to the DEA's National Drug Intelligence Center.

Despite the agency's reports, a DEA spokesman denied that increased quantities of heroin were reaching the United States from Afghanistan.

"We are not seeing a nationwide spike in Afghanistan-based heroin," Garrison Courtney wrote in an e-mail to the Los Angeles Times.

Courtney said in an interview that the report that showed the growth of Afghanistan's U.S. market share was one of many sources the agency used to evaluate drug trends. He refused to provide a copy of DEA reports that could provide an explanation.

The agency declined to give the Times the report on the doubling of Afghan heroin into the U.S. A copy was provided by the office of Sen. Dianne Feinstein (D-Calif.).

The impact is being felt in Feinstein's home state. Heroin-related deaths in Los Angeles County soared from 137 in 2002 to 282 in 2004 before dropping to 239 in 2005, still a jump of nearly 75 percent in three years, a period when other factors contributing to overdose deaths remained unchanged, experts said.

The jump in deaths was especially prevalent among users older than 40, who lack the resilience to recover from an overdose of unexpectedly strong heroin, according to a study by the county's Office of Health Assessment and Epidemiology.

"The rise of heroin from Afghanistan is our biggest rising threat in the fight against narcotics," said Orange County sheriff's spokesman Jim Amormino.

The potent Afghan heroin has prompted warnings from some officials who deal with addicts that they reduce the amount of the drug they use. Many addicts seeking the most euphoric high employ a dangerous calculation to gauge how much of the drug they can consume without overdosing. An unexpectedly powerful bundle of heroin, therefore, can be deadly.

"I tell people, `If you're using it, only use half or three-quarters of what you used to,' because of the higher potency," said Orlando Ward, director of public affairs at the Midnight Mission on Los Angeles' Skid Row.

Health workers in rehab centers and health clinics say increasing numbers of clients are addicted to more powerful heroin.

"My patients say it's more available and cheaper," said Dr. Michael Lowenstein at the Waismann Method detoxification center in Beverly Hills.

From 1980 to 1985, Afghan heroin dominated the U.S. market, with a 47 percent to 54 percent share, according to the DEA. Afghanistan's share dwindled to 6 percent for much of the 1990s, as competition from Southeast Asia and Colombia grew. Meanwhile, the Taliban was cracking down as it gained territory, and virtually eliminating poppy production after taking over Afghanistan.

Once the fundamentalist Islamic government was overthrown in 2001 with the help of U.S. forces, Afghans turned again to the poppy trade.

A Nov. 28 report by the World Bank said U.S. and European efforts to end Afghanistan's $2.3 billion opium business were failing.

The production of opium used for heroin reached its highest level ever in Afghanistan this year. It accounted for more than one-third of Afghanistan's gross domestic product and 90 percent of the world's supply of illicit opium, mainly supplying Asia and Europe, according to the report.

- - -

Chicago avoids potent product

While Afghan heroin is having an increasing effect in the United States, police have found almost none of it is sold in Chicago.

Most of the heroin in Chicago comes in a light brown powder form produced in Colombia and Mexico. It is trafficked to Chicago by cartels in Mexico, especially through the state of Durango.

Although most Afghanistan's heroin in the U.S. is moved through Mexican channels as well, the illicit drug is dealt mostly west of the Mississippi River, said a member of the Chicago Police Department's heroin task force, who asked not to be identified.

-- David Heinzmann

ACROSS THE NATION - Audits: AIDS funds accountability lacking

ACROSS THE NATION - Audits: AIDS funds accountability lacking
Copyright © 2006, Chicago Tribune
Published December 26, 2006

WASHINGTON, D.C. -- President Bush's ambitious AIDS-fighting program in poor countries has pushed so hard for fast results that basic record-keeping often went by the wayside, making it hard to judge the true success, according to government audits and officials.

Investigators have found that the 3-year-old, $15-billion program has overcounted and undercounted thousands of patients it helped, or was unable to verify claims of success.

The Bush administration says it has worked to fix the problems that were outlined in several audits reviewed by The Associated Press.

Gay marriage industry booms - Same-sex ceremonies are fueling a growing gay-friendly wedding business

Gay marriage industry booms - Same-sex ceremonies are fueling a growing gay-friendly wedding business
By Dionne Walker
Copyright © 2006, Chicago Tribune and The Associated Press
Published December 26, 2006

RICHMOND, Va. -- He's no celebrity, but when Phillip McKee III tied the knot in September, he did it with all the pomp and circumstance of an A-lister: Custom-designed gold rings, a $2,000 kilt and a caviar-and-crepe reception at a posh hotel.

McKee, 34, sank some $60,000 into his Scottish-themed nuptials, worth it he says for the chance to stand before a minister and be pronounced husband --and husband.

Even as lawmakers across the nation debate legislation concerning same-sex marriage, couples are uniting in weddings both miniature and massive, fueling a growing industry peddling everything from pink triangle invitations to same-sex cake toppers.

Vendors say attention to the marriage issue has encouraged more gay couples to recognize their relationships, though in most states, the ceremonies are purely sentimental.

"For the longest time, there was so much shame and privacy around it that people didn't really give themselves permission to have ceremonies like this," said Kathryn Hamm, an Arlington-based wedding consultant who planned McKee's marriage to partner Nopadon Woods. "[Now] the market is growing as the headlines remain out there."

Unlike the multibillion-dollar traditional wedding industry, experts say the gay wedding business is harder to track. Some estimates place its value at up to $1 billion.

In 2005, gays spent $7.2 million with vendors found at the Rainbow Wedding Network Web site, according to data collected by the site, which publishes a national magazine and hosts wedding expos. That's up from $2.1 million in 2002, according to Cindy Sproul, who co-owns the North Carolina firm.

Sproul estimated gay couples spend about $20,000 on ceremonies in states offering some form of recognition, like Massachusetts and Vermont. Sproul said couples average $15,000 on ceremonies in states that have banned gay marriage such as Georgia, where an annual wedding expo her company hosts draws about 500, mostly black gays and lesbians.

Vinyelle White and Madeline Jones of Richmond spent $4,000 -- a month's worth of their combined income -- on their August ceremony, a homespun affair with handmade invitations.

"It may sound really stupid to say, but why not," said White, who visited gay wedding Web sites before choosing an African-themed wedding. "We're showing this is how much we love each other, whether it's legal or not."

Massachusetts is the only state to date to allow gay marriage. In November, Virginia was one of seven states that approved gay-marriage bans, joining 20 that had done so in previous elections. But other states are moving in the opposite direction: New Jersey's gay couples gained new rights last week when the state legalized same-sex civil unions there.

McKee and Woods invited 200 guests to their black-tie ceremony, followed by a cocktail hour and reception at the Ritz-Carlton in Tysons Corner, Va.

Groomsmen received engraved pocket watches; a bagpiper, pianist and DJ serenaded guests, who dined on caviar and lobster.

McKee used gay wedding books, Web sites and a wedding coordinator to find things like gay-friendly photographers. The ceremony cost half their annual income.

In Virginia, the men were no more legally bound after the lavish wedding than before. Still, they considered it a good investment. "For us, the essence of a marriage is our love," McKee said. "Whether the state honors it is the icing on the cake -- it's not the cake itself."

- - -

Custom-made gifts

Items available for same-sex nuptials:

- Rainbow-bejeweled rings

- Double-bride thank you cards

- "His and His" towel sets

International Herald Tribune Editorial - Fear and bigotry

International Herald Tribune Editorial - Fear and bigotry
Copyright by The International Herald Tribune
Published: December 25, 2006


Besides Santa Claus, the Christmas season usually brings some reminder that the worst way to acknowledge the importance of religious faith in America is by demanding that the entire nation follow one particular theology. This year, it's the flap over whether one newly elected member of Congress can use the Koran rather than the Bible next month in a private ceremony.

Keith Ellison, who converted to Islam when he was in college, will be the first Muslim member of the House of Representatives come January. We suspect Ellison's constituents in Minnesota would like to see him using a book that best represents his religious beliefs.

Not so for a radio talk host named Dennis Prager, who claimed that using the Koran would "embolden Islamic extremists." Then Representative Virgil Goode Jr. of Virginia announced that his concerns went beyond the erosion of the Bible's exclusive rights to be sworn on. Goode is bothered by Ellison's faith in general, and wrote a letter to his constituents saying that this was a wake-up call about the danger that there would be "many more Muslims elected to office and demanding the use of the Koran" unless immigration laws were tightened.

Ellison, who traces his ancestors in the United States to 1742, has behaved with extreme grace throughout the incident. As for Prager and Goode, we appreciate their help in demonstrating how very fast things can get both nutty and unpleasant once the founding fathers' wise decision to avoid institutionalizing any religious faith gets breached.

Iran defiant after UN imposes nuclear sanctions - Tehran officials vow not to change course

Iran defiant after UN imposes nuclear sanctions - Tehran officials vow not to change course
By Nazila Fathi
Copyright by The International Herald Tribune
Published December 25, 2006.

TEHRAN: Iran has reacted defiantly to the UN Security Council resolution imposing sanctions on the country's nuclear program. Iranian officials vowed to continue efforts to enrich uranium and warned that the Security Council action would change Iran's relationship with the United Nations' nuclear monitoring agency.

The Security Council voted unanimously Saturday to impose sanctions on Iran, banning the import and export of materials and technology used in uranium enrichment, reprocessing and ballistic missiles.

Mahmoud Ahmadinejad, the Iranian president, said Sunday that the sanctions would not prevent Iran from developing its nuclear program, the Iranian Students News Agency reported.

"The nuclear technology is our right, and no one can take it away from us," Ahmadinejad was quoted as saying.

"You will soon regret this superficial action," he said referring to the sanctions. "What kind of Security Council is this, that is completely in the hands of the Zionists, the United States and Britain?" he said.

Iran's chief nuclear negotiator, Ali Larijani, said Iran would respond immediately to the vote by pushing forward with its plan to develop its nuclear program, the newspaper Kayhan reported Sunday. "Beginning Sunday morning, we will begin activities at Natanz — site of 3,000 centrifuges — and we will drive with full speed," he was quoted as saying. "This will be our immediate response to the resolution."

The Foreign Ministry said in a statement that Iran, in response to the sanctions, intended to put into operation an additional 3,000 centrifuges at its main nuclear complex in Natanz, the newspaper Iran reported Sunday. It had said it would have 3,000 in operation by the end of the month.

Progress at Natanz has been slow, though. Iran has sporadically operated only a single "cascade" of 164 centrifuges, the devices that spin at high speed and turn ordinary uranium into a fuel usable for nuclear power plants — or, at higher enrichment levels, nuclear arms.

Members of Parliament agreed Sunday to discuss a bill that would require the government "to review its cooperation" with the International Atomic Energy Agency, the UN monitoring agency. It was not clear what the bill would require. The deputy speaker of Parliament, Mohammad Reza Bahonar, refused to comment when asked whether it might require that Iran withdraw from the international Nuclear Nonproliferation Treaty.

"Our efforts should be reasonable and moderate," he told the Iranian Students News Agency. "That means we should be after getting our rights and also show that we are not after a fight. And if they are willing to recognize our rights, we will cooperate."

Iran says its program is peaceful and that as a signatory of the treaty, it has the legal right to enrich uranium.

It says it wants to enrich uranium to produce fuel for its nuclear reactors independently. However, enriched uranium can be used for making nuclear weapons if it is enriched to higher levels. The United States says Iran is a major oil exporter and that its nuclear program is a cover for its weapons program.

The Security Council on Saturday required Mohamed ElBaradei, director of the nuclear monitoring agency, to report to the council within 60 days on whether Iran had complied and suspended its enrichment program. The council warned that it would take "further appropriate measures" if Iran refused to comply.

But there were no hints Sunday by the Iranian authorities that Iran might halt the program.

"Our response to the resolution is the continuation of peaceful nuclear activities in a more concrete, decisive and more organized manner than before," said the Foreign Ministry spokesman, Mohammad Ali Hosseini, during his weekly news conference.

Larijani also told Kayhan that pressure from the West through the Security Council would not work. "It will make us more determined to reach our nuclear goals," he said.

Chicago Sun Times Editorial - Warning on Muslim gets it all wrong

Chicago Sun Times Editorial - Warning on Muslim gets it all wrong
Copyright by The Chicago Sun Times
December 26, 2006


It's hard to decide where to start when criticizing Rep. Virgil H. Goode Jr. (R-Va.), who thinks Keith Ellison, the first Muslim elected to Congress, poses a serious threat to American values. His complaint is short on the facts and short on logic, not to mention being short on tolerance. And it's disrespectful to the voters who elected Ellison.

Goode sent a letter to voters citing the election of Ellison, a Minnesota Democrat and a Muslim, as a warning that Americans need to crack down on immigration or there would likely be "many more Muslims elected to office and demanding the use of the [Quran]."

First of all, Ellison isn't an immigrant. He's an African-American convert to Islam who can trace his American roots back to 1742.

And Ellison wants to use the Quran in a private swearing-in ceremony -- after the official event, which requires no religious text. Such constitutional niceties don't register with Goode, who objects to Ellison's decision to not use the Bible. But doesn't it make more sense for Ellison to swear on the book that he regards as the most relevant and holds with the most reverence? Not to Goode.

Goode should learn a lesson from Ellison. "I want to let him know that there's nothing to fear," Ellison told the New York Times. "The fact that there are many different faiths, many different colors and many different cultures in America is a great strength."

Ethiopian warplanes attack Somalia

Ethiopian warplanes attack Somalia
By JEFFREY GETTLEMAN
Copyright by The International Herald Tribune
Published: December 24, 2006


ZANZIBAR, Tanzania: Ethiopia sent its warplanes to bomb Somalia on Sunday, openly escalating its conflict with Islamist fighters into a dreaded regional war.

According to witnesses, the warplanes bombarded several towns while Ethiopian tanks pushed aggressively into territory that had been controlled by Somalia's Islamist forces. Ethiopia is backing Somalia's transitional government, which has been losing control of parts of the country to the rival Islamist forces.

Until today, Ethiopian officials denied they had combat forces in Somalia, saying instead that their presence was limited to a few hundred military advisors. But witnesses had said Ethiopian troops were already in Somalia.

"Our defense force has been forced to enter a war," Ethiopian Prime Minister Meles Zenawi said on television today, according to news reports. He said his country was defending itself against "attacks from extremists and anti-Ethiopian forces" and would "protect the sovereignty of the land."The Ethiopian offensive ignited fighting up and down the Somali coast.

"The Ethiopians are blowing things up all over the place," said Mohammed Hussein Galgal, an Islamist commander in Beledweyne, near the Ethiopian border. "Civilians have been killed, people are fleeing. But don't worry, we won't be defeated."Ethiopian officials said today that they had run out of patience with the Islamist leaders, who have declared war on Ethiopia and vowed to turn Somalia into a recruiting ground for anti-Ethiopian fighters.

"What did you expect us to do?" said Zemedkun Tekle, a spokesman for Ethiopia's information ministry. "Wait for them to attack our cities?"

Somalia has two rival governments - the weak, internationally recognized transitional government, marooned in the inland city of Baidoa, and the Islamist forces, a popular grassroots movement that controls much of the country, including the battle-scared seaside capital, Mogadishu.

Since the Islamists came to power in June, Ethiopia has been increasingly involved in internal Somali politics, trying to protect the transitional government from advances by the Islamist forces.

Heavy fighting erupted last week between the two sides, and witnesses said the teenage soldiers of the Islamists were no match for the more professional (and adult) forces of Ethiopia and the transitional government.

Ethiopia has the most powerful military in the region, trained by American advisors and funded by American aid. American officials have acknowledged that they tacitly supported Ethiopia's decision to send troops to Somalia because they felt it was the best way to check the growing power of the Islamists, whom American officials have accused of sheltering Al Qaeda terrorists. .

Residents of Beledweyne, which is controlled by the Islamists, said Ethiopian bombers blew up an Islamist recruitment center, killing several civilians, and dropped bombs on Islamist troops hiding in the hills.

Though western diplomats had been urging Ethiopia to use restraint, Ethiopia's attacks today did not come as a surprise. The question now seems to be if Ethiopia will go into Mogadishu and try to finish off the Islamist military, which many fear could spur a long and ugly insurgency, or simply deal them enough of a blow to force them back to the negotiating table with the transitional government. Ethiopia's prime minister recently told American officials that he could wipe out the Islamists " in one to two weeks."

What complicates the issue is the presence of other foreign troops inside Somalia and the rising potential for Somalia's neighbors to be dragged in. United Nations officials estimate that there are several thousand soldiers from Eritrea, Ethiopia's arch-enemy, fighting for the Islamists, along with a growing number of Muslim mercenaries from Yemen, Egypt, Syria and Libya who want to turn Somalia into the third front of jihad, after Iraq and Afghanistan. On Friday, residents of Mogadishu said they saw boatloads of armed men landing on the city's beaches.

Somalia and Ethiopia have had bad blood between them for years. Ethiopia has a long and storied Christian identity, while Somalia is almost purely Muslim. The two countries fought a costly war in 1977 and 1978, when Somali forces tried to reclaim a border area only to be routed by Ethiopian troops. Since then, Ethiopia has, on several occasions, teamed up with various clans in Somalia's interclan wars. Those wars led to the collapse of the central government in 1991, followed by 15 years of anarchy.

Chicago Sun Times Editorial - Todd's taking advantage

Chicago Sun Times Editorial - Todd's taking advantage
Copyright by The Chicago Sun Times
December 24, 2006



When new Cook County Board President Todd Stroger was picked by the city's Democratic bosses to succeed his father on the November ballot, we weren't the only ones who compared the shenanigans to a coronation. Now comes evidence that Stroger really does think he was crowned. How else can you explain his recent actions?

First, he reserved one of the County Building's 12 elevators for his exclusive use. There it sits, roped off so no one else can use it, even if Stroger is not even in the building. It might be understandable if his aides said it was for security reasons. But no, it seems he needs the perk -- although they don't call it that. To them, it's a way to ''modernize county operations'' -- because Stroger is too chatty, and his exchanges with lowly peons are disrupting his hectic schedule.

Stroger also has decreed that his subjects no longer may address him and other officials at board meetings. And he has proclaimed that reporters may not speak to him -- not even to say hi -- if they happen to pass his majesty in the hallways near his throne, er, office. You get the feeling Stroger doesn't want to hear from anyone, or doesn't want anyone to hear from him.

There are a couple of conclusions one can draw from Stroger's aristocratic bent. One is that he doesn't know how bad it looks to the rest of us. The other is that Stroger knows but simply doesn't care, and is thumbing his noble nose at us.

A MESSAGE FROM AN APPALLED OBSERVER:

A MESSAGE FROM AN APPALLED OBSERVER:

Today I went to visit the new World War II Memorial in Washington, DC. I got an unexpected history lesson. Because I'm a baby boomer, I was one of the youngest in the crowd. Most were the age of my parents, veterans of "the greatest war," with their families. It was a beautiful day, and people were smiling and happy to be there. Hundreds of us milled around the memorial, reading the inspiring words of Eisenhower and Truman that are engraved there.

On the Pacific side of the memorial, a group of us gathered to read the words President Roosevelt used to announce the attack on Pearl Harbor: Yesterday, December 7, 1941-- a date which will live in infamy--the United States of America was suddenly and deliberately attacked.

One elderly woman read the words aloud:

"With confidence in our arm ed forces, with the unbounding determination of our people, we will gain the inevitable triumph."

But as she read, she was suddenly turned angry. "Wait a minute," she said, "they left out the end of the quote. They left out the most important part. Roosevelt ended the message with 'so help us God.'"

Her husband said, "You are probably right. We're not supposed to say things like that now."

"I know I'm right," she insisted. "I remember the speech." The two looked dismayed, shook their heads sadly and walked away.

Listening to their conversation, I thought to myself, "Well, it has been over 50 years. She's probably forgotten."

But she had not forgotten. She was right.

I went home and pulled out the book my book club is reading --- "Flags of Our Fathers" by James Bradley. It's all about the battle at Iwo Jima. I haven't gotten too far in the book. It's tough to read because it's a graphic description of the WWII battles in the Pacific.

But! right there it was on page 58.

Roosevelt'S speech to the nation ends in "so help us God."

The people who edited out that part of the speech when they engraved it on the memorial could have fooled me. I was born af ter the war. But they couldn't fool the people who were there. Roosevelt'S words are engraved on their hearts.

International Herald Tribune Editorial - A gag on free speech

International Herald Tribune Editorial - A gag on free speech
Copyright by The International Herald Tribune
Published: December 15, 2006


The Bush administration is trampling on the First Amendment, which protects the right to free speech, and well-established criminal law by trying to use a subpoena to force the American Civil Liberties Union to hand over a classified document in its possession. The dispute is shrouded in secrecy, and very little has been made public about the document, but we do not need to know what's in it to know what's at stake: If the government prevails, it will have engaged in prior restraint — almost always a serious infringement on free speech — and it could start using subpoenas to block reporting on matters of vital public concern.

Justice Department lawyers have issued a grand jury subpoena to the ACLU demanding that it hand over "any and all copies" of the three- and-a-half-page government document, which was recently leaked to the group. The ACLU is asking a U.S. District Court judge in Manhattan to quash the subpoena.

There are at least two serious problems with the government's action. It goes far beyond what the law recognizes as the legitimate purpose of a subpoena. Subpoenas are supposed to assist an investigation, but the government does not need access to the ACLU's document for an investigation since it already has its own copy. It is instead trying to confiscate every available copy of the document to keep its contents secret. The ACLU says it knows of no other case in which a grand jury subpoena has been used this way.

The subpoena is also a prior restraint because the government is trying to stop the ACLU in advance from speaking about the document's contents. The Supreme Court has held that prior restraints are almost always unconstitutional. The danger is too great that the government will overreach and use them to ban protected speech or interfere with free expression by forcing the media, and other speakers, to wait for their words to be cleared in advance. The correct way to deal with speech is to evaluate its legality after it has occurred.

If the ACLU's description of its secret document is correct, there is no legitimate national defense issue. The document does not contain anything like intelligence sources or troop movements, the group says. It is merely a general statement of policy whose release "might perhaps be mildly embarrassing to the government." Given this administration's abysmal record on these issues, this case could set a disturbing and dangerous precedent. If the subpoena is enforced, the administration will have gained a powerful new tool for rolling back free-speech rights — one that could be used to deprive Americans of information they need to make informed judgments about their elected leaders' policies and actions.

Big drop seen in U.S. breast cancer rates

Big drop seen in U.S. breast cancer rates
By Gina Kolata
Copyright by The International Herald Tribune
Published: 2006-12-14 23:46:52


Rates of the most common form of breast cancer dropped a startling 15 percent from August 2002 to December 2003, U.S. researchers reported Thursday.

The reason, they believe, may be because during that time, millions of women abandoned hormone treatment for the symptoms of menopause after a large national study concluded that the hormones slightly increased breast cancer risk.

The new analysis of breast cancer rates in the United States, by researchers from the M. D. Anderson Cancer Center in Houston and presented at a breast cancer conference in San Antonio, was based on a recent report by the National Cancer Institute on the cancer's incidence.

Investigators cautioned that they would like to see the findings confirmed in other studies, including, perhaps, in data from Canada and Europe, and they would like to see what happens in the next few years.

"Epidemiology can never prove causality," said Dr. Peter Ravdin, a medical oncologist at the M.D. Anderson center and one of the authors of the analysis.

But, he said, the hormone hypothesis seemed to perfectly explain the data and he and his colleagues could find no other explanation.

Donald Berry, head of the division of quantitative science at the cancer center and the senior investigator for the analysis, called the connection between the drop in rates and hormone use "astounding."

Over all, for women of all ages and all breast cancer types, the incidence of the cancer, the second leading killer of women, dropped by 7 percent in 2003, or about 14,000 cases, the researchers said. It was the first time that breast cancer rates had fallen significantly, something experts said was especially remarkable because the rates had slowly inched up, year by year, since 1945.

But the decrease was most striking for women with so-called estrogen-positive tumors, which account for 70 percent of all breast cancers.

In July 2002, the Women's Health Initiative, a large clinical trial looking at the use of one menopause drug, Prempro, made by Wyeth, found that women taking the drug had slightly higher breast cancer rates. The study's findings were a shock to many women and their doctors. Until then, many had assumed that Prempro simply replaced the lost hormones of youth. Within six months, the drug's sales had fallen by 50 percent.

Scientists knew that hormones could fuel the growth of estrogen-positive tumors, which carry receptors for estrogen on their cell surfaces. The hypothesis is that when women stopped taking menopausal hormones, tiny cancers already in their breasts were deprived of estrogen and stopped growing, never reaching a stage where they could have been seen on mammograms.

Other cancers may have regressed, making them undetectable. And, possibly, without hormones, cancers that would have gotten started may never have grown at all.

"This could well be the study of the year in cancer," said Dr. Otis Brawley, director of the Georgia Cancer Center at Emory University. He added that it also might help explain why breast cancer rates were lower for black women than for white women — blacks, he said, were less likely to use hormones for menopause.

Brawley also said the findings might explain why cancer in black women was more lethal. Hormone-initiated cancers, he said, might be less deadly than those that arise on their own.

Candace Steele, a Wyeth spokeswoman, said in an e-mail message that "breast cancer is a complex disease and the causes are not known.

At this point, she said, "it is simply inappropriate to make any speculative statements" based on the analysis.

And, she added, "clearly, more studies are warranted."

Berry said that the biggest effect overall was seen in women ages 50 to 69. That, he added, is the group most likely to have been taking menopausal hormones. In them, the incidence of breast cancer, including the type that grows in response to estrogen and the one that does not, fell by 12 percent in 2003, the latest year for which data is available.

The findings of the new analysis were supported by a separate study in California. That study, published in the Nov. 20 issue of the Journal of Clinical Oncology, found an even bigger drop in rates in that state and a correspondingly bigger drop in hormone use starting in July 2002.

Other researchers, who saw Berry's analysis in advance of its presentation Thursday, said they found the hypothesis convincing.

Susan Ellenberg, a professor of biostatistics at the University of Pennsylvania, said the work was provocative. And, she added, "I certainly don't see any obvious thing that says, 'Oh, this can't be right,' or any obvious flaws."

Until 2002, as many as a third of American women over age 50 were taking menopausal hormones. The drugs could relieve symptoms like hot flashes, and were thought to protect against heart disease. Because the pills were known to slow bone loss, some women used them to prevent osteoporosis. Some women and doctors also believed, without any good evidence, that the pills could keep skin youthful, preserve memory and make women energetic.

The use of estrogen to treat menopause took off in 1966, when a doctor, Robert Wilson, wrote the best-selling book "Feminine Forever" and flew across the country promoting it. He insisted that estrogen could keep women young, healthy and attractive. Women would be replacing a hormone they had lost at menopause just as diabetics replace the insulin their pancreas fails to make.

Before long, the menopause drugs, and in particular Prempro, from Wyeth, a combination of estrogen and progestins, became one of the most popular drugs in history.

The reversal of fortune came in July 2002 when the Women's Health Initiative was halted. Its accumulating data indicated that Prempro was associated with a slight increase in breast cancer and in heart attacks, strokes and blood clots. The drug slightly decreased the risk of hip fractures and colon cancer, but those benefits were not enough to overcome its risks, the researchers said. Health authorities cautioned that similar pills must be regarded as having the same risks as Prempro until proven otherwise.

The very next year, 2003, the National Cancer Institute reported recently, there was a huge decline in breast cancer incidence. It was, Ravdin said, the largest decline for a single cancer in a single year that he was aware of. He and his colleagues wondered what was going on. The cancer kills an estimated 40,000 women a year and any decline in incidence can be important.

"We looked at all the possible explanations," Berry said. He ticked them off: less mammography screening. But there was no sign of that. Increased use of drugs like tamoxifen that can prevent breast cancer; no evidence of that.

"There was some notion that it might be statins, but that was essentially debunked," Berry said.

After July 2002, Berry said, the rate "dropped each month and it is exactly where you would expect it to be" if the declining use of menopausal hormones were the reason.

Dr. Barnett Kramer, the associate director for disease prevention at the National Institutes of Health, said that hormones were certainly the most plausible explanation for such an immediate effect on incidence. Most breast cancer is fueled by estrogen and studies have found that removing estrogen, with drugs like tamoxifen that block the hormone, sharply reduces breast cancer rates within a year.

That was also the conclusion of Christina Clarke, an epidemiologist at the Northern California Cancer Center, and her colleagues, when they analyzed the cancer's rates in California. The investigators used data they had collected for a National Cancer Institute's program and data from Kaiser Permanente, the health insurer.

Clarke said that they had data through 2004 and so could ask whether the decrease in cancer incidence in 2003 continued the next year. It did, she said, although it slowed somewhat, as might be expected.

The investigators found that the breast cancer incidence fell even more in California than in the rest of the country — the overall drop was 11 percent in 2003, compared with 7 percent nationally. And, Clarke said, more women in California also had been using hormone therapy than women in other states.

Kaiser Permanente's prescriptions for hormone combinations like Prempro fell by two-thirds in 2003 and prescriptions for estrogen alone dropped by one-third, Clarke and her colleagues reported. (Estrogen without progestin can cause cancer of the uterine lining so should only be used by women whose uteruses have been removed. While there is some question about whether estrogen alone increases breast cancer risk, the Women's Health Initiative did not find such an effect.)

The heaviest users of hormone therapy were women in affluent places like Marin County, where high breast cancer rates had long troubled women and researchers. Women in those areas also largely abandoned the treatments after the 2002 report and their cancer rates declined accordingly, Clarke said.

Dr. Marcia Stefanick, a professor of medicine at Stanford University and chairwoman of the steering committee for the Women's Health Initiative, said she found the hormone argument persuasive and felt it helped clear up the mystery in Marin County.

"Everyone kept saying, What is it? What's in the environment?" she said. Now, she said, it is becoming clear. "The best explanation is hormone therapy."

International Herald Tribune Editorial - Rare good news about AIDS

International Herald Tribune Editorial - Rare good news about AIDS
Copyright by The International Herald Tribune
Published: December 14, 2006


The announcement Wednesday about the results in two African studies of male circumcision may be the most important development in AIDS research since the debut of antiretroviral drugs more than a decade ago. The National Institutes of Health halted studies in Uganda and Kenya when it became overwhelmingly clear that circumcision significantly reduces men's chances of catching HIV.

The studies recruited men willing to be circumcised and randomly assigned them to immediate surgery or to a control group. In both studies, the circumcised men acquired half the number of HIV infections that their uncircumcised counterparts did. The studies confirm the results of a trial that ended last year in South Africa, in which circumcision prevented 60 to 70 percent of new AIDS infections.

Until now, efforts at AIDS prevention have largely failed. Little wonder. It requires people to resolve — every day — either not to have sex or to use condoms. Circumcision, by contrast, is a one-time procedure. It is familiar and widely accepted all over the world, even by groups who do not practice it. And safe circumcision does not require a doctor. Community workers and traditional healers can be trained to do the operation safely and given the correct tools. Based on the South African results, groups like the United Nations AIDS program and the World Health Organization were already discussing how they might promote circumcision in countries around the world. They should now move as quickly as possible.

Governments and international donors should also work urgently to provide new financing to help high- risk countries train community workers to do safe circumcision. News of the South African results has already led to a surge in demand for the procedure across Africa, and clinics that now offer it have long waiting lists.

Any campaign will have to be coupled with warnings that circumcision offers only partial protection against HIV and should not become a license for risky sex. Governments must continue to promote condoms and partner reduction.

For years, the holy grail of AIDS prevention has been a vaccine, even one that is only 50 to 60 percent effective. A real vaccine is years away. But now we know its near equivalent exists. International donors and governments should join together to spread the good news about circumcision and make the procedure available everywhere.

International Herald Tribune Editorial - Ships that don't dare to sail

International Herald Tribune Editorial - Ships that don't dare to sail
Copyright by The International Herald Tribune
Published: December 14, 2006

The Coast Guard, supposedly America's first line of defense against water-borne terrorists and drug smugglers, has been staggered by a shipbuilding scandal of enormous proportions. A long-term modernization program to replace nearly all of the Coast Guard's ships, planes and helicopters — begun four years ago in the wake of 9/11 — is foundering while its projected costs are skyrocketing. In Iraq, lax government oversight and incompetence or profiteering by contractors have disabled reconstruction efforts. Now the same disease is undermining U.S. coastal defenses.

The misjudgments and slipshod work would be grist for slapstick comedy if the consequences, in cost and weakened defenses, were not so serious. The estimated costs of the project, known as Deepwater, have ballooned from $17 billion when it started in 2002 to $24 billion today. The plans call for 91 new ships, 124 small boats, 195 new or rebuilt helicopters and 49 unmanned aerial vehicles. But don't count on any of the new vehicles working.

The initial venture — converting the Coast Guard's rusting patrol boats into bigger, more versatile cutters — has been canceled because hull cracks and engine failures made the first eight ships unseaworthy. Plans for a new class of ships with an innovative hull design were halted after the design was found to be flawed. And even the radios placed in small open boats proved faulty; they shorted out because they had not been made waterproof.

In the latest chapter in this disgraceful performance, the Coast Guard did not inform Congress that it was warned two years ago by its chief engineer that a proposed National Security Cutter, meant to be the flagship of its fleet, had "significant flaws" in its structural design and should not be started until the problems were addressed. The Coast Guard began construction anyway. It plans to reinforce the first two versions that are being built and change the design on the remaining six.

How could this happen? Mostly because the Coast Guard, in an astonishing abdication of responsibility, gave two large military contractors, Lockheed Martin and Northrop Grumman, near total freedom to plan, supervise and deliver the new ships and helicopters. In some cases, the contractors made boneheaded decisions, as when their shipyard partner ignored warnings by Coast Guard engineers that the converted patrol boats might buckle under the extra weight.

No wonder the contractors are ducking for cover as the scandal reverberates, and are leaving all comment to the hapless Coast Guard. The Coast Guard seems, belatedly, to be moving in the right direction by giving its own engineers more supervisory power over the work and creating a division to oversee procurement and maintenance of ships and planes. Even so, the new Congress and the Department of Homeland Security, which is responsible for the Coast Guard, will need to keep a sharp eye on the Coast Guard's performance. The industrial contractors have proved they were not up to the job.

N.J. Lawmakers Approve Civil Unions

N.J. Lawmakers Approve Civil Unions
by Geoff Mulvihill
Copyright Associated Press
Thursday Dec 14, 2006


Democratic Gov. Jon Corzine said he would sign the measure, which would extend to same-sex couples all the rights and privileges available under state law to married people. The bill passed the Assembly 56-19 and the Senate 23-12.

"Love counts,’’ Democratic Assemblyman Wilfredo Caraballo, a chief sponsor of the bill, said as the debate opened. "The gender of whom one loves should not matter to the state.’’

But Republican Assemblyman Ronald S. Dancer said: "It’s my personal belief, faith and religious practice that marriage has been defined in the Bible. And this is one time that I cannot compromise my personal beliefs and faiths.’’

Massachusetts is the only state to allow gay marriage. Vermont and Connecticut have civil unions, and California has domestic partnerships that work similarly. Since 2004 New Jersey has had a more limited version of domestic partnerships.

Among the benefits gay couples would get under New Jersey’s civil unions bill are adoption rights, hospital visitation rights and inheritance rights. Officials could begin granting civil unions 60 days after the governor signs the legislation; Corzine did not say when he would do so.

The bill was drafted in response to a New Jersey Supreme Court ruling in October that required the state to extend the rights and benefits of marriage to gay couples within 180 days. The court, in its 4-3 ruling, left it up to the Legislature to decide whether to call such unions "marriages’’ or something else.

Gay rights groups have argued that not calling such unions "marriage’’ creates a different, and inferior, institution. But they welcomed Thursday’s legislation as a step toward gaining the right to marry.

Some lawmakers also considered Thursday’s action to be an interim step on the way to full marriage rights.

"This should be called what it is - marriage.’’ said Democratic Sen. Loretta Weinberg, a sponsor of the bill. She said the title should be changed after there has been some time to study how the civil unions bill works.

Steven Goldstein, director of the gay rights advocacy organization Garden State Equality, said he expects gay couples to be able to get married in New Jersey within two years.

Bush doesn't seem capable of admitting he serious errors

Bush doesn't seem capable of admitting he serious errors
BY ANDREW GREELEY
Copyright by The Chicago Sun Times
December 15, 2006

The long-awaited report of the Iraq Study Group was dead on arrival. It was designed as a proposal by a bipartisan commission of wise men that would provide President Bush with a way out of the Big Muddy into which he had led the country. There was no particular reason to think that any of the major recommendations would in fact change the situation in Iraq.

Certainly, the Shiites and the Sunni must reconcile, but they've been fighting each other for 12 centuries. Attempts to force the Iraq government to end the conflict are doomed from the beginning. Patently, the conflict in Palestine must end for the Middle East to settle down. However, hard-liners on both sides don't want to pay the price of peace, as the failure of President Bill Clinton's Camp David negotiations confirmed.

Clearly, there cannot be peace in Iraq without some kind of cooperation between Iran and Syria. But there is little reason to think that either country wants to take the United States off the hook -- and it is unlikely that the president would negotiate with those countries even if Secretary of State Condoleezza Rice would permit him. James Baker and Lee Hamilton were quite clear that there was no guarantee that any of these efforts would work or even be accepted by the president.

However, they would provide the administration with something to do for the next year before the president began to "draw down" American troops in the first quarter of 2008, just before the presidential campaign began in earnest.

The president and the residual hawks in his administration could say, "Look, we tried to do everything they suggested and it's just not working." Presumably Baker, who helped the president steal the election in 2000, thought that his protege was flexible enough to take that route out of the Big Muddy.

It seemed obvious from the beginning that the president was not about to buy into such a scenario. He was still the commander in chief, his spokesman told us. He was still the "decider." The ISG members were repeating, in muted language, the criticism of the "liberals," who are cowards who want to cut and run. His scary behavior at the press conference with Tony Blair, in which he verbally assaulted a British journalist, left no doubt that he was not backing off from his previous views. Jabbing his fingers, shouting, swaggering, smirking, he was fighting off all his enemies. When he feels he is under attack, the president digs in and strikes back.

It is late in the day to wonder if the president has the character required of a man who must play his role. Strength for him means single-minded stubbornness and very little else. He does not seem capable of admitting that he has made serious mistakes -- which presidents such as Kennedy, Johnson, Reagan and Clinton were able to do. He is innocent of his father's suave flexibility, to say nothing of the evasiveness of FDR, for whom there was no hole deep enough that he could not slip out. Even if the country and his party and his legacy are deep in the Big Muddy, there is nothing in his personality which permits this president to lead the way out until the mission is accomplished. He will certainly not change his goals merely because the Democrats won a mid-term election.

The "new strategy" that he is going to unveil as a Christmas gift to the nation will likely be a spin on the old strategy. He will tell us that he has read all the recommendations and this is what he has decided. This spin might well hearten some of his faithful followers and win him a few points in the polls for awhile, but it will not stop the killing in Iraq.

It will be interesting -- and horrible -- to keep track of how many Americans die in Iraq during 2008.

New York Times columnist Thomas Friedman, who strongly supported the war in 2003, now says that it will take either 10 minutes or 10 years to end the Iraq incursion. One must end it by ending it. Despite the caution and the hopes of the ISG, it will require a different president to grasp that overwhelming truth.

A War Bush Wouldn't Pay For
Copyright by The Washington Post
By E.J. Dionne Jr.
Friday, December 15, 2006; Page A35

Believe it or not, winning the war in Iraq was never the Bush administration's highest priority. Saving its tax cuts was more important. That was once spoken of as a moral problem. Now it's a practical barrier to a successful outcome.

Until recently President Bush's refusal to scale back any of his tax cuts was discussed as the question of shared sacrifice: How could we ask so much from a courageous group of Americans fighting in Iraq and Afghanistan but not ask even the wealthiest of their fellow citizens to part with a few extra dollars to support an endeavor supposedly central to our nation's security? On the contrary, even after we committed to war in Iraq, the administration pushed for yet more tax cuts in dividends and capital gains.

Now we know that the decision to put the war on a credit card is not simply a moral question. The administration's failure to acknowledge the real costs of the war -- and to pay them -- has put it in a corner.

The president's options in Iraq are severely constrained because our military is too small for the foreign policy he is pursuing. Sending more troops would place even more excruciating burdens on members of our armed forces and their families. And the brass fears that an extended new commitment could, quite simply, break the Army.

Yet, instead of building up our military for a long engagement and levying the taxes to pay for such an enterprise, the administration kept issuing merry reports of progress in Iraq. Right through Election Day this year, the president continued to condemn anyone who dared suggest that maybe, just maybe, we should raise taxes to pay for this war.

I think it would be a mistake to send more troops to Iraq. But for the sake of argument, let's take seriously the idea that doing so might help, as Sen. John McCain has insisted and as American Enterprise Institute scholar Frederick W. Kagan argued in a report released yesterday. By not matching the military's size to what we are asking it to do, we have hugely raised the costs, including the human costs, of such a policy.

Kagan and William Kristol acknowledged in the Weekly Standard last month that "surging 50,000 more troops" to Iraq "will strain a strained military further."

"But it is also true," they added, "that we can do it -- if we think success in Iraq is a national priority -- by extending tours, moving troops from other theaters into Iraq, and calling up expanded numbers from the Guard and Reserves."

How easy it is to talk about extending other people's tours, calling (or recalling) reservists and National Guard members who have already paid such a high price in this war, and endangering American interests elsewhere in the world in one last effort to make the Iraq gamble work. It's absurd that the most powerful country in the world finds itself forced to treat its armed forces so shabbily.

Kagan and Kristol, at least, have long spoken out in favor of building a bigger Army. But I don't recall that they or their comrades in this cause proposed any taxes to pay for it. Presumably that would have been too much to ask of the Republican coalition and those who bankroll it.

So here we are: Policymakers and politicians will demand more and more from the volunteers who serve our country, but they can't find the gumption to ask shareholders to pay a bit more tax on their dividends or high earners to pay slightly larger levies on their incomes. By my back-of-the-envelope calculations, since 2001 we've offered $2 in tax cuts for every $1 we have spent on the wars in Iraq and Afghanistan. And conservatives wonder why we have deficits. At least the libertarians, who are against both high taxes and an interventionist foreign policy, have their philosophical story (and their numbers) straight.

It has always been true that the administration and its allies couldn't have it both ways. Their illogic has finally caught up with them. They claimed to be against big government so they could justify big tax cuts. But they were also for a big, activist foreign policy, especially after Sept. 11, 2001, which required a big military, and -- sorry to break it to you, guys -- a big military is a big part of big government. They were not willing to pay for a large enough military, and so now we, and especially our armed forces, are paying for their deficit in logic and courage.

postchat@aol.com

The Gold Standard - The short view By John Authers

The Gold Standard - The short view By John Authers
Copyright The Financial Times Limited 2006
Published: December 15 2006 02:00 | Last updated: December 15 2006 02:00


It is more than 110 years since William Jennings Bryan, the first great US populist politician, warned that the US economy must not be "crucified on a cross of gold".

His fierce arguments against the gold standard won him presidential nominations, but never got him to the White House, and abandonment of the gold standard only came decades later.

But his spirit lives on. Critics of cheap money now believe that 2006 has shown how his ideas would work in action. US stock investors have had a very good year. The S&P 500 is up 13 per cent, in dollar terms. But if you take sterling as the base currency, US stocks are actually down for the year. In euro terms, US equities are barely flat. In gold, the hardest currency of all, the S&P has dropped 6.5 per cent this year.

For non-US investors, this could be a buying signal. Legg Mason's legendary stockpicker Bill Miller suggested this week that there might be big profits from betting on a resurgence of the dollar.

But Richard Bernstein, investment strategist at Merrill Lynch, cautions that the US is suffering from a form of "money illusion".

"The markets are rallying largely because the dollar is depreciating. If the underlying corporate assets maintain their values, then the stock market will accordingly rise as the dollar falls. Meanwhile, the relative standard of living of dollar-based investors slowly depreciates."

This rings true in the UK. Almost 40 years ago the late Harold Wilson, a somewhat less charismatic politician than Bryan by all accounts, defended a 14 per cent sterling devaluation by saying it would not mean that the pound, "here in Britain, in your pocket or purse or in your bank, has been devalued".

But in the years that followed the Wilson devaluation, as inflation took hold, Britons complained that the pound in their pocket had lost a lot of value.

Lower exchange rates usually lead to inflation as imports become more expensive. Even if they now have what Bryan wanted, Americans may yet feel that the dollar in their pocket has been devalued.

Apple options probe delays annual report

Apple options probe delays annual report
WASHINGTON, Dec 15, 2007
© Reuters Limited


Apple Computer Inc., which is undergoing an independent investigation into its historical stock option practices, filed with the U.S. Securities and Exchange Commission on Friday to delay its 10-K annual report filing.

The company said it will need to restate its past financial statements to record non-cash charges for compensation expense relating to past stock option grants. The amount of the restatements and which periods will need to be restated are being reviewed, Apple said.

Apple has previously disclosed that an internal investigation found irregularities with its past stock option grants, making it among the long list of companies wrapped up in the options scandal.

When it disclosed the irregularities, in October, the makers of the popular iPod digital media device and Macintosh computer said it would likely need to restate its past financial statements.

Because Apple is still studying the amount of charges it will need to take when it restates its results, it has delayed filing the annual report for the year ended Sept. 30, 2006.

It was supposed to file the report by Dec. 14. The company said it will now file the annual report within 15 days of that date.

Shares of Apple were down 51 cents at $88.04 in early Nasdaq trade.

Latino Leaders Meet WITH CDC/Latinos y Latinas se reúnen con el CDC

December 15, 2006
For immediate release
Contacts: Mario Guerrero, Bienestar (626) 628-5219
Guillermo Chacon, Latino Commission on AIDS, 212-920-1611

Latino Leaders Meet WITH CDC,
ASK FOR STRONGER RESPONSE to hiv CRISIS

ATLANTA, GA– (December 15, 2006) On Wednesday December 13th, Latino leaders representing community based organizations from multiple states met with Dr. James Fenton, Director for the National Center for HIV, STD and TB Prevention from the Centers for Disease Control and Prevention (CDC). The discussion was centered around the CDC’s response to the increased infections of HIV in the Latino community across the nation. The HIV infection statistics in the Latino community are alarming. Latinos represent one in every five newly diagnosed HIV infections in the U.S.

“The meeting of Latino leaders with the CDC was an essential first step in addressing the needs of the Latino community,” stated Oscar De La O, President & CEO from BIENESTAR. “We look forward to a continued dialogue and a partnership to improve CDC’s response to this health crisis” Stated Dennis De Leon, President of Latino Commission on AIDS; Catalina Sol, Director of HIV Services from Clinica Del Pueblo in Washington, DC stated that "Our delegation was unified in speaking with one voice to Dr. Fenton in hope to a greater response to the AIDS epidemic," Stated members of a National Latino Delegation that meet with Dr. Fenton.

In this historical meeting, among the requests to CDC, Latino leaders sought for the following:
· Request for Increased Communication: Dr. Fenton agreed to meet on at least a yearly basis with Latino Leaders. CDC also agreed to identify a liaison that would be the point person for issues related to HIV and Latinos.
· Latino Consultation: CDC agreed to come up with a strategy within its strategic plan in which to focus on HIV issues specific to the Latino community. The proposed strategy would include capacity building, epidemiology, leadership involvement, research, and others. This plan would also take into account the diversity of the Latino community and issues such as bilingualism and other social, economic, and cultural issues.
· Behavioral research journal: Leaders requested a CDC sponsored a journal to highlight behavioral research for Latinos. The journal would raise the visibility of research challenges concerning Latinos and HIV/AIDS.
· Two day Latino social science consultation: Leaders requested that CDC consider funding a two day Latino social science consultation after the National HIV Prevention Conference
taking place December 2-5, 2007 in Atlanta, Georgia.
CDC agreed to most of the requests and also pledged to focus on Latino participation in the 2007 National HIV Prevention Conference by way of a Latino track and roundtable discussions. The two day Latino social science consultation was not yet confirmed and is being given further consideration.
Centers for Disease Control and Prevention is one of the thirteen major operating components of the Department of Health and Human Services (HHS), which is the principal agency in the United States government for protecting the health and safety of all Americans through the provision of essential human services.

Community Based Organizations Present Included:
Clínica del Pueblo, Washington, DC; BIENESTAR, Southern California; The Latino Commission on AIDS, NY; Salud Latina/Latino Health, Chicago, IL; CPG, Puerto Rico, Mujeres Unidas Contra el SIDA, TX


COMUNICADO DE PRENSA
15 de Diciembre del 2006
Para Distribución Inmediata
Contactos: Mario Guerrero, Bienestar (626)628-5219
Guillermo Chacón, Comisión Latina sobre el SIDA, (212) 920-1611

Latinos y Latinas se reúnen con el CDC,
piden una respuesta más agresiva ante la crisis del VIH/SIDA
Atlanta, GA – (15 de Diciembre del 2006) El 13 de Diciembre, Latinos representando organizaciones comunitarias de distintos Estados se reunieron con el Dr. James Fenton, Director de los Centros Nacionales para la prevención del VIH, Enfermedades de Transmisión Sexual y Tuberculosis, perteneciente a los centros para el control y la prevención de las enfermedades (CDC siglas en Ingles) para discutir la respuesta de los CDCs al incremento de infecciones por VIH en las comunidades Latinas a lo largo y ancho de los Estados Unidos. Los Centros para el Control y Prevención de Enfermedades son uno de los 13 principales componentes operativos del Departamento de Salud y Servicios Sociales (HHS siglas en Ingles), el cual constituye la agencia principal en el Gobierno de los Estados Unidos para proteger la salud y la seguridad de toda la población americana, así como proveer servicios humanos esenciales, principalmente para aquellos que no pueden ayudarse a si mismos. Las estadísticas de infección por VIH son alarmantes. Los Latinos y Latinas representan una de cada cinco infecciones de VIH y las infecciones por VIH entre Latinas continúan incrementándose.
“Esta fue una muy buena reunión, pero es solamente el primer paso para tratar las necesidades de las comunidades Latinas” declaro Oscar de La O, Presidente y Director Ejecutivo de BIENESTAR. “Estaremos en espera de un diálogo continuo y un trabajo conjunto que pueda ayudar a mejorar la respuesta de los CDC a esta crisis de salud” declaro Dennis de Leon, Presidente de La Comisión Latina sobre el SIDA; Catalina Sol, Directora de Servicios de VIH de “La Clínica del Pueblo” con sede en Washington D.C., dijo que “Nuestra delegación se presento de forma unificada y se expreso en una sola voz al dirigirse al Dr. Fenton con la esperanza de una mejor respuesta a la epidemia del SIDA.”
En esta reunión histórica, entre las peticiones que se formularon a los CDC, los líderes Latinos buscaron lo siguiente:
Una petición para más y mejor comunicación. El Dr. Fenton estuvo de acuerdo en reunirse –por lo menos- una vez al año con los Lideres Latinos. Los CDC también estuvieron de acuerdo en identificar una persona de contacto, que servirá de puente para temas relacionados a VIH y Latinos/as
Una Consulta Latina. Los CDC acordaron desarrollar una estrategia como parte de su plan estratégico, esta estrategia será enfocada en temas específicos relacionados al VIH e involucrara a muchas o todas las ramas de los CDC, que incluyen entre otros, la rama de prevención, capacitación, epidemiología, desarrollo de liderazgo e investigación. Esta iniciativa tomara en cuenta la diversidad dentro de la comunidad Latina y temas como el bilingüismo y otros temas en el área social, económico y cultural.
Una publicación relacionada al campo que investiga el comportamiento. Se solicito a los CDC el patrocinio de una publicación enfocada en la investigación sobre el comportamiento dentro de los/as Latinos/as. Esto es importante para incrementar la visibilidad sobre los retos de investigación concerniente a Latinos/as y el VIH/SIDA.
Dos días de consulta sobre el campo social en Latinos. Se solicito a los CDC que consideraran apoyar económicamente dicha consulta después de la conferencia nacional sobre prevención de VIH, programada entre el 2 al 5 de Diciembre, 2007 en Atlanta, GA.
Los CDC concordaron con la mayoría de las solicitudes y también aseguraron poner atención para la participación Latina en la Conferencia Nacional de Prevención de VIH, estableciendo un enfoque Latino así como mesas de discusión. Sobre la consulta de dos días, no fue confirmada, pero será considerada.
Las organizaciones Latinas presentes en la reunión fueron: Clínica del Pueblo, Washington, DC; BIENESTAR, Southern California; La Comisión Latina sobre el SIDA, NY; Salud Latina/Latino Health, Chicago, IL; CPG, Puerto Rico, Mujeres Unidas Contra el SIDA, TX
Mario Guerrero
Development & Public Affairs Director


BIENESTAR
5326 E. Beverly Blvd.
Los Angeles, CA 90022
Phone: 323-727-7896
Fax: 323-727-7985

New Book Dares to Show Queer Jesus

New Book Dares to Show Queer Jesus

BERKELEY, CA -- Dec. 14, 2006 -- A controversial novel about a bisexual Jesus is being published now by AndroGyne Press.

"Christ's story is for everyone," said Kittredge Cherry, author of JESUS IN LOVE, the first novel ever published about a queer Christ. "It's okay to imagine yourself in the story of Jesus. He is ALL of us."

Like the bestseller DA VINCI CODE, JESUS IN LOVE is a work of fiction that sparks debate by raising the issue of Christ's sexuality. JESUS IN LOVE includes a gay love story between Jesus and his beloved disciple John. Cherry is not trying to prove that the historical Jesus had a homosexual relationship, although some pioneering Bible scholars do say so.

Controversy began even before publication. Hundreds of gay news sites covered the launch of Cherry's website, JesusInLove.org, which features the growing number of books and art based on the queer Christ. Bloggers battled over whether it was "sick and disgusting" or "a rather heavenly idea."

"The queer Christ is a sign of hope when Christians and gays seem to be at war. He loves and stands for all people, including the sexually marginalized," said Cherry, a lesbian Christian author whose ministry put her at the forefront of the sexuality debate at the National Council of Churches (USA) and the World Council of Churches.

Cherry was ordained by Metropolitan Community Churches and served as clergy in the lesbian, gay, bisexual and transgender community for seven years. Her previous books include HIDE AND SPEAK, EQUAL RITES and WOMANSWORD. The New York Times Book Review praised her "very graceful, erudite" writing style.

Rev. Mel White, founder of Soulforce, urged people to read JESUS IN LOVE. "In imagining a Jesus who really lived, laughed and loved, Kitt Cherry has broken through the stained-glass barrier," he said.

"Don't be afraid. This is not a prurient look at the sex life of Jesus, but a classic re-telling of the greatest story ever told, the story of a truly human Jesus and those truly human women and men who lived, laughed and loved with him. Read JESUS IN LOVE and you will feel His Spirit reaching out to you, inviting you to live, laugh and love with him as well," Rev. White concluded.

Rev. Carter Heyward, theology professor emerita, also applauded the novel. "What a lovely, gentle, playful book! It sparkles with erotic christic power, which we might read as an image of Jesus' own sexual energies."

Toby Johnson, author of GAY SPIRITUALITY, described JESUS IN LOVE as "a wonderful, gay-sensitive, and delightfully 'shocking' reassessment of the stories of the old-time religion."

Many publishers rejected JESUS IN LOVE because it was too gay for the church presses, and too Christian for the gay publishers. AndroGyne Press, a new queer studies press based in
Berkeley, CA, finally dared to publish it.

Jesus has today's queer sensibilities and psychological sophistication as he lives out his legendary life in JESUS IN LOVE. The novel shows how Jesus grows over a one-year period --from his decision to get baptized until the day he sends his disciples away to teach others.

Readers can relate to his struggles: Society doesn't understand him. He falls in love with people of both sexes. He feels like his real self is both male and female. Jesus, the narrator, speaks in an engaging, up-to-date tone as he reveals his intimate relationships with John the beloved disciple, Mary Magdalene and the multi-gendered Holy Spirit

"I wrote the novel to introduce readers to the all-loving Jesus who I met in my own prayer life," Cherry said. "I believe that Jesus is both divine and human -- including the full range of sexual attractions and gender identities."
For more information on JESUS IN LOVE, visit:
http://jesusinlove.org/newbook.php
or
http://www.androgynepress.com

Chicago Sun Times Editorial - When everything's relative, good government loses

Chicago Sun Times Editorial - When everything's relative, good government loses
Copyright by The Chicago Sun Times
December 14, 2006


The nepotistic dominoes have all fallen. Todd Stroger replaces his father, John, on the ballot and wins the Cook County Board presidency. Robert Steele replaces his mother, Bobbie, on the board, while she walks off with her fat pension. William Beavers takes John Stroger's board seat, and his daughter, Darcel, takes his place as alderman. Is this "good, Democratic politics," as Beavers proclaims? Well, it's politics all right -- especially as practiced in Chicago -- but it's not good.

The practice of an elected official passing on his or her office to his or her offspring has become so ingrained in Chicago that a recent letter to the editor in the Sun-Times suggested it be enshrined into law -- and another writer had to ask whether the first was joking or not. (He was.) And there's a simple reason why it has become so commonplace here -- because the voters tolerate it.

The classic recent example is the case of Rep. Dan Lipinski. Many defenders of the recent nepotism ask this question: "Why is it all right for the Daleys, the Madigans and the Lipinskis, but not all right for the Strogers, the Steeles and the Beavers?" The answer is, it's never all right for someone's family connections to be the only consideration for office. You can argue that Lisa Madigan and Richard Daley won their place on the ballot and their elections on their own merits, though certainly their fathers' names and clout helped. You can't say the same about Lipinski, whose father, Bill, ran in the 2004 Democratic primary but then arranged for his son to replace him on the ballot, assuring his victory in the heavily Democratic district.

It was wrong, and we said so then: "By arranging to have his son run against a sham opponent, Bill Lipinski doubly corrupts the system. It's dirty. . . . We are left to wonder at this sham perpetrated by his dad. Why worry about terrorists undermining our system when the powers that be do it so well?"

Lipinski won the 2004 election, then won again this year. Todd Stroger also won this year. The voters may have favored them over their Republican opponents (the Sun-Times backed Stroger for that reason) but that does not excuse the appalling nepotism that got them on the ballots.

When does it stop? Here's hoping that at the next scheduled election -- the city contests early next year -- the voters finally draw the line. We haven't judged Darcel Beavers or any of her potential opponents. But we find it illuminating that she insists nepotism had nothing to do with her appointment to replace her father. Why? Because she has worked for him for 22 years. If you practice nepotism long enough, does it cease to be nepotism? In Chicago, unfortunately, that appears to be the case.

It's suit vs. suit in priest case - Accusers counter cleric's legal move

It's suit vs. suit in priest case - Accusers counter cleric's legal move
By Margaret Ramirez
Copyright © 2006, Chicago Tribune
Published December 14, 2006

Two weeks after a Roman Catholic priest filed a defamation lawsuit against two brothers who said he sexually abused them, an attorney for the alleged victims struck back Wednesday by suing the priest and the Chicago archdiocese.

Rev. Robert Stepek, former pastor of St. Albert the Great Church in Burbank, was removed from ministry last month after an archdiocesan review board determined there was reasonable cause to suspect that sexual abuse of minors occurred. Shortly after his removal, Stepek filed a $4 million lawsuit against his accusers, stating that the sexual abuse allegations were false andretaliation for disagreements between the priest and the two men.

According to Survivors Network of those Abused by Priests (SNAP), Stepek is one of about a dozen priests who have sued their accusers. But victim advocates said the countersuit is believed to be the first ever filed in the U.S. against clergy. The suit filed in Cook County Circuit Court states that Stepek's actions have led the two accusers "to suffer severe and permanent emotional distress, embarrassment, loss of self-esteem and loss of religious faith." The suit also states that any damage suffered by Stepek was not caused by the accusers but by the archdiocese, which permitted confidential abuse information to become public.

Attorney Jeff Anderson, who is representing the accusers, said he is calling on Cardinal Francis George to order Stepek to withdraw his lawsuit and cease and desist from all further action until Vatican proceedings in his case conclude.

"We took this action because the cardinal has been so woefully silent," Anderson said during a news conference in his downtown Chicago law office. "The cardinal has the power to step in and stop Stepek. He should not allow these victims to be re-victimized."

In a statement released Tuesday by the archdiocese, Chancellor Jimmy Lago said that last month following publicity about the matter, the cardinal instructed his counsel to write to the attorneys in the case and ask them not to do anything that would undermine the process. "However, we regret that the cardinal's advice and offer of assistance have not been taken," Lago said in the statement.

Lago also wrote in the statement: "We cannot prevent anyone from seeking redress from the courts and acknowledge that they have the right to do so. From time to time, persons bringing allegations against a priest of the archdiocese of Chicago have chosen to bring their cases to the civil courts as well. The archdiocese respects those decisions."

In response to the lawsuit filed by the victims, Lago issued another statement Wednesday saying: "The archdiocese regrets when anyone files a lawsuit in a misconduct matter, whether the person is claiming abuse or acting in defense of a claim." Lago said the archdiocese had notreviewed the new lawsuit. .

Phillip J. Zisook, Stepek's attorney, said he had not reviewed the lawsuit either. But Zisook said the idea that a person can destroy someone's good name through false accusations and be left without remedy is "unconscionable."

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maramirez@tribune.com

Iraq report actually fuels hawks

Iraq report actually fuels hawks
By Steve Chapman
Copyright © 2006, Chicago Tribune
Published December 14, 2006

The report of the Iraq Study Group was eagerly awaited by many Americans, but no one was more thrilled to get it than staunch supporters of the Iraq war. Not because they agreed with what it said, but because they didn't. After all these years of haplessly defending a war that has been a dismal failure, they leaped at the chance to go on the attack.

Richard Perle, a leading neoconservative advocate of the invasion, sneered at the Baker-Hamilton commission for daring to propose negotiations with Iran and Syria. Middle Eastern scholar Fouad Ajami ridiculed its suggestion that we address the Israeli-Palestinian conflict. Johns Hopkins University professor Eliot Cohen accused the panel of "sheer fantasy" and said all we need to prevail in Iraq is "energy and competence in fighting the fight."

Energy and competence from an administration that stumbled into this quagmire with no idea what lay in store? Well, look who's fantasizing. He might as well invite Obi-Wan Kenobi and Princess Leia to join the struggle.

The amazing thing is that these great thinkers still have the nerve to show themselves in public, much less feign wisdom about how to conduct the war. Three long years ago, Perle airily assured an interviewer that "we will soon be turning Iraq over to the Iraqis" and that "they are capable of, with our help, handling their own security."

Ajami predicted that when we invaded, the streets of Iraq would "erupt in joy." Last winter, Cohen announced that in Iraq, "we have the right people at the top and the right policies in effect--and even more importantly, the right philosophy behind it all." And they accuse the Iraq Study Group of not having a clue?

It should come as no surprise that having been given a pig, the commission has no formula for turning it into a princess. Its members don't pretend that our mistakes in Iraq can be undone easily, if they can be undone at all. The panel merely made a game effort to separate the bad options from the worse ones.

Any of the panel's 79 recommendations can be derided, but they deserve to be weighed against the alternatives. During the time we've spurned negotiations, Iran and Syria have fomented considerable violence in Iraq, and Tehran has made great progress toward a nuclear arsenal. Maybe we could do worse by talking to them, but it would be hard. And ignoring the Israeli-Palestinian conflict--gee, that's worked out swell for everybody, hasn't it?

If the group's proposals are not likely to produce a happy outcome, that's only because nothing is likely to produce a happy outcome. Had supporters of the war been right about Iraq, we wouldn't need outside advice. The administration is contemplating disaster partly because it screwed up so many things along the way, but mainly because the invasion was a doomed enterprise from the start. One thing we should have learned from the last century is that people generally detest foreign occupation. Another is that when resistance to occupation flares into full-fledged war or insurgency, the resistance almost always prevails in the end.

Look at the French in Algeria, the Americans in Vietnam, the Israelis in Lebanon (in the 1980s and '90s) or the Soviets in Afghanistan. Each had huge advantages in military might, but all failed.

The administration and its allies learned nothing from this history. So the United States now finds itself in a familiar dilemma. It can withdraw from Iraq, accepting failure and leaving chaos and civil war behind. Or it can stay and keep spending lives and money in a lost cause that has forfeited public support.

Supporters of the war think that's the fault of the public. Former House Republican Leader Tom DeLay complained that what happened in Korea and Vietnam may be happening in Iraq as well: "Our nation lost the will to fight the war."

But you can hardly expect the people to favor a war that is protracted, costly, launched on mistaken premises and so far unsuccessful--especially when they were told it would be quick and easy. If the administration lacks public support, that's because the public can no longer believe this war will have a happy ending.

On that point, the public is right. The Iraq Study Group can be criticized for not offering a reliable path to victory. But that's like blaming Noah for the flood.

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Steve Chapman is a member of the Tribune's editorial board. E-mail: schapman@tribune.com

Financial Times Editorial - Ahmadi-Nejad is beyond the pale

Financial Times Editorial - Ahmadi-Nejad is beyond the pale
Copyright The Financial Times Limited 2006
Published: December 14 2006 02:00 | Last updated: December 14 2006 02:00


If Iran wishes and expects to be treated as a member of the international community in full standing, and requires its neighbours and adversaries to take into account its legitimate security concerns (as this newspaper has argued they should), then it cannot behave in the way it did this week, by hosting a grotesque carnival of Holocaust deniers, white supremacists, anti-Semites, Jewish millenarians, assorted lumpen-academics and rednecks.

It is simply contemptible to attempt to cast doubt on the most consciously wicked crime against humanity and one of the greatest affronts to civilisation. Does the Iranian leadership think it can in any way advance its interests - much less Iran's national interest - by consorting with neo-Nazis and former leaders of the Ku Klux Klan?

The man behind the Tehran conference to "debate" the Holocaust, President Mahmoud Ahmadi-Nejad, is a weird political mixture. Part shrewd populist, part end-of-days mystic, he clearly believes that stirring up sentiment against Israel (and against Jews in general) will deflect popular attention from his near complete failure to fulfil his campaign pledges to end poverty and corruption.

In fact, the event went virtually unnoticed in Iran, whereas internationally it has unleashed a storm of outrage, not least after Mr Ahmadi-Nejad told the conference that Israel's days were numbered.

"Just as the Soviet Union was wiped out and today does not exist, so will the Zionist regime soon be wiped out," he said.

Students of Iran know that the president is not, by any means, the most powerful man in a complex political hierarchy headed by Ayatollah Ali Khamenei, the unelected supreme leader, who controls foreign and security policy. Nevertheless, his rantings about the "myth" of the Nazi death camps and calls for Israel to be "wiped off the map" are pressing already very hot buttons in the US and Israel, where there is a raging debate about whether to attack Iran to disrupt its presumed nuclear ambitions.

Mr Ahmadi-Nejad's remarks are damaging in other ways. They give the impression that anti-Jewish bigotry is widespread across the Muslim world. In historical reality, anti-Semitism is a Christian disease. There is no trace of it in Persia's Shahnameh or Book of Kings, while the Koran enjoins believers to respect Jews and Christians as monotheist People of the Book, sharing the common legacy of Abraham. That is not less true because some modern Muslim and Arab leaders prefer to change the subject, from their failure to do anything about Israel's policies and behaviour to crude attacks on the Jewish people.

But Mr Ahmadi-Nejad's cynicism is no less intolerable for that. His superiors should rein him in - before he furnishes justification in the eyes of the world for an attack on Iran.

Business and military call for US to end reliance on oil

Business and military call for US to end reliance on oil
By Carola Hoyos in London,Edward Luce in Washington and Krishna,Guha in Beijing
Copyright The Financial Times Limited 2006
Published: December 14 2006 02:00 | Last updated: December 14 2006 02:00



The Bush administration should act decisively to break America's dependence on oil, said a group of leading US business executives and senior military officers in a report presented yesterday to the White House and Congress.

The bipartisan group, which includes the chief executives of Fedex, UPS, Dow Chemicals and some of America's best known retired generals, urged Washington to recognise that "pure market economics will never solve the problem" of oil dependency.

The report poured cold water on the Bush administration's goal of reducing US dependence on foreign oil, rather than on oil in general. It urged Mr Bush and the new Democrat-controlled Congress to set up a plan to halve the American economy's oil-intensity by 2030.

Mr Bush has repeatedly identified "energy independence" and immigration reform as two of the issues most likely to attract bipartisan support following the Republican loss of control of Capitol Hill in mid-term elections last month.

"Events affecting supply or demand anywhere will affect consumers everywhere," said the report, brought out by the Energy Security Leadership Council, a think tank. "Exposure to price shocks is a function of how much oil a nation consumes and is not significantly affected by the ratio of "domestic oil" to so-called "foreign oil".

The report also warned Mr Bush, who is expected to announce new energy independence measures in his annual State of the Union address next month, that America's oil dependence makes it acutely vulnerable to terrorist attacks.

America's transport system is 97 per cent dependent on oil. More than 90 per cent of world oil supply is controlled by foreign governments. "America must address this critical weakness," said P.X. Kelley, a retired Marine Corps general. However, there is scepticism about the willingness of the Bush administration to take the tough steps most energy experts say are necessary.

Last January Mr Bush declared that America was "addicted to oil". But Mr Bush's announcement was not followed by any significant change in energy strategy. "There is little reason to believe the White House will take the tough measures necessary to make this happen," said a Washington-based energy lobbyist.

However, the US administration wants to step up co-operation with China on energy efficiency and the use of alternative fuels. Energy and the environment will be among the topics addressed in Friday's final session of the US-China strategic economic dialogue involving top officials meeting in Beijing.

International Herald Tribune Editorial - Of prices and paychecks

International Herald Tribune Editorial - Of prices and paychecks
Copyright by The International Herald Tribune
Published: December 13, 2006


As chairman of the Federal Reserve, Ben Bernanke is America's top inflation cop. When he expresses alarm — as he has done of late over rising labor costs — his concern drives policy, as it apparently did Tuesday when the Fed's interest rate committee decided to hold rates steady in a bid to dampen inflationary pressures.

But of all the reasons Bernanke might have for fretting about inflation, rising wages should not be one of them. For starters, wage growth is slowing, not rising. Working Americans have more to spend lately, but it's because prices have eased, mainly for energy.

So where does Bernanke's fear about inflationary wage pressures come from? Maybe he is worried that pay raises in relatively strong job fields — like engineering, law and health care — will soon be passed on to consumers. Betting that companies will compel consumers to foot the bill for higher salaries could prove to be a safe wager.

Another good bet at this point is, sadly, that the U.S. economy will continue to downshift in 2007, removing any upward wage pressures that may exist. An economy that has not been good for jobs and wages during its strong growth phase is not likely to become so as it weakens.

International Herald Tribune Editorial - Without deliberate speed

International Herald Tribune Editorial - Without deliberate speed
Copyright by The International Herald Tribune
Published: December 13, 2006


The claims of calm deliberation emerging from the White House this week are maddening. The search for a new plan for Iraq seems to be taking place with as much urgency as the deliberations over a new color for the dollar bill.

In Baghdad on Tuesday, a suicide bomber killed at least 70 people, most of them Shiite laborers whose only sin was looking for work. In Washington, meanwhile, President George W. Bush held a series of carefully stage-managed meetings with officials and outside experts whose common credential appeared to be their opposition to the recommendations of James Baker's Iraq Study Group.

To top it off, White House aides told reporters that — despite earlier promises of a pre-Christmas speech by Bush — America now should not expect any announcement of a new strategy until early next year. The president's spokesman, Tony Snow, said that "it's a complex business, and there are a lot of things to take into account," adding that Bush "wants to make sure it's done right."

We are more than eager for this White House to finally get something right on Iraq. But we find it chilling to imagine that Bush and his advisers have only now begun a full policy review, months after Iraq plunged into civil war and years after experts began warning that the administration's strategy was not working.

We would like to believe that the reason for delay is that some of Bush's advisers have come up with a sensible change in course and they are now trying to persuade the president to take it. Or that behind the scenes Bush is already strong-arming Iraq's leaders to rein in the sectarian militias and begin long-delayed national reconciliation talks.

We fear that a more likely explanation is that the president's ever-divided policy advisers are still wrangling over the most basic decisions, while his political handlers are waiting for public enthusiasm for the Baker report to flag before Bush tries to explain why he won't follow through on some of the report's most important and reasonable suggestions — like imposing a timetable on Iraqi leaders to make political compromises or face a withdrawal of U.S. support. Or trying to persuade Iran and Syria to cease their meddling.

The Baker study, of course, is not the received wisdom of the ages. It should have been released far earlier, rather than being delayed to get past the midterm elections. But it was a good-faith effort by people wise enough and experienced enough to know how bad the situation really is in Iraq, and how little time left there is for the president to act.

Bush has no more time to waste on "listening tours" and photo ops. The United States is in a crisis, and Americans need to hear how he plans to unwind the chaos he has unleashed in Iraq. If the president is delaying because he is searching for a good option, he can stop. There are none. But Americans need to see that he is prepared to choose among the undesirable alternatives, and clear the way for a withdrawal of American troops that does not leave even more killing and mayhem behind.

South Dakota senator hospitalized; Democrats' control of Senate thrown into question

South Dakota senator hospitalized; Democrats' control of Senate thrown into question
The Associated Press
Published: 2006-12-13 16:40:14


WASHINGTON: A Democratic senator suffered a possible stroke and was taken to a Washington hospital Wednesday, a glaring reminder to Democrats just how razor-thin their one-vote majority in the Senate is.

Democrats won a 51 seats to 49 in the November election. South Dakota's Republican governor, Mike Rounds, would appoint a replacement until the 2008 election should Sen. Tim Johnson die or resign.

If the two-term senator should have to be replaced, Rounds' replacement, almost certainly a Republican, would provide a 50-50 split in the Senate, and under the Constitution, the vice president breaks ties. That is Republican Dick Cheney.

Johnson is up for re-election in 2008.

Johnson, who will be 60 on Dec. 28, became disoriented during a conference call with reporters at midday Wednesday, stuttering in response to a question. He appeared to recover and asked if there were any more questions, then ended the call.

Back at his Capitol office he appeared not to be feeling well, and the Capitol physician came to his office, examined him and decided he should go to the hospital.

Johnson's office released a statement saying he had suffered a possible stroke.

"At this stage, he is undergoing a comprehensive evaluation by the stroke team," the statement read.

The White House issued a statement wishing him a speedy recovery.

"Our thoughts and prayers are with Senator Johnson and his family," said White House spokesman Alex Conant.

South Dakota Secretary of State Chris Nelson said there are no special restrictions on an appointment by the governor, and a replacement would not have to be from the same political party.

Johnson, a centrist Democrat, was elected to the Senate in 1996 and has been one of the more reserved members of the chamber, rarely holding sway over news conferences.

He served in the House for 10 years from 1987 to 1997. His focus has been on committee assignments important to his state's interests — Indian Affairs and Energy and Natural Resources — as well as a spot on Appropriations. The latter allows him to direct money to South Dakota.

Johnson narrowly defeated Republican John Thune in his 2002 re-election bid. Thune defeated Democratic Sen. Tom Daschle two years later.

Thune issued a statement saying his prayers were with Johnson and his family. Rounds also issued a statement, saying he was hoping for good news.

Johnson has worked as a lawyer and county prosecutor and served several years in the 1970s and 1980s in the South Dakota state Legislature.

Both Johnson and his wife have battled cancer.

The senator underwent prostate cancer treatment in 2004, and subsequent tests have shown him to be clear of the disease. Barb Johnson is a breast cancer survivor.

The couple have two sons and a daughter: Brooks, who served in the U.S. Army in Bosnia, Kosovo, South Korea, Afghanistan and Iraq; Brendan, a Sioux Falls lawyer, and Kelsey, who works in Washington.

In response to one reporter's question on the Wednesday conference call, Johnson said he was most looking forward to spending the holidays with his family and grandchildren.

Johnson is the second senator to become ill after the Nov. 7 election. Wyoming Sen. Craig Thomas, a Republican, was diagnosed with leukemia on Election Day. He is back at work.

____

Associated Press Writers Laurie Kellman and Natasha Metzler in Washington and Dirk Lammers in Sioux Falls contributed to this report.

The season of letter-perfect families by Garrison Keillor

The season of letter-perfect families by Garrison Keillor
Copyright © 2006, Chicago Tribune
Published December 13, 2006

I love reading Christmas newsletters in which the writer bursts the bonds of modesty and comes forth with one gilt-edged paragraph after another: "Tara was top scorer on the Lady Cougars soccer team and won the lead role in the college production of `Antigone,' which by the way they are performing in the original Greek. Her essay on chaos theory as an investment strategy will be in the next issue of Fortune, the same week she'll appear as a model in Vogue. How she does what she does and still makes Phi Beta Kappa is a wonderment to us all. And, yes, she is still volunteering at the homeless shelter."

I get a couple dozen Christmas letters a year, and I sit and read them in my old bathrobe as I chow down on Hostess Twinkies. Everyone in the letters is busy as beavers, piling up honors hand over fist, volunteering up a storm, traveling to Beijing, Abu Dhabi and Antarctica; nobody is in treatment or depressed or flunking out of school, though occasionally there is a child who gets shorter shrift. "Chad is adjusting well to his new school and making friends. He especially enjoys the handicrafts." How sad for Chad. There he is in reform school learning to get along with other little felons and making belts and birdhouses, but he can't possibly measure up to the goddess Tara. Or Lindsay or Meghan or Madison, each of whom is also stupendous.

This is rough on us whose children are not paragons. Most children aren't.

A great many teenage children go through periods when they loathe you and go around slamming doors and playing psychotic music and saying things like "I wish I had never been born," which is a red-hot needle stuck under your fingernail.

One must be very selective, writing about them for the annual newsletter. "Sean is becoming very much his own person and is unafraid to express himself. He is a lively presence in our family and his love of music is a thing to be-hold."

I come from Minnesota, where it's considered shameful to be shameless, where modesty is always in fashion, where self-promotion is looked at askance. Give us a gold trophy and we will have it bronzed so you won't think that we think we're special. There are no Donald Trumps in Minnesota: We strangled them all in their cribs. A football player who likes to do his special dance after scoring a touchdown is something of a freak.

The basis of modesty is winter. When it's 10 below zero and the wind is whipping across the tundra, there is no such thing as stylish and smart, and everybody's nose runs. And the irony is, if you're smart and stylish, nobody will tell you about your nose. You look in the rearview mirror and you see a gob of green snot hanging from your left nostril and you wonder, "How long have I been walking around like that? Is that why all those people were smiling at me?"

Yes, it is.

So we don't toot our own horns. We can be rather ostentatious in our modesty and can deprecate faster than you can compliment us. We are averse to flattery. We just try to focus on keeping our noses clean.

So here is my Christmas letter:

Dear friends. We are getting older but are in fairly good shape and moving forward insofar as we can tell. We still drink strong coffee and read the paper and drive the same old cars. We plan to go to Norway next summer. We think that this war is an unmitigated disaster that will wind up costing a trillion dollars and we worry for our country. Our child enjoys her new school and is making friends. She was a horsie in the church Christmas pageant and hunkered down beside the manger and seemed to be singing when she was supposed to. We go on working and hope to be adequate to the challenges of the coming year but are by no means confident. It's winter. God is around here somewhere but does not appear to be guiding our government at the moment. Nonetheless we persist. We see kindness all around us and bravery and we are cheered by the good humor of young people. The crabapple tree over the driveway is bare, but we have a memory of pink blossoms and expect them to return. God bless you all.

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Garrison Keillor is an author and host of "A Prairie Home Companion."

Europe poised to overtake US

Europe poised to overtake US
By Peter Thal Larsen and Gillian Tett in London
Copyright The Financial Times Limited 2006
Published: December 13 2006 02:00 | Last updated: December 13 2006 02:00



Europe could overtake the United States as the world's largest source of capital markets revenues this year following a surge in equity and debt issuance and growing financial innovation in the City of London.

A study by McKinsey, the consultancy, found that capital markets revenues from Europe, the Middle East and Africa lagged slightly behind those from North and South America in 2005 but are growing twice as fast.

"London and the Continent may soon become the world's financial powerhouse as measured by top-line numbers," the report concludes.

The study underlines a growing consensus that New York is in danger of losing its crown as the world's leading financial centre as foreign companies rush to raise money in London.

A panel of US economists, academics and executives called last week for an easing of regulatory burdens in order to increase the attractions of the country's capital markets.

However, McKinsey points out that capital markets revenues as a proportion of gross domestic product are lower in Europe than in the Americas, suggesting that Europe has more room to grow. "Structurally, Europe should overtake the Americas sooner or later," said Markus Böhme, a principal in McKinsey's Munich office.

Revenues in Japan and the rest of Asia still lag well behind the west but penetration of capital markets products is also much lower.

The study, based on detailed data from 30 global, regional and national banks, estimates that revenues from global capital markets are likely to exceed $250bn this year.

London has long been known for having a lead over New York in foreign exchange. However, it is now providing increasingly fertile ground for the development of new, over-the-counter derivatives.

Indeed, some argue that London has displaced New York as the main centre for this type of activity. That may be because Europe has traditionally had a weaker cash bond market than the US - forcing investors to use higher margin derivatives products to a greater extent.

It was notable, for example, that it was Europe which first created constant proportion debt obligations (CPDOs) this summer - a credit instrument that has since become wildly fashionable in the credit markets.

Similarly, the newly emerging market for longevity bonds, which are now being developed by some investment banks, looks set to be centred on London, not New York.

Europe produced greater profit in 2005, McKinsey found, with pre-tax profit of $31.3bn compared with $29.5bn in the Americas and just $13.8bn in Japan and Asia.

Large investment banks control almost two-thirds of the market in the Americas. But in Europe regional and national banks account for more than half the business.

Bush resists disclosure of Iraq war spending - will not be part of the Federal Budget

Bush resists disclosure of Iraq war spending - will not be part of the Federal Budget
By Caroline Daniel andKrishna Guha in Washington
Copyright The Financial Times Limited 2006
Published: December 13 2006 02:00 | Last updated: December 13 2006 02:00


The Bush administration is unlikely to accept the recommendation of the Iraq Study Group to include all Iraq war spending in its budget request for 2008 but may be willing to compromise on being more specific about the costs of the war.

The ISG report sharply criticised the way the administration accounted for the war, noting that most of the costs emerged in emergency supplemental appropriations, bypassing the normal budget review and scrutiny by authorising committees. "The public interest is not well served" by this approach, it said, and called for the costs of the war to be "included in the president's annual budget, starting in 2008".

A senior administration official was sceptical of the ISG's suggestions. "I wish they could have talked about it in more practical terms," he said. While the ISG effort was "generally helpful, practically speaking it is hard for the military to tell you in advance what the conditions are likely to be and what funding needs will be".

Even so, the official suggested "there is a compromise here on a practical way to scrub the emergency spending to see what is more like base spending… Some of the items in the supplemental and in the bridge [a provisional allocation of funds for the war] could be characterised as base spending because they are of a more permanent nature".

In its mid-session review in July, faced with earlier criticism, the administration said it expected to ask for $110bn (€83bn, £56bn) in spending on the "war on terror", including Iraq and Afghanistan, as part of its 2007 budget submission, an unprecedented move to include anticipated war costs in budget estimates.

"I thought we did a better job last year but we can do more in showing those costs," the official said.

An aide on the House budget committee said Democrats would push for more transparency. "We have consistently said that the war costs should be reflected in the budget. They moved in this direction in July but it is still less than half what it is likely to cost."

On Social Security, where previous reform efforts have stalled, the administration is expected next year to make another push.

The official was optimistic about progress. "I feel better about it, based on hearing directly from Democrats who have said they are interested. We have a window of opportunity of one year."

In January, President George W. Bush called for a bipartisan commission on Social Security but the effort ran aground. The idea may be revived as a way to resolve the harder political questions posed by wider entitlement reform, addressing Medicare and Medicaid spending, but Social Security reform is likely to be addressed without a new commission.

US retail sales signal resilient economy

US retail sales signal resilient economy
By Eoin Callan in Washington
Copyright The Financial Times Limited 2006
Published: December 13 2006 14:38 | Last updated: December 13 2006 14:38



US retail sales rose sharply last month in a sign that American consumers are continuing to drive economic growth despite a continued slowdown in the housing market.

Retail sales rose by 1 per cent to $368.9bn last month, an increase that was five times greater than the 0.2 per cent lift expected by Wall Street economists.

The strong rise underscores the Federal Reserve’s view that the economy is headed for moderate growth and that the housing slowdown will not unduly undermine consumer confidence.

There were unexpected signs of a pick-up in spending on housing as sales of building materials rose to $30bn from $29bn.

The biggest increase was seen at online and catalogue retailers, which saw sales rise 10 per cent to $24bn as holiday shopping got underway.

Sales were also higher than previously thought in October, while the three month trend showed sales were 5.3 per cent higher than a year ago.

The signs of robust spending prompted a retreat by investors to scale back their expectations of interest rate cuts. Treasuries fell as the yield on the benchmark 10-year rose 5 basis points to 4.53 percent.

The dollar edged higher as currency investors welcomed signs of a stronger economy.

United in merger talks with Continental

United in merger talks with Continental
By Doug Cameron in Chicago and James Politi in New York
Copyright The Financial Times Limited 2006
Published: December 13 2006 06:15 | Last updated: December 13 2006 12:50



United Airlines is pursuing exploratory merger talks with Continental Airlines, the FT has learned, amid what one executive called “a feeding frenzy” of potential consolidation among US carriers.

Glenn Tilton, United’s chairman and chief executive, has been the most outspoken proponent of the need for deals to aid the recovery of the domestic industry, a process fired into life by US Airways’ unsolicited bid for Delta Air Lines.

United and Continental are also looking at alternative tie-ups, according to people with knowledge of the discussions, but a combination of the second and fourth-largest US carriers has long been viewed as the most complementary in terms of their route networks, fleet and cost structures.

Continental recently overtook Northwest Airlines as the fourth-largest US carrier by revenue, and a combination with United would create a group with pro forma sales of $32.7bn, making it by far the largest airline in the world.

However, people close to the discussions stressed that no deal is imminent amid a merry-go-round of talks between all of the major carriers. “Everybody is doing something at the last moment,” said one executive.

US Airways’ surprise move for Delta has forced executives at rival carriers to re-examine the competitive and regulatory landscape in the US, six years after antitrust officials blocked a potential round of deals between the six remaining network airlines, including United’s bid for US Airways and American Airline’s approach to Northwest.

The $8.8bn offer to Delta’s creditors – the airline filed for bankruptcy protection in September 2005 – could attract as many as three counter-offers, according to industry financiers, with United, Northwest and Continental all seen as potential candidates.

The potential deal-making has also extended to the low-cost sector, with AirTran launching a hostile $290m offer on Wednesday for Milwaukeee-based Midwest Air, which operates business class-focused services throughout the central US.

Officials at the major carriers declined to comment on the manoeuvring, though all remain cautious about the chances of completing any of the proposed transactions because of the complexities which have dogged US airline mergers for decades.

The strong voice of labour in the highly-specialised and unionised US airline industry is still viewed as the major barrier to near-term consolidation. Delta’s pilots will hold a rally on Wednesday to voice their opposition to the US Airways’ bid, backed by senior Congressional figures.

Continental and American are the only two major carriers to avoid a spell in bankruptcy protection during the current industry downturn.

Any deal involving the two Texas-based carriers would heighten tensions with staff after years of costs cuts to maintain competitiveness with rivals which have used the bankruptcy process to restructure.

Larry Kellner, Continental’s chairman and chief executive, has made it clear in recent weeks that he would prefer an independent future for the Houston-based carrier, but that he is also aware that an evolving industry landscape could leave it vulnerable to the emergence of new, larger rivals.

United emerged from more than three years of bankruptcy protection last February, but analysts still believe it still has to cut more costs to remain competitive. The carrier has successfully pursued a focus on premium passengers – a strategy shared with Continental – but remains dogged by a simmering dispute with pilots unhappy at a management compensation scheme.

John Prater, a Continental captain who will take over as president of the Air Line Pilots Association in January, has also signalled a more activist approach by labour, which could impact any merger plans.

“After five years of concessionary bargaining, lost pensions, and battered work rules, our pilots are primed to take offensive action,” he said following his election in October over an incumbent seen by analysts as more moderate. “This may mean a return to the hard-nosed tactics of earlier years and a grassroots mobilisation of each and every one of our members.”

International Herald Tribune Editorial - Royalty rip-off

International Herald Tribune Editorial - Royalty rip-off
Copyright by The International Herald Tribune
Published: December 12, 2006


The U.S. treasury is already short more than a billion dollars because of the Interior Department's failure over the last decade to collect all the royalties owed from oil and gas producers in the Gulf of Mexico. The new Congress needs to fix the problem, or persuade a sluggish Bush administration to do so.

This failure — and how much it is costing the U.S. taxpayer — has been richly detailed over the last year by Edmund Andrews of The New York Times. The problems are twofold. The first is a loophole in leases signed by the Clinton administration in 1998 and 1999 to encourage deep-water exploration at a time when oil and gas prices were relatively low. The leases gave companies a break on royalty payments, but did not include a standard escape clause that would have restored full royalties when prices went up. The loophole has already cost the taxpayers $1.5 billion and, if not corrected, could cost $10 billion more over the course of the leases.

A bill that would have forced companies to renegotiate these flawed leases before being granted new ones failed by only two votes in the House on Friday. Unless the Interior Department succeeds in renegotiating the leases quickly, the new Congress should pass the legislation.

The more serious problem involves royalty collection, which is the responsibility of the department's Minerals Management Service. Whistleblowers have testified to the service's shortcomings, and last week, the Interior Department's inspector general said that the service relied too heavily on statements by oil companies, instead of independent audits.

Officials say they are trying hard to renegotiate the flawed leases. As for the broader management failures, they have hired new people and begun an internal review. This is all to the good, but the Interior Department has a long history of accounting failures and a more recent history of giving the oil and gas industry much of what it wants on public lands. When Congress summons Secretary Dirk Kempthorne to testify, it will want more than promises.

International Herald Tribune Editorial - Fighting drug fakes

International Herald Tribune Editorial - Fighting drug fakes
Copyright by The International Herald Tribune
Published: December 12, 2006


Tempted to buy cheap medicines from a pharmacy Web site? Think twice. If the Web site shows no verifiable street address for the pharmacy, there is a 50 percent chance the drugs are counterfeit.

In rich countries, fake medicines mainly come from virtual stores. Elsewhere, they are on the pharmacy shelves. In much of the former Soviet Union, 20 percent of the drugs on sale are fakes. In parts of Africa, Asia and Latin America, 30 percent are counterfeit. The culprits range from mom-and-pop operations processing chalk in their garages to organized- crime networks that buy the complicity of regulators, customs officials and pharmacists.

In Panama, dozens of people died after taking counterfeit drugs made with an industrial solvent. Often counterfeiters put in real ingredients for their smell or taste, but heavily diluted. This has sped the emergence of resistant strains of infections, and is probably a big reason some malaria drugs and antibiotics have lost their power.

Drug counterfeiting can be fought. Five years ago, the majority of Nigeria's drugs were fakes, and the country was a major source of counterfeits abroad. When the Nigerian government donated 88,000 doses of meningitis vaccine to Niger during an epidemic in 1995, the vaccine turned out to be a fake — causing more than 2,500 children to die.

Now the possibility that a drug is fake in Nigeria has dropped to 17 percent, according to the World Health Organization. Nigeria's drug control agency is informing people through radio and television jingles about fake medicines. It has also fired corrupt officials, hired a fleet of inspectors to drop in on pharmacies, banned imports from 30 companies, and begun prosecuting counterfeiters.

One of the problems Nigeria still faces is that the penalty for counterfeiting medicine is as little as a $70 fine — a small price to pay for a crime that can reap a fortune. All over the developing world, governments treat falsifying medicines as a mere copyright infringement, rather than potential murder.

The WHO has recently set up a task force that brings together many groups that work on counterfeit drugs. It is a start. Multinational drug companies — which have been reluctant to report fakes lest they erode consumer confidence in all drugs — need to do more. An international convention is also needed to establish stiffer penalties for counterfeiting drugs, and marshal more funds and support to fight this deadly crime.

International Herald Tribune Editorial - Consumption gap

International Herald Tribune Editorial - Consumption gap
Copyright by The International Herald Tribune
Published: December 12, 2006


Conservative economists often argue that wage stagnation and income inequality are not as big a threat to Americans' standard of living as they've been made out to be. In their view, how much one buys — rather than how much one makes — is a better measure of economic well-being.

In a recent article in The National Review, researchers at the American Enterprise Institute asserted just that, saying that when you look at how much the middle class is consuming, they're "even doing better than the upper crust."

Why make a fuss over other grim economic statistics if everyone manages to keep buying things?

Here's why. The assertion — that the middle class has out-consumed the "upper crust" during the Bush years — is false, the result of rosy assumptions that turned out to be wrong.

Researchers at two other think tanks, the Center on Budget and Policy Priorities and the Economic Policy Institute, reworked the figures, including newly available spending data for 2005. There is no dispute among the various researchers over the new findings. Over all, consumption is growing. But the growth is unbalanced, consistent with the wide disparity in wages and income that has characterized the Bush years.

Consumer spending by low-income households is way down since 2001. Over the same period, spending by high-income Americans has been robust, supported, in part, by generous tax cuts. In 2005, the top 20 percent of households made 39 percent of all consumer expenditures, the highest share since the government started keeping track in 1984.

The information on middle-income households is mixed, with some data showing a decline in their spending during the Bush era and some showing an increase. But there is no question that spending by the middle class has been weaker in the current economic expansion than in previous recoveries.

It would be nice if by some magic Americans could spend their way out of today's economic woes. But the gathering evidence shows that growing income inequality has fostered consumption inequality as well. It's time for policy makers to acknowledge that such inequality is an economic and social ill — and to start finding cures.

It's not just China, Mr. Paulson

It's not just China, Mr. Paulson
By Philip Bowring
Copyright by The International Herald Tribune
Published: December 12, 2006


HONG KONG: The current American obsession with China, reflected in the size and weight of the U.S. team being led to Beijing this week by Treasury Secretary Henry Paulson, may be the economic equivalent of an earlier one with Iraq. It is worrying that the United States is once again focusing on a single country while ignoring the regional — and global — context.

There are major bilateral issues between the United States and China, of course — trade, market access and intellectual property, as well as the currency. And of course, China is the big new player on the block. But given that trade and payments imbalances are the major threat to global economic stability, Paulson and his team should extend their tour to other East Asian capitals — and maybe drop in on a major Middle Eastern oil exporter as well.

Paulson could have started by going to Seoul, where he could have noted, for China's benefit, how South Korea is still registering strong export growth and satisfactory domestic demand growth despite have see its currency rise by 20 percent against the dollar in two years and 30 percent since 2003.

He could have visited Southeast Asia, the other focus of the Asian financial crisis, and congratulated countries such as Thailand and Singapore on their flexible currency policies, and their belief that a strong currency reflects a strong economy rather than a threat. Anyone remember how proud Germany was of the mark's gains through the 1960s and 1970s?

Indeed so far it is South Korea and the small Southeast Asian economies that have carried most of the burden of currency appreciations. All of their currencies could easily stand appreciating at least as fast as the euro has done — if only Japan and China did the same.

Paulson could then have carried that lesson to Tokyo. Despite years of failure to stimulate domestic demand via negligible interest rates and an ultra-cheap currency, Japan clings to the notion that a weak yen rather than global demand for quality products is behind its export success.

The Treasury secretary could have gone to Taiwan with the same message. Following Japan down the path of very low interest rates and an undervalued, manipulated currency did nothing for domestic demand and made a nonsense of Taiwan's claims to be a fully open economy and candidate for financial center status.

Or perhaps Paulson could have stayed at home and studied some numbers on how much of China's accumulation of foreign exchange reserves — now more than $1 trillion — was the result not of its trade surplus but the inflow of capital. That, in turn, has been the result of the very liberalization that China has been urged to adopt, and the huge sums that banks — not least Paulson's old firm Goldman Sachs — have been prepared to pay for positions in China.

Paulson could equally have asked the Federal Reserve chairman, Ben Bernanke, who is also traveling to Beijing this week, to explain why they should be so fussed about China when the biggest surplus countries by far are now the oil exporters, such as Saudi Arabia and Russia.

Or he could ask another member of the team, Commerce Secretary Carlos Gutierrez, why he is so concerned about China's current account surplus when it is of roughly the same magnitude as those of its Asian neighbors who mostly enjoy big trade surpluses with China — which is often just an assembler of their products.

The U.S. trade representative, Susan Schwab, could explain why she is so keen on signing up bilateral trade deals that undercut the nonpreferential basis of the World Trade Organization at the same time that China is being accused of failing to live up to its WTO obligations. Or why getting some help from China on saving the current global trade negotiations does not seem high on the list of U.S. trade priorities.

Paulson could ask Labor Secretary Elaine Chao, also going on the trip, why economies that had far more job losses to China than the United States has suffered — such as Taiwan and South Korea — still have healthy trade balances. Or he could ask almost any corporate analyst for a breakdown of the profits made by non-Chinese companies from their manufacturing or buying operations in China.

In Beijing — or Tokyo, Seoul or Singapore — Paulson would find a ready audience for a good old-fashioned U.S. moralistic lecture on carbon emissions and environmental concerns. But Asia is not going to hear it — yet.

Good can only come out of this bilateral economic summit if both parties recognize that the major issues they both face are multilateral ones. The bilateral issues are side- shows — just as Iraq should have been.

The Obama bandwagon

The Obama bandwagon
By Scot Lehigh
Copyright by The Boston Globe
Published: December 12, 2006


MANCHESTER, New Hampshire: On Sunday, George Bruno, a longtime politico, recalled Bill Clinton's first official campaign trip to New Hampshire, the state with the country's earliest presidential primary. Despite having declared for president a few days before, Clinton never drew a major-league crowd during that October 1991 swing.

So it's no wonder Bruno was astonished as he surveyed the 1,500 people (plus 150 media types) gathered to hear Illinois Senator Barack Obama on his waters-testing trip here.

"This is pretty amazing," he said. "It is unprecedented."

He was hardly the only one bowled over by what Obama had wrought.

"I have never seen anything like this is my 40 years of being active in politics," said Jack Buckley, the former mayor of Dover. "If I were Hillary, I would be more than a little concerned."

If you were John Edwards, you might be as well, for there was state Senator Lou D'Allesandro, a pillar of Edwards's 2004 New Hampshire effort, giddy as a schoolgirl as he talked about a recent conversation with Obama and marveled at the crowd.

"It is incredible," he gushed.

At the Jefferson-Jackson dinner back in October, D'Allesandro told me he would be with Edwards if he ran again. Does that still hold? Edwards hasn't said he's running, the senator replied. But if he does? Well, "obviously I would be thinking about it strongly," he said, seemingly hedging his bets.

So what is it that Obama was peddling at the great Manchester swoonfest?

Mostly it was this year's hottest political product: an audacious little thing called hope.

Now, a modern-day Oliver Twist could argue that hope by itself can be pretty thin gruel, and that voters might want something more filling. Particularly New Hampshire voters, who pride themselves on their owlish ability to appraise candidates.

Party panjandrums had decided not to let reporters roam into the huge function room to speak with the voters themselves, but by cramming my press credential in my pocket — and fixing a look of resolute optimism on my face — I managed to mix in with the folks who had paid $25 to attend the New Hampshire Democratic Party rally.

From what I heard, Oliver Twist would be wrong — and Buckley looks right.

Hope is working. And Hillary Clinton should be more than a little concerned.

Voters I talked to were not merely curious about Obama. Almost to a person, they were in search of a fresh face, someone inspirational, different, real — and they felt strongly that Obama fit the bill.

As for Clinton? Some were angry at her over the war. Others said they liked her, but harbored doubts about whether she could win.

Were they concerned about whether the 45-year-old Obama, who has only two years in the U.S. Senate under his belt, is experienced enough for the job? How much real experience did George W. Bush have before he was elected, several countered? (That's somewhat curious reasoning, given the low esteem in which most Democrats hold the current occupant of the White House.)

As voter after voter made clear, governmental experience is not a major consideration for them; instead, they trust their own measure of the man.

If some of Obama's appeal sounds similar to what liberals saw in Howard Dean last time around, there are also significant differences. Dean was a hot, aggressively partisan candidate, eagerly advertising his eagerness to mix it up with Republicans.

Obama is folksy rather than fiery, comfortable and conversational rather than combative. Although he acknowledged the challenges racial bias and his foreign- sounding name could present, the senator said he had always found that "if people get to know you ... people will judge you on the merits."

He stressed the importance of civility, and the need to find commonsensical, pragmatic, non-ideological solutions for voters' concerns.

That said, the matters he touched glancingly on — universal healthcare, energy independence, action on global warming, more affordable education, and a phased withdrawal from Iraq — will have a clear appeal to progressives.

If, as expected, Clinton runs, the immediate question will be this: Who will become the principal alternative to her?

On Sunday, a self-deprecating Obama said he was suspicious of the hype over his visit. Still, his capacity- crowd Granite State audition made clear the strong claim he would have on that role.

Scot Lehigh's column appears regularly in The Boston Globe.

Pessimism over Iraq deepens as Bush weighs his next move - Bush speech delayed until New Year to get review 'done right'

Pessimism over Iraq deepens as Bush weighs his next move - Bush speech delayed until New Year to get review 'done right'
By Brian Knowlton
Copyright by The International Herald Tribune
Published: December 12, 2006

WASHINGTON: As President George W. Bush on Tuesday continued his high-profile exploration of expert views on Iraq, several new opinion surveys showed a dramatic deepening of American pessimism about the war and the president's handling of it. The White House said Bush would delay a planned major speech on Iraq until the New Year.

The speech had been expected by the end of next week, but a White House spokesman said the delay should not be seen as a reflection of indecision or a major shift in direction.

The review and decision process "requires findings of fact, it requires tactical calculations, it involves matters of state within the region," said Gordon Johndroe, a National Security Council spokesman. He added: "The key here is to get it done right."

Tony Snow, the White House spokesman, said Bush knew the general directions he would take in the speech but wanted time to work out the details.

The president also wanted to give the incoming defense secretary, Robert Gates, time to weigh in, said Secretary of State Condoleezza Rice. Gates is to take office Monday.

Wayne Downing, a retired U.S. general who was one of five experts to meet Monday with Bush, said Tuesday that "the impression I had was there will be some changes."

"I think you're going to see some new things come out," he said on NBC-TV.

What those may be remains far from clear. The president has distanced himself from the bipartisan Iraq Study Group's core recommendations that most U.S. combat troops be withdrawn by early 2008 and that the United States consult with Iran and Syria on stabilizing Iraq. He has been more receptive to the call for a new push for an Israel- Palestinian peace agreement.

The debate spread to Europe on Tuesday, where Bush's key Iraq war ally, Prime Minister Tony Blair of Britain, appeared to have toughened his tone against Iran since meeting Thursday with Bush, and where Chancellor Angela Merkel of Germany said that there could be no Middle East peace without Syrian involvement.

But as Bush continued his consultations — he spoke by videoconference to American military commanders in Iraq before conferring in person with the Iraqi vice president, and he was preparing for talks at the Pentagon on Wednesday — the opinion polls underscored the urgency of his search for "a new way forward."

Public opposition to this war has edged beyond the strongest levels registered to the Vietnam War, one poll indicated. Another survey pointed to a stunning collapse in support among the president's fellow Republicans for his conduct of the war.

The continuing violence in Iraq, victories by Democrats in the Nov. 7 elections and the grim description by the study group of a "grave and deteriorating" situation in Iraq all appeared to play a role.

Seventy percent of Americans told pollsters for CBS that the war was going badly — the largest percentage ever in that survey — and only 4 percent said the United States should stay with the same tactics. Half of those surveyed said the administration should move to end U.S. involvement altogether.

Sixty percent told Washington Post/ABC News pollsters that the war was not worth fighting. Last month, 70 percent of Republicans approved of Bush's handling of the war. Now, CBS found, only 47 percent do.

But 75 percent of respondents of a USA Today/Gallup poll supported the key proposals of the Iraq Study Group.

Sixty-two percent of respondents in the CBS poll said that sending troops to Iraq had been a mistake. Gallup polls in the early 1970s found 60 percent saying that sending troops to Vietnam had been a mistake.

Just as Bush has appeared skeptical of the study group's call for an early 2008 pullout and talks with Iran and Syria, the five experts invited Monday to meet with him also disagreed with those goals, The Washington Post reported.

While the president welcomed the bipartisan report, his public tone and language appear to have shifted little: He still speaks of a long-term struggle and a commitment to Iraq. The worldwide fight against extremists and radicals, he said Monday, "is really the calling of our time." Bush faces an intensely complicated, high-stakes juggling act in Iraq. He is pressed at home to find better approaches quickly — if not withdrawing, then threatening withdrawal to goad the government of Prime Minister Nuri Kamal al-Maliki to more decisive action.

But some of his military and political advisers — seconded by many American conservatives — have called a hasty withdrawal a recipe for disaster, and engagement with Iran and Syria pointless.

During Bush's meeting with Vice President Tariq al-Hashimi of Iraq, neither man used the word "victory" to describe his goals. The president said his objective was "to help the Iraqi government deal with the extremists and killers" and "to help your government be effective." Hashemi, a Sunni who has criticized the inability of the Shiite-led government to control violence, said he shared the president's view that "there is no way but success in Iraq."

"There is," he said, "a light in the corridor."

Meantime, debate on the call for talks with Iran and Syria — received coolly by the administration — was getting started in Europe.

Blair, who had advocated such talks before his Oval Office meeting Thursday with Bush, appeared Tuesday to have hardened his stance, at least on Iran.

"Iran is deliberately causing maximum problems for moderate governments and for ourselves in the region — in Palestine, in Lebanon and in Iraq," he said. Blair said there was "little point" in involving Iran or Syria "unless they are prepared to be constructive," the BBC reported.

But in Berlin, Merkel said that it would be impossible to forge Middle East peace without involving Syria, Reuters reported. The chancellor spoke a week after sending Foreign Minister Frank-Walter Steinmeier to Damascus for talks.

"It is important that we tell Syria what expectations we have of it," she said. "I don't believe that one can arrive at a comprehensive peace solution in the Middle East without bringing in Syria in some way."

On Monday, Secretary of State Condoleezza Rice discussed the U.S. reservations.

"If it's in Syria's interest to stabilize Iraq, then they'll do it," she said. But Rice indicated that the United States was not ready to bargain for Syrian help at the cost, for example, of giving Syria a pass on its involvement in Lebanon.

With the U.S.-backed government of Prime Minister Fouad Siniora in Beirut under siege by thousands of protesters organized by the Syrian-backed Hezbollah movement, she said, there should be no doubt about full American support for the elected government.

"In no way is the United States going to get into a situation where it is even a conceivable notion on the part of Syria or Iran that the future of Lebanon would somehow be compromised for other interests of the United States," she told Agence France-Presse.

Currency indices by J. P. Morgan

Currency indices
By Peter Garnham
Copyright The Financial Times Limited 2006
Published: December 12 2006 02:00 | Last updated: December 12 2006 02:00


JPMorgan, the US investment bank, has launched two indices it hopes will become the benchmarks for tracking volatility in currencies in the same way that the CBOE Volatility Index, or Vix, does for equities.

The indices launched yesterday track currencies from the leading industrialised nations and from emerging market countries. The bank will offer investors access through forward contracts that will settle against a daily fixing level.

The VXY index measures volatility in a basket of G7 currencies and the EM-VXY tracks volatility in emerging market currencies. They will fill a gap in the market at a time of increased interest in investing in currencies as an asset class among a broader range of fund managers. They could also help form trading strategies.

"Even after last month's spike, currency volatility remains low by historical standards," said John Normand, global currency and fixed income strategist at JPMorgan. "Yet for all the focus on this issue, there is no benchmark for tracking aggregate volatility in currencies." The indices could also inform currency trading styles, such as carry trades.

Both indices are based on three-month at-the-money forward options, weighted by market turnover.

The weightings of different currencies within the indices are based on option turnover taken from the Bank for International Settlements' Triennial Central Bank Survey of the foreign exchange and derivatives markets.

JPMorgan said that the weightings were fixed and would not be adjusted in future, although this could change for EM currencies which have a greater likelihood of seeing significant changes in liquidity.

2nd Colorado pastor quits over gay sex allegations

2nd Colorado pastor quits over gay sex allegations
Copyright © 2006, Chicago Tribune and The Associated Press
Published December 12, 2006

ENGLEWOOD, Colo. -- The founding pastor of a second Colorado church has resigned over gay sex allegations, just weeks after the evangelical community was shaken by a scandal surrounding megachurch leader Ted Haggard.

Paul Barnes, 54, founding pastor of the 2,100-member Grace Chapel in Englewood, a Denver suburb, tearfully told his evangelical congregation in a videotaped message Sunday that he had had sexual relations with men and was stepping down.

Dave Palmer, associate pastor of Grace Chapel, told The Denver Post that Barnes confessed to him after the church received a call last week.

On the video, which The Post was allowed to view, Barnes told church members: "I have struggled with homosexuality since I was a 5-year-old boy. ... I can't tell you the number of nights I have cried myself to sleep, begging God to take this away."

His wife, Char, said on the video that she did not know about her husband's struggles until he told her last week, according to The Post. The couple has two daughters in their 20s, the paper reported.

Palmer said in a statement that "While we cannot condone what he has done, we continue to support and love Paul."

Last month, Haggard, a gay-marriage opponent, acknowledged unspecified "sexual immorality" when he resigned as president of the National Association of Evangelicals and pastor of the 14,000-member New Life Church in Colorado Springs.

Unlike Haggard, Barnes is not a household name. The self-described introvert started his non-denominational church 28 years ago in his basement.

This Daley run will not be like the others

This Daley run will not be like the others
By Gary Washburn and Dan Mihalopoulos. Tribune staff reporters Mickey Ciokajlo and Todd Lighty contributed to this report
Copyright © 2006, Chicago Tribune
Published December 12, 2006

On the surface it looked a lot like past campaigns for mayor, with Richard Daley touting his record in office and declaring his passion for the job and the city. But while Daley was talking Monday about seeking a sixth term, his aides were filing nominating petitions with fewer than 25,000 signatures.

That figure was far from the political power plays of the past, when Daley's campaign filed as many as 200,000 signatures.

It was a sign that things are a little different this time around for the mayor. Since the 2003 election, the mayor's loyal political street organizations have suffered at the hands of an ongoing federal investigation into illegal hiring that rewarded campaign workers.

"All this means is that he doesn't have as many street workers this time around," said Ald. Ricardo Munoz (22nd). "Four years ago, the federal government wasn't breathing down his neck."

Still, polls have shown that Daley's popularity is high despite City Hall scandals, and most political experts consider him the clear favorite to win re-election. Another four years would allow Daley to eclipse his father's record of almost 22 years in the job.

"With all that we have accomplished, am I satisfied?" Daley asked during his speech at the Comer Youth Center on the South Side. "Do I believe Chicago is the best it can be? ... Or do I have more to give our city?

"Today I am here to answer with all my heart and soul and compassion. And the answer is yes. I have more to give to keep Chicago moving forward."

But Daley felt the need to mention the scandals, saying he had "accepted responsibility for the things that have gone wrong" and taken steps to address them, such as changing hiring procedures.

The mayor's former patronage chief, Robert Sorich, was sentenced to prison last month for his role in a long-running scheme to rig city hiring in favor of campaign workers for pro-Daley political groups. Witnesses in the Sorich trial said they owed their city jobs to their campaign work.

This fall, Daley's campaign required volunteers who circulated petitions to sign affidavits swearing they had not been offered public jobs or promotions for their help.

"There's nothing really for these guys to gain," said Ald. Brian Doherty (41st), whose campaign workers circulated petitions for the incumbent, although Doherty is a Republican. "No one will bust their tails except for the true believers."

Another sign of the times was a memo sent Friday to all Water Management Department employees by First Deputy Commissioner William Bresnahan.

"This is a reminder that political/campaign activities ... cannot be mingled with city work or resources," said the memo, obtained by the Tribune. "No employees can be forced to participate in a political campaign, including donations of time and money."

Terry Peterson, Daley's campaign manager, made no apologies for the small number of signatures. He noted that Daley only needs 12,500 valid signatures to get on the ballot.

Besides Democratic ward organizations, Daley's petitions were circulated by block club leaders, ministers and "just ordinary citizens [who] would walk into the campaign office and say, `Terry, can I get a sheet to circulate for the mayor?'" Peterson said.

Absent from the effort this time, Peterson said, were the Hispanic Democratic Organization and other pro-Daley groups that have figured into the federal investigation.

One Democratic ward committeeman, who spoke on condition of anonymity, wondered whether the low number could be part of a Daley campaign strategy to avoid making a splash with his petitions.

But Daley's two announced challengers predicted the mayor was vulnerable.

"The mayor's organization has been weakened, and he isn't the mayor he used to be," said Bill "Dock" Walls, who presented 39,000 signatures.

Dorothy Brown, clerk of the Cook County Circuit Court, did not file her petitions for mayor Monday but held a news conference to state that "Mayor Daley is beatable."

Brown said she would end "17years of almost unprecedented graft and corruption" under the Daley administration.

Filing for city clerk Monday were Miguel del Valle, appointed by Daley recently to fill a vacancy in the office, and Jose Cerda, a former mayoral aide who is running without Daley's blessing. Stephanie Neely, appointed by the mayor recently to fill the vacant city treasurer's job, was the only candidate Monday to file for that office.

The dissolution of Daley's patronage armies was widely expected to encourage more competition for City Council seats, and 120 candidates filed for alderman Monday. At least 40 of the city's 50 aldermen will face challengers.

Scores of incumbents and their would-be replacements lined up at 69 W. Washington St. early Monday to file their nominating petitions. The filing deadline is 5 p.m. Monday.

Paul Stewart, an 18th Ward candidate, was the first aldermanic hopeful in line. He said being there so early has symbolic value because it shows voters his "true commitment" to the race.

Standing right behind him was Mazonne "Maze" Jackson, another candidate for the 18th Ward seat left open by Thomas Murphy's election as a Cook County judge.

But sources said Daley would soon appoint Lona Lane, a Murphy aide, to replace him. Lane also filed petitions Monday, as the mayor's office declined comment on the 18th Ward vacancy.

The 18th Ward campaign could become a proxy battle for several African-American leaders, with U.S. Rep. Jesse Jackson Jr. (D-Ill.) and Illinois Secretary of State Jesse White expected to back candidates there.

Ald. Burton Natarus (42nd), who has been on the council since 1971, filed for re-election just moments after Brendan Reilly joined the race. Reilly is a former aide to Illinois House Speaker Michael Madigan.

"I think I'll be OK," Natarus told reporters as Reilly stood a few feet away.

The mayor's top ally in the council's Latino caucus, Ald. Daniel Solis (25th), has four opponents already and more appear poised to join the scrum. The hopefuls include former council members Ambrosio Medrano, who went to prison for corruption, and Juan Soliz.

Other challengers are local school council member Cuahutemoc Morfin and Aaron del Valle of the Hispanic Democratic Organization. HDO once supported Solis, but he has feuded with leaders of the once powerful pro-Daley group.

Another hotly contested campaign could be in the 2nd Ward, where three challengers filed Monday against 13-year incumbent Madeline Haithcock.

Although a candidate in the ward needs only 150 signatures to get on the ballot, lawyer Robert Fioretti filed more than 8,500.

Larry Doody, another 2nd Ward candidate, filed about 2,000 signatures and downplayed Fioretti's larger total. "Petitions don't win races," Doody said.

Vilma Colom, who lost her council spot four years ago to Ald. Rey Colon (35th), is seeking a rematch next year.

Former 1st Ward Ald. Jesse Granato also is attempting a comeback four years after voters dropped him from the council. This time, though, Granato is running in the 26th Ward, opposing Ald. Billy Ocasio.

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gwashburn@tribune.com

dmihalopoulos@tribune.com

Portland archdiocese to settle abuse suits

Portland archdiocese to settle abuse suits
By Jeff Barnard
Copyright © 2006, Chicago Tribune and The Associated Press
Published December 12, 2006

EUGENE, Ore. -- About 150 people who alleged they were molested by priests have agreed to settle their lawsuits against the Roman Catholic Archdiocese of Portland for an undisclosed amount.

U.S. District Judge Michael Hogan announced the agreement Monday but would not give a dollar amount. He told reporters the archdiocese, which is in Chapter 11 bankruptcy, could cover all current and future claims without selling off property held by parishes and schools.

The judge said the archdiocese has more than $50 million from settling litigation with insurance companies, plus sufficient real estate and other assets to cover the claims.

Portland was the first archdiocese in the nation to seek protection from creditors when it went to federal bankruptcy court to head off lawsuits claiming sexual abuse by Rev. Maurice Grammond, who has since died. Other priests also were accused of abuses.

Three other dioceses--Tucson, Ariz.; Spokane, Wash.; and Davenport, Iowa--also have sought bankruptcy court protection from a flood of lawsuits by people alleging sexual abuses by priests. Tucson emerged from the process last year.

Court records show the Portland archdiocese has spent $15 million on legal costs.

"These are expensive lessons," Hogan said. "All of our hope is, including the archdiocese, is that they have been learned."

About 20 lawsuits remain, but Hogan said he was confident the remaining plaintiffs would accept the settlement. All parties are under a gag order.

David Clohessy, national director of Survivors Network of those Abused by Priests, who is not a party in the agreement, expressed hope that the settlement would bring healing to those who sued.

"We are grateful they had the wisdom to go to the courts and had the persistence to continue throughout this arduous process," he said in a statement.

Despite the agreement, there is still work to be done in the archdiocese's bankruptcy case.

Final terms of the settlement will have to be incorporated into a reorganization plan for the archdiocese, and Bankruptcy Judge Elizabeth Perris will have to rule that the plan is fair for all parties.

The bankruptcy case has pitted U.S. courts against church law over church property ownership.

International Herald Tribune Editorial - Pinochet: The dextrous dictator

International Herald Tribune Editorial - Pinochet: The dextrous dictator
Copyright by The International Herald Tribune
Published: December 11, 2006


The central puzzle of the dictator Augusto Pinochet Ugarte, who died Sunday at the age of 91, was that until recently he retained admirers in Chile and abroad, especially among people emerging from Communism. He masked his corruption and brutality by tailoring his level of repression to just what he needed to retain power and prestige.

Pinochet was head of the army in 1973 when he led a coup against the socialist Salvador Allende, whose chaotic presidency had been further destabilized by the Nixon administration. In the first three years, Pinochet's regime killed almost 3,000 people. Thousands more were tortured. The vast majority of the victims were nonviolent.

At first, Chileans, exhausted by politics, bought the government's stories that the victims were terrorists killed in confrontations with police. Then Pinochet made the repression more subtle. Killings were selective — but that was enough to take care of the few brave dissidents. He distracted the rest of Chile with an artificially strong peso that made imports cheap and allowed even the middle class to buy color televisions and cars. The protests did not begin until 1983, after the peso crashed.

Pinochet also exploited Chileans' need for legality. In 1980, he passed a constitution providing for a plebiscite in 1988 on whether to hold free elections — robbing the coming protests of their power. When the plebiscite arrived, the government tried to rig it. But even members of the junta objected, and Pinochet was forced to hold elections in 1989. The opposition won.

Once Pinochet was out of office, his reputation slowly disintegrated. Although his second wave of economic policy worked, the center-left governments that followed deepened reforms and brought their benefits to average people, refuting the argument that a Pinochet was necessary for economic discipline. Chileans who argued that the human rights abuses were exaggerated were shown irrefutable proof.

Investigators also discovered at least $28 million that Pinochet held in more than 100 secret bank accounts, most of them in the United States. At the time of his death, he was under indictment for kidnapping, torture and murder, as well as corruption-related charges of tax evasion and possession of false passports. Time has revealed that the once-admired Pinochet was accomplished only at holding on to power.

International Herald Tribune Editorial - U.S. Congress: Desperately seeking ethics

International Herald Tribune Editorial - U.S. Congress: Desperately seeking ethics
Copyright by International Herald Tribune
Published: December 11, 2006


Watching their elected leaders in action, it's not surprising that Americans wonder if there is any limit to the crass misbehavior that members of Congress are willing to tolerate from their colleagues to protect their privileges and hold on to their own jobs. The House ethics committee answered that question Friday with a resounding "No."

Sixty-four days after it promised to find out who knew about Representative Mark Foley's wildly inappropriate, sexually predatory behavior with teenage House pages, and why they failed to stop it, the bipartisan committee produced a report Friday that was a 91-page exercise in cowardice.

The report's authors were clearly more concerned about protecting the members of the House than the young men and women under their charge in the page program. And they made absolutely no effort to define the high standard of behavior that should be required of all members of Congress and their staffs.

The committee, which never heard from Foley, did not call for disciplinary action against current members of the House or their staffs. The committee said those who have already left, like Foley, were no longer its problem.

The panel's justification for inaction is a breathtaking exercise in sophistry: "the requirement that House members and staff act at all times in a manner that reflects creditably on the House does not mean that every error in judgment or failure to exercise greater oversight or diligence" is a violation.

No, not every error or failure should be a violation, but certainly the ones that lead to an elected official's sexually stalking teenage boys while his colleagues turn a blind eye or cover it up should be. We'd set the bar at least there. Apparently, it's too high for the House.

Bush did not set out to miss the mark, of course, but his inattention to the execution of his grand ideas has had fatal consequences.

Trouble From the Top Down - Bush did not set out to miss the mark, of course, but his inattention to the execution of his grand ideas has had fatal consequences.
By Jonathan Alter
© 2006 Newsweek, Inc.



Dec. 18, 2006 issue - In government, the tone set at the top can be as powerful as the mightiest army. It reverberates through everything. The history of the American presidency is the story of the character and temperament of the man in the Oval Office coursing through thousands of smaller decisions, often thousands of miles away. If the president is supple and open-minded, those decisions made many layers below him are more likely to be agile and empirical. If he's stubborn and too sure that he has all the answers, the modeling of his behavior is likely to result in decisions you would ground your teenager for.

This process is uncanny and usually unconscious, the product less of explicit orders or egregious boot-licking than of bureaucratic osmosis. The temperament of the chief leaches into the performance of functionaries he has never met.

Fortuitously, presidential personality traits have often led to major accomplishment. FDR was a great believer in experimentation, so the legions below him launched hundreds of experimental programs to fight the Depression. Ike was a champion of logistics during World War II, so it figured that the Interstate Highway System got built on his watch. LBJ was a master legislator, so it was no coincidence that his presidency featured scads of legislation. (His insecurities, in turn, contributed to the Vietnam debacle.) In recent years, George H.W. Bush's habit of writing endless thank-you notes bore indirect fruit in the gracious and face-saving way he managed the demise of the Soviet Union. Bill Clinton's messy but thorough policy analysis led to dozens of small, well-built initiatives that worked with surprising consistency.

The United States in the Second Bush Era has not been as fortunate. Beyond the headlines and major policy recommendations, the Iraq Study Group's mercifully readable report shows how President Bush's personal shortcomings manifest themselves in appalling miscues on the ground.

Consider this largely overlooked portion of the report: "Our embassy of 1,000 has 33 Arabic speakers, just six of whom are at the level of fluency. In a conflict that demands effective and efficient communications with Iraqis, we are often at a disadvantage."

Disadvantage? Nah. Who could imagine that having only .6 percent of our personnel who speak the native language might cause us some problems over there? If the damn Iraqis would just learn English we wouldn't be in this mess! Bush did not set out to miss the mark, of course, but his inattention to the execution of his grand ideas has had fatal consequences. At $8 billion per month in Iraq, you would think we'd have a few more people there who could find their way to the bathroom.

After 9/11, the absence of Arabic speakers was a big story. Analysts all agreed that we could not stop terrorism without addressing the problem. A different kind of president would have ordered a Manhattan Project-style crash program to teach the difficult-to-learn language in schools. Such a "National Security Language Initiative" was finally launched—with little notice, money or presidential attention—this year, five years late.

In the meantime, several reports highlighting the shortage have "gathered dust," the president's words for what usually happens to Washington studies. They show that as of 2006 only 33 FBI agents—1 percent—have even limited proficiency in Arabic. (The bureau claims its outside contractors can do the job.) One of the tiny handful who is actually fluent, Special Agent Bassem Youssef, is currently engaged in a lawsuit over his rough treatment inside the FBI. (The fact that he is of Arab descent apparently made him suspicious.) Among other terrifying revelations, the suit has shown in eye popping videotaped depositions that the men who run FBI counterterrorism efforts don't know the difference between Sunnis and Shiites.

This is what happens when you have a president who is incurious and impatient with inconvenient facts he doesn't "need to know": hundreds of thousands of dead Iraqis, nearly 3,000 dead Americans and what the Baker-Hamilton Commission estimates as a $2 trillion tab for our children.

Another part of their report touches on an even darker example of presidential tone-setting. In identifying a "significant underreporting of the violence in Iraq," the commission explains how the administration cooks the books on Iraqi casualties: "If we [the U.S. government] cannot determine the source of a sectarian attack, the assault does not make it into the data base. A roadside bomb or a rocket or a mortar attack that doesn't hurt U.S. personnel doesn't count."

Ponder that. For more than three years, those whining, negative journalists who reported "too much bad news" out of Iraq were actually soft-pedaling the problem, thanks to the bogus statistics on which they still depend. A war that was launched by twisting intelligence is being lost while twisting body counts. Shakespeare's "tangled web" of deceit was woven at the top, but its threads extend everywhere.

Not for Profit Organizations - Giving Freely—And Wisely

Not for Profit Organizations - Giving Freely—And Wisely
One site names preachers who may be misusing money and suggests that you 'prayerfully' consider giving to other ministries instead.
By Jane Bryant Quinn
© 2006 Newsweek, Inc.
Updated: 11:36 p.m. MT Dec 9, 2006



Dec. 18, 2006 issue - They're out to get you—the nonprofits, I mean. In any year, charities may collect half the money they'll get from individuals in the weeks between Thanksgiving and New Year. But even as donors open their wallets, many give with divided minds. You admire the cause but secretly worry that the group might squander your money.

The better nonprofits worry about that, too. They seethe when less worthy competitors (and they know the names!) pull in big bucks. Several Web sites rate charities to weed out the detectable stinkers. They tell you what each nonprofit does and how it says it spends your money. But here's what you don't know: whether the group makes a real difference in the world and if its financial disclosures are fair.

Questions like these are driving a budding "transparency movement" for public charities. State laws can do nothing. A series of Supreme Court decisions leaves charities free to hide or say whatever they want when they're raising funds (short of fraud, of course). Instead, the chief actors are donors, public-policy think tanks and concerned nonprofits themselves.

The first order of business is to follow the money. Today, that's the heart of what the rating services do. Most nonprofits (including religious charities but not churches) have to file Form 990, a financial disclosure, with the IRS. These are being mined for data and put on the Web.

Unfortunately, you can't always believe what the 990 says. It's supposed to show how much the nonprofit spends on actual services, as opposed to fund-raising and administration. But the law isn't much enforced. In a report covering part of the 1990s, the General Accounting Office found that 64 percent of public charities claimed to have zero—zero!—fund-raising expenses. Do you believe that? Neither do I.

The charities' own, independent audits generally do better—and good groups disclose them. But accountants have a lot of discretion in deciding which expenses to call "fund-raising." Nonprofits that disguise their costs or exaggerate the value of donations can win higher ratings than those that present their finances more fairly. The temptation is always there.

Some of the rating services adjust for these problems. Uncharitably, they often slam each other's methods while touting their own. I'm a civilian in these wars, so my advice is to look for good grades from every source. Start your research here:

1. The Better Business Bureau Wise Giving Alliance (Give.org). It currently posts reports on more than 900 nonprofits, testing them by a number of standards including good governance. About 65 percent of them pass. The rest fail, or refuse to be evaluated (a bad sign, no matter what excuse the charity gives).

2. American Institute of Philanthropy (CharityWatch.org). It's the toughest of the bunch, rating more than 500 charities on a scale of A+ down to F. Because it disregards certain, potentially suspect, expenses and donations, it fails some nonprofits that the other raters approve. Readers of this column can get its latest Charity Rating Guide free from AIP, P.O. Box 578460, Chicago, IL 60657.

3. CharityNavigator.org rates 5,100 nonprofits on a scale of zero to four stars. This site draws only from a nonprofit's latest 990 form, which could mislead. But I like its Top Ten lists, such as 10 Charities Overpaying Their For-Profit Fund-Raisers.

4. MinistryWatch.com rates more than 500 evangelical groups on a scale of 1 to 5 stars. It's an ardent advocate for financial disclosure. The site names preachers who may be misusing money and suggests that you "prayerfully" consider other ministries instead. Withholding that advice, says MinistryWatch.com, would be "tantamount to condoning sin." Hear, hear.

5. The Evangelical Council for Financial Accountability (Ecfa.org) accredits Evangelical churches and charities based on such standards as audited financial reports and ECFA's own field reviews. If your group hasn't joined (or is on the lists of those that left) you should ask why. There's no comparable service for Jewish, Muslim or Catholic organizations.

You'll find other sources. GuideStar.org gives no ratings, just access to 990s for nearly 700,000 charities. Pennsylvania's Department of State lists nonprofits that ran into trouble there. They may be fund-raising in other states.

Still, most people donate simply because someone asks them to, says William Meehan, chair of Philanthropic Research, parent of GuideStar. Charity ratings haven't had much impact, because they're flawed and not enough people follow them. Besides, the ratings don't help you choose among similar charities. For that, you need to know how well they do their jobs. That's the next step—and a new Web site should help it along. Watch for GreatNonprofits.org, launching next spring. People familiar with specific charities—clients, donors, staff and volunteers—will be able to post opinions there, for you to read before you decide to give.

In a skeptical age, charities need to prove they're using money well. I'd bet that the more they tell, the more they'll find people eager to help.

Reporter Associate: Temma Ehrenfeld

No `American' holy book

No `American' holy book
By Clarence Page
Published December 11, 2006

WASHINGTON -- The first Muslim to be elected to Congress has not been sworn in yet, but he's already taking heat.

Dennis Prager, a conservative columnist and radio talk-show host, objects to the holy book on which Rep.-elect Keith Ellison plans to take his oath of office on Jan. 4.

The Minnesota Democrat plans to use a Koran instead of a Bible.

Poor naive me. Here I thought it was an encouraging sign of this country's respect for liberty and diversity that Americans would elect a Muslim to Congress in the midst of an international war against Islamic terrorists. No country is perfect, but we've come a long way on the tolerance scale since World War II when thousands of innocent Japanese-Americans were rounded up into camps far from their homes just for their ancestry.

But not Prager. Ellison's choice should be blocked, Prager wrote, "not because of any American hostility to the Koran, but because the act [of taking the oath on the Koran] undermines American culture."

Again, poor naive me. I had no idea that American civilization was so fragile. "America, not Keith Ellison, decides what book a congressman takes his oath on," said Prager's headline on his blog.

The America I know has a Constitution. In Article VI, it says that "no religious test shall ever be required as a qualification to any office or public trust."

Besides, contrary to Prager's account, House members are sworn in together on the floor of the chamber. The ritual that usually involves a Bible or another holy book is actually a ceremonial photo-op with the speaker of the House.

Prager insists that he was not calling for a religious test. Yet, he also wrote this: "Insofar as a member of Congress taking an oath to serve America and uphold its values is concerned, America is interested in only one book, the Bible. If you are incapable of taking an oath on that book, don't serve in Congress." The Constitution does not have a religious test, but Prager does, judging by his writing.

Prager is not just another ambitious crank looking to feather his nest with a little pinch of old-fashioned demagoguery. He's got connections in important places. He was appointed by President Bush in August to fill a vacancy on the United States Holocaust Memorial Council.

The council oversees the taxpayer-supported Holocaust Memorial Museum, whose mission statement encourages visitors "to reflect upon the moral and spiritual questions raised by the events of the Holocaust as well as their own responsibilities as citizens of a democracy." The Council on American-Islamic Relations, a civil rights group that supported Ellison's election, asked Bush to remove Prager from the Holocaust Memorial board. It didn't think he was living up to the museum's mission statement.

Bush declined to step in. As White House spokesman Tony Snow put it, Ellison's holy book is "an issue that the president does not need to adjudicate and, therefore, will not." That's understandable. Bush has enough to worry about with sectarian clashes in Iraq without stepping into Prager's war over whose holy book is more "American."

Prager, you may notice, is the sort of commentator who uses the word "America" a lot, even when he is speaking for hardly anyone outside of himself. Or maybe I just don't live in Prager's America. Lucky me.

The Anti-Defamation League called Prager's views "intolerant, misinformed and downright un-American." I guess the league doesn't live in Prager's America, either.

Even Prager's fellow conservatives have not rushed to his side. In the case of the conservative New York Sun, for example, Prager appears to have performed a minor miracle: He has made Ellison look sympathetic in the eyes of a newspaper that opposed his election. "Mr. Prager is not only wrong," a Sun editorial said, "but his comments are so outrageous and, by our lights, almost unbelievably ignorant, that one just has to shake one's head in wonder."

Fortunately, Sen. Norm Coleman emerged as a welcome voice of reason late last week. He's a Republican from Ellison's home state and a member of the Holocaust Memorial board.

In that spirit, Coleman took a middle-of-the-road position: Ellison should feel free to use the Koran, Coleman said, and Prager should be allowed to stay on the board. "I don't agree with Dennis Prager," said Coleman, according to the Associated Press. "But I think it's absurd to rescind his appointment on the Holocaust board."

Sounds good to me. Both sides should back off in the spirit of all-American tolerance and mutual respect for differences. After all, we need to set a good example for Iraq.

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E-mail: cptime@aol.com

Financial Times Editorial - Bemused Bernanke

Financial Times Editorial - Bemused Bernanke
Copyright The Financial Times Limited 2006
Published: December 11 2006 02:00 | Last updated: December 11 2006 02:00


Most people would agree that, 10 months into the job, the new chairman of the Federal Reserve has not had the smoothest of rides. In that time, Ben Bernanke has had to deal with a slowing economy, large currency moves, volatile oil prices and difficulties communicating with the markets. The top job at the Fed has clearly become much harder. But with some luck, Mr Bernanke may still be able to manage it.

The strong economic expansion that started in 2002 came to an end this year, with the last two quarters showing a noticeable moderation in output growth. In the past month, data have become increasingly choppy. Some indicators, especially those relating to the housing market and consumer confidence, portray a weakening economy. Others, such as the strong payroll job creation numbers last Friday, paint a still resilient picture.

Inflation has moderated recently, thanks to favourable comparisons with last year's spike in oil prices. But excluding oil, inflation is still persistently high, reaching up to 2.9 per cent in the past three months. In spite of adopting a "wait and see" policy since August, keeping interest rates at 5.25 per cent, the Fed is still more concerned about high inflation than weaker growth.

However, the Fed's view that interest rates are more likely to go up than down is not shared by the market. Some of this is down to how Mr Bernanke has communicated recent policy decisions. But mostly, the divergence of views is due to the fact that the job of predicting where the economy is going has become much harder.

There are two reasons. First, it seems that the rate of potential growth is declining. The US economy has enjoyed a period when both the size of the workforce and its productivity have expanded strongly. Now it seems that the retirement of the baby-boom generation and a deceleration in female participation growth will lower potential from more than 3 to about 2.75 per cent. A lower rate of potential growth does not imply any specific interest rate reaction. However, the Fed must monitor the economy's changing capacity, as this will ultimately determine future inflationary pressures.

Second, Mr Bernanke's job has got much harder because the economic cycle is about to reach a turning point. The slowdown in growth has been led by a cooling in the housing market. The pessimists argue that most of the pain is still to come, requiring sharply lower rates in the first half of 2007. The optimists believe that the rest of the economy will be able to sustain activity, even in the face of a weaker dollar.

Achieving a soft landing is never easy. In the US, cyclical and structural factors make it even harder. On balance, the Fed's view that the economy remains resilient and inflation is the bigger risk is probably correct. Mr Bernanke now has to persuade the markets to share his optimism.

Financial Times Editorial - Attacking Iran would compound Iraq fiasco

Financial Times Editorial - Attacking Iran would compound Iraq fiasco
Copyright The Financial Times Limited 2006
Published: December 11 2006 02:00 | Last updated: December 11 2006 02:00



No one who has read the Baker report's devastating if delicately worded indictment of US policy in Iraq could fail to understand that it spells failure. And that without wholesale changes of policy the US is staring at a humiliating defeat in the Middle East. No one, that is, except George W. Bush.

The president seems incapable of acknowledging the scale of the disaster in Iraq. He and his coterie blame the Iraqis, and Iran, for US failures. They persist in identifying the US national interest and Israeli hegemony in the Middle East as the same thing. For good measure, Mr Bush rejects a key finding of the Baker report: that, in pursuing policies to stabilise the region and get a grip on Iraq, the US should talk to Syria and, above all, to Iran.

But it is not just that Mr Bush is petulantly spurning the lifeline thrown to him by his father's former secretary of state - more of interest to students of psychodrama than geopolitics.

There is a terrifying possibility this administration will raise the stakes and compound the Iraq misadventure into a regional and international catastrophe by attacking Iran - or by acquiescing in an attack by Israel.

True, Robert Gates, the new defence secretary confirmed last week to replace Donald Rumsfeld, the man most directly responsible for Iraq, has said there are no plans to attack Iran except as an "absolute last resort". That is not altogether reassuring.

The problem goes beyond the well-founded suspicions about Iran's nuclear ambitions. The US has been viscerally incapable of dealing with Iran ever since the 1979 Islamist revolution, the 1980-81 Tehran hostages crisis and the 1983-84 bombings of US marines and diplomats in Beirut. That hostility has only been deepened by the bitter paradox that the US invasion of Iraq has greatly expanded Shia Iran's influence throughout the Middle East.

Washington rages against the mullahs and their proxies but has become dependent on Iran to hold together western Afghanistan and prevent total implosion in Iraq. Israel, meanwhile, has convinced the Bush administration Iran is a threat to its existence rather than its hegemony - a claim helped by President Mahmoud Ahmadi-Nejad's outrageous Holocaust denials.

But Iran is, nonetheless, as big a challenge in the Middle East as the Soviet Union was in Europe. It requires a similarly robust but reasoned policy response. Attacking it would trigger a wave of reprisals and a long war of attrition across and beyond the region, and might not even seriously set back Iran's well-concealed nuclear programme. That leaves engagement.

The goal, as the Baker report indicates, is to get workable mutual security arrangements with Iran: to steer it away from the nuclear path and towards co-operation in a region where its role would be recognised. That is not appeasement but hard-nosed diplomacy and it is obviously worth trying.

International Herald Tribune Editorial - Back to the Moon

International Herald Tribune Editorial - Back to the Moon
Copyright by The International Herald Tribune
Published: December 10, 2006


Three years after President George W. Bush announced an ambitious long-term goal to return astronauts to the Moon and then send them on to Mars, the National Aeronautics and Space Administration has finally put some flesh on his nebulous aspirations. This week, the agency announced plans to establish a permanent base on the Moon by 2024, explained why Americans should want to send astronauts back to a world they visited repeatedly more than three decades ago, and described what they might do when they get there. It was belated justification for a decision that the Bush administration and Congress have already made. But the payoff is distant and the likely future costs very high, leaving it unclear how realistic these aspirations will prove to be.

The agency has done a commendably thorough job by consulting some 1,000 experts and 13 other space agencies in fashioning its plans. Such a costly and difficult venture should ideally be pursued cooperatively with other nations, to share the costs and the risks. It would be especially desirable to have multiple ways of reaching the Moon in case the American program runs into problems like those that grounded the shuttles.

What's worrisome about the new plans is their lack of focus. The agency cites six major reasons for returning to the Moon. The most persuasive is to use the Moon as a base to test technologies and operating techniques to be used on future missions to Mars, a more compelling target. It makes sense to first try "living off the land" on the Moon, where astronauts are only days away from home should something go wrong, before taking the long leap to Mars. The venture is also justified on scientific, economic, educational and global partnership grounds, and as a step toward eventual settlements on the Moon.

The wide sweep of these rationales is reminiscent of the extravagant promises for the space station, which was sold to Congress as a steppingstone to the planets, a scientific and economic bonanza, and a stimulus for students but is still limping along, half finished and far over budget, with greatly diminished expectations for what it can accomplish.

An even more expansive document — listing some 180 objectives that the astronauts might pursue on the Moon — is essentially a wish list compiled after consulting virtually every expert in the world who might have an opinion. The list puts the lie to criticisms that there is almost nothing useful to do on the Moon. But some of the objectives have a pie-in-the-sky quality, like exporting power from the Moon for use on Earth, while others, like observatories on the Moon, might not prove feasible or affordable for decades. The objectives will need to be winnowed and focused if they are to serve as useful guides in pursuing the program.

If the United States is to continue a human space flight program it makes sense to pick a more exciting destination than a space station circling endlessly in low Earth orbit. Our main concern is that the political proponents of the Moon-Mars adventure will not provide money commensurate with the task. NASA's crowning scientific achievements have come from its unmanned probes to distant worlds and its orbiting observatories. It would be a shame if an underfinanced program to return to the Moon on a permanent basis and then venture on to Mars forced reductions in research programs of higher scientific value.

International Herald Tribune Editorial - Iraq, about those other problems

International Herald Tribune Editorial - Iraq, about those other problems
Copyright by The International Herald Tribune
Published: December 10, 2006

No one could ever suggest that James Baker lacks ambition or self-confidence. So it is not surprising that along with its effort to salvage Iraq, the report from Baker's Iraq Study Group offers some strong advice on how to fix George W. Bush's dysfunctional Washington — and the president's dysfunctional relations with the rest of the world.

We were particularly drawn to Recommendations 46, 72 and 78. Under separate headings dealing with the military, the federal budget and the nation's intelligence agencies, they share one basic idea: Government officials should not lie to the public or each other, especially in matters of war.

One should not need a blue ribbon commission to know that. But the fact that it had to be said, and so often, in the report goes a long way toward explaining how Bush got the country into the Iraq mess and why it is proving so hard to dig out of it.

Consider Recommendation 46, which calls on the new secretary of defense to create "an environment in which the senior military feel free to offer independent advice" to civilian leaders, including the president. That is their sworn duty. But the back story is the Pentagon's prewar refusal to listen to the former Army chief of staff (and who knows how many other generals) who warned that it would take several hundred thousand troops to stabilize a post-invasion Iraq. The good news is that the new secretary of defense, Robert Gates, acknowledged as much in his confirmation hearings. The bad news is that Bush has not.

Recommendation 72 says that "costs for the war in Iraq should be included in the president's annual budget request." The report warns that the White House's habit of using emergency funding for the war has eroded both "budget discipline" and congressional oversight. And just in case you were worrying that you hadn't been paying sufficient attention to the war's price tag, the report says the White House presents its requests in such a "confusing manner" that only detailed analyses by budget experts can answer "what should be a simple question: How much money is the president requesting for the war in Iraq?"

And finally, Recommendation 78 calls on the Pentagon and the intelligence community to "institute immediate changes" in how they collect data on violence in Iraq "to provide a more accurate picture of events on the ground." The report says that officials have used a standard for recording attacks (it notes that "a murder of an Iraqi is not necessarily counted") that systematically underreports Iraq's mayhem. It cites one day this past July when the government recorded 93 "attacks or significant acts of violence," while the Iraq Study Group's own analysis "brought to light 1,100 acts of violence."

Sprinkled among the recommendations, the report also has some homespun advice on how Bush might fix America's foreign relations. It suggests that the nature of diplomacy is to engage with adversaries as well as friends. And it warns that the United States does Israel "no favors" by refusing to try to broker peace in the Middle East, adding that it is "an axiom that when the political process breaks down there will be violence on the ground."

It is mind-boggling that this commission felt compelled to deliver Governing 101 lessons to the president of the United States. But that fits with the implicit message of the entire exercise — a rebuke of the ideologically blinkered way Bush operates. The report shows that there have always been plenty of alternatives to Bush's stubborn insistence on staying the course, and that if he were just willing to make an effort, it would be possible to forge a bipartisan consensus on the toughest issues.

It's tragic that Bush could not figure that out for himself. It is far past time for him to heed this new advice.

Presidential treatment for $1 coins - Commanders in chief to be honored in new series starting in 2007

Presidential treatment for $1 coins - Commanders in chief to be honored in new series starting in 2007
BY ANDREW LECKEY
Copyright © 2006, Chicago Tribune
December 10, 2006

The U.S. dollar has been around since 1785, its rise and fall remaining a critical factor in the world economy.

But it is the silver dollar that conjures up romantic images of America's rough-and-tumble past.

The U.S. landscape, especially the West, is dotted with establishments named the Silver Dollar Saloon. Each has some history connected to it and the town in which it is located.

Some stories are wholesome and others unsavory, but in hindsight it doesn't matter. Because the point was that anybody with a silver dollar was welcome, this wide net captured a Wild West clientele of card sharks, gold miners and desperados.

Recent establishments also have adopted the name to present a fun-loving image, even if it includes features such as karaoke that Jesse James might have frowned upon.

The fact is that the dollar coin has not been wildly popular in this country. Throughout its early days, it wasn't even continuously minted.

In modern times, the Susan B. Anthony dollar coin, minted in 1979, failed because it looked too much like a quarter. Issuance of additional Anthony coins in 1999 and its replacement with the gold-hued Sacagawea dollar coin in 2000 haven't helped.

Anthony was, of course, the famous women's civil-rights leader, while Sacagawea was the Shoshone Indian woman who helped guide explorers Lewis and Clark. The government owes them both big time for this whole coin thing. It should dedicate something more popular to each of them in the future.

People are just too used to paper dollars. Many of their coins are tossed in a bowl somewhere or lost in couch cushions. Vending machines don't take dollar coins. Who needs more?

Well, the U.S. Mint is trying once again, perhaps hoping parking meter prices will escalate or collectors are restless. Beginning in 2007, it will produce four new $1 coins each year to honor the U.S. presidents in their order of service.

These will be similar to the Sacagawea coin, which will continue to constitute a portion of dollar coins minted each year. Scheduled to run at least until 2016, the new coins will first feature George Washington, John Adams, Thomas Jefferson and James Madison.

Grover Cleveland will appear on two coins, not because the portly chief executive couldn't be fitted on to just one, but because he was the only president to serve non-consecutive terms.

This coin game is taking place as the U.S. dollar's value has shown vulnerability in late 2006, and many experts predict it may slide lower. Although Federal Reserve Chairman Ben Bernanke says he isn't worried, ultimately the U.S. economy decides the dollar's fate.

Whether it fits in a billfold or jingles in a pocket, the U.S. dollar has a power of its own that transcends anyone who happens to be on it.

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Andrew Leckey is a Tribune Media Services columnist.

New Requirements for Travelers 12-10-2006

New Requirements for Travelers as of 12-10-2006

Source US department of State http://www.travel.state.gov

The proposed implementation timeline has two phases:

Beginning January 23, 2007, ALL persons, including U.S. citizens, traveling by air between the United States and Canada, Mexico, Central and South America, the Caribbean, and Bermuda will be required to present a valid passport, Air NEXUS card, or U.S. Coast Guard Merchant Mariner Document, or an Alien Registration Card, Form I-551, if applicable.
As early as January 1, 2008, ALL persons, including U.S. citizens, traveling between the U.S. and Canada, Mexico, Central and South America, the Caribbean, and Bermuda by land or sea (including ferries), may be required to present a valid passport or other documents as determined by the Department of Homeland Security. While recent legislative changes permit a later deadline, the Departments of State and Homeland Security are working to meet all requirements as soon as possible. Ample advance notice will be provided to enable the public to obtain passports or passport cards for land/sea entries.
Travel Documents for U.S. Citizens Under WHTI

Under the proposed implementation plan, the following documents will be acceptable to fulfill document requirements:

U.S. Passport: U.S. citizens may present a valid U.S. passport when traveling via air between the United States and Canada, Mexico, Central and South America, the Caribbean, and Bermuda, and may also use a U.S. passport when traveling via sea and land borders (including ferry crossings).
The Passport Card (also referred to as the PASS Card): This limited-use passport in card format is currently under development and will be available for use for travel only via land or sea (including ferries) between the U.S. and Canada, Mexico, the Caribbean, and Bermuda. Similar in size to a credit card, it will fit easily into a wallet.
DOS and DHS also anticipate that the following documents will continue to be acceptable for their current travel uses under WHTI: SENTRI, NEXUS, FAST, and the U.S. Coast Guard Merchant Mariner Document. As proposed, members of the U.S. Armed Forces on active duty traveling on orders will continue to be exempt from the passport requirement.
Background

The Intelligence Reform and Terrorism Prevention Act of 2004 requires the Department of Homeland Security and Department of State to develop and implement a plan to require all travelers, U.S. citizens and foreign nationals alike, to present a passport or other document, or a combination of documents, that denote identity and citizenship when entering the United States. Congress amended portions of the Act in 2006. The Western Hemisphere Travel Initiative is the Administration’s proposed plan to implement this mandate.

The goal of the Initiative is to strengthen border security and facilitate entry into the United States for U.S. citizens and legitimate foreign visitors by providing standardized, secure and reliable documentation which will allow the Department of Homeland Security to quickly, reliably and accurately identify a traveler.

Passport countdown

Flying out of the country in the new year? As of Jan. 23 you'll need a passport if you're traveling by air either way between the U.S. and the Caribbean, Mexico, Bermuda, Canada, Central and South America.

No passport is needed for travelers flying between the U.S. and its territories, including the U.S. Virgin Islands and Puerto Rico.

Details and passport applications can be found at travel.state.gov.

Post offices that accept passport applications are listed at www.usps.com/passport.

In Chicago, the main passport office is in the Kluczynski Federal Building, 230 S. Dearborn St., 18th floor; 877-487-2778.

Can Same Sex Marriage save the Institution of Marriage for Heterosexuals? By Carlos T Mock.

Can Same Sex Marriage save the Institution of Marriage for Heterosexuals?
By Carlos T Mock.
December 2, 2006,

I read in an article by Molly Moore at the Washington Post (November 23, 2006) that "in France, the country that evokes more images of romance than perhaps any other, marriage has increasingly fallen out of favor. Growing numbers of couples are choosing to raise children, buy homes, and build family lives without religious or civil approval of their partnerships. In the past generation, the French marriage rate has plunged more than 30 percent, even as population and birthrates have been rising."

The article continued: "Marriage is in decline across much of northern Europe, from Scandinavia to France, a pattern some sociologists describe as a "soft revolution" in European society--a generational shift away from Old World traditions and institutions toward a greater emphasis on personal independence."

I read on November 22, 2006, an article by Mike Stobbe, an Associate Press writer, published in the Chicago Tribune that stated: "Out-of-wedlock births in the United States have climbed to an all-time high, accounting for nearly 4 in 10 babies born last year, government health officials said Tuesday." While teen births are dropping.

This brought back memories of an article published October 15, 2006 in the New York Times that said: "Married couples, whose numbers have been declining for decades as a proportion of U.S. households, have finally slipped into a minority, according to an analysis of new census figures by The New York Times."

Are all of you heterosexuals getting the picture? You have destroyed the institution of marriage all on your own. As a friend of mine told me recently: "You gays should be allowed to marry, so you can suffer with the rest of us."

So why has Freedom to Marry, the ACLU, Lambda Legal and many gay activists launched themselves to obtain the right to marry? Is it because they want to be as miserable as straight people? No, I think they truly believe they can save the institution of marriage for all heterosexuals.

Lets face it, when I was working as an Obstetrician Gynecologist in the conservative western suburbs of Chicago, not only was I in the closet, but I was working twice as hard as my straight counterparts. I took call on all the holidays (since I had no family to take care of), and I took any extra call that my equal partners did not want, simply because of my sense of insecurity drove me to be the best gynecologist in town. I felt it was my duty to overcome my "gayness" by working extra hard.

Could it be that this is the same force that is driving the GLBT movement? Tired of being denied over 1000 rights that they deserve under the 14th amendment of our Constitution which states "No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States," they are willing to take on the institution of marriage and clean it up.

In the 1999 movie American Beauty, directed by Sam Mendez, it is the best example of what I'm trying to expose. The only normal couple in the movie was the gay couple.

As we celebrate 25 of the AIDS epidemic, we have proven to ourselves that we can take care of our own. The AIDS response, led by gays and lesbians and joined by all truly caring people, demonstrated the high levels of magnificence and effectiveness of which humans are capable. That response will remain a standard for all of history to look back on with admiration and awe. Is that what we can bring into the marriage equation—a sense of commitment?

What if, like in Massachusetts, same sex marriage becomes the law of the land? Will the straight couples emulate us, just like they do on everything else that we do best: arts, decorating, hairdressing, beauty, harmony, etc.?

Is this the true motivation (other than being tired of being second class citizens) behind the same sex marriage movement?

Before you answer my question, please take a moment to examine your own heterosexual marriage and tell me how happy you are in it.

0% financing sparks questions

0% financing sparks questions
Experts warn that failure to read the fine print in these plans can cost you retroactive interest and even hurt your credit rating
By Becky Yerak
Copyright © 2006, Chicago Tribune
Published December 2, 2006

With $1.5 billion in estimated wealth, Oprah Winfrey hardly has to worry about how she's going to pay for life's material things.

But even the media queen can't help but notice zero-percent financing offers for various big-ticket items.

"I see these ads all the time for, `Buy now, zero-percent financing.' What does that mean?" Winfrey asked a financial expert on one of her shows earlier this year. "I think, `It's too good to be true.'"

Less than a month before Christmas, retailers including Carson Pirie Scott, Sears, Comp USA and Toys "R" Us are advertising various no-interest financing plans to catch the eye of shoppers and generate traffic.

Consumers also can hop into a Chevrolet that they've bought with zero-percent financing for 72 months, head to a Lasik eye center where they can pay zero down and no interest until 2008, and exercise on a treadmill purchased with interest-free financing.



Ticking financial time bombs

Consumer advocates say such offers--which generally enable consumers to escape interest payments if they pay the bill by a specified time--can be a great deal for people on top of their finances.

"It's like a second helping of pumpkin pie," said Greg McBride, Bankrate.com senior financial analyst. "If you're a workout warrior, you're pretty safe."

But for consumers less disciplined about their spending or less diligent about checking under the hood for the fine print, such offers can be ticking financial time bombs.

According to TrueCredit.com, most of the retail industry's no-interest/no-payment plans work like this: If, say, an appliance retailer offers no payments or interest for 12 months on Dec. 1, the shopper has through Nov. 31 of next year to enjoy the product without paying any interest on top of the purchase price.

But, if the item isn't paid off by the maturity date, the consumer could owe not only the unpaid balance, but also interest backdated from the 12 months.

"You buy $5,000 worth of furniture, and you've paid all but $200 back and the promotional period ends, and, bam, you're hit with hundreds of dollars of interest," said Curtis Arnold, founder of Cardratings.com, a credit education Web site.

Heading into the holidays, many consumers vowed to resist zero-percent financing and no-payment/no-interest pitches, according to a study last month by TrueCredit.com, a unit of credit information provider TransUnion LLC.

Asked how likely they are to make a big purchase this holiday using zero-percent financing or a no-payment/no-interest offer, fewer than 2 in 10, or 18 percent, say it's very or somewhat likely.

"People are feeling a little conservative about zero-percent financing offers," Lucy Duni, TrueCredit.com consumer education director, said last week.

But maybe not conservative enough--only 71 percent responded that if they were to take advantage of such an offer, they'd pay off the total due before incurring an interest charge, TrueCredit.com also found.



Credit rating at stake

Retroactive interest isn't the only potential pitfall they'd face.

The no-interest/no-payment plans often require opening a store account. But applying for too many accounts can hurt credit scores, triggering a chain reaction making it tougher to get favorable terms later for, say, a mortgage.

Also, the merchant often opens the account with a credit limit at the product's purchase amount, "so right there you have a new credit account already at its limit," Duni said. "You want to try to keep credit at below 35 percent of the limit."

If consumers don't pay off the program in time and have to pay retroactive interest, they'll likely face higher payments than they would with a bank credit card.

"Store credit cards are typically charging higher interest rates than the average Visa or MasterCard," said Howard Dvorkin, author of "Credit Hell: How to Dig Out of Debt"

Shaun Davis, a Hollywood, Fla., businessman, learned firsthand about the dark side of such offers after signing up for a 12-month no-interest program to buy a TV. He was tripped up when the due date on the statement differed from the original maturity date on the zero-percent deal.

"Unless you pay strict attention to all the dates, the payment can go in on time for the billing period, but it may be late for the zero-percent financing" due date, Davis explained. "It was deceiving."

The finance company slapped him with about $1,500 in retroactive interest. "We fought it and got it reduced a little," he noted.

"Most people with credit will know when the payment is due for the billing date," Davis said. "When you have this other layer, if you just pay attention to what you normally pay attention to, it throws you off."

Still, some consumers might find zero-percent financing and no-payment/no-interest plans a hard habit to break.

That's because the auto industry has conditioned a growing number of motorists--including those whose credit isn't in tip-top shape--to expect such offers.



Car buyers beware

In a survey last September, 37 percent of car buyers said zero-percent financing was the most appealing incentive, according to the 2006 Kelley Blue Book New-Vehicle Buyer Attitude Study on Vehicle Purchasing and Pricing. That's up 11 points from last year.

Car buyers became more receptive to zero-percent financing offers as interest rates rose over the year, and automakers under pressure to sell cars were willing to oblige them, Kelley executive editorial director Jack Nerad said in a recent interview.

The way zero-percent financing generally works in the auto industry is: The consumer begins monthly payments upon buying the car but doesn't pay anything beyond the principal, as the interest payments are being subsidized by the manufacturer or its finance company.

Among the questions that consumers should ask about zero-percent financing or no-payment/no-interest plans: What would the interest rate go to if I can't pay it off in time? Are there fees to pay off the balance early? Is anything else, such as cash rebates, being offered that might be a better deal than the zero-percent financing?

Glinda Bridgforth, a Detroit financial counselor who appeared on the Oprah show during which the subject of zero-percent financing arose, has seen consumers get in over their heads with such offers.

"They go into it with good intentions and fully intend to pay it back in 12 or 24 months with a bonus or a tax refund," she said last week. "And then life happens."

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byerak@tribune.com

Historic downturn in home construction - 7-month decline longest on record

Historic downturn in home construction - 7-month decline longest on record
By William Sluis
Copyright © 2006, Chicago Tribune
Published December 2, 2006

A decline in home construction for the seventh month in a row and the first report of shrinkage in manufacturing in nearly four years sent a shiver through financial markets Friday, as analysts expressed concerns that the stumbling real estate and auto industries could drag the country into recession.

A widely watched survey from the Institute for Supply Management showed an index of manufacturing falling to 49.5 in November, behind October's reading of 51.2. A reading below 50 indicates the factory sector is contracting; it had been above 50 since June 2003.

The index was one of two worrisome economic reports that pushed stocks down by triple digits before partly recovering.

The Commerce Department said construction activity in October plummeted by the largest amount since 2001. The seven-month decline in home building, starting in April, was the longest on record.

"Construction spending lost momentum in October," said economist Ken Simonson, of the Associated General Contractors of America.

The Census Bureau said the value of construction outlays in October totaled $1.178 trillion, down 1 percent from a downwardly revised September figure.

"Residential construction spending shrank again in October, by 1.9 percent, bringing the cumulative decline to 10 percent since peaking last March," Simonson said.

"There are too many homes for sale, and some of them are getting stale," said economist Carl Tannenbaum of LaSalle Bank.

Other analysts said cutbacks in the domestic auto industry are hurting broad swaths of manufacturing. Detroit's carmakers have been shedding workers, offering buyouts to members of their unions.

The weak economic numbers indicate the Federal Reserve soon will need to reverse course and lower interest rates, said economist Ian Shepherdson.

"All that's needed now to put the Fed under irresistible pressure is a further downshift in payroll growth and a rise in the unemployment rate. Both are imminent," said Shepherdson, of High Frequency Economics, Valhalla, N.Y.

Meanwhile, a group of Chicago-area builders said Friday that local home construction, which fell by about 7 percent this year, will drop by another 3 percent in 2007. However, it will hold at levels of 2003, they said.

The builders, at a conference in Oakbrook Terrace, said gloom about real estate sales has been overblown.

Developers plan to create about 36,000 units of new housing in the Chicago area next year, down from a peak of 40,000 units in 2005, those at the session were told.

For now, builders are growing eager to raise prices. That means incentives, including price cuts, free upgrades and special mortgage deals, will be harder to find.

The price cuts that have hit home construction are similar to those afflicting the auto industry, said Robert Shield of Wells Fargo Home Mortgage in Naperville.

"Detroit started offering steep discounts and got into a situation from which the carmakers couldn't escape," Shield said.

While home builders have been offering deep price cuts, 3.99 percent financing for a year and deals that offer no payments for six months or more, such a situation is temporary, said builder Patrick Curran of West Point Builders, which is selling homes in Elgin.

"It is a question of having had too much inventory. However, not many builders still have large numbers of unsold homes," Curran said.

"A few builders have needed massive discounts to sell houses and found themselves in a desperate situation," said Robert Meyn of Ryland Homes, with local offices in West Dundee.

Because of rising costs for land, material and labor, such discounting is coming to an end, Meyn said.

In recent months, sales have been slow because of an overhang of existing houses. The number of listings in the Chicago area has risen by 30 percent to 35 percent from a year ago, he said.

"Gone are the days when you could put any house on the market and sell it quickly," said builder Chris Naatz of the Dell Webb unit of Pulte Homes, with offices in Elgin.

At one point, Meyn said, "there was a frenzied investor mindset, driven by rapid home price appreciation. That is gone. There is a more realistic approach to pricing."

To help buyers overcome worries about selling the house in which they are living, several of the builders said they are providing help in the selection of real estate agents, focusing on those who can move houses quickly.

Giving a boost to the local housing market, according to the builders, have been two trends: a growing job market and continued arrivals of immigrants.

Builder John Carroll told session participants that the construction industry has been helped by a large number of jobs being created in office corridors rising near outlying expressways and toll roads.

"The center of the circle for jobs and housing has moved farther from Chicago," he said.

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wsluis@tribune.com

L.A. archdiocese settles suits

L.A. archdiocese settles suits
By Gillian Flaccus
Copyright © 2006, Chicago Tribune and The Associated Press
Published December 2, 2006

LOS ANGELES -- The nation's largest Roman Catholic archdiocese said Friday it will pay $60 million to settle 45 sex abuse lawsuits, the largest payout yet by the archdiocese of Los Angeles and among the biggest resulting from the molestation crisis that has plagued the church.

The cases were among more than 500 abuse claims pending against the Los Angeles archdiocese.

"It's a day of healing and reconciliation as we move forward with these 45 cases," Cardinal Roger Mahony said. "This is very special for these victims in their moment of healing."

The claims settled Friday involve 22 priests and include allegations from two periods when the archdiocese had limited or no insurance against sexual abuse claims--prior to the mid-1950s and after 1987.

Mahony said $40 million of the payment would come from the archdiocese, while $20 million would be from religious orders plus a small amount of independent insurance coverage.

Negotiations on the deal had been in progress for at least a year but were held up because attorneys for the plaintiffs wanted the church to release the accused priests' private personnel files.

The agreement calls for an independent judge to review those files and decide which documents can be released to the accusers. That process is expected to take several months.

Ray Boucher, the lead plaintiffs' attorney, said the settlement was the largest the Los Angeles archdiocese had reached "by far." Boucher said at least two plaintiffs had died while awaiting the resolution.

He said not all of the plaintiffs' attorneys had signed off on the finalized documents, but that process was expected to be completed by Monday.

Mary Dispenza, one plaintiff who will receive money, was relieved at the news and said it would help her heal. The former nun said she was abused by the now-defrocked Rev. George Neville Rucker beginning in 1947, when she was 7.

"I don't know that I can ever reconcile with the church. That isn't even my goal," Dispenza, of Bellevue, Wash., said in a phone interview. "I just want to be at peace with myself, and I am."

Don Steier, an attorney who represents Rucker and 10 other accused priests, declined to comment about specific allegations in the lawsuits. He said in a statement that his clients were "pleased that these cases are moving toward resolution. Everybody wants to put these matters behind them and move on with their lives."

David Clohessy, national director for the Survivors Network of Those Abused by Priests, said he was happy for the alleged victims who were part of the settlement but remained angry at Mahony and other church leaders.

"We recognize it for what it is, which is a purely business move designed to keep Mahony out of depositions and off the witness stand. That's what every bishop fears the most and that's why they settled," Clohessy said.

U.S. secretly gathers data on travelers - Privacy experts decry program

U.S. secretly gathers data on travelers - Privacy experts decry program
By Frank James, Washington Bureau. "Assessing risk" list by the Associated Press
Copyright © 2006, Chicago Tribune and The Associated Press
Published December 2, 2006

WASHINGTON -- A government program that secretly collects data on millions of travelers entering and leaving the United States, then assigns them terrorist-risk ratings, has raised concerns about privacy and the possibility of innocent people being mistakenly labeled terror threats.

Another source of alarm for some is that the scores produced by the 4-year-old Automated Targeting System, or ATS, aren't accessible for individual review, and so can't be checked for accuracy the way financial credit scores can be.

Furthermore, the Department of Homeland Security says it will keep the information for 40 years, even for people not judged to be risks. And, the department says, the information will be available to other parts of the government, for criminal prosecutions, for instance.

Customs officials for years have assessed the terrorist risk of cargo entering the U.S., with cargo that raised suspicions given extra scrutiny. Privacy advocates had no problem with that.

But they were surprised to learn recently of the ATS, a scoring system for people begun in 2002 that came to light only after Homeland Security published a notice last month in the Federal Register about the program.

"Never before in American history has our government gotten into the business of creating mass `risk assessment' ratings of its own citizens," Barry Steinhardt of the American Civil Liberties Union said in a statement.

"That is a radical new step with far-reaching implications, but one that has been taken almost thoughtlessly by expanding a cargo-tracking system to incorporate human beings, and with little public notice, discussion or debate," said Steinhardt, who directs the ACLU's Technology and Liberty Project.

Privacy experts predicted that European Union officials would be dismayed by ATS, since Europeans have been very assertive about protecting citizen privacy in recent years. In October, the Homeland Security Department finally reached agreement with the Europeans over what passenger information airlines servicing the European continent could share with the U.S. agency--an agreement made more difficult because of European privacy concerns.


Program made public

It was unclear to experts why Homeland Security made the program's existence public now. Some weren't even certain from the Federal Register filing whether the agency was talking about a proposed program or one that already was in operation.

Homeland Security spokesman Jarrod Agen confirmed that it was an existing program and sought to downplay any controversy about something that isn't new.

Agen said a good-government effort on the department's part was the reason ATS was placed in the Federal Register a few weeks ago.

"Because the department is relatively new ... we are making sure the public has an idea of how our systems function," he said. "This is a case of us taking the lead and getting that information out in the public realm so people can know how we collect and screen data."

Privacy experts who have dealt with the department scoffed at that explanation. "That's positively Orwellian," Steinhardt said in an interview. "DHS is the most closed agency in the federal government.

"The notion that they're transparent and would come forward because of their great respect for transparency is laughable," he said.

According to the Federal Register notice, the data analyzed by the program come from the information travelers give to airlines, as well as the information those who cross the border by car or on foot provide to border and customs agents.

"As part of this screening function, the ATS compares information obtained from the public with a series of queries designed to permit targeting of conveyances, goods, cargo, or persons to facilitate [Homeland Security's] border enforcement mission," the published notice said.


Similarity to previous program

To some privacy advocates, the ATS project seemed a resurrection of the Defense Department program known as Total Information Awareness. In that program, federal officials sought to data mine the consumer and banking records of millions of Americans to discern patterns that might point to individuals as possible terrorists.

The congressional and public outcry after TIA details started to emerge in late 2002 killed the program, at least publicly
What's going on here is the terrorist scoring of U.S. citizens which really should have been left on the shelf after TIA was canned," said Marc Rotenberg, executive director of the Electronic Privacy Information Center based in Washington.

Rotenberg called the ATS a "perfect example of mission creep" because a cargo program is now being applied to people.

But "cargo doesn't have privacy rights, people do," he said. "And information about people can be misused and abused. It can be inaccurate. It can be incomplete. It can leave people to be denied jobs, security clearances and government contracts. Lots of people now are having the experience of being kept off airplanes for reasons that the government won't tell them."

Agen, the Homeland Security spokesman, said the department has acted to help travelers who have been wrongly placed on do-not-fly lists.

"The department as a whole is working on streamlining that process even further ... so that anybody who encounters these types of problems can very easily rectify them.

"But the department's job is to protect the homeland," he said. "The data that we're receiving on passengers or cargo that are coming into the U.S., our ability to collect that data and to use that data to protect the homeland is our ultimate goal. ... That's why we have no-fly lists and watch lists and targeting systems like this."

- - -

Assessing risk

Some of the data used by the Automated Targeting System to assess international travelers' potential terrorist risk:



PERSONAL DATA

Passenger name, seat information and address

Billing address and telephone numbers

E-mail address

Personal searches



TRAVEL DATA

Aircraft arrival records

Reservation/travel dates

Form of travel payment

Travel itinerary

Visa data
Immigration control records

Frequent flyer miles

Travel agency used

Travel agent who made arrangements

Passenger travel status

History of one-way travel

History of not showing up for flights

Number of bags

Special services, such as wheelchair or meals for dietary or religious reasons

Voluntary/involuntary upgrades



COURT RECORDS

FBI crime data

Property seizure records

Vehicle seizure records

--Associated Press

----------

fjames@tribune.com

Hard landing fears hit dollar

Hard landing fears hit dollar
By Peter Garnham and Christopher Brown-Humes in London and Krishna Guha in Washington
Copyright The Financial Times Limited 2006
Published: December 1 2006 20:04 | Last updated: December 1 2006 21:41



The dollar fell further on Friday as weak US economic data heightened investor fears that the country’s economy could be heading for a hard landing.

The latest sell-off, which was particularly sharp against the euro and sterling, came after data suggested US manufacturing contracted for the first time in 3½ years in November.

The US currency fell as much as 0.8 per cent to a new 20-month low of $1.3348 against the euro and 1 per cent to $1.9847 against the pound, a new 14-year trough.

In afternoon trade in New York, the euro was worth $1.3322 and the pound $1.9798. During the week, the dollar lost 1.7 per cent against the euro and more than 2 per cent against sterling, taking its drop for the year to about 13 per cent and 15 per cent respectively.

The fall in the Institute for Supply Management’s factory index to 49.5 from 51.2 in October – a reading below 50 indicates that manufacturing is contracting – followed US data releases showing weakness in house prices and business activity.

Some economists said the ISM survey proves the slowdown is spreading from housing to other parts of the economy.

“Combined with other soft US data, the ISM data will reinforce fears of a hard landing and will add to the momentum behind the dollar sell-off,” said Martin Slaney at GFT Global Markets.

Ashraf Laidi of CMC Markets said: “Traders are going to be less cautious about selling the dollar against the euro and sterling going into next week.”

Private sector analysts have been predicting a 2.5 per cent rise in US gross domestic product in 2007. While there is no direct relationship between ISM data and GDP, James Knightley at ING Financial Markets said the ISM figures were consistent with growth slowing below 2 per cent.

Other economists, however, believe manufacturing is going through an inventory correction, and will recover next year. Ben Bernanke, Federal Reserve chairman, said this week he believed manufacturing remained in reasonably good shape.

The dollar’s fall helped push European shares down 2 per cent this week, while the S&P 500 index of leading US shares lost 0.3 per cent. But Federal Reserve have remained hawkish on interest rates.

Marc Chandler, currency strategist at Brown Brothers Harriman in New York, said the Fed and the market differed over the outlook for the US economy.

New York Times Editorial - The Joneses can't keep up

New York Times Editorial - The Joneses can't keep up
Copyright by The New York Times
Published: December 1, 2006


An article in The New York Times and the IHT about American obstetricians who prefer working in Botox boutiques is a reminder that the growing gap between the rich and superrich has an impact on those who are neither.

In the United States, the very richest earners are increasing their earnings at twice the rate of their onetime peers, and the average-rich are taking resentful note. It's hard for people flying in coach to have much patience with those in first class bemoaning their lack of a personal jet. Neither policy makers nor society at large need sympathize with the longing of millionaires to become billionaires. But we do need to worry about the effects on society as a whole when members of the educated elite think they are grossly underpaid.

America has long had a problem attracting enough well-trained people to important but not particularly well-compensated positions, like public defender, social worker or teacher. But an era in which a cancer researcher moves over into health-care management consulting because the pay is better is something else entirely.

Part of the explanation is undoubtedly a tax code that has sent the incomes of America's wealthiest sliver into hyperdrive. Another might be the spike in education costs, which send many new doctors, lawyers and scientists out into the world armed with a diploma and a six-figure debt. But the bottom line seems to be that in 21st-century America, more people can't feel successful unless they're making a killing.

Boston Globe Editorial - Abstinence and AIDS

Boston Globe Editorial - Abstinence and AIDS
The Boston Globe
Published: December 1, 2006


From Africa, the continent most afflicted with the AIDS epidemic, the news was mixed at best on World AIDS Day on Friday. But in the United States, the nation that surpasses all others in its AIDS funding in Africa, there is one solid piece of good news. Thanks to the change of power in Congress, U.S.-financed prevention programs could be freed of the requirement that one-third of all their funding go to abstinence-only efforts.

There is a definite role for abstinence, especially among the young, where the training has been shown in some cases to delay the age of first sexual activity. Abstinence-only programs, however, are of little help to some of those most vulnerable to infection, including impoverished young women under pressure to have sex for economic or cultural reasons.

The changeover in Congress will greatly improve the prospects of a bill sponsored by Representative Barbara Lee of California. Lee's bill would direct President George W. Bush to develop a full strategy to reduce the high risk of HIV infection faced by women and girls in developing countries. In southern Africa, 76 percent of infected persons between age 15 and 24 are female.

Lee's bill calls for greater access to female condoms and better educational opportunities for young women. The measure's sheer scope might endanger its chances in the Senate, where the Democratic margin is hair- thin, but it should be possible for both houses at least to agree on eliminating the abstinence-only earmark.

A report this year by the Government Accountability Office showed that U.S. officials working in AIDS prevention overseas found the abstinence earmark confusing and difficult to balance with other programs. Another problem is the administration policy opposing needle-exchange programs, which would be effective in countries where many HIV infections are related to drug use. Reversing that policy might require a change in the White House, but it would be a welcome first step in improving the U.S. role in preventing AIDS if Congress drops the abstinence earmark.

New York Times Editorial - Bush, Maliki and that memo

New York Times Editorial - Bush, Maliki and that memo
Copyright by The New York Times
Published: December 1, 2006


President George W. Bush's news conference Thursday with Prime Minister Nuri Kamal al-Maliki of Iraq had an even greater than usual sense of unreality about it, with Bush insisting that Maliki is "the right guy for Iraq" and that American troops will stay "until the job is complete," while Maliki asserted that his country is a democracy and he is not a captive of Shiite militias.

But the disconnect seemed even more stunning once you realized that Bush's national security adviser had sent him a memorandum three weeks ago describing how Iraq was being pulled apart by sectarian hatreds and warning that Maliki was either "ignorant of what is going on" or unwilling or unable to stop it.

The memo, published by The New York Times this week, at least answers the question of whether Bush is being told what's going on in Iraq. In it, his national security adviser, Stephen Hadley, describes how Maliki's Shiite-dominated government has deprived Sunnis of basic services, blocked military actions against Shiite targets and purged Iraq's most effective military commanders to ensure Shiite dominance. The memo also warns that Maliki may not have "the political or security capabilities" to free himself from his narrow militia-dominated political base.

But Bush's performance this week - his refusal to impose any deadlines on Maliki to start reconciliation talks and break with the militias, and his refusal to give the Pentagon a deadline to stand up an effective Iraqi army - tells us once again that Bush does not listen.

That does not bode well for James Baker and the Iraq Study Group, which, according to reports, is likely to call for some pullback of American combat troops along with more aggressive regional diplomacy. On Thursday, Bush seemed eager to pre- empt that advice, brushing off suggestions that he talk directly to Iran and insisting that there would be no "graceful exit" from Iraq.

Bush's lack of curiosity was well known even before he became president, but as time has gone on and bad news has mounted, that disinterested quality has turned into a stubborn refusal to hear bad news. America simply cannot afford it any longer. Three years of having Bush trust only his gut has plunged Iraq into bloody chaos and done untold damage to America. There needs to be an urgent change in policy.

Hadley's memo actually provides a clue to how Bush has managed to avoid facing hard facts. Despite the horrific situation it describes, the policy recommendations fail to convey any strong sense of urgency and seem to shrug off American responsibility for what has gone wrong. Either the president's security adviser was afraid to be as blunt as the situation requires or he, too, has managed to convince himself that the disaster is really not all that disastrous.

The president's advisers need to tell him all the harsh truths about Iraq in the vivid terms they require; they need to tell him how little time he has left to act. This administration has been orchestrating a foreign policy disaster of epic proportions, and history will remember both that the president failed to hear the warning bells and that many others failed to ring them loudly enough

Financial Times Editorial - Business and AIDS

Financial Times Editorial - Business and AIDS
Copyright The Financial Times Limited 2006
Published: December 1 2006 02:00 | Last updated: December 1 2006 02:00



On World Aids Day, a quarter of a century after the disease was first identified, the burden of the epidemic continues to deepen and broaden. The private sector needs to get more involved and the public and non-governmental sectors should recognise and harness a greater contribution from business.

With 40m people now living with HIV, over 4m new infections and nearly 3m deaths this year, the impact is greater than ever. And with the fastest growth in infections taking place in the former Soviet world, China and India, the economic and social risks are intensifying. Without the sharp increase in recent years in funding, new medicines and innovative approaches to public health to tackle Aids, the position would be far worse. But much more still needs to be done and the business community should play a growing role.

One issue is to bring in additional resources. Enlightened employers should be committed to workplace programmes to fight discrimination, ideally through written policies. They can lead by example and bring to bear peer pressure on others, including through their supply chains. Transport companies, whose drivers are often a source of transmission in the developing world, are one obvious target.

As part of their corporate social responsibility, companies can play an important part in funding programmes for prevention, support and even, in resource-poor settings, by opening their own clinics to treat others.

As responsible taxpayers and corporate citizens, companies should also lobby governments - donors and recipient countries alike - to direct more resources to health and development.

The Global Fund to Fight Aids, TB and Malaria and other intermediaries channelling resources need to re-examine policies banning in-kind donations. There have been scandals around supplies of out of date or inappropriate drugs, but with suitable safeguards companies should be able to step up non-cash contributions.

But just as important as boosting resources is ensuring that they are best spent. Businesses have a role in pushing for stronger evaluation and reallocation of funding to the most effective programmes. They could also usefully offer secondments and support to strengthen innovative but poorly resourced and inexperienced non-governmental organisations which are increasingly shouldering the burden of tackling Aids prevention.

Aids is also a business opportunity, with the potential for private sector providers to deliver products, healthcare services, insurance and management. Through formal or informal payments, most people in the developing world pay something for healthcare.

Ultimately, the fight against Aids is linked to the battle against poverty and discrimination, which is in turn linked to economic development. Progress on that would be the greatest contribution of all business could make.

Dollar slides as US business slows - British Pound at hignest Level Since 1992

Dollar slides as US business slows- British Pound at hignest Level Since 1992
By Richard Beales in New York
Copyright The Financial Times Limited 2006
Published: November 30 2006 18:42 | Last updated: December 1 2006 00:12
The dollar suffered sharp falls on Thursday, hit by reports of weak US business activity and a benign inflation picture.

The euro rose 0.7 per cent against the dollar to $1.3247 by late afternoon in New York after data from Chicago purchasing managers indicated that business activity in the Midwest unexpectedly fell last month.

Sterling rose to its highest level against the dollar since its ejection from the European Exchange Rate Mechanism in September 1992 as UK house prices continued to show rapid growth. The pound rose to $1.9699 before edging back to $1.9658, almost 1 per cent up on the day. The yen also gained, up 0.5 per cent against the dollar to Y115.77.

A report revealed that inflation in US personal consumption expenditure excluding food and energy, the Federal Reserve’s preferred inflation benchmark, held steady in October at 2.4 per cent year-on-year. Data suggested further inflation-fighting interest rate rises by the Fed, which could support the dollar, were even less likely to be needed.

The slide in the dollar was briefly arrested on Wednesday following an upward revision to official estimates of US third-quarter growth.

Michael Woolfolk, foreign exchange strategist at Bank of New York, said: “[The] personal income and spending report and Chicago PMI were the one-two punch that knocked the dollar back on the ropes, leaving little doubt over near-term direction in the beleaguered greenback.”

The Chicago purchasing managers’ index is regarded as a leading indicator of the national manufacturing index from the Institute for Supply Management, due today. The Chicago PMI index fell to 49.9 last month from 53.5 in October. Many economists had expected it to rise. The core personal consumption expenditure deflator, which excludes food and energy prices, rose 0.2 per cent, against a consensus forecast of 0.1 per cent.

Simon Hayley of Capital Economics said risk aversion could start playing a greater role in the dollar’s decline, as traders shied away from the carry trade, in which traders borrow cheaply in yen and buy higher-yielding currencies: “The risk of short-term dollar weakness may now be greatest against the yen.”

But Alan Ruskin, chief international strategist at RBS Greenwich Capital, said: “Ultimately the lesson from recent days and many other past events is that a weaker US dollar is highly unlikely to turn into a freefall [and] tends not to have a lasting negative impact on US asset markets,” he said.

Additional reporting by Neil Dennis and Peter Garnham

US manufacturing shrinks for first time in 3 years

US manufacturing shrinks for first time in 3 years
By Daniel Pimlott and Michael Mackenzie in New York
Copyright The Financial Times Limited 2006
Published: December 1 2006 16:00 | Last updated: December 1 2006 16:00



The US manufacturing industry contracted last month for the first time in over three years suggesting that weakness in the economy has spread beyond the housing market, according to a closely watched measure of industrial activity.

The Institute for Supply Management said its index of activity in US factories fell in November to 49.5 per cent, down from 51.2 last month and below forecasts of 51.5.

Falling below the 50 per cent level is an indication of contraction, and is considered significant because signs of decline in manufacturing have traditionally over the last 20 years spurred the Federal Reserve to cut interest rates.

Rates have been held at 5.25 per cent since August, following 17 consecutive rises.

The market was pricing in a 80 per cent chance of a quarter point rate cut by the end of March, against 50 per cent before the release of the data.

The ISM data come after Chicago manufacturing data on Thursday showed industry was contracting in the midwest, also coming in below expectations.

“If we were running the Fed, we’d ease today, but the agony will probably be drawn out a couple more meetings while the backward-looking contingent are finally persuaded to stop worrying about inflation; we expect the first ease in March,” said Ian Shepherdson, chief US economist at High Frequency Economics.

But a rapid interest rate cut may be less significant than in the past because manufacturing is a less important part of the US economy than it once was. Moreover, the prices paid component of the ISM, an indication of inflationary pressures, rose to 53.5 from 47.0 last month, potentially placing policymakers in a difficult position.

Other analysts suggested that the economy remained strong in most areas, and said that given the Fed’s recent warnings on inflation, an interest rate cut in the short term remained unlikely.

“The weakness is concentrated in the housing and auto-related sectors while most everything else still looks OK,” said Stephen Stanley of RBS Greenwich Capital.

He added: “We are simply not convinced that the economy is weak enough in a broad sense for the Fed to envision easing, especially given the levels of core inflation and the unemployment rate.”

The Fed’s interest rate setting committee has said it remains very concerned about inflation. In a speech earlier this week, Ben Bernanke, Fed Chairman, said inflation was still “uncomfortably high”.

The dollar weakened against the euro and the pound on news of the report, continuing the downward trajectory. Yields on two-year Treasury notes fell to 11 basis points to 4.50, outpacing a decline of five basis points on the 10-year note

A disease's grim legacy 25 years after AIDS was officially recognized as a disease

A disease's grim legacy 25 years after AIDS was officially recognized as a disease, World AIDS Day will be observed around Chicago with events that show its deadly impact hasn't gone away
By Charles Sheehan
Copyright © 2006, Chicago Tribune
Published December 1, 2006


When Chuck Hyde started tending bar 25 years ago at a nightclub on Chicago's North Side, word began to arrive from California that a horrifying new disease was killing gay men by the scores.

Now a managing partner of the Sidetrack nightclub, an institution in the heart of Chicago's gay community, Hyde recently leaned against the mahogany bar and recalled the hundreds of customers, employees and friends who have died from the illness that came to be known as AIDS.

Hyde hopes that Friday's observance of World Aids Day will serve as a reminder of the estimated worldwide death toll of 25 million men, women and children--more than 550,000 of them Americans--since the disease was officially recognized in 1981.

"It's a great awareness event for the rest of the world. But AIDS never leaves us here, really," Hyde said. "I can't imagine there is anyone out there that hasn't been affected by AIDS, but it doesn't seem to matter. The world clearly still needs reminding."

Among the dozens of events marking the event locally, the City of Chicago will offer free AIDS testing at nine sites--in grocery stores, barber shops and beauty salons. In Glenview, marchers will call on the U.S. government to increase annual funding for AIDS programs to $5 billion. And in Schaumburg, two panels of the AIDS quilt will be displayed at the Illinois Institute of Art-Schaumburg.

Activists plan to rally outside the White House on Friday, the day the federal government will launch a new HIV/AIDS Web site, www.aids.gov. The site will provide information on prevention, testing and treatment.

The event will be observed everywhere from Argentina, where public discussions will be held, to Amsterdam, where street demonstrations are scheduled.

For more than a decade, the U.S. has recorded about 40,000 new infections each year, and about 1,000 of those infections are from the Chicago area, statistics show.

The map of the free testing sites--most of them are in Latino and African-American neighborhoods--reflects the changing face of AIDS, which is increasingly a "disease of color," said Mark Ishaug, executive director of the AIDS Foundation of Chicago.

There is growing frustration, he said, that the number of infections remains steady.

"We know that the public dollars have not kept pace if you look at Chicago, where there are 1,000 new infections each year," Ishaug said. "The state has put millions into new prevention programs. But on the federal level, there has been no new money for AIDS prevention."

On the Far South Side, Ida Byther-Smith scrapes together state and city grants and whatever private donations she can to fund Joray House, a shelter for people with AIDS or HIV, the virus that causes acquired immune deficiency syndrome.

The stigma of the disease in African-American and Latino communities remains as strong as it was on Nov. 7, 1991, the day Byther-Smith learned her husband had infected her, she said.

"I was going to kill myself," said Byther-Smith, 57. "A married, black Christian woman. I wouldn't hug my babies. I couldn't talk about it in church."

Byther-Smith took herbs to combat the disease and did not see a doctor until 2000 when she became seriously ill.

"What made me act like that, that ignorance, is still here," she said. "We're 25 years into this virus and it makes me cry that this stigma still exists."

The AIDS rate among African-Americans in Chicago was 44.6 per 100,000 in 2004, more than three times the rate for whites, according to the Chicago Department of Public Health.

As Byther-Smith makes numerous speaking appearances on Friday, Jaime Delgado will shuttle among the free AIDS-testing sites, many of them in Latino communities.

Delgado, services director for the Community Outreach Intervention Project at the University of Illinois at Chicago, said there are unique hurdles to combat the disease in Latino neighborhoods.

"These are migratory communities, and often when someone gets ill they go home to Puerto Rico or to Mexico," he said. "Add that to the number of undocumented [workers] and language, you can get an incomplete picture."

The AIDS rate among Puerto Ricans in Chicago, 26 per 100,000, is second only to that of African-Americans, according to the Henry J. Kaiser Family Foundation, a health-care organization in Menlo Park, Calif.

Nationally, Latinos make up 14 percent of the U.S. population, but they account for 20 percent of all people living with AIDS, according to the foundation.

Because the growing Latino population in Chicago includes a large number of adolescents, their communities are at an even greater risk because nearly half of people now infected with HIV are under the age of 25, experts say.

Sidetrack, 3349 N. Halsted St., will hold a fundraiser on Friday for local AIDS organizations. Even in a place where most of the patrons are gay, Hyde said, World AIDS Day is a needed reminder of a tragedy not far removed.

"There are some people who don't think AIDS is a death sentence anymore because of new treatments," he said. "In that atmosphere, I don't think a reminder even once a year can hurt."

----------

csheehan@tribune.com

Chicago Sun Times Editorial - AIDS battle needs injection of a redoubled effort

Chicago Sun Times Editorial - AIDS battle needs injection of a redoubled effort
Copyright 2006 Associated Press
December 1, 2006


Today is World AIDS Day -- the 18th World AIDS Day, if you're counting. That we still need to stage this event, 25 years after the devastating disease took hold, tells you the battle is not over. What you may not appreciate, though, at a time when the cause is suffering a loss of urgency, among nations as well as individuals, is how far off victory is likely to be. To treat and educate the infected, health agencies are going to need a lot more care and money than is being allocated.

In fact, the AIDS epidemic is getting worse, not better. New reports by the United Nations AIDS Program and the World Health Organization, which created World AIDS Day, tell us 2.9 million people worldwide have died of AIDS this year. Based on WHO projections, that means 117 million more will die in the next 25 years, adding to the 25 million who have died since the outbreak of the virus in 1981. So much for the declared aim of world leaders five years ago to halt and reverse HIV and AIDS by 2015. Their more recent promises of universal access to treatment by 2010 also look shaky, at best.

As part of their "3 by 5" initiative, UNAIDS and WHO had hoped to get 3 million infected individuals in low- and middle-income nations on antiretroviral treatment by the end of 2005. They failed to meet that deadline -- an especially disappointing result considering the encouraging outcomes of the treatments it did provide. The goal of treating some 10 million people on HIV drugs by 2010 stands to fall short by half. Even a celebrity war-on-AIDS advocate like Bono can't raise enough to meet the $20 billion that is needed for the initiative.

We don't need to look to Africa or Asia to find a lack of urgency in the fight against AIDS. While the incidence of AIDS in the United States isn't what it was, there are more than 40,000 new HIV infections in this country every year. African Americans are hit at an increasingly disproportionate high rate. In Illinois, where they make up only 15 percent of the population, they account for 52 percent of diagnosed AIDS cases -- way above the 40 percent national rate, even though African Americans account for 13 percent of the population.

According to a Kaiser Foundation study, HIV was the third leading cause of death for African Americans in the 25-to-34 age bracket -- a statistic that matches up with grim projections that have AIDS becoming the third leading cause of death in the world. Gov. Blagojevich's Brothers And Sisters United Against HIV/AIDS awareness campaign has had a positive impact, as have initiatives such as his AIDS Drug Assistance Program. But critics say the $2.5 million increase slated for ADAP in his 2007 budget isn't enough to keep it at full strength. More than ever, optimum support is essential.

Moral health tip to America: Stay out of draft

Moral health tip to America: Stay out of draft
BY ANDREW GREELEY
Copyright by The Chicago Sun Times
December 1, 2006

Rep. Charles Rangel (D-N.Y.) celebrated the Democratic election victory by proposing to renew the military draft. His oft-repeated argument is that the draft would produce an army with social and racial equity. White, college-educated young men and women would have to serve as target practice for Shiites, Sunnis and other murderous tribes in Iraq when they take time out from killing one another.

Others jumped on the bandwagon. If President Bush had college men and women wading into the Big Muddy, young people would have rioted, wealthy parents would have complained, the war would have stopped.

Just like the Vietnam War stopped in 1968, right?

The war will stop because people voted against it and against the president. (Eighty percent would vote against him if he could run again.)

Rangel's argument is patently sick. It assumes that Bush would be cowed by riots in the street. Moreover, there is no successful appeal from the ballot to the bullet in this country, from elections to street demonstrations (except maybe in Florida, where ballots don't count anymore). To create social unrest through a draft is to shortcut the electoral process.

Moreover, if there had not been a draft to provide unlimited young bodies for the jungles of Vietnam, that war would never have started -- nor, for that matter, would the Korean War. As the world should have learned in 1914 and 1939, the availability of conscript armies is an open invitation to leaders to make war. If Bush could have mustered conscript armies of men and women, he might have taken on Iran and Korea, too -- whatever was required for victory.

The suggestion of "National Service" brought a lot of authoritarian liberals out of the woodwork. All young Americans, they argued, should be obliged to do two years of service either in the military or in some other form of indentured servitude to the government. They owe the duty of such service to their country.

To which the only valid reply is, "Who says?" Isn't this the United States of America, not ancient Sparta? The government has no claim on the time and life of anyone, except the people who volunteer for military service (often, alas, because they have not many other choices in life) and convicted criminals. Conscription is just barely tolerable in times of great national emergency, if then. The government doesn't own Americans simply because they are young. The late economist Milton Friedman argued that the draft was an inequitable tax levied against the young and in favor of the middle-aged and the old.

The editorial writers of the New York Times, who have often had a soft spot in their hearts for national service, lament that Rangel's proposal will fail. Like most authoritarian liberals, they think it right and proper and orderly that young men and women be pushed into adulthood by government pressure to do good. It will teach young people, they imply, maturity and responsibility and self-control (and get them away from video games and beer bashes!).

In fact, volunteer service rates among young Americans are the highest in the world. The generosity and the merit of volunteering is diminished if it becomes compulsory and is destroyed altogether when the young people are forced to work for an inept and incompetent government.

Moreover, volunteering as a requirement for graduation is a perversion. Humans grow in virtue not by being forced to repeat virtuous actions but by freely choosing such actions.

Veterans of military service usually weigh in on this issue by announcing that the military "made a man out of me." What kind of man, I wonder, has to brag that military brutality was essential to his manhood? Will it make a woman out of his daughter?

One should ask Rangel if the draft created such racial and social equity in the 1960s, how the president and vice president managed to avoid combat. How could such draft dodgers be elected to high office? And don't tell me that the president served in the Texas Air National Guard. That's like serving in the Nebraska Navy.

New York Times Editorial - Bush's eavesdropping

New York Times Editorial - Bush's eavesdropping
Copyright by The New York Times
Published: November 30, 2006


It was one of the more outrageous moments in the story of the Bush administration's illegal domestic wiretapping. Almost a year ago, congressional Democrats called for a review of the Justice Department's role in the program. But the department investigators assigned to do the job were unable to proceed because the White House, at President George W. Bush's personal direction, refused to give them the necessary security clearance.

Now the president, for reasons we can't help thinking might have something to do with the midterm elections, has changed his mind. The White House will give Justice Department inspectors the required clearance, and a review will go forward.

That's all to the good, as long as the investigation is not intended to pre- empt any efforts by the new Democratic majority to conduct its own congressional review of the wiretap program. The Justice Department inquiry will hardly do the full job.

The department's inspector general, Glenn Fine, has already said that the question of whether the program was legal is beyond his jurisdiction. Instead, he will investigate whether department employees followed the rules governing the program, established in a secret executive order signed by Bush in October 2001. Since the rules will presumably stay secret, the investigation will not even clarify just how far from established legal standards Bush strayed when he authorized the government to eavesdrop on Americans' international calls and e-mail without a court-issued warrant.


The Justice Department inquiry also will do nothing to fix the biggest problem with Bush's eavesdropping program, which is that - once again - he ignored existing law and instead tried to create a system outside the law, resting on his dangerously expansive claims of executive power.

If Bush had wanted to conduct the wiretapping within the law, he could have quite easily done so, using the Foreign Intelligence Surveillance Act.

Fine could still provide an important - if limited - service. The investigation might help Congress understand whether FISA needs updating - something the administration has been loath to discuss as long as it has been able to end-run the court.

The question of the wiretap program's constitutionality is making its way through the courts and should ultimately be decided by the Supreme Court. Congress should not be satisfied with Fine's very limited investigation. It should mount its own independent inquiry into how the war on terror, and American civil liberties, are being affected by an eavesdropping program about which the American people have been told so little.