Health Spending vs. Results - Confronting the truth about America's "best health care system in the world."
Copyright by The New York Times
Published: June 5, 2010
http://www.nytimes.com/interactive/2010/06/06/business/metrics-health-care-outlier.html
The United States spends much more on health care than countries with similar kinds of economies. So costs are sure to be examined closely as federal officials shape regulations under the new health care law. Americans have abundant access to high-tech diagnostic tools like CT and M.R.I. scanners, and to life-saving surgical procedures like angioplasties.
Yet Americans don’t see doctors more often or live longer, healthier lives, according to data from the Organization for Economic Cooperation and Development. And Americans’ cancer survival rates are not markedly better. In fact, the population of the United States has about the same prevalence of disease as that of other developed countries.
So where does the money go?
Doctor visits, medical procedures and prescription drugs cost vastly more, on average, in the United States than in other countries. The United States also spends more money on health care administration, according to a report by the McKinsey Global Institute.
“We have known for a long time that health care is a market failure,” said Colleen M. Grogan, a professor of health administration and policy at the University of Chicago. “We have a system where there is an enormous incentive to charge higher prices, and no accountability to control those prices.”
HANNAH FAIRFIELD
How the United States compares with other O.E.C.D. members
1 Legend Data from 2007 or most recent available year
A country’s wealth usually dictates how much money it spends on health care, but spending in the United States is far beyond that of its peer countries.
Health care spending as a percentage of gross domestic product
2 Spending
The McKinsey study shows that the intensity of medical treatment — as seen in measures like the number of high-tech diagnostic scanners — is relatively high in the United States.
CT scanners, per million people
3 Cat Scan
Though Americans undergo more surgical procedures like angioplasties, which widen clogged arteries, deaths from heart attacks are not proportionately lower.
Angioplasty procedures, per 1,000 people
4 Angioplasty
Despite very good access to diagnostic equipment and surgical procedures, Americans’ life expectancy is lower than that of many other countries.
Life expectancy at birth
5 Expectancy
Economists point to the rate of cancer deaths in the United States as an indicator that its spending is out of line with results.
Deaths from cancer, per 100,000 people
6 Deaths
Experts say that the United States lags in basic preventive care, like annual checkups, and relies too heavily on expensive specialists.
Annual consultations with doctors, per capita
7 Consultations
The United States also has relatively few hospital beds for its population. Economists have noted that hospitals’ inpatient care is growing at a much slower rate than outpatient care, which has a much higher profit margin.
Hospital beds, per 1,000 people
8 Beds
By HANNAH FAIRFIELD/The New York Times |
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Sources: Organization for Economic Cooperation and Development; McKinsey Global Institute
Sunday, June 06, 2010
No-bid contracts draw probe - State's attorney's office talks to 2 county employees, political adviser about a dozen Cook County deals
No-bid contracts draw probe - State's attorney's office talks to 2 county employees, political adviser about a dozen Cook County deals
BY LISA DONOVAN Cook County Reporter
Copyright by The Chicago Sun Times
June 6, 2010
http://www.suntimes.com/news/cityhall/2358126,CST-NWS-probe06.article
The Cook County state's attorney's office is investigating about a dozen no-bid contracts approved by top aides to Cook County Board President Todd Stroger, including one handed to a private company owned by his embattled deputy chief of staff, Carla Oglesby, law enforcement sources have confirmed.
Two county employees and a political adviser to Todd Stroger tell the Chicago Sun-Times they've been questioned in recent weeks about the contracts by prosecutors in the state's attorney's Public Corruption and Financial Crimes Unit.
All three declined to be identified for fear of retribution but said they were interviewed at length about a communications contract given to CGC Communications, a public relations firm owned by Oglesby.
"They wanted to know exactly who had told me about the contract and just any knowledge I had about the CGC contract," one Stroger administration employee said.
The county employee told prosecutors that questions began bubbling up in Stroger's fifth floor executive office at 118 N. Clark about fast-tracking a check to CGC Communications.
"Someone was complaining about it," the staffer told the Sun-Times, recalling what was also shared with prosecutors. "They mentioned that a check needed to be fast-tracked to CGC."
While the staffer said that the irritated co-worker had no idea who owned CGC -- it registered immediately with the staffer. Prosecutors pressed the staffer about failing to speak up to a boss about concerns over the contract.
"They [prosecutors] wanted to know why I didn't say anything right away," the employee told the Sun-Times. "I said I didn't know what the whole story was . . . it did raise red flags, but I certainly didn't want to jump to any conclusions."
A spokeswoman for the Cook County state's attorney had no comment on the investigation.
The contracts have sparked a firestorm of criticism. Cook County commissioners have pointed to an ordinance that prohibits awarding a contract to a firm owned by a county employee, with some going so far as to say the contracts are evidence that Stroger administration members are lining their pockets during his final months in office.
Oglesby was the campaign spokesman for Stroger until he lost the Feb. 2 primary.
On Feb. 16, she joined the county as Stroger's $120,000-a-year deputy chief of staff.
Little more than a week later, she approved a county contract for her public relations firm to get the word out about federal funding available to victims of the 2008 flooding around the county.
Oglesby told the Sun-Times last month she approved the contract for her firm and fast-tracked the $24,975 payment, but called that the mistake of a new county employee who didn't know any better.
Stroger suspended her for five days and the county's inspector general, the county Ethics Board and the state's attorney's office are investigating that contract along with nearly a dozen other contracts that fall below the $25,000 threshold and aren't subject to approval by Cook County Commissioners.
Oglesby said last week she hadn't been questioned by the prosecutor's office about the CGC contract -- or any of the others that have been tied to her and Eugene Mullins, Stroger's communications chief and childhood pal.
That includes eight "Census outreach'' contracts that Mullins recommended and Oglesby approved in recent months -- each under the $25,000 mark.
Prosecutors sat down with another county staffer recently, one who has intimate knowledge of the county's contracting process. They focused on the approval process and asked about roughly a dozen contracts, including the one with CGC and the Census outreach contracts. The prosecutors asked at one point about the few days it took -- rather than the typical weeks or sometimes months -- between approving the CGC contract and the county paying the firm.
"They asked me, 'Didn't this raise a red flag, all of this happening in a week?' I told them, 'It's not common, but it does happen that you'll have someone who forgets [to put in the paperwork] and needs [a vendor] to be paid quickly,' " the county employee said last week.
BY LISA DONOVAN Cook County Reporter
Copyright by The Chicago Sun Times
June 6, 2010
http://www.suntimes.com/news/cityhall/2358126,CST-NWS-probe06.article
The Cook County state's attorney's office is investigating about a dozen no-bid contracts approved by top aides to Cook County Board President Todd Stroger, including one handed to a private company owned by his embattled deputy chief of staff, Carla Oglesby, law enforcement sources have confirmed.
Two county employees and a political adviser to Todd Stroger tell the Chicago Sun-Times they've been questioned in recent weeks about the contracts by prosecutors in the state's attorney's Public Corruption and Financial Crimes Unit.
All three declined to be identified for fear of retribution but said they were interviewed at length about a communications contract given to CGC Communications, a public relations firm owned by Oglesby.
"They wanted to know exactly who had told me about the contract and just any knowledge I had about the CGC contract," one Stroger administration employee said.
The county employee told prosecutors that questions began bubbling up in Stroger's fifth floor executive office at 118 N. Clark about fast-tracking a check to CGC Communications.
"Someone was complaining about it," the staffer told the Sun-Times, recalling what was also shared with prosecutors. "They mentioned that a check needed to be fast-tracked to CGC."
While the staffer said that the irritated co-worker had no idea who owned CGC -- it registered immediately with the staffer. Prosecutors pressed the staffer about failing to speak up to a boss about concerns over the contract.
"They [prosecutors] wanted to know why I didn't say anything right away," the employee told the Sun-Times. "I said I didn't know what the whole story was . . . it did raise red flags, but I certainly didn't want to jump to any conclusions."
A spokeswoman for the Cook County state's attorney had no comment on the investigation.
The contracts have sparked a firestorm of criticism. Cook County commissioners have pointed to an ordinance that prohibits awarding a contract to a firm owned by a county employee, with some going so far as to say the contracts are evidence that Stroger administration members are lining their pockets during his final months in office.
Oglesby was the campaign spokesman for Stroger until he lost the Feb. 2 primary.
On Feb. 16, she joined the county as Stroger's $120,000-a-year deputy chief of staff.
Little more than a week later, she approved a county contract for her public relations firm to get the word out about federal funding available to victims of the 2008 flooding around the county.
Oglesby told the Sun-Times last month she approved the contract for her firm and fast-tracked the $24,975 payment, but called that the mistake of a new county employee who didn't know any better.
Stroger suspended her for five days and the county's inspector general, the county Ethics Board and the state's attorney's office are investigating that contract along with nearly a dozen other contracts that fall below the $25,000 threshold and aren't subject to approval by Cook County Commissioners.
Oglesby said last week she hadn't been questioned by the prosecutor's office about the CGC contract -- or any of the others that have been tied to her and Eugene Mullins, Stroger's communications chief and childhood pal.
That includes eight "Census outreach'' contracts that Mullins recommended and Oglesby approved in recent months -- each under the $25,000 mark.
Prosecutors sat down with another county staffer recently, one who has intimate knowledge of the county's contracting process. They focused on the approval process and asked about roughly a dozen contracts, including the one with CGC and the Census outreach contracts. The prosecutors asked at one point about the few days it took -- rather than the typical weeks or sometimes months -- between approving the CGC contract and the county paying the firm.
"They asked me, 'Didn't this raise a red flag, all of this happening in a week?' I told them, 'It's not common, but it does happen that you'll have someone who forgets [to put in the paperwork] and needs [a vendor] to be paid quickly,' " the county employee said last week.
Chicago Tribune Editorial: Put it all out there
Chicago Tribune Editorial: Put it all out there
Copyright © 2010, Chicago Tribune
7:18 a.m. CDT, June 5, 2010
http://www.chicagotribune.com/news/opinion/ct-edit-taxes-20100604,0,6499515.story
Jason Plummer, the 27-year-old Republican candidate for lieutenant governor, has refused to release his tax returns for voters to see. Plummer's family owns the R.P. Lumber chain headquartered in Edwardsville and other businesses and partnerships. Plummer calls the controversy over his returns a distraction from more serious issues. "I don't think a person's economic status, their financial status, should be a standard for whether or not they run for office," he said.
He can think whatever he wishes, but the distraction will dog him throughout the campaign. Bill Brady, the GOP candidate for governor, initially refused to release his returns, then relented and gave reporters a limited window to peruse six years of filings. They revealed that Brady paid no federal income taxes the last two years because of business losses.
So Plummer wants voters to trust him — on his terms.
Gov. Pat Quinn pounced on Plummer's statements, just as he pounced on Brady's initial refusal to release his returns. Quinn and his running mate, Sheila Simon, have released their tax returns. "When these candidates play peekaboo, or not at all, with their returns, I think there's legitimate questions to be asked," Quinn said. Asked whether he believed Plummer is hiding something, Quinn replied, "I think that's a natural conclusion."
Republican Party Chairman Pat Brady countered that Attorney General Lisa Madigan and her father, House Speaker Michael Madigan, should release their tax returns. Since then, Lisa Madigan has allowed scrutiny of her returns. But Michael Madigan — the most powerful man in the state — has not.
Given the feathering of one's own nest that has become disgustingly routine in Illinois politics, it's a good idea — make that a must — for major candidates to release personal tax and income information.
But we'd sure like to hear candidates push this like they mean it. Gov. Quinn, where's your demand that your fellow Democrat, U.S. Senate candidate Alexi Giannoulias, put it all out there? Sen. Brady, tell your running-mate Plummer he shouldn't hide from voters. Otherwise, it's all just more gamesmanship.
Copyright © 2010, Chicago Tribune
7:18 a.m. CDT, June 5, 2010
http://www.chicagotribune.com/news/opinion/ct-edit-taxes-20100604,0,6499515.story
Jason Plummer, the 27-year-old Republican candidate for lieutenant governor, has refused to release his tax returns for voters to see. Plummer's family owns the R.P. Lumber chain headquartered in Edwardsville and other businesses and partnerships. Plummer calls the controversy over his returns a distraction from more serious issues. "I don't think a person's economic status, their financial status, should be a standard for whether or not they run for office," he said.
He can think whatever he wishes, but the distraction will dog him throughout the campaign. Bill Brady, the GOP candidate for governor, initially refused to release his returns, then relented and gave reporters a limited window to peruse six years of filings. They revealed that Brady paid no federal income taxes the last two years because of business losses.
So Plummer wants voters to trust him — on his terms.
Gov. Pat Quinn pounced on Plummer's statements, just as he pounced on Brady's initial refusal to release his returns. Quinn and his running mate, Sheila Simon, have released their tax returns. "When these candidates play peekaboo, or not at all, with their returns, I think there's legitimate questions to be asked," Quinn said. Asked whether he believed Plummer is hiding something, Quinn replied, "I think that's a natural conclusion."
Republican Party Chairman Pat Brady countered that Attorney General Lisa Madigan and her father, House Speaker Michael Madigan, should release their tax returns. Since then, Lisa Madigan has allowed scrutiny of her returns. But Michael Madigan — the most powerful man in the state — has not.
Given the feathering of one's own nest that has become disgustingly routine in Illinois politics, it's a good idea — make that a must — for major candidates to release personal tax and income information.
But we'd sure like to hear candidates push this like they mean it. Gov. Quinn, where's your demand that your fellow Democrat, U.S. Senate candidate Alexi Giannoulias, put it all out there? Sen. Brady, tell your running-mate Plummer he shouldn't hide from voters. Otherwise, it's all just more gamesmanship.
GOP's Obama vs. the real one
GOP's Obama vs. the real one
By Clarence Page
Copyright © 2010, Chicago Tribune
June 6, 2010
http://www.chicagotribune.com/news/columnists/ct-oped-0606-page-20100606,0,684090,full.column
Don't count Bobby Jindal out. The Louisiana governor, touted as "the Republican Obama" before his first big national speech flopped, is rising again, strong enough this time to go toe-to-toe with the real President Barack Obama.
At a time when Jindal's party's strongest voices seem to be coming from angry conservative radio pundits and cable TV hosts, Jindal presents a powerfully authentic image of rolled-up-shirtsleeves populist indignation over the gooey threat that BP's oil disaster in the Gulf of Mexico poses to his state's "way of life."
That's a far cry from Jindal's first appearance on the national stage. His excruciatingly folksy response on behalf of his party to President Obama's first congressional address brought comparisons to "Kenneth the page," a gleeful bumpkin character on NBC's "30 Rock."
Until then Jindal, who will be 39 on Thursday, was often called the "Republican Obama" for his similarities to the original. The Ivy League and Oxford-educated former congressman and son of Indian-American immigrants also belongs to a once-plentiful but now sadly endangered political species, a Republican of color.
Today the former Kenneth looks more like Super Bobby, in the news almost daily, at threatened beaches and marshland, talking to constituents and lecturing reporters on the finer points of levees, currents, wind, sand berms and Washington sluggishness.
"In his public remarks, Jindal has gotten as worked up as a circuit-riding preacher," writes Gary Reese in the Southern Political Report. "Is this righteous indignation or political pantomime? It depends on who you ask."
Either way, Jindal's passion resonates well with the traditions of colorful Louisiana legends like Huey Long — in sharp contrast to Obama's professorial impatience with BP and its failure to stop the big gushing leak, despite assistance from the best scientific minds that the White House can pull together.
"I would love to just spend a lot of my time venting and yelling at people," Obama told Larry King in a CNN interview that aired Thursday, "but that's not the job I was hired to do. My job is to solve this problem and ultimately this isn't about me and how angry I am."
Indeed, even libertarian Republican Rep. Ron Paul of Texas said on the Don Imus show on Fox Business Network that Obama and, in the aftermath of Hurricane Katrina, President George W. Bush both deserve a break from the "overkill" of those who mistakenly believe "that the president is everything to everybody, that he can fix an oil leak."
Yet, as an example of how statecraft is largely stagecraft in this media age, Jindal's dispute with the White House over sand berms offers an excellent example of his effectiveness.
At first the White House resisted his request for federal approval that would force BP to pay for the cost of building sand berms inside barrier islands to protect the mainland and wetlands — and the huge fisheries industries — from the oil. But after six weeks and despite considerable evidence that the berms might not work, the Obama administration gave in.
The administration's cave-in on sand berms calls to mind the National Guard troops that Obama recently approved for our Mexican border. For weeks the White House maintained that troops would do too little to solve the immigration or drug smuggling problems. But sometimes it's better to switch than fight, especially when nothing else seems to be working.
Lately Jindal also has been receiving praise from liberal-leaners, as reporter Jesse Zwick writes in a recent issue of The New Republic, for "the kind of smarts and ideological flexibility that we should applaud in our leaders, no matter the party." The headline: "Kenneth the Page becomes a man."
Yet, praise from the left for "ideological flexibility" brings scorn from the right for flip-flopping. Some conservatives are miffed that Jindal threatened to reject federal economic stimulus funds, then took them anyway, just because his state needed the money.
Conservatives are similarly upset that Jindal is seeking federal help to combat the oil spill. Welcome to the life of a governor, where the ideology that helped you to get your job can get in the way of your ability to do the job.
No, don't count Bobby Jindal out. I think he'll do just fine, if his fellow conservatives don't get in his way.
Clarence Page is a member of the Tribune's editorial board and blogs at chicagotribune.com/pagespage
cpage@tribune.com
By Clarence Page
Copyright © 2010, Chicago Tribune
June 6, 2010
http://www.chicagotribune.com/news/columnists/ct-oped-0606-page-20100606,0,684090,full.column
Don't count Bobby Jindal out. The Louisiana governor, touted as "the Republican Obama" before his first big national speech flopped, is rising again, strong enough this time to go toe-to-toe with the real President Barack Obama.
At a time when Jindal's party's strongest voices seem to be coming from angry conservative radio pundits and cable TV hosts, Jindal presents a powerfully authentic image of rolled-up-shirtsleeves populist indignation over the gooey threat that BP's oil disaster in the Gulf of Mexico poses to his state's "way of life."
That's a far cry from Jindal's first appearance on the national stage. His excruciatingly folksy response on behalf of his party to President Obama's first congressional address brought comparisons to "Kenneth the page," a gleeful bumpkin character on NBC's "30 Rock."
Until then Jindal, who will be 39 on Thursday, was often called the "Republican Obama" for his similarities to the original. The Ivy League and Oxford-educated former congressman and son of Indian-American immigrants also belongs to a once-plentiful but now sadly endangered political species, a Republican of color.
Today the former Kenneth looks more like Super Bobby, in the news almost daily, at threatened beaches and marshland, talking to constituents and lecturing reporters on the finer points of levees, currents, wind, sand berms and Washington sluggishness.
"In his public remarks, Jindal has gotten as worked up as a circuit-riding preacher," writes Gary Reese in the Southern Political Report. "Is this righteous indignation or political pantomime? It depends on who you ask."
Either way, Jindal's passion resonates well with the traditions of colorful Louisiana legends like Huey Long — in sharp contrast to Obama's professorial impatience with BP and its failure to stop the big gushing leak, despite assistance from the best scientific minds that the White House can pull together.
"I would love to just spend a lot of my time venting and yelling at people," Obama told Larry King in a CNN interview that aired Thursday, "but that's not the job I was hired to do. My job is to solve this problem and ultimately this isn't about me and how angry I am."
Indeed, even libertarian Republican Rep. Ron Paul of Texas said on the Don Imus show on Fox Business Network that Obama and, in the aftermath of Hurricane Katrina, President George W. Bush both deserve a break from the "overkill" of those who mistakenly believe "that the president is everything to everybody, that he can fix an oil leak."
Yet, as an example of how statecraft is largely stagecraft in this media age, Jindal's dispute with the White House over sand berms offers an excellent example of his effectiveness.
At first the White House resisted his request for federal approval that would force BP to pay for the cost of building sand berms inside barrier islands to protect the mainland and wetlands — and the huge fisheries industries — from the oil. But after six weeks and despite considerable evidence that the berms might not work, the Obama administration gave in.
The administration's cave-in on sand berms calls to mind the National Guard troops that Obama recently approved for our Mexican border. For weeks the White House maintained that troops would do too little to solve the immigration or drug smuggling problems. But sometimes it's better to switch than fight, especially when nothing else seems to be working.
Lately Jindal also has been receiving praise from liberal-leaners, as reporter Jesse Zwick writes in a recent issue of The New Republic, for "the kind of smarts and ideological flexibility that we should applaud in our leaders, no matter the party." The headline: "Kenneth the Page becomes a man."
Yet, praise from the left for "ideological flexibility" brings scorn from the right for flip-flopping. Some conservatives are miffed that Jindal threatened to reject federal economic stimulus funds, then took them anyway, just because his state needed the money.
Conservatives are similarly upset that Jindal is seeking federal help to combat the oil spill. Welcome to the life of a governor, where the ideology that helped you to get your job can get in the way of your ability to do the job.
No, don't count Bobby Jindal out. I think he'll do just fine, if his fellow conservatives don't get in his way.
Clarence Page is a member of the Tribune's editorial board and blogs at chicagotribune.com/pagespage
cpage@tribune.com
Chicago Tribune Editorial: Candidates and trust
Chicago Tribune Editorial: Candidates and trust
Copyright © 2010, Chicago Tribune
June 6, 2010
http://www.chicagotribune.com/news/opinion/editorials/ct-edit-trust-0606-20100606,0,1688954.story
The current junior U.S. senator from Illinois, Roland Burris, lied his way into the job. He has given five different versions — three of them sworn — about his lobbying for the appointment during the fading days of Rod Blagojevich's governorship. Burris won't be on the Nov. 2 ballot, but his conduct is enough to make Illinoisans think thrice about the truthfulness of his successor.
And truthfulness is, for the moment, the overarching issue in the tussle over whose fanny next occupies this seat. Republican Mark Kirk and Democrat Alexi Giannoulias are asking for the trust of voters by the millions.
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Kirk on Thursday took responsibility for a series of misstatements that had made his certifiably stellar military career appear more stellar than the facts support. He spoke for an hour to the Tribune editorial board — and called back later to volunteer that during the interview he had displayed too much defensiveness, and too little candor. Before our eyes, he had tried to writhe away from questions about whether he repeatedly had embellished his service record. Not until his subsequent phone call did he say in plain English that the simple answer to those questions is Yes.
Why had he stretched the already admirable truth? We don't know the motive. Taken together, though, Kirk's misstatements demonstrate how deeply he had succumbed to the I-must-sell-myself temptations of politics, elevating the importance of what "I" accomplished in the military. Most veterans instead speak of what "we" won or lost. There is no Army — or in Kirk's case, Navy — of One.
Kirk's reluctant acknowledgement of his errors has been maddening but also saddening. For a decade this page has respected naval intelligence officer Kirk and Congressman Kirk. Thus the dilemma: What are we — what are all the voters of Illinois — now to make of candidate Kirk? He has weakened one of the most compelling arguments for electing him to the Senate.
•••
There is uncomfortable context here: Kirk did his acknowledging and apologizing Thursday from the same chair Giannoulias occupied March 3 when he was trying to quell the public relations storm over the pending failure of his family's bank and its loans to unsavory characters.
We'll stick with the verdict we rendered in a March 4 editorial:
The broad extent of all that Giannoulias says he didn't know about the bank's dealings remains the most unsatisfying theme of that interview and of his campaign for the Senate. When the family bank was flying high and Giannoulias had his eye on the state treasurer's office, he was the senior loan officer. But when the tough decisions were being made or the questionable characters came to call, it was almost always Alexi's day to empty the wastebaskets.
Voters have almost five months to decide where they will invest their trust. Every Senate seat matters, so campaign money is sure to gullywash into Illinois. The television ads will be brutal. We don't predict much in politics, but: It's our guess that you have not heard the last of Mark Kirk's exaggerated military record or the Giannoulias family's failed Broadway Bank.
For us, the disclosures of Mark Kirk's career inflation are not excusable. For military families in particular, this is serious. Neither, though, are his offenses a reason to discount his service or to declare him unfit for the Senate. Kirk made arrogant errors and now he has apologized. He may not go one day between now and Nov. 2 without having to offer his personal regrets to the people of Illinois.
Because of that testing exercise, we voters will come to know more about Mark Kirk — and, owing to similar public scrutiny, about Alexi Giannoulias — than we do today. Their images and their voices will be everywhere we look and listen, proclaiming themselves worthy of our trust. They will talk to us about how they've described themselves to us in the past, and perhaps about what they should have said differently.
And maybe they'll even convince us.
Copyright © 2010, Chicago Tribune
June 6, 2010
http://www.chicagotribune.com/news/opinion/editorials/ct-edit-trust-0606-20100606,0,1688954.story
The current junior U.S. senator from Illinois, Roland Burris, lied his way into the job. He has given five different versions — three of them sworn — about his lobbying for the appointment during the fading days of Rod Blagojevich's governorship. Burris won't be on the Nov. 2 ballot, but his conduct is enough to make Illinoisans think thrice about the truthfulness of his successor.
And truthfulness is, for the moment, the overarching issue in the tussle over whose fanny next occupies this seat. Republican Mark Kirk and Democrat Alexi Giannoulias are asking for the trust of voters by the millions.
Get the Chicago Tribune delivered to your home for only $1 a week >>
Kirk on Thursday took responsibility for a series of misstatements that had made his certifiably stellar military career appear more stellar than the facts support. He spoke for an hour to the Tribune editorial board — and called back later to volunteer that during the interview he had displayed too much defensiveness, and too little candor. Before our eyes, he had tried to writhe away from questions about whether he repeatedly had embellished his service record. Not until his subsequent phone call did he say in plain English that the simple answer to those questions is Yes.
Why had he stretched the already admirable truth? We don't know the motive. Taken together, though, Kirk's misstatements demonstrate how deeply he had succumbed to the I-must-sell-myself temptations of politics, elevating the importance of what "I" accomplished in the military. Most veterans instead speak of what "we" won or lost. There is no Army — or in Kirk's case, Navy — of One.
Kirk's reluctant acknowledgement of his errors has been maddening but also saddening. For a decade this page has respected naval intelligence officer Kirk and Congressman Kirk. Thus the dilemma: What are we — what are all the voters of Illinois — now to make of candidate Kirk? He has weakened one of the most compelling arguments for electing him to the Senate.
•••
There is uncomfortable context here: Kirk did his acknowledging and apologizing Thursday from the same chair Giannoulias occupied March 3 when he was trying to quell the public relations storm over the pending failure of his family's bank and its loans to unsavory characters.
We'll stick with the verdict we rendered in a March 4 editorial:
The broad extent of all that Giannoulias says he didn't know about the bank's dealings remains the most unsatisfying theme of that interview and of his campaign for the Senate. When the family bank was flying high and Giannoulias had his eye on the state treasurer's office, he was the senior loan officer. But when the tough decisions were being made or the questionable characters came to call, it was almost always Alexi's day to empty the wastebaskets.
Voters have almost five months to decide where they will invest their trust. Every Senate seat matters, so campaign money is sure to gullywash into Illinois. The television ads will be brutal. We don't predict much in politics, but: It's our guess that you have not heard the last of Mark Kirk's exaggerated military record or the Giannoulias family's failed Broadway Bank.
For us, the disclosures of Mark Kirk's career inflation are not excusable. For military families in particular, this is serious. Neither, though, are his offenses a reason to discount his service or to declare him unfit for the Senate. Kirk made arrogant errors and now he has apologized. He may not go one day between now and Nov. 2 without having to offer his personal regrets to the people of Illinois.
Because of that testing exercise, we voters will come to know more about Mark Kirk — and, owing to similar public scrutiny, about Alexi Giannoulias — than we do today. Their images and their voices will be everywhere we look and listen, proclaiming themselves worthy of our trust. They will talk to us about how they've described themselves to us in the past, and perhaps about what they should have said differently.
And maybe they'll even convince us.
Look who's shopping with coupons - Men joining the new wave of coupon cutters to save money
Look who's shopping with coupons - Men joining the new wave of coupon cutters to save money
By Wendy Donahue
Copyright © 2010, Chicago Tribune
June 5, 2010
http://www.chicagotribune.com/features/family/sc-cons-0603-smart-solutions-coupon-20100603,0,772590.story
Imagine this conversation at a back-porch barbecue: "Dude, skip the beer, have a margarita! I got a buck off three cans of Bacardi mix with a coupon online. … With salt? … Totally!"
A new study by Harris Interactive with Coupons.com shows that conversations such as this are pretty close to reality. That puts a new face on today's coupon clipper as someone who increasingly is affluent and educated, lives in a metro area and, quite possibly, is male.
The study found that 51 percent of American men have used a coupon in the last six months. More than one-third have a designated place to keep coupons. And 18 percent have told a friend about a coupon they found online.
Overall, six out of 10 U.S. adults with a household income of $100,000 or more said they had redeemed a coupon in the previous six months.
"Coupons aren't just for the groceries anymore," said Jeanette Pavini, household savings expert for Coupons.com, which offers weekly deals by city.
Online coupon sources, mobile coupon applications for cell phones and other techniques make using coupons easier and less conspicuous, Pavini said.
For grocery store items — a big coupon segment — shoppers can link a major store's rewards card to Coupons.com and then save specific coupons to the card so the discount is automatically applied at checkout. No paper coupon needed.
"This makes it techy and fun and easy for men to do," Pavini said.
Last year was the first year that coupon use increased since 1992, Coupons.com reported. The recent study showed that eight out of 10 U.S. adults plan to continue using coupons even if the economy improves.
To streamline the habit, Pavini suggests stashing coupons in an accordion-style folder in the car. So even if you forget them, you can just dash out to the parking lot.
She also suggests planning the weekly menu around coupons and local market specials to double the savings.
"It's exciting when you look at the bottom of your receipt," Pavini said, "and you saved $45 or $50."
wdonahue@tribune.com
By Wendy Donahue
Copyright © 2010, Chicago Tribune
June 5, 2010
http://www.chicagotribune.com/features/family/sc-cons-0603-smart-solutions-coupon-20100603,0,772590.story
Imagine this conversation at a back-porch barbecue: "Dude, skip the beer, have a margarita! I got a buck off three cans of Bacardi mix with a coupon online. … With salt? … Totally!"
A new study by Harris Interactive with Coupons.com shows that conversations such as this are pretty close to reality. That puts a new face on today's coupon clipper as someone who increasingly is affluent and educated, lives in a metro area and, quite possibly, is male.
The study found that 51 percent of American men have used a coupon in the last six months. More than one-third have a designated place to keep coupons. And 18 percent have told a friend about a coupon they found online.
Overall, six out of 10 U.S. adults with a household income of $100,000 or more said they had redeemed a coupon in the previous six months.
"Coupons aren't just for the groceries anymore," said Jeanette Pavini, household savings expert for Coupons.com, which offers weekly deals by city.
Online coupon sources, mobile coupon applications for cell phones and other techniques make using coupons easier and less conspicuous, Pavini said.
For grocery store items — a big coupon segment — shoppers can link a major store's rewards card to Coupons.com and then save specific coupons to the card so the discount is automatically applied at checkout. No paper coupon needed.
"This makes it techy and fun and easy for men to do," Pavini said.
Last year was the first year that coupon use increased since 1992, Coupons.com reported. The recent study showed that eight out of 10 U.S. adults plan to continue using coupons even if the economy improves.
To streamline the habit, Pavini suggests stashing coupons in an accordion-style folder in the car. So even if you forget them, you can just dash out to the parking lot.
She also suggests planning the weekly menu around coupons and local market specials to double the savings.
"It's exciting when you look at the bottom of your receipt," Pavini said, "and you saved $45 or $50."
wdonahue@tribune.com
No-interest, no-payments credit card leads to no fun - Address glitch means late fees pile up as bills returned to sender
No-interest, no-payments credit card leads to no fun - Address glitch means late fees pile up as bills returned to sender
By Jon Yates
Copyright © 2010, Chicago Tribune
June 6, 2010
http://www.chicagotribune.com/business/problemsolver/ct-biz-0606-problem-gow-20100606,0,590974.column
Kevin Gow loved everything about his new house — except its old appliances. So after closing on the Lake Zurich home in May 2009, Gow went appliance shopping at Sears.
As luck would have it, the department store was running a special. If he signed up for a SearsCharge PLUS credit card, offered through Citibank, he could make no payments for an entire year. Better yet, he'd also get a 12-month reprieve on interest.
Gow applied for the credit card and promptly charged a stove, dishwasher, refrigerator, washer and dryer. The grand total: $4,681.93.
He returned to his apartment and realized his new house came with a yard. So the next day, he returned to Sears for one more item — a $159.99 weed trimmer.
If he had known then how much trouble the weed trimmer would cause, Gow would have paid for it with cash.
Unbeknownst to him, the weed trimmer was not part of the "no interest, no payments" promotion.
It would not have been a problem had the Sears employee typed in Gow's information for the credit card correctly. Because he hadn't yet moved, Gow gave the address of his apartment. Instead of typing in apartment 732, the Sears employee entered just 73.
For months, Citibank sent Gow's bills to the incorrect address and they were returned to Citibank.
Gow, who assumed he wasn't receiving bills because he was not required to make payments for a year, had no idea the bills were piling up in some faraway Citibank office, or that finance charges had kicked in.
By the time Citibank turned Gow's account over to a collection agency in January, the late fees and interest on the weed trimmer had grown to a startling $1,078.79.
Although Citibank had never contacted him about the missed payments, the collection agency had little trouble finding him. In April, Leading Edge Recovery Solutions sent Gow a letter saying he owed the full amount for his appliances, his weed trimmer, and the still-growing fees.
Leading Edge Recovery Solutions offered to let him settle his $5,981.54 balance for a mere $2,392.54.
Gow couldn't believe his eyes. He checked his credit report and saw the unpaid charges had been reported to the credit bureaus, severely damaging his credit rating.
He immediately called Sears, which referred him to the collection agency. He called the collection agency, which referred him back to Sears.
"I was kind of in credit resolution limbo," Gow said. "I couldn't get a straight answer from anybody. The collection agency didn't want to hear my sob story. Obviously, they just wanted to get their cash."
He wrote a letter detailing the mix-up and sent it to Sears, Citibank, the collection agency, the Illinois attorney general's office — and What's Your Problem?
The Problem Solver was the only one who responded.
Gow said he gave Sears his cell phone number when he signed up for the credit card, so he should have been contacted when his bills were sent back. Had he known he owed on the weed trimmer he would have paid it off immediately, he said.
"I never received a phone call," he said. "With one phone call, I could have rectified this immediately."
Gow said he could have paid the $2,392.62 to the collection agency and saved himself some money. He decided not to, he said, because he felt that would be admitting he did something wrong. Worse yet, it would have had a long-lasting impact on his credit report.
"I have a great credit score," he said. "I always pay my bills on time. I'm not looking to get out of what I owe. I'm just looking to owe it properly."
The Problem Partner, Kristin Samuelson, called Sears spokesman Larry Costello. Costello then consulted with his colleagues at Citibank.
In late May, a Citibank representative called Gow and agreed to erase the more than $1,000 in finance charges and late fees. Citibank also promised to correct his credit report and begin a new billing cycle with the original charges intact.
"The slate's going to be wiped clean," Gow said. "The biggest thing is not my bill, but that my credit is going to be corrected."
By Jon Yates
Copyright © 2010, Chicago Tribune
June 6, 2010
http://www.chicagotribune.com/business/problemsolver/ct-biz-0606-problem-gow-20100606,0,590974.column
Kevin Gow loved everything about his new house — except its old appliances. So after closing on the Lake Zurich home in May 2009, Gow went appliance shopping at Sears.
As luck would have it, the department store was running a special. If he signed up for a SearsCharge PLUS credit card, offered through Citibank, he could make no payments for an entire year. Better yet, he'd also get a 12-month reprieve on interest.
Gow applied for the credit card and promptly charged a stove, dishwasher, refrigerator, washer and dryer. The grand total: $4,681.93.
He returned to his apartment and realized his new house came with a yard. So the next day, he returned to Sears for one more item — a $159.99 weed trimmer.
If he had known then how much trouble the weed trimmer would cause, Gow would have paid for it with cash.
Unbeknownst to him, the weed trimmer was not part of the "no interest, no payments" promotion.
It would not have been a problem had the Sears employee typed in Gow's information for the credit card correctly. Because he hadn't yet moved, Gow gave the address of his apartment. Instead of typing in apartment 732, the Sears employee entered just 73.
For months, Citibank sent Gow's bills to the incorrect address and they were returned to Citibank.
Gow, who assumed he wasn't receiving bills because he was not required to make payments for a year, had no idea the bills were piling up in some faraway Citibank office, or that finance charges had kicked in.
By the time Citibank turned Gow's account over to a collection agency in January, the late fees and interest on the weed trimmer had grown to a startling $1,078.79.
Although Citibank had never contacted him about the missed payments, the collection agency had little trouble finding him. In April, Leading Edge Recovery Solutions sent Gow a letter saying he owed the full amount for his appliances, his weed trimmer, and the still-growing fees.
Leading Edge Recovery Solutions offered to let him settle his $5,981.54 balance for a mere $2,392.54.
Gow couldn't believe his eyes. He checked his credit report and saw the unpaid charges had been reported to the credit bureaus, severely damaging his credit rating.
He immediately called Sears, which referred him to the collection agency. He called the collection agency, which referred him back to Sears.
"I was kind of in credit resolution limbo," Gow said. "I couldn't get a straight answer from anybody. The collection agency didn't want to hear my sob story. Obviously, they just wanted to get their cash."
He wrote a letter detailing the mix-up and sent it to Sears, Citibank, the collection agency, the Illinois attorney general's office — and What's Your Problem?
The Problem Solver was the only one who responded.
Gow said he gave Sears his cell phone number when he signed up for the credit card, so he should have been contacted when his bills were sent back. Had he known he owed on the weed trimmer he would have paid it off immediately, he said.
"I never received a phone call," he said. "With one phone call, I could have rectified this immediately."
Gow said he could have paid the $2,392.62 to the collection agency and saved himself some money. He decided not to, he said, because he felt that would be admitting he did something wrong. Worse yet, it would have had a long-lasting impact on his credit report.
"I have a great credit score," he said. "I always pay my bills on time. I'm not looking to get out of what I owe. I'm just looking to owe it properly."
The Problem Partner, Kristin Samuelson, called Sears spokesman Larry Costello. Costello then consulted with his colleagues at Citibank.
In late May, a Citibank representative called Gow and agreed to erase the more than $1,000 in finance charges and late fees. Citibank also promised to correct his credit report and begin a new billing cycle with the original charges intact.
"The slate's going to be wiped clean," Gow said. "The biggest thing is not my bill, but that my credit is going to be corrected."
How to manage student loan debt
How to manage student loan debt
By Michelle Singletary
Copyright by The Washington Post
Sunday, June 6, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/05/AR2010060500721.html?hpid=topnews
Soon the sounds of "Pomp and Circumstance" will fade and thousands of college graduates will have to really start facing the music -- their education loans.
For them, I have a new tune: Know what you owe.
That should be the mantra for every student borrower because an unsettling number of graduates -- and their parents -- only have a vague idea of how much has been borrowed. It's only after the degree has been obtained that they add up the costs. Many don't know who they borrowed from or how many different loans they have.
In 2008, about two-thirds of students graduating from four-year colleges and universities had student loan debt averaging $23,200, according to data analyzed by the Project on Student Debt, an initiative of the nonprofit Institute for College Access & Success.
Okay, graduates, so now that you have your degree, what do you know about your loans, and how will you manage them?
Remember CliffsNotes?
For this month's Color of Money Book Club selection, I am recommending a CliffsNotes book -- "Graduation Debt: How to Manage Student Loans and Live Your Life," by Reyna Gobel. True to the CliffsNotes brand, this compact guide walks you through the student loan labyrinth starting with "know what you owe."
"In order to work toward paying off your student loan debt, you need to be aware of the existence and the amounts of each loan," writes Gobel, a freelance financial journalist who amassed $63,000 in student loans obtaining her bachelor's and then two master's degrees.
More than 1 million people have at least $40,000 in student loan debt, according to data from the National Center for Education Statistics, Gobel reports.
The book starts with a pop quiz that I know many recent graduates would fail: How many different federal student loans do you have? Do you know the servicers on each loan or the interest rates on every single loan, or how many are subsidized or unsubsidized?
"Whether you just graduated from college or you've been out of school for a decade, it's not always easy to keep tabs on eight semesters of loans," Gobel writes.
She is tender where I might be tough. I think you darn well should know intimately every single loan you've taken out long before you take that graduation march, especially when you're locking yourself into financial bondage for several decades. Maybe if more students kept up with how much debt they were accumulating and the interest due, they would borrow less.
But if you don't know the answers to Gobel's questions, go to the National Student Loan Data System at http://www.nslds.ed.gov. This is the U.S. Department of Education's central database for student aid. Gobel walks you though the process of finding information about your individual loans.
"Brace yourself, because you are going to see how much interest has accrued since the first day you borrowed your first student loan dollar," Gobel cautions.
Don't think Gobel's advice to create a cheat sheet of your loans is trite. I was working with one student who, after finally organizing her loan data, found a forgotten loan that was already in default. She had been getting notices about the loan but said to me: "I just couldn't face the debt." She didn't open the notices.
Forgetting a loan, Gobel writes, is a fairly common problem. People think they are making payments on all their loans only to discover a loan was left out. It even happened to the author.
"If payments had been organized, this never would have happened," she writes.
You'll find what you need in this book from evaluating your debt situation to repayment and consolidation options to paying your student loans off early.
While many professors may discourage students from using CliffsNotes, I assure you this particular guide is a shortcut that will well serve borrowers looking for a concise road map to handling their education loans.
As with all Color of Money Book Club selections, I'll be hosting a live online chat about the book with the author. This one will be at noon Eastern on June 17 at http://washingtonpost.com/discussions. By the way, I would be interested in hearing how many of you are handling heavy student loan debt.
The online chat is a way for book club members to meet virtually and talk, ask questions or just vent. Every month, I randomly select readers who will receive a copy of the featured book, donated by the publisher. For a chance to win Gobel's book, e-mail colorofmoney@washpost.com with your name and address.
Readers can write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.
Comments and questions are welcome, but because of the volume of mail, personal responses are not always possible. Please note that comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.
By Michelle Singletary
Copyright by The Washington Post
Sunday, June 6, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/05/AR2010060500721.html?hpid=topnews
Soon the sounds of "Pomp and Circumstance" will fade and thousands of college graduates will have to really start facing the music -- their education loans.
For them, I have a new tune: Know what you owe.
That should be the mantra for every student borrower because an unsettling number of graduates -- and their parents -- only have a vague idea of how much has been borrowed. It's only after the degree has been obtained that they add up the costs. Many don't know who they borrowed from or how many different loans they have.
In 2008, about two-thirds of students graduating from four-year colleges and universities had student loan debt averaging $23,200, according to data analyzed by the Project on Student Debt, an initiative of the nonprofit Institute for College Access & Success.
Okay, graduates, so now that you have your degree, what do you know about your loans, and how will you manage them?
Remember CliffsNotes?
For this month's Color of Money Book Club selection, I am recommending a CliffsNotes book -- "Graduation Debt: How to Manage Student Loans and Live Your Life," by Reyna Gobel. True to the CliffsNotes brand, this compact guide walks you through the student loan labyrinth starting with "know what you owe."
"In order to work toward paying off your student loan debt, you need to be aware of the existence and the amounts of each loan," writes Gobel, a freelance financial journalist who amassed $63,000 in student loans obtaining her bachelor's and then two master's degrees.
More than 1 million people have at least $40,000 in student loan debt, according to data from the National Center for Education Statistics, Gobel reports.
The book starts with a pop quiz that I know many recent graduates would fail: How many different federal student loans do you have? Do you know the servicers on each loan or the interest rates on every single loan, or how many are subsidized or unsubsidized?
"Whether you just graduated from college or you've been out of school for a decade, it's not always easy to keep tabs on eight semesters of loans," Gobel writes.
She is tender where I might be tough. I think you darn well should know intimately every single loan you've taken out long before you take that graduation march, especially when you're locking yourself into financial bondage for several decades. Maybe if more students kept up with how much debt they were accumulating and the interest due, they would borrow less.
But if you don't know the answers to Gobel's questions, go to the National Student Loan Data System at http://www.nslds.ed.gov. This is the U.S. Department of Education's central database for student aid. Gobel walks you though the process of finding information about your individual loans.
"Brace yourself, because you are going to see how much interest has accrued since the first day you borrowed your first student loan dollar," Gobel cautions.
Don't think Gobel's advice to create a cheat sheet of your loans is trite. I was working with one student who, after finally organizing her loan data, found a forgotten loan that was already in default. She had been getting notices about the loan but said to me: "I just couldn't face the debt." She didn't open the notices.
Forgetting a loan, Gobel writes, is a fairly common problem. People think they are making payments on all their loans only to discover a loan was left out. It even happened to the author.
"If payments had been organized, this never would have happened," she writes.
You'll find what you need in this book from evaluating your debt situation to repayment and consolidation options to paying your student loans off early.
While many professors may discourage students from using CliffsNotes, I assure you this particular guide is a shortcut that will well serve borrowers looking for a concise road map to handling their education loans.
As with all Color of Money Book Club selections, I'll be hosting a live online chat about the book with the author. This one will be at noon Eastern on June 17 at http://washingtonpost.com/discussions. By the way, I would be interested in hearing how many of you are handling heavy student loan debt.
The online chat is a way for book club members to meet virtually and talk, ask questions or just vent. Every month, I randomly select readers who will receive a copy of the featured book, donated by the publisher. For a chance to win Gobel's book, e-mail colorofmoney@washpost.com with your name and address.
Readers can write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.
Comments and questions are welcome, but because of the volume of mail, personal responses are not always possible. Please note that comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.
Hungary Warns of Greek-Style Crisis
Hungary Warns of Greek-Style Crisis
By DAN BILEFSKY and MATTHEW SALTMARSH
Copyright by The New York Times
Published: June 4, 2010
http://www.nytimes.com/2010/06/05/world/europe/05hungrary.html?hpw
PRAGUE — Fears that the debt crisis could migrate to central Europe were stirred Friday after a senior Hungarian government official said the previous government had manipulated budget figures and lied about the state of the economy, but most financial experts dismissed the remarks as a ham-handed negotiating ploy.
The official, Peter Szijjarto, a spokesman for Prime Minister Viktor Orban, was quoted by Bloomberg News and other news agencies as saying that the Hungarian economy was in a “very grave situation.” He even raised the specter of a default, saying such speculation “isn’t an exaggeration.”
His comments followed similar warnings on Thursday by Lajos Kosa, a vice president of the governing center-right Fidesz party, and other officials that Hungary was in danger of suffering a Greek-style crisis, with budget deficits — officially 4 percent of gross domestic product in 2009 — possibly reaching 7.5 percent of G.D.P. this year.
After the comments, the Hungarian currency slid and the yield on benchmark 10-year Hungarian bonds surged, to close at 8.1 percent from 7.4 percent on Thursday. The Budapest Stock Exchange Index closed down 3.4 percent, having fallen as much as 7.1 percent earlier in the day.
For all the alarmism by senior government officials in recent days, however, economists said the country was nowhere near the crisis level of Greece and emphasized that the comments appeared to have been politically motivated to tarnish the previous Socialist government and to give Mr. Orban a stronger negotiating position with the I.M.F.
Mr. Orban, whose Fidesz party won a sweeping victory in April in part on a platform of ending austerity and promoting growth, has indicated repeatedly that he wants the I.M.F. to allow Hungary to run a higher budget deficit than the current 2010 target of 3.8 percent of gross domestic product.
Hungary is among the countries in Eastern Europe hardest hit by the international financial crisis. In late 2008 it was forced to approach the International Monetary Fund for $25 billion in emergency financing. Unemployment has soared to 11.4 percent while the economy s contracted by 6.3 percent last year.
Peter Rona, a leading economist, said the doomsday talk had seriously backfired by spooking investors already jittery over debt problems in the euro zone, potentially depriving Hungary of credit on the international financial markets and undermining the government’s credibility.
“Fundamentally, Hungary’s economy is nowhere near the debt level of Greece, and it has more than enough money to service its debt, while I don’t think there is a data integrity problem,” he said. “But the government has shown itself to be a bunch of bunglers and amateurs when it comes to communicating with financial markets, and it will now face a challenge to convince the markets that Hungary is heading in the right direction.”
Mr. Rona added that the government’s credibility had been further dented by its pledge on Friday to slash taxes, even as it compared Hungary’s economic situation with Greece. “Their economic plans and statements are confusing and contradictory.”
The comments from Hungary “reminded investors of what happened in Greece,” said Martin van Vliet, an economist at ING in Amsterdam. “The bond markets are still hyper-sensitive to any bad news on sovereign debt.”
In Athens, it was a new Socialist government that blamed the previous administration for lying about the state of the finances, leading to substantial upward revisions in the country’s deficit projections.
Nigel Rendell, a senior emerging markets analyst at RBC Capital Markets in London, said the Hungarian comments appeared to have been aimed at a domestic audience by a “naïve” official.
In fact, since receiving the I.M.F. aid, Hungary appears to have made good progress in controlling its deficit, he said.
According to European Union figures, the country’s budget deficit was stable in 2009 at 4 percent of gross domestic product, higher than the 3.8 percent a year earlier but well below 2006 and 2007 levels. Its total debt was equal to 78 percent of G.D.P. last year, about the same level as France.
“It takes years to build credibility, and that can be destroyed in days,” Mr. Rendell said. “They should have known better. They have damaged themselves, and it may take many, many months to recover.”
The new Hungarian government was sworn in just last month. A government fact-finding panel will present a preliminary report on the state of the economy over the weekend, to be followed by a government action plan, Mr. Szijjarto, the spokesman, said.
Dan Bilefsky reported from Prague and Mathew Saltmarsh from Paris.
By DAN BILEFSKY and MATTHEW SALTMARSH
Copyright by The New York Times
Published: June 4, 2010
http://www.nytimes.com/2010/06/05/world/europe/05hungrary.html?hpw
PRAGUE — Fears that the debt crisis could migrate to central Europe were stirred Friday after a senior Hungarian government official said the previous government had manipulated budget figures and lied about the state of the economy, but most financial experts dismissed the remarks as a ham-handed negotiating ploy.
The official, Peter Szijjarto, a spokesman for Prime Minister Viktor Orban, was quoted by Bloomberg News and other news agencies as saying that the Hungarian economy was in a “very grave situation.” He even raised the specter of a default, saying such speculation “isn’t an exaggeration.”
His comments followed similar warnings on Thursday by Lajos Kosa, a vice president of the governing center-right Fidesz party, and other officials that Hungary was in danger of suffering a Greek-style crisis, with budget deficits — officially 4 percent of gross domestic product in 2009 — possibly reaching 7.5 percent of G.D.P. this year.
After the comments, the Hungarian currency slid and the yield on benchmark 10-year Hungarian bonds surged, to close at 8.1 percent from 7.4 percent on Thursday. The Budapest Stock Exchange Index closed down 3.4 percent, having fallen as much as 7.1 percent earlier in the day.
For all the alarmism by senior government officials in recent days, however, economists said the country was nowhere near the crisis level of Greece and emphasized that the comments appeared to have been politically motivated to tarnish the previous Socialist government and to give Mr. Orban a stronger negotiating position with the I.M.F.
Mr. Orban, whose Fidesz party won a sweeping victory in April in part on a platform of ending austerity and promoting growth, has indicated repeatedly that he wants the I.M.F. to allow Hungary to run a higher budget deficit than the current 2010 target of 3.8 percent of gross domestic product.
Hungary is among the countries in Eastern Europe hardest hit by the international financial crisis. In late 2008 it was forced to approach the International Monetary Fund for $25 billion in emergency financing. Unemployment has soared to 11.4 percent while the economy s contracted by 6.3 percent last year.
Peter Rona, a leading economist, said the doomsday talk had seriously backfired by spooking investors already jittery over debt problems in the euro zone, potentially depriving Hungary of credit on the international financial markets and undermining the government’s credibility.
“Fundamentally, Hungary’s economy is nowhere near the debt level of Greece, and it has more than enough money to service its debt, while I don’t think there is a data integrity problem,” he said. “But the government has shown itself to be a bunch of bunglers and amateurs when it comes to communicating with financial markets, and it will now face a challenge to convince the markets that Hungary is heading in the right direction.”
Mr. Rona added that the government’s credibility had been further dented by its pledge on Friday to slash taxes, even as it compared Hungary’s economic situation with Greece. “Their economic plans and statements are confusing and contradictory.”
The comments from Hungary “reminded investors of what happened in Greece,” said Martin van Vliet, an economist at ING in Amsterdam. “The bond markets are still hyper-sensitive to any bad news on sovereign debt.”
In Athens, it was a new Socialist government that blamed the previous administration for lying about the state of the finances, leading to substantial upward revisions in the country’s deficit projections.
Nigel Rendell, a senior emerging markets analyst at RBC Capital Markets in London, said the Hungarian comments appeared to have been aimed at a domestic audience by a “naïve” official.
In fact, since receiving the I.M.F. aid, Hungary appears to have made good progress in controlling its deficit, he said.
According to European Union figures, the country’s budget deficit was stable in 2009 at 4 percent of gross domestic product, higher than the 3.8 percent a year earlier but well below 2006 and 2007 levels. Its total debt was equal to 78 percent of G.D.P. last year, about the same level as France.
“It takes years to build credibility, and that can be destroyed in days,” Mr. Rendell said. “They should have known better. They have damaged themselves, and it may take many, many months to recover.”
The new Hungarian government was sworn in just last month. A government fact-finding panel will present a preliminary report on the state of the economy over the weekend, to be followed by a government action plan, Mr. Szijjarto, the spokesman, said.
Dan Bilefsky reported from Prague and Mathew Saltmarsh from Paris.
Washington Asks: What to Do About Israel?
Washington Asks: What to Do About Israel?
By HELENE COOPER
Copyright by The New York Times
Published: June 4, 2010
http://www.nytimes.com/2010/06/06/weekinreview/06cooper.html?ref=global-home
WASHINGTON — Some topics are so inflammatory that they are never discussed without first inserting a number of caveats. And so, when Anthony Cordesman, a foreign policy dignitary in this town’s think tank circuit, dropped an article on Wednesday headlined “Israel as a Strategic Liability,” he made sure to open with a plethora of qualifications.
First, he noted, America’s commitment to Israel is motivated by morality and ethics — a reaction to the Holocaust, to Western anti-Semitism and to American foot-dragging before and during World War II that left European Jews slaughtered by the Nazis. Second, Israel is a democracy with the same values as the United States. Third, the United States will never abandon Israel, and will help it keep its military edge over its neighbors. And America will guard Israel against an Iranian nuclear threat.
But once Mr. Cordesman had dispensed with what in the newspaper world is called the “to-be-sure” paragraphs, he laid out a dispassionate argument that has gained increased traction in Washington — both inside the Obama administration (including the Pentagon, White House and State Department) and outside, during forums, policy breakfasts, even a seder in Bethesda. Recent Israeli governments, particularly the one led by Prime Minister Benjamin Netanyahu, Mr. Cordesman argued, have ignored the national security concerns of its biggest benefactor, the United States, and instead have taken steps that damage American interests abroad.
“The depth of America’s moral commitment does not justify or excuse actions by an Israeli government that unnecessarily make Israel a strategic liability when it should remain an asset,” Mr. Cordesman wrote, in commentary for the centrist Center for Strategic and International Studies, where he is the Arleigh A. Burke Chair in strategy. “It is time Israel realized that it has obligations to the United States, as well as the United States to Israel, and that it become far more careful about the extent to which it tests the limits of U.S. patience and exploits the support of American Jews.”
The list of recent moves by the Netanyahu government that potentially threaten American interests has grown steadily, many foreign policy experts argue. The violence that broke out when Israeli commandos stormed aboard a Gaza flotilla last week chilled American relations with a key Muslim ally, Turkey. The Gaza fight also makes it more difficult for America to rally a coalition that includes Arab and Muslim states against Iran’s nuclear ambitions. Mr. Netanyahu’s refusal to stop Jewish housing construction in Arab East Jerusalem also strains American ties with Arab allies. It also makes reaching an eventual peace deal, which many administration officials believe is critical to America’s broader interests in the Muslim world, even more difficult.
Both President Obama and Gen. David H. Petraeus, who oversees America’s wars in Iraq and Afghanistan, have made the link in recent months between the long-running Arab-Israeli conflict and American security interests. During a press conference in April, Mr. Obama declared that conflicts like the one in the Middle East ended up “costing us significantly in terms of both blood and treasure”; he drew an explicit tie between the Israeli-Palestinian strife and the safety of American soldiers as they battle Islamic extremism in Iraq, Afghanistan and elsewhere.
General Petraeus sounded a similar theme in Congressional testimony earlier this year, when he said that the lack of progress in the Middle East created a hostile environment for America. After a furor erupted, he said he wasn’t suggesting that soldiers were being put in harm’s way by American support for Israel, and he went to great lengths to point out the importance of America’s strategic partnership with Israel.
“But the status quo is unsustainable,” he said in an interview Friday. “If you don’t achieve progress in a just and lasting Mideast peace, the extremists are given a stick to beat us with.”
And in March, Secretary of State Hillary Rodham Clinton told AIPAC, the pro-Israel lobbying group, that new construction in East Jerusalem or the West Bank “exposes daylight between Israel and the United States that others in the region hope to exploit.”
All of this has led to deep soul-searching in parts of the American Jewish community, alongside a fierce debate among officials from past and present administrations. Mr. Obama’s mere characterization of the acts that led to the deaths in the Gaza flotilla as “tragic” unleashed a withering response from Liz Cheney, daughter of the former vice president. “There is no middle ground here,” she said in a statement. “Either the United States stands with the people of Israel in the war against radical Islamic terrorism or we are providing encouragement to Israel’s enemies — and our own.”
Ms. Cheney’s remarks reflect some of the alarm among Israeli officials and some American Jewish leaders, who preferred the Bush administration’s steadfast support, no matter which Israeli government was in office and no matter what actions that government took.
Some Democrats are alarmed about the shift in thinking too. Representative Steve Israel, Democrat of New York, said he spent two hours at the White House with Mr. Obama and a group of other Jewish lawmakers two weeks ago, “expressing my concerns repeatedly and emphatically.” Questioning Israel as a strategic asset, he said, “seeks to blame Israel for difficulties in the Middle East, but it’s not Israel’s fault that you have an ineffective Palestinian leadership incapable of striking a deal. It’s not Israel’s fault that you have intransigent Arab regimes unwilling to push the Palestinians into negotiations. Those are the ugly truths.”
Some foreign policy experts say the new willingness to suggest that the Israeli government’s actions may become an American national security liability marks a backlash against the Bush-era neoconservative agenda, which posited that America and Israel were fighting together to promote democracy in an unstable region.
The new concern is also, paradoxically, a consequence of commitments made during the Bush years, when the lives of American soldiers, fighting in Iraq and Afghanistan, became tied to the state of Arab and Muslim public opinion.
Mr. Obama has de-emphasized democracy promotion. He is pulling American troops out of Iraq, and has promised to begin doing so in Afghanistan next year. Meanwhile, he has reached out to the Muslim world and emphasized, in his new national security strategy, that the United States needs to act in concert with other nations.
“The prior administration’s worldview lined up more with the Israeli government,” said Jeremy Ben-Ami, founder of J Street, a liberal Jewish lobbying group. “Now we’re seeing a reflection of a different worldview, that gives you a completely different set of policies and priorities.”
Mr. Ben-Ami says he represents Jews who support Israel, but not all of its policies. Some of them are raising the issue of Israeli government actions as a strategic liability for the United States, and that question animated a seder held in April by influential officials and advisers in Bethesda, Md. A debate broke out there over where to draw the line when considering American support for Israel’s government.
Within the Obama administration, there are gradations of how to even talk about that issue. At the seder, one Jewish adviser to the administration invoked concerns that ordinary Americans might get so frustrated with Israeli government actions that they will begin to question America’s support for that government. He asked that his name not be used because of the sensitivities surrounding the issue.
More recently, Daniel Levy, director of the Middle East Task Force at the New America Foundation and a member of J Street, said in an interview: “America has three choices. Either say, it’s politically too hot a potato to touch, and just pay the consequences in the rest of the world. Or try to force through a peace deal between Israelis and Palestinians, so that the Palestinian grievance issue is no longer a driving force or problem.” The third choice, he said, “is for America to say, we can’t solve it, but we can’t pay the consequences, so we will distance ourselves from Israel. That way America would no longer be seen, as it has been this week, as the enabler of excesses of Israeli misbehavior.”
Unsurprisingly, Mr. Levy advocates the second choice. But he warns that the third may become more palatable to Americans if Mr. Netanyahu’s government stays on its present course.
Jeffrey Goldberg of The Atlantic, author of one of the most well-read blogs in the American Jewish community, put it this way: “I don’t necessarily believe you solve all of America’s problems in Iraq, Afghanistan, Pakistan and Yemen by freezing settlement growth. On the other hand, there’s no particular reason for Israel to make itself a pain in the tush either.”
By HELENE COOPER
Copyright by The New York Times
Published: June 4, 2010
http://www.nytimes.com/2010/06/06/weekinreview/06cooper.html?ref=global-home
WASHINGTON — Some topics are so inflammatory that they are never discussed without first inserting a number of caveats. And so, when Anthony Cordesman, a foreign policy dignitary in this town’s think tank circuit, dropped an article on Wednesday headlined “Israel as a Strategic Liability,” he made sure to open with a plethora of qualifications.
First, he noted, America’s commitment to Israel is motivated by morality and ethics — a reaction to the Holocaust, to Western anti-Semitism and to American foot-dragging before and during World War II that left European Jews slaughtered by the Nazis. Second, Israel is a democracy with the same values as the United States. Third, the United States will never abandon Israel, and will help it keep its military edge over its neighbors. And America will guard Israel against an Iranian nuclear threat.
But once Mr. Cordesman had dispensed with what in the newspaper world is called the “to-be-sure” paragraphs, he laid out a dispassionate argument that has gained increased traction in Washington — both inside the Obama administration (including the Pentagon, White House and State Department) and outside, during forums, policy breakfasts, even a seder in Bethesda. Recent Israeli governments, particularly the one led by Prime Minister Benjamin Netanyahu, Mr. Cordesman argued, have ignored the national security concerns of its biggest benefactor, the United States, and instead have taken steps that damage American interests abroad.
“The depth of America’s moral commitment does not justify or excuse actions by an Israeli government that unnecessarily make Israel a strategic liability when it should remain an asset,” Mr. Cordesman wrote, in commentary for the centrist Center for Strategic and International Studies, where he is the Arleigh A. Burke Chair in strategy. “It is time Israel realized that it has obligations to the United States, as well as the United States to Israel, and that it become far more careful about the extent to which it tests the limits of U.S. patience and exploits the support of American Jews.”
The list of recent moves by the Netanyahu government that potentially threaten American interests has grown steadily, many foreign policy experts argue. The violence that broke out when Israeli commandos stormed aboard a Gaza flotilla last week chilled American relations with a key Muslim ally, Turkey. The Gaza fight also makes it more difficult for America to rally a coalition that includes Arab and Muslim states against Iran’s nuclear ambitions. Mr. Netanyahu’s refusal to stop Jewish housing construction in Arab East Jerusalem also strains American ties with Arab allies. It also makes reaching an eventual peace deal, which many administration officials believe is critical to America’s broader interests in the Muslim world, even more difficult.
Both President Obama and Gen. David H. Petraeus, who oversees America’s wars in Iraq and Afghanistan, have made the link in recent months between the long-running Arab-Israeli conflict and American security interests. During a press conference in April, Mr. Obama declared that conflicts like the one in the Middle East ended up “costing us significantly in terms of both blood and treasure”; he drew an explicit tie between the Israeli-Palestinian strife and the safety of American soldiers as they battle Islamic extremism in Iraq, Afghanistan and elsewhere.
General Petraeus sounded a similar theme in Congressional testimony earlier this year, when he said that the lack of progress in the Middle East created a hostile environment for America. After a furor erupted, he said he wasn’t suggesting that soldiers were being put in harm’s way by American support for Israel, and he went to great lengths to point out the importance of America’s strategic partnership with Israel.
“But the status quo is unsustainable,” he said in an interview Friday. “If you don’t achieve progress in a just and lasting Mideast peace, the extremists are given a stick to beat us with.”
And in March, Secretary of State Hillary Rodham Clinton told AIPAC, the pro-Israel lobbying group, that new construction in East Jerusalem or the West Bank “exposes daylight between Israel and the United States that others in the region hope to exploit.”
All of this has led to deep soul-searching in parts of the American Jewish community, alongside a fierce debate among officials from past and present administrations. Mr. Obama’s mere characterization of the acts that led to the deaths in the Gaza flotilla as “tragic” unleashed a withering response from Liz Cheney, daughter of the former vice president. “There is no middle ground here,” she said in a statement. “Either the United States stands with the people of Israel in the war against radical Islamic terrorism or we are providing encouragement to Israel’s enemies — and our own.”
Ms. Cheney’s remarks reflect some of the alarm among Israeli officials and some American Jewish leaders, who preferred the Bush administration’s steadfast support, no matter which Israeli government was in office and no matter what actions that government took.
Some Democrats are alarmed about the shift in thinking too. Representative Steve Israel, Democrat of New York, said he spent two hours at the White House with Mr. Obama and a group of other Jewish lawmakers two weeks ago, “expressing my concerns repeatedly and emphatically.” Questioning Israel as a strategic asset, he said, “seeks to blame Israel for difficulties in the Middle East, but it’s not Israel’s fault that you have an ineffective Palestinian leadership incapable of striking a deal. It’s not Israel’s fault that you have intransigent Arab regimes unwilling to push the Palestinians into negotiations. Those are the ugly truths.”
Some foreign policy experts say the new willingness to suggest that the Israeli government’s actions may become an American national security liability marks a backlash against the Bush-era neoconservative agenda, which posited that America and Israel were fighting together to promote democracy in an unstable region.
The new concern is also, paradoxically, a consequence of commitments made during the Bush years, when the lives of American soldiers, fighting in Iraq and Afghanistan, became tied to the state of Arab and Muslim public opinion.
Mr. Obama has de-emphasized democracy promotion. He is pulling American troops out of Iraq, and has promised to begin doing so in Afghanistan next year. Meanwhile, he has reached out to the Muslim world and emphasized, in his new national security strategy, that the United States needs to act in concert with other nations.
“The prior administration’s worldview lined up more with the Israeli government,” said Jeremy Ben-Ami, founder of J Street, a liberal Jewish lobbying group. “Now we’re seeing a reflection of a different worldview, that gives you a completely different set of policies and priorities.”
Mr. Ben-Ami says he represents Jews who support Israel, but not all of its policies. Some of them are raising the issue of Israeli government actions as a strategic liability for the United States, and that question animated a seder held in April by influential officials and advisers in Bethesda, Md. A debate broke out there over where to draw the line when considering American support for Israel’s government.
Within the Obama administration, there are gradations of how to even talk about that issue. At the seder, one Jewish adviser to the administration invoked concerns that ordinary Americans might get so frustrated with Israeli government actions that they will begin to question America’s support for that government. He asked that his name not be used because of the sensitivities surrounding the issue.
More recently, Daniel Levy, director of the Middle East Task Force at the New America Foundation and a member of J Street, said in an interview: “America has three choices. Either say, it’s politically too hot a potato to touch, and just pay the consequences in the rest of the world. Or try to force through a peace deal between Israelis and Palestinians, so that the Palestinian grievance issue is no longer a driving force or problem.” The third choice, he said, “is for America to say, we can’t solve it, but we can’t pay the consequences, so we will distance ourselves from Israel. That way America would no longer be seen, as it has been this week, as the enabler of excesses of Israeli misbehavior.”
Unsurprisingly, Mr. Levy advocates the second choice. But he warns that the third may become more palatable to Americans if Mr. Netanyahu’s government stays on its present course.
Jeffrey Goldberg of The Atlantic, author of one of the most well-read blogs in the American Jewish community, put it this way: “I don’t necessarily believe you solve all of America’s problems in Iraq, Afghanistan, Pakistan and Yemen by freezing settlement growth. On the other hand, there’s no particular reason for Israel to make itself a pain in the tush either.”
Debtors’ Prism: Who Has Europe’s Loans?
Debtors’ Prism: Who Has Europe’s Loans?
By JACK EWING
Copyright by The New York Times
Published: June 4, 2010
http://www.nytimes.com/2010/06/06/business/global/06toxic.html?ref=global-home
FRANKFURT
IT’S a $2.6 trillion mystery.
That’s the amount that foreign banks and other financial companies have lent to public and private institutions in Greece, Spain and Portugal, three countries so mired in economic troubles that analysts and investors assume that a significant portion of that mountain of debt may never be repaid.
The problem is, alas, that no one — not investors, not regulators, not even bankers themselves — knows exactly which banks are sitting on the biggest stockpiles of rotting loans within that pile. And doubt, as it always does during economic crises, has made Europe’s already vulnerable financial system occasionally appear to seize up. Early last month, in an indication of just how dangerous the situation had become, European banks — which appear to hold more than half of that $2.6 trillion in debt — nearly stopped lending money to one another.
Now, with government resources strained and confidence in European economies eroding, some analysts say the Continent’s banks have to come clean with a transparent and rigorous accounting of their woes. Until then, they say, nobody will be able to wrestle effectively with Europe’s mounting problems.
“The marketplace knows very little about where the real risks are parked,” says Nicolas Véron, an economist at Bruegel, a research organization in Brussels. “That is exactly the problem. As long as there is no semblance of clarity, trust will not return to the banking system.”
Limited disclosure and possibly spotty accounting have been long-voiced concerns of analysts who follow European banks. Though most large publicly listed banks have offered information about their exposure — Deutsche Bank in Frankfurt says it holds 500 million euros in Greek government bonds and no Spanish or Portuguese sovereign debt — there has been little disclosure from the hundreds of smaller mortgage lenders, state-owned banks and thrift institutions that dominate banking in countries like Germany and Spain.
Depfa, a German bank that is now based in Dublin, is one of the few second-tier European banking institutions that have offered detailed disclosures about their financial wherewithal, and its stark troubles may be emblematic of those still hidden on other banks’ books.
Despite boasting as recently as two years ago of its “very conservative lending practices,” Depfa, which caters primarily to governments, has flirted with disaster. It narrowly avoided collapsing in late 2008 until the German government bailed it out, and today its books are still laden with risk.
DEPFA and its parent, Hypo Real Estate Holding, a property lender outside Munich, have 80.4 billion euros in public-sector debt from Greece, Spain, Portugal, Ireland and Italy. The amount was first disclosed in March but did not draw much attention outside Germany until last month, when investors decided to finally try to tally how much cross-border lending had gone on in Europe.
Before Greece’s problems spilled into the open this year, investors paid little heed to how much lending European banks had done outside their own countries — so it came as a surprise how vulnerable they were to economies as weak as those of Greece and Portugal.
“Everybody knew there was a lot of debt out there,” said Nick Matthews, senior European economist at Royal Bank of Scotland and one of the authors of the report that tallied up Greek, Spanish and Portuguese debt. “But I think the extent of the exposure was a lot higher than most people had originally thought.”
Concern has quickly spread beyond just the sovereign bonds issued by the three countries as well as by Italy and Ireland, which are also seriously indebted. Private-sector debt in the troubled countries is also becoming an issue, because when governments pay more for financing, so do their domestic companies. Recession, along with higher interest payments, could lead to a surge in corporate defaults, the European Central Bank warned in a report on May 31.
Hypo Real Estate has hundreds of millions in shaky real estate loans on its books, as well as toxic assets linked to the subprime crisis in the United States. In the first quarter, it set aside an additional 260 million euros to cover potential loan losses, bringing the total to 3.9 billion euros. But that amount is a drop in the bucket, a mere 1.6 percent of Hypo’s total loan portfolio. Hypo has not yet set aside anything for money lent to governments in Greece and other troubled countries, arguing that the European Union rescue plan makes defaults unlikely.
The European Central Bank estimates that the Continent’s largest banks will book 123 billion euros ($150 billion) for bad loans this year, and an additional 105 billion euros next year, though the sums will be partly offset by gains in other holdings.
Analysts at the Royal Bank of Scotland estimate that of the 2.2 trillion euros that European banks and other institutions outside Greece, Spain and Portugal may have lent to those countries, about 567 billion euros is government debt, about 534 billion euros are loans to nonbanking companies in the private sector, and about 1 trillion euros are loans to other banks. While the crisis originated in Greece, much more was borrowed by Spain and its private sector — 1.5 trillion euros, compared with Greece’s 338 billion.
Beyond such sweeping estimates, however, little other detailed information is publicly known about those loans, which are equivalent to 22 percent of European G.D.P. And the inscrutability of the problem, as serious as it is, is spawning spoofs, at least outside the euro zone. A pair of popular Australian comedians, John Clarke and Bryan Dawe, who have created a series of sketches about various aspects of the financial crisis, recently turned their attention to the bad-debt problem in Europe. After grilling Mr. Clarke about the debt crisis in a mock quiz show, Mr. Dawe tells Mr. Clarke that his prize is that he has lost a million dollars. “Well done,” says Mr. Dawe. “That’s an extraordinary performance.”
On a more serious front, Timothy F. Geithner, the United States Treasury secretary, visited Europe at the end of May and called on European leaders to review their banks’ portfolios, as American regulators did last year, to separate healthy banks from those that need intensive care.
LENDING practices at Depfa may have seemed conservative before its 2008 meltdown, but its business model had always been based on a precarious assumption: borrowing at short-term rates to finance long-term lending, often for huge infrastructure projects.
From its base in Dublin, where it moved from Germany in 2002 for tax reasons, Depfa helped raise money for the Millau Viaduct, the huge bridge in France; for refinancing the Eurotunnel between France and Britain; and for an expansion of the Capital Beltway in suburban Virginia. Depfa was also a big player in the United States in other ways, like lending to the Metropolitan Transportation Authority in New York and to schools in Wisconsin.
Before the current crisis, Depfa was proud of its engagement in Mediterranean Europe. In its 2007 annual report, the company boasted of helping to raise 200 million euros for Portugal’s public water supplier and 100 million euros for public transit in the city of Porto. In Spain, it helped cities such as Jerez refinance their debt and helped raise money for public television stations in Valencia and Catalonia as well as raise 90 million euros for a toll road in Galicia. And in Greece, Depfa raised 265 million euros for the government-owned railway and in 2007 told shareholders of a newly won mandate: providing credit advice to the city of Athens.
Depfa said it performed a rigorous analysis of the creditworthiness of its customers, including a 22-grade internal rating system in addition to outside ratings. More than a third of its buyers earned the top AAA rating, the bank said in 2008, while more than 90 percent were A or better.
The public infrastructure projects in which Depfa specialized were considered low-risk, and typically generated low interest payments. Yet because long-term interest rates were typically higher than short-term rates, Depfa could collect the difference, however modest, in profit.
To outsiders, Depfa still looked like a growth story even after the subprime crisis began in the United States. Hypo Real Estate, which focused on real estate lending, acquired Depfa in 2007. After the acquisition, Depfa kept its name and its base in Dublin.
But when the United States economy reached the precipice in September 2008, banks suddenly refused to make short-term loans to one another, blowing a hole in Depfa’s financing and leaving it with a loss for the year of 5.5 billion euros and dependent on the German government for a bailout.
As Hypo’s 2008 annual report said of Depfa: “The business model has proved not to be robust in a crisis.”
Even with Depfa’s myriad travails, most investors weren’t aware of the extent of its cross-border problems until it disclosed them this year.
The question now hanging over Europe is how many other banks have problems similar to Depfa’s, but haven’t disclosed them.
On May 7, the cost of insuring against credit losses on European banks reached levels higher than in the aftermath of the Lehman Brothers collapse in the United States. Officials at the European Central Bank warned that risk premiums were soaring to levels that threatened their ability to carry out their fundamental role of controlling interest rates.
Three days later, European Union governments joined with the International Monetary Fund to offer nearly $1 trillion in loan guarantees to Europe’s banks. At the same time, the European Central Bank began buying government bonds for the first time ever to prevent a sell-off of Greek, Spanish and other sovereign debt.
The measures, widely regarded as a de facto bank rescue, restored some calm to the markets, but critics said that the aid merely bought time without reducing overall debt load. Europe’s major stock indexes and the euro have continued to fall as investors remain dubious about the ability of Greece and perhaps other countries to repay their debts.
Even so, figuring out which banks may be most exposed to those countries largely remains a guessing game.
Regulators in each country know what assets their domestic banks hold, but have been reluctant to share that information across borders. Lucas D. Papademos, vice president of the European Central Bank, which gets an indication of banks’ health based on which ones draw heavily on its emergency credit lines, said at a news conference Monday that a small number of banks were “overreliant” on that funding.
But Mr. Papademos, who retired last Tuesday at the end of his term, wouldn’t be more specific. He said European banks would undertake a vigorous round of stress tests by July.
It’s obvious that Greek and Spanish banks hold large amounts of their own government’s bonds. Spanish banks hold 120 billion euros in sovereign debt, according to the Spanish central bank. But a central bank spokesman said that those holdings were not a problem because, thanks to the European Union’s rescue plan, the prices of Spanish bonds have recovered.
Guessing also falls heavily on public and quasipublic institutions like the German Landesbanks, which are owned by German states sometimes in conjunction with local savings banks. Five of Germany’s nine Landesbanks required federal or state government support after they loaded up on assets that later turned radioactive, ranging from subprime loans in the United States to investments in Icelandic banks that failed.
According to the Royal Bank of Scotland study, banks in France have the largest exposure to debt from Greece, Spain and Portugal, with 229 billion euros; German banks are second, with 226 billion euros. British and Dutch banks are next, at about 100 billion euros each, with American banks at 54 billion euros and Italian banks at 31 billion euros.
“Banks continue to not trust each other,” says Jörg Rocholl, a professor at the European School of Management and Technology in Berlin. “They know other banks are sick, but they don’t know which ones.”
DEPFA and Hypo Real Estate, meanwhile, face continued setbacks as they try to steer back to health. Hypo reported a pretax loss for the group of 324 million euros in the first quarter, down from 406 million euros a year earlier.
At the end of May, the German government raised its guarantees for Hypo to 103.5 billion euros from 93.4 billion. Some analysts say they think the bank may need more aid in the future.
“I don’t think it’s over yet,” says Robert Mazzuoli, an analyst at Landesbank Baden-Württemberg in Stuttgart.
Raphael Minder contributed reporting from Madrid.
By JACK EWING
Copyright by The New York Times
Published: June 4, 2010
http://www.nytimes.com/2010/06/06/business/global/06toxic.html?ref=global-home
FRANKFURT
IT’S a $2.6 trillion mystery.
That’s the amount that foreign banks and other financial companies have lent to public and private institutions in Greece, Spain and Portugal, three countries so mired in economic troubles that analysts and investors assume that a significant portion of that mountain of debt may never be repaid.
The problem is, alas, that no one — not investors, not regulators, not even bankers themselves — knows exactly which banks are sitting on the biggest stockpiles of rotting loans within that pile. And doubt, as it always does during economic crises, has made Europe’s already vulnerable financial system occasionally appear to seize up. Early last month, in an indication of just how dangerous the situation had become, European banks — which appear to hold more than half of that $2.6 trillion in debt — nearly stopped lending money to one another.
Now, with government resources strained and confidence in European economies eroding, some analysts say the Continent’s banks have to come clean with a transparent and rigorous accounting of their woes. Until then, they say, nobody will be able to wrestle effectively with Europe’s mounting problems.
“The marketplace knows very little about where the real risks are parked,” says Nicolas Véron, an economist at Bruegel, a research organization in Brussels. “That is exactly the problem. As long as there is no semblance of clarity, trust will not return to the banking system.”
Limited disclosure and possibly spotty accounting have been long-voiced concerns of analysts who follow European banks. Though most large publicly listed banks have offered information about their exposure — Deutsche Bank in Frankfurt says it holds 500 million euros in Greek government bonds and no Spanish or Portuguese sovereign debt — there has been little disclosure from the hundreds of smaller mortgage lenders, state-owned banks and thrift institutions that dominate banking in countries like Germany and Spain.
Depfa, a German bank that is now based in Dublin, is one of the few second-tier European banking institutions that have offered detailed disclosures about their financial wherewithal, and its stark troubles may be emblematic of those still hidden on other banks’ books.
Despite boasting as recently as two years ago of its “very conservative lending practices,” Depfa, which caters primarily to governments, has flirted with disaster. It narrowly avoided collapsing in late 2008 until the German government bailed it out, and today its books are still laden with risk.
DEPFA and its parent, Hypo Real Estate Holding, a property lender outside Munich, have 80.4 billion euros in public-sector debt from Greece, Spain, Portugal, Ireland and Italy. The amount was first disclosed in March but did not draw much attention outside Germany until last month, when investors decided to finally try to tally how much cross-border lending had gone on in Europe.
Before Greece’s problems spilled into the open this year, investors paid little heed to how much lending European banks had done outside their own countries — so it came as a surprise how vulnerable they were to economies as weak as those of Greece and Portugal.
“Everybody knew there was a lot of debt out there,” said Nick Matthews, senior European economist at Royal Bank of Scotland and one of the authors of the report that tallied up Greek, Spanish and Portuguese debt. “But I think the extent of the exposure was a lot higher than most people had originally thought.”
Concern has quickly spread beyond just the sovereign bonds issued by the three countries as well as by Italy and Ireland, which are also seriously indebted. Private-sector debt in the troubled countries is also becoming an issue, because when governments pay more for financing, so do their domestic companies. Recession, along with higher interest payments, could lead to a surge in corporate defaults, the European Central Bank warned in a report on May 31.
Hypo Real Estate has hundreds of millions in shaky real estate loans on its books, as well as toxic assets linked to the subprime crisis in the United States. In the first quarter, it set aside an additional 260 million euros to cover potential loan losses, bringing the total to 3.9 billion euros. But that amount is a drop in the bucket, a mere 1.6 percent of Hypo’s total loan portfolio. Hypo has not yet set aside anything for money lent to governments in Greece and other troubled countries, arguing that the European Union rescue plan makes defaults unlikely.
The European Central Bank estimates that the Continent’s largest banks will book 123 billion euros ($150 billion) for bad loans this year, and an additional 105 billion euros next year, though the sums will be partly offset by gains in other holdings.
Analysts at the Royal Bank of Scotland estimate that of the 2.2 trillion euros that European banks and other institutions outside Greece, Spain and Portugal may have lent to those countries, about 567 billion euros is government debt, about 534 billion euros are loans to nonbanking companies in the private sector, and about 1 trillion euros are loans to other banks. While the crisis originated in Greece, much more was borrowed by Spain and its private sector — 1.5 trillion euros, compared with Greece’s 338 billion.
Beyond such sweeping estimates, however, little other detailed information is publicly known about those loans, which are equivalent to 22 percent of European G.D.P. And the inscrutability of the problem, as serious as it is, is spawning spoofs, at least outside the euro zone. A pair of popular Australian comedians, John Clarke and Bryan Dawe, who have created a series of sketches about various aspects of the financial crisis, recently turned their attention to the bad-debt problem in Europe. After grilling Mr. Clarke about the debt crisis in a mock quiz show, Mr. Dawe tells Mr. Clarke that his prize is that he has lost a million dollars. “Well done,” says Mr. Dawe. “That’s an extraordinary performance.”
On a more serious front, Timothy F. Geithner, the United States Treasury secretary, visited Europe at the end of May and called on European leaders to review their banks’ portfolios, as American regulators did last year, to separate healthy banks from those that need intensive care.
LENDING practices at Depfa may have seemed conservative before its 2008 meltdown, but its business model had always been based on a precarious assumption: borrowing at short-term rates to finance long-term lending, often for huge infrastructure projects.
From its base in Dublin, where it moved from Germany in 2002 for tax reasons, Depfa helped raise money for the Millau Viaduct, the huge bridge in France; for refinancing the Eurotunnel between France and Britain; and for an expansion of the Capital Beltway in suburban Virginia. Depfa was also a big player in the United States in other ways, like lending to the Metropolitan Transportation Authority in New York and to schools in Wisconsin.
Before the current crisis, Depfa was proud of its engagement in Mediterranean Europe. In its 2007 annual report, the company boasted of helping to raise 200 million euros for Portugal’s public water supplier and 100 million euros for public transit in the city of Porto. In Spain, it helped cities such as Jerez refinance their debt and helped raise money for public television stations in Valencia and Catalonia as well as raise 90 million euros for a toll road in Galicia. And in Greece, Depfa raised 265 million euros for the government-owned railway and in 2007 told shareholders of a newly won mandate: providing credit advice to the city of Athens.
Depfa said it performed a rigorous analysis of the creditworthiness of its customers, including a 22-grade internal rating system in addition to outside ratings. More than a third of its buyers earned the top AAA rating, the bank said in 2008, while more than 90 percent were A or better.
The public infrastructure projects in which Depfa specialized were considered low-risk, and typically generated low interest payments. Yet because long-term interest rates were typically higher than short-term rates, Depfa could collect the difference, however modest, in profit.
To outsiders, Depfa still looked like a growth story even after the subprime crisis began in the United States. Hypo Real Estate, which focused on real estate lending, acquired Depfa in 2007. After the acquisition, Depfa kept its name and its base in Dublin.
But when the United States economy reached the precipice in September 2008, banks suddenly refused to make short-term loans to one another, blowing a hole in Depfa’s financing and leaving it with a loss for the year of 5.5 billion euros and dependent on the German government for a bailout.
As Hypo’s 2008 annual report said of Depfa: “The business model has proved not to be robust in a crisis.”
Even with Depfa’s myriad travails, most investors weren’t aware of the extent of its cross-border problems until it disclosed them this year.
The question now hanging over Europe is how many other banks have problems similar to Depfa’s, but haven’t disclosed them.
On May 7, the cost of insuring against credit losses on European banks reached levels higher than in the aftermath of the Lehman Brothers collapse in the United States. Officials at the European Central Bank warned that risk premiums were soaring to levels that threatened their ability to carry out their fundamental role of controlling interest rates.
Three days later, European Union governments joined with the International Monetary Fund to offer nearly $1 trillion in loan guarantees to Europe’s banks. At the same time, the European Central Bank began buying government bonds for the first time ever to prevent a sell-off of Greek, Spanish and other sovereign debt.
The measures, widely regarded as a de facto bank rescue, restored some calm to the markets, but critics said that the aid merely bought time without reducing overall debt load. Europe’s major stock indexes and the euro have continued to fall as investors remain dubious about the ability of Greece and perhaps other countries to repay their debts.
Even so, figuring out which banks may be most exposed to those countries largely remains a guessing game.
Regulators in each country know what assets their domestic banks hold, but have been reluctant to share that information across borders. Lucas D. Papademos, vice president of the European Central Bank, which gets an indication of banks’ health based on which ones draw heavily on its emergency credit lines, said at a news conference Monday that a small number of banks were “overreliant” on that funding.
But Mr. Papademos, who retired last Tuesday at the end of his term, wouldn’t be more specific. He said European banks would undertake a vigorous round of stress tests by July.
It’s obvious that Greek and Spanish banks hold large amounts of their own government’s bonds. Spanish banks hold 120 billion euros in sovereign debt, according to the Spanish central bank. But a central bank spokesman said that those holdings were not a problem because, thanks to the European Union’s rescue plan, the prices of Spanish bonds have recovered.
Guessing also falls heavily on public and quasipublic institutions like the German Landesbanks, which are owned by German states sometimes in conjunction with local savings banks. Five of Germany’s nine Landesbanks required federal or state government support after they loaded up on assets that later turned radioactive, ranging from subprime loans in the United States to investments in Icelandic banks that failed.
According to the Royal Bank of Scotland study, banks in France have the largest exposure to debt from Greece, Spain and Portugal, with 229 billion euros; German banks are second, with 226 billion euros. British and Dutch banks are next, at about 100 billion euros each, with American banks at 54 billion euros and Italian banks at 31 billion euros.
“Banks continue to not trust each other,” says Jörg Rocholl, a professor at the European School of Management and Technology in Berlin. “They know other banks are sick, but they don’t know which ones.”
DEPFA and Hypo Real Estate, meanwhile, face continued setbacks as they try to steer back to health. Hypo reported a pretax loss for the group of 324 million euros in the first quarter, down from 406 million euros a year earlier.
At the end of May, the German government raised its guarantees for Hypo to 103.5 billion euros from 93.4 billion. Some analysts say they think the bank may need more aid in the future.
“I don’t think it’s over yet,” says Robert Mazzuoli, an analyst at Landesbank Baden-Württemberg in Stuttgart.
Raphael Minder contributed reporting from Madrid.
New York Times Editorial: The Doctor Payment Follies
New York Times Editorial: The Doctor Payment Follies
Copyright by The New York Times
Published: June 4, 2010
http://www.nytimes.com/2010/06/06/opinion/06sun1.html?th&emc=th
The formula that is used to pay doctors who treat Medicare patients is producing increasingly absurd results. If it were to be followed this year, doctors would face a 21 percent cut in payments for the tests, procedures, office visits and other services they provide to elderly Americans.
That would be a disaster, driving many doctors to stop accepting Medicare patients. Luckily, nobody is seriously contemplating that. As it has done repeatedly in recent years, Congress is readying a short-term fix that would provide a modest increase in physician fees for the next 19 months.
There will likely be no real solution until the American health care system moves away from unfettered fee-for-service payments that encourage doctors to perform unnecessary and costly tests and procedures and pays them instead for better management of a patient’s care over time.
The flawed reimbursement formula predates the new health care reform law by more than a decade. But its problems are a reminder that even with reform there is a lot of work ahead to rein in the cost of health care.
When first enacted in 1997, the “sustainable growth rate” formula looked liked a reasonable way to restrain Medicare spending. It set annual limits for the total amount of money to be paid to doctors in the traditional Medicare program. It also included allowances for inflation in the cost of operating a medical practice, for growth in the elderly population, and even a little extra money to pay for increases in the volume and complexity of services performed.
It worked well for the first five years. Starting in 2002 it began to hit a variety of problems. The fatal flaw in the formula was that it had no way to limit the array of services doctors provided or distinguish between valuable and needless treatments.
If doctors in the aggregate drove expenditures above the limit, the formula called for fees in the following year to grow more slowly than medical inflation or be reduced. That aggregate punishment was not enough to persuade individual doctors to change behavior.
When Medicare doctors were faced with the prospect of actual rate cuts, they screamed for help. Congress provided repeated relief. Each time it postponed a scheduled cut, the meter kept ticking and the required cuts accumulated. That is why the system was due to cut doctors’ reimbursement by 21 percent on June 1.
The Obama administration is holding off, the House has approved a 19-month fix, and the Senate is expected to concur this week. The bill would raise doctors’ payments, in the aggregate, by about $1 billion over current rates — and $23 billion over what they would get if the required cuts were imposed. That is probably the best that can be done for now.
Meanwhile, the experience suggests that there could be problems with at least one key element of the new health care reform law. To hold down the cost of Medicare, it sets target levels for per capita Medicare spending beginning in 2015.
Once again the formula sets targets that may be hard to reach — and will require Medicare to find savings in the following year if they are not. The encouraging news is that a new independent board will have the power to recommend a much broader range of potential savings, not just cuts in doctor payments, to make up the difference. Congress will have the final say.
The reform law also tries to cut costs by emphasizing primary care and setting up pilot programs to find better ways to organize and deliver high-quality care at lower cost and move the system away from fee-for-service payments. If these work well, they could finally put a real brake on Medicare spending.
Copyright by The New York Times
Published: June 4, 2010
http://www.nytimes.com/2010/06/06/opinion/06sun1.html?th&emc=th
The formula that is used to pay doctors who treat Medicare patients is producing increasingly absurd results. If it were to be followed this year, doctors would face a 21 percent cut in payments for the tests, procedures, office visits and other services they provide to elderly Americans.
That would be a disaster, driving many doctors to stop accepting Medicare patients. Luckily, nobody is seriously contemplating that. As it has done repeatedly in recent years, Congress is readying a short-term fix that would provide a modest increase in physician fees for the next 19 months.
There will likely be no real solution until the American health care system moves away from unfettered fee-for-service payments that encourage doctors to perform unnecessary and costly tests and procedures and pays them instead for better management of a patient’s care over time.
The flawed reimbursement formula predates the new health care reform law by more than a decade. But its problems are a reminder that even with reform there is a lot of work ahead to rein in the cost of health care.
When first enacted in 1997, the “sustainable growth rate” formula looked liked a reasonable way to restrain Medicare spending. It set annual limits for the total amount of money to be paid to doctors in the traditional Medicare program. It also included allowances for inflation in the cost of operating a medical practice, for growth in the elderly population, and even a little extra money to pay for increases in the volume and complexity of services performed.
It worked well for the first five years. Starting in 2002 it began to hit a variety of problems. The fatal flaw in the formula was that it had no way to limit the array of services doctors provided or distinguish between valuable and needless treatments.
If doctors in the aggregate drove expenditures above the limit, the formula called for fees in the following year to grow more slowly than medical inflation or be reduced. That aggregate punishment was not enough to persuade individual doctors to change behavior.
When Medicare doctors were faced with the prospect of actual rate cuts, they screamed for help. Congress provided repeated relief. Each time it postponed a scheduled cut, the meter kept ticking and the required cuts accumulated. That is why the system was due to cut doctors’ reimbursement by 21 percent on June 1.
The Obama administration is holding off, the House has approved a 19-month fix, and the Senate is expected to concur this week. The bill would raise doctors’ payments, in the aggregate, by about $1 billion over current rates — and $23 billion over what they would get if the required cuts were imposed. That is probably the best that can be done for now.
Meanwhile, the experience suggests that there could be problems with at least one key element of the new health care reform law. To hold down the cost of Medicare, it sets target levels for per capita Medicare spending beginning in 2015.
Once again the formula sets targets that may be hard to reach — and will require Medicare to find savings in the following year if they are not. The encouraging news is that a new independent board will have the power to recommend a much broader range of potential savings, not just cuts in doctor payments, to make up the difference. Congress will have the final say.
The reform law also tries to cut costs by emphasizing primary care and setting up pilot programs to find better ways to organize and deliver high-quality care at lower cost and move the system away from fee-for-service payments. If these work well, they could finally put a real brake on Medicare spending.
Local Officials Simmer Over BP Recovery Efforts
Local Officials Simmer Over BP Recovery Efforts
By JOHN LELAND
Copyright by The New York Times
Published: June 5, 2010
http://www.nytimes.com/2010/06/06/us/06pensacola.html?th&emc=th
PENSACOLA BEACH, Fla. — Five hours after the first tar balls were reported on this front stretch of the Florida coast, William A. Lee looked up and down a crowded beach and did not like what he saw.
There were swimmers and sunbathers enjoying an exquisite morning; there were news crews and satellite trucks; there were beachcombers gathering and photographing blobs of sticky brown oil. What there were not were cleanup crews.
Mr. Lee, the executive director of the Santa Rosa Island Authority, which administers this 1,474-acre sliver of white sand, knew immediately whom to blame.
“We called BP at 4:30 this morning and told them to send cleanup crews,” he said Friday. “It’s 9:30 and they’re not here. There’s supposed to be 30 or 40 skimmers out there to protect Pensacola Beach. Do you see any? BP dropped the ball.”
Under the Oil Pollution Act of 1990, all cleanup efforts after an oil spill are administered through a central unified command, in which the oil company takes a prominent role among federal, state and local agencies.
To Mr. Lee and other local officials here, the delay is just a small example of what they see as a bureaucracy that is unresponsive to their needs. Last week the five commissioners of Escambia County, which includes Pensacola Beach, unanimously passed a resolution asking that BP be removed from field cleanup operations, except financially. The resolution is largely symbolic, but it is a measure of the frustration simmering here.
“When it comes to taking care of beaches, that’s something we know how to do,” said Grover Robinson, chairman of the County Commission, whose authority includes Pensacola Beach. “With BP I feel I’m always two days behind in information, and when I ask a question I don’t get an answer.”
Their frustration echoed that of Gov. Bobby Jindal of Louisiana and other state officials, who complained that BP was too slow in providing containment boom, skimmers and other supplies.
BP did not return calls for comment.
State officials in Florida are also frustrated. Alex Sink, the state’s chief financial officer, said she wanted BP “out of the claims-handling process” for businesses hurt by the spill. “Some businesses are on the verge of bankruptcy because of the way BP is handling things,” she said. “This is just not working.”
Bill McCollum, the state attorney general, has likewise called for a greater federal role in recovery plans.
On Pensacola Beach, the cleanup crews arrived late Friday morning. The decision to call them came from a joint command center in Mobile, Ala.
Mr. Lee complained that local officials were unable to handle the spill the way they considered best. “The way unified command works,” Mr. Lee said, “if you want to do something you have to fill out a form and get their O.K., or you won’t get reimbursed.”
But Pete Capelotti, a master chief petty officer for the Coast Guard, who was at the beach, defended the unified command’s response time. “People say, ‘Why wasn’t this cleaned up in five minutes?’ ” he said. “But it’s an evaluative process. A report comes in. It has to be verified. Teams have to assess what it is. Then we call in the cleanup crews.”
For Mr. Lee this was unsatisfying. “I’d rather have FEMA come in,” he said, referring to the Federal Emergency Management Agency, which coordinates hurricane relief and received much criticism for its handling of Hurricane Katrina. “With FEMA,” Mr. Lee said, “we’d do what we have to do and send invoices to FEMA and let them go after BP” for reimbursement.
He added, “We’d have hired our own contractors and had this cleaned up before daylight.”
By JOHN LELAND
Copyright by The New York Times
Published: June 5, 2010
http://www.nytimes.com/2010/06/06/us/06pensacola.html?th&emc=th
PENSACOLA BEACH, Fla. — Five hours after the first tar balls were reported on this front stretch of the Florida coast, William A. Lee looked up and down a crowded beach and did not like what he saw.
There were swimmers and sunbathers enjoying an exquisite morning; there were news crews and satellite trucks; there were beachcombers gathering and photographing blobs of sticky brown oil. What there were not were cleanup crews.
Mr. Lee, the executive director of the Santa Rosa Island Authority, which administers this 1,474-acre sliver of white sand, knew immediately whom to blame.
“We called BP at 4:30 this morning and told them to send cleanup crews,” he said Friday. “It’s 9:30 and they’re not here. There’s supposed to be 30 or 40 skimmers out there to protect Pensacola Beach. Do you see any? BP dropped the ball.”
Under the Oil Pollution Act of 1990, all cleanup efforts after an oil spill are administered through a central unified command, in which the oil company takes a prominent role among federal, state and local agencies.
To Mr. Lee and other local officials here, the delay is just a small example of what they see as a bureaucracy that is unresponsive to their needs. Last week the five commissioners of Escambia County, which includes Pensacola Beach, unanimously passed a resolution asking that BP be removed from field cleanup operations, except financially. The resolution is largely symbolic, but it is a measure of the frustration simmering here.
“When it comes to taking care of beaches, that’s something we know how to do,” said Grover Robinson, chairman of the County Commission, whose authority includes Pensacola Beach. “With BP I feel I’m always two days behind in information, and when I ask a question I don’t get an answer.”
Their frustration echoed that of Gov. Bobby Jindal of Louisiana and other state officials, who complained that BP was too slow in providing containment boom, skimmers and other supplies.
BP did not return calls for comment.
State officials in Florida are also frustrated. Alex Sink, the state’s chief financial officer, said she wanted BP “out of the claims-handling process” for businesses hurt by the spill. “Some businesses are on the verge of bankruptcy because of the way BP is handling things,” she said. “This is just not working.”
Bill McCollum, the state attorney general, has likewise called for a greater federal role in recovery plans.
On Pensacola Beach, the cleanup crews arrived late Friday morning. The decision to call them came from a joint command center in Mobile, Ala.
Mr. Lee complained that local officials were unable to handle the spill the way they considered best. “The way unified command works,” Mr. Lee said, “if you want to do something you have to fill out a form and get their O.K., or you won’t get reimbursed.”
But Pete Capelotti, a master chief petty officer for the Coast Guard, who was at the beach, defended the unified command’s response time. “People say, ‘Why wasn’t this cleaned up in five minutes?’ ” he said. “But it’s an evaluative process. A report comes in. It has to be verified. Teams have to assess what it is. Then we call in the cleanup crews.”
For Mr. Lee this was unsatisfying. “I’d rather have FEMA come in,” he said, referring to the Federal Emergency Management Agency, which coordinates hurricane relief and received much criticism for its handling of Hurricane Katrina. “With FEMA,” Mr. Lee said, “we’d do what we have to do and send invoices to FEMA and let them go after BP” for reimbursement.
He added, “We’d have hired our own contractors and had this cleaned up before daylight.”
Growing Obesity Increases Perils of Childbearing
Growing Obesity Increases Perils of Childbearing
By ANEMONA HARTOCOLLIS
Copyright by The New York Times
Published: June 5, 2010
http://www.nytimes.com/2010/06/06/health/06obese.html?th&emc=th
As Americans have grown fatter over the last generation, inviting more heart disease, diabetes and premature deaths, all that extra weight has also become a burden in the maternity ward, where babies take their first breath of life.
About one in five women are obese when they become pregnant, meaning they have a body mass index of at least 30, as would a 5-foot-5 woman weighing 180 pounds, according to researchers with the federal Centers for Disease Control and Prevention. And medical evidence suggests that obesity might be contributing to record-high rates of Caesarean sections and leading to more birth defects and deaths for mothers and babies.
Hospitals, especially in poor neighborhoods, have been forced to adjust. They are buying longer surgical instruments, more sophisticated fetal testing machines and bigger beds. They are holding sensitivity training for staff members and counseling women about losing weight, or even having bariatric surgery, before they become pregnant.
At Maimonides Medical Center in Brooklyn, where 38 percent of women giving birth are obese, Patricia Garcia had to be admitted after she had a stroke, part of a constellation of illnesses related to her weight, including diabetes and weak kidneys.
At seven months pregnant, she should have been feeling the thump of tiny feet against her belly. But as she lay flat in her hospital bed, doctors buzzing about, trying to stretch out her pregnancy day by precious day, Ms. Garcia, who had recently weighed in at 261 pounds, said she was too numb from water retention to feel anything.
On May 5, 11 weeks shy of her due date, a sonogram showed that the baby’s growth was lagging, and an emergency Caesarean was ordered.
She was given general anesthesia because her bulk made it hard to feel her spine to place a local anesthetic. Dr. Betsy Lantner, the obstetrician on call, stood on a stool so she could reach over Ms. Garcia’s belly. A flap of fat covered her bikini line, so the doctor had to make a higher incision. In an operation where every minute counted, it took four or five minutes, rather than the usual one or two, to pull out a 1-pound 11-ounce baby boy.
Studies have shown that babies born to obese women are nearly three times as likely to die within the first month of birth than women of normal weight, and that obese women are almost twice as likely to have a stillbirth.
About two out of three maternal deaths in New York State from 2003 to 2005 were associated with maternal obesity, according to the state-sponsored Safe Motherhood Initiative, which is analyzing more recent data.
Obese women are also more likely to have high blood pressure, diabetes, anesthesia complications, hemorrhage, blood clots and strokes during pregnancy and childbirth, data shows.
The problem has become so acute that five New York City hospitals — Beth Israel Medical Center and Mount Sinai Medical Center in Manhattan, Maimonides in Brooklyn and Montefiore Medical Center and Bronx-Lebanon Hospital Center in the Bronx — have formed a consortium to figure out how to handle it. They are supported by their malpractice insurer and the United Hospital Fund, a research group.
One possibility is to create specialized centers for obese women. The centers would counsel them on nutrition and weight loss, and would be staffed to provide emergency Caesarean sections and intensive care for newborns, said Dr. Adam P. Buckley, an obstetrician and patient safety expert at Beth Israel Hospital North who is leading the group.
Very obese women, or those with a B.M.I. of 35 or higher, are three to four times as likely to deliver their first baby by Caesarean section as first-time mothers of normal weight, according to a study by the Consortium on Safe Labor of the National Institutes of Health.
While doctors are often on the defensive about whether Caesarean sections, which carry all the risks of surgery, are justified, Dr. Howard L. Minkoff, the chairman of obstetrics at Maimonides, said doctors must weigh those concerns against the potential complications from vaginal delivery in obese women. Typically, these include failing to progress in labor; diabetes in the mother, which can lead to birth complications; and difficulty monitoring fetal distress. “With obese women we are stuck between Scylla and Charybdis,” Dr. Minkoff said.
But even routine care, like finding a vein to take blood, can be harder through layers of fatty tissue.
And equipment can be a problem. Dr. Janice Henderson, an obstetrician for high-risk pregnancies at Johns Hopkins in Baltimore, described a recent meeting where doctors worried that the delivery room table might collapse under the weight of an obese patient.
At Maimonides, the perinatal unit threw away its old examining tables and replaced them with wider, sturdier ones. It bought ultrasound machines that make lifelike three-dimensional images early in pregnancy, when the fetus is still low in the uterus and less obscured by fat, but also less developed and thus harder to diagnose clearly. “You really need to use the best equipment, which is more expensive,” said Dr. Shoshana Haberman, the director of perinatal services.
Many experienced obstetricians complain that as Americans have grown larger, the perception of what constitutes obesity has shifted, leading to some complacency among doctors. At UMass Memorial Medical Center in Worcester, Mass., Dr. Tiffany A. Moore Simas, the associate director of the residency program in obstetrics, demands that residents calculate B.M.I. as a routine part of prenatal treatment. “It’s one of my siren songs,” Dr. Moore Simas said, “because we are very bad at eyeballing people.”
Dr. Haberman said there was obesity in her own family, and she had seen how hurtful even professionals could be. “We as a society have issues with the perception of obesity; anatomically, you get turned off,” she said.
So she was sympathetic to Ms. Garcia, making sure she got a room with a window, and calling to check on her after hours.
Ms. Garcia, 38, a former school bus dispatcher, is 5 feet tall. She said she had tried diets, weight-watching groups and joining a gym. She was 195 pounds before her pregnancy (B.M.I., 38) and ballooned to 261 pounds, which she attributed to water weight and inactivity.
“I’m the smallest one in my family,” she said. Her older brother weighed more than 700 pounds before having gastric bypass surgery.
She wiped tears away as she confessed that she worried that she might die and leave her baby without a mother.
At Ms. Garcia’s stage of pregnancy, every day in the womb was good for the baby but bad for the mother, Dr. Minkoff said. “She’s making a heroic decision to put her own self in peril for the sake of the child,” he said.
She survived, but was dismayed by the size of her son, Josiah Patrick, who had to be put on a breathing machine. At first she could see him only by remote video. But after a month, Josiah was off the ventilator, taking 15 milliliters of formula and had smiled at his mother, and doctors said he was where he should be developmentally for a preemie his age.
The hospital estimated that the cost of caring for the mother and baby would be more than $200,000, compared with $13,000 for a normal delivery.
Ms. Garcia promised Dr. Minkoff that she would lose weight and see her baby graduate from college. “I’m going on a strict, strict, strict diet,” she said. “I’m not going through this again.”
By ANEMONA HARTOCOLLIS
Copyright by The New York Times
Published: June 5, 2010
http://www.nytimes.com/2010/06/06/health/06obese.html?th&emc=th
As Americans have grown fatter over the last generation, inviting more heart disease, diabetes and premature deaths, all that extra weight has also become a burden in the maternity ward, where babies take their first breath of life.
About one in five women are obese when they become pregnant, meaning they have a body mass index of at least 30, as would a 5-foot-5 woman weighing 180 pounds, according to researchers with the federal Centers for Disease Control and Prevention. And medical evidence suggests that obesity might be contributing to record-high rates of Caesarean sections and leading to more birth defects and deaths for mothers and babies.
Hospitals, especially in poor neighborhoods, have been forced to adjust. They are buying longer surgical instruments, more sophisticated fetal testing machines and bigger beds. They are holding sensitivity training for staff members and counseling women about losing weight, or even having bariatric surgery, before they become pregnant.
At Maimonides Medical Center in Brooklyn, where 38 percent of women giving birth are obese, Patricia Garcia had to be admitted after she had a stroke, part of a constellation of illnesses related to her weight, including diabetes and weak kidneys.
At seven months pregnant, she should have been feeling the thump of tiny feet against her belly. But as she lay flat in her hospital bed, doctors buzzing about, trying to stretch out her pregnancy day by precious day, Ms. Garcia, who had recently weighed in at 261 pounds, said she was too numb from water retention to feel anything.
On May 5, 11 weeks shy of her due date, a sonogram showed that the baby’s growth was lagging, and an emergency Caesarean was ordered.
She was given general anesthesia because her bulk made it hard to feel her spine to place a local anesthetic. Dr. Betsy Lantner, the obstetrician on call, stood on a stool so she could reach over Ms. Garcia’s belly. A flap of fat covered her bikini line, so the doctor had to make a higher incision. In an operation where every minute counted, it took four or five minutes, rather than the usual one or two, to pull out a 1-pound 11-ounce baby boy.
Studies have shown that babies born to obese women are nearly three times as likely to die within the first month of birth than women of normal weight, and that obese women are almost twice as likely to have a stillbirth.
About two out of three maternal deaths in New York State from 2003 to 2005 were associated with maternal obesity, according to the state-sponsored Safe Motherhood Initiative, which is analyzing more recent data.
Obese women are also more likely to have high blood pressure, diabetes, anesthesia complications, hemorrhage, blood clots and strokes during pregnancy and childbirth, data shows.
The problem has become so acute that five New York City hospitals — Beth Israel Medical Center and Mount Sinai Medical Center in Manhattan, Maimonides in Brooklyn and Montefiore Medical Center and Bronx-Lebanon Hospital Center in the Bronx — have formed a consortium to figure out how to handle it. They are supported by their malpractice insurer and the United Hospital Fund, a research group.
One possibility is to create specialized centers for obese women. The centers would counsel them on nutrition and weight loss, and would be staffed to provide emergency Caesarean sections and intensive care for newborns, said Dr. Adam P. Buckley, an obstetrician and patient safety expert at Beth Israel Hospital North who is leading the group.
Very obese women, or those with a B.M.I. of 35 or higher, are three to four times as likely to deliver their first baby by Caesarean section as first-time mothers of normal weight, according to a study by the Consortium on Safe Labor of the National Institutes of Health.
While doctors are often on the defensive about whether Caesarean sections, which carry all the risks of surgery, are justified, Dr. Howard L. Minkoff, the chairman of obstetrics at Maimonides, said doctors must weigh those concerns against the potential complications from vaginal delivery in obese women. Typically, these include failing to progress in labor; diabetes in the mother, which can lead to birth complications; and difficulty monitoring fetal distress. “With obese women we are stuck between Scylla and Charybdis,” Dr. Minkoff said.
But even routine care, like finding a vein to take blood, can be harder through layers of fatty tissue.
And equipment can be a problem. Dr. Janice Henderson, an obstetrician for high-risk pregnancies at Johns Hopkins in Baltimore, described a recent meeting where doctors worried that the delivery room table might collapse under the weight of an obese patient.
At Maimonides, the perinatal unit threw away its old examining tables and replaced them with wider, sturdier ones. It bought ultrasound machines that make lifelike three-dimensional images early in pregnancy, when the fetus is still low in the uterus and less obscured by fat, but also less developed and thus harder to diagnose clearly. “You really need to use the best equipment, which is more expensive,” said Dr. Shoshana Haberman, the director of perinatal services.
Many experienced obstetricians complain that as Americans have grown larger, the perception of what constitutes obesity has shifted, leading to some complacency among doctors. At UMass Memorial Medical Center in Worcester, Mass., Dr. Tiffany A. Moore Simas, the associate director of the residency program in obstetrics, demands that residents calculate B.M.I. as a routine part of prenatal treatment. “It’s one of my siren songs,” Dr. Moore Simas said, “because we are very bad at eyeballing people.”
Dr. Haberman said there was obesity in her own family, and she had seen how hurtful even professionals could be. “We as a society have issues with the perception of obesity; anatomically, you get turned off,” she said.
So she was sympathetic to Ms. Garcia, making sure she got a room with a window, and calling to check on her after hours.
Ms. Garcia, 38, a former school bus dispatcher, is 5 feet tall. She said she had tried diets, weight-watching groups and joining a gym. She was 195 pounds before her pregnancy (B.M.I., 38) and ballooned to 261 pounds, which she attributed to water weight and inactivity.
“I’m the smallest one in my family,” she said. Her older brother weighed more than 700 pounds before having gastric bypass surgery.
She wiped tears away as she confessed that she worried that she might die and leave her baby without a mother.
At Ms. Garcia’s stage of pregnancy, every day in the womb was good for the baby but bad for the mother, Dr. Minkoff said. “She’s making a heroic decision to put her own self in peril for the sake of the child,” he said.
She survived, but was dismayed by the size of her son, Josiah Patrick, who had to be put on a breathing machine. At first she could see him only by remote video. But after a month, Josiah was off the ventilator, taking 15 milliliters of formula and had smiled at his mother, and doctors said he was where he should be developmentally for a preemie his age.
The hospital estimated that the cost of caring for the mother and baby would be more than $200,000, compared with $13,000 for a normal delivery.
Ms. Garcia promised Dr. Minkoff that she would lose weight and see her baby graduate from college. “I’m going on a strict, strict, strict diet,” she said. “I’m not going through this again.”
In Gulf, It Was Unclear Who Was in Charge of Oil Rig
In Gulf, It Was Unclear Who Was in Charge of Oil Rig
By IAN URBINA
Copyright by The New York Times
Published: June 5, 2010
http://www.nytimes.com/2010/06/06/us/06rig.html?th&emc=th
NEW ORLEANS — Over six days in May, far from the familiar choreography of Washington hearings, federal investigators grilled workers involved in the Deepwater Horizon disaster in a chilly, sterile conference room at a hotel near the airport here.
Oil in the Gulf of Mexico off East Grand Terre Island near the Louisiana coast on Thursday. Critics say delays in the response to the spill will result in greater environmental and economic damage.
The six-member panel of Coast Guard and Minerals Management Service officials pressed for answers about what occurred on the rig on April 20 before it exploded. They wanted to know who was in charge, and heard conflicting answers.
They pushed for more insight into an argument on the rig that day between a manager for BP, the well’s owner, and one for Transocean, the rig’s owner, and asked Curt R. Kuchta, the rig’s captain, how the crew knew who was in charge.
“It’s pretty well understood amongst the crew who’s in charge,” he said.
“How do they know that?” a Coast Guard investigator asked.
“I guess, I don’t know,” Captain Kuchta said. “But it’s pretty well — everyone knows.”
Looking annoyed, Capt. Hung Nguyen of the Coast Guard, one of the chief federal investigators, shook his head. The exchange confirmed an observation he had made earlier in the day at the hearing.
“A lot of activities seem not very tightly coordinated in the way that would make me comfortable,” he said. “Maybe that’s just the way of business out there.”
Investigators have focused on the minute-to-minute decisions and breakdowns to understand what led to the explosion of the Deepwater Horizon, killing 11 people and setting off the largest oil spill in United States history and an environmental disaster. But the lack of coordination was not limited to the day of the explosion.
New government and BP documents, interviews with experts and testimony by witnesses provide the clearest indication to date that a hodgepodge of oversight agencies granted exceptions to rules, allowed risks to accumulate and made a disaster more likely on the rig, particularly with a mix of different companies operating on the Deepwater whose interests were not always in sync.
And in the aftermath, arguments about who is in charge of the cleanup — often a signal that no one is in charge — have led to delays, distractions and disagreements over how to cap the well and defend the coastline. As a result, with oil continuing to gush a mile below the surface in the Gulf of Mexico, the laws of physics are largely in control, creating the daunting challenge of trying to plug a hole at depths where equipment is straining under more than a ton of pressure per square inch.
Tad W. Patzek, chairman of the Petroleum and Geosystems Engineering Department at the University of Texas, Austin, has analyzed reports of what led to the explosion. “It’s a very complex operation in which the human element has not been aligned with the complexity of the system,” he said in an interview last week.
His conclusion could also apply to what occurred long before the disaster.
Exceptions Are the Rule
Deepwater oil production in the gulf, which started in 1979 but expanded much faster in the mid-1990s with new technology and federal incentives, is governed as much by exceptions to rules as by the rules themselves.
Under a process called “alternative compliance,” much of the technology used on deepwater rigs has been approved piecemeal, with regulators cooperating with industry groups to make small adjustments to guidelines that were drawn up decades ago for shallow-water drilling.
Of roughly 3,500 drilling rigs and production platforms in the gulf, fewer than 50 are in waters deeper than 1,000 feet. But the risks and challenges associated with this deeper water are much greater.
“The pace of technology has definitely outrun the regulations,” Lt. Cmdr. Michael Odom of the Coast Guard, who inspects the rigs, said last month at a hearing.
As a result, deepwater rigs operate under an ad hoc system of exceptions. The deeper the water, the further the exceptions stretch, not just from federal guidelines but also often from company policy.
So, for example, when BP officials first set their sights on extracting the oily riches under what is known as Mississippi Canyon Block 252 in the Gulf of Mexico, they asked for and received permission from federal regulators to exempt the drilling project from federal law that requires a rigorous type of environmental review, internal documents and federal records indicate.
As BP engineers planned to set certain pipes and casings for lining the well in place in the ocean floor, they had to get permission from company managers to use riskier equipment because that equipment deviated from the company’s own design and safety policies, according to internal BP documents obtained by The New York Times.
And when company officials wanted to test the blowout preventer, a crucial fail-safe mechanism on the pipe near the ocean floor, at a lower pressure than was federally required, regulators granted an exception, documents released last week show.
Regulators granted yet another exception when BP sought to delay mandatory testing of that blowout preventer because they had lost “well control,” weeks before the rig exploded, BP e-mail messages show.
The Minerals Management Service, which regulates offshore drilling, went along with these requests partly because the agency has for years had a dual role of both fostering and policing the industry — collecting royalty payments from the drilling companies while also levying fines on them for violations of law.
Its safety inspections usually consist of helicopter visits to offshore rigs to sift through company reports of self-administered tests.
Even Ken Salazar, the interior secretary, who oversees the minerals agency, has said that oil companies have a history of “running the show” at the agency, a problem he has vowed to correct.
The minerals agency shares responsibility for oversight of drilling in the gulf with many others. The Environmental Protection Agency and others review offshore drilling for potential damage to wildlife and the environment. The Coast Guard inspects vessels for seaworthiness and licenses crew members to work on the rigs. The National Oceanic and Atmospheric Administration monitors dangerous weather conditions over deep seas.
And regulatory duties extend even past the federal government. Foreign countries, or “flag states,” where many oil rigs are registered, have their own sets of safety requirements and inspections.
Regulations have not kept up with the risks that deepwater drilling poses.
On the Deepwater Horizon, for example, the minerals agency approved a drilling plan for BP that cited the “worst case” for a blowout as one that might produce 250,000 barrels of oil per day, federal records show. But the agency did not require the rig to create a response plan for such a situation.
If a blowout were to occur, BP said in its plan, the first choice would be to use a containment dome to capture the leaking oil. But regulators did not require that a containment dome be kept on the rig to speed the response to a spill. After the rig explosion, BP took two weeks to build one on shore and three days to ship it out to sea before it was lowered over the gushing pipe on May 7. It did not work.
(The rig’s “spill response plan,” provided to The Times, includes a Web link for a contractor that goes to an Asian shopping Web site and also mentions the importance of protecting walruses, seals and sea lions, none of which inhabit the area of drilling. The agency approved the plan.)
More broadly, regulators have not required technology and strategies for dealing with deepwater spills to be improved.
Engineers trying to control the blowout are using the same tactics they used in 1979 when the Ixtoc I well blew up in the Bay of Campeche off the coast of Mexico. In the earlier blowout, they first tried lowering a containment dome over the leak. When that failed, they unsuccessfully tried to inject golf balls and other material in a move called a junk shot, which was also tried and abandoned for the Deepwater Horizon.
Questions of oversight also came up in the New Orleans hearings last month. For example, Michael J. Saucier, an official with the Minerals Management Service, said that his agency “highly encouraged” — but did not require — companies to have backup systems to trigger blowout preventers in case of an emergency.
“Highly encourage?” Captain Nguyen of the Coast Guard asked. “How does that translate to enforcement?”
“There is no enforcement,” Mr. Saucier answered.
Problems Early On
In some ways it was jinxed from the start.
As early as June 2009, BP engineers had expressed concerns in internal documents about using certain casings for the well because they violated the company’s safety and design guidelines. But they proceeded with those casings.
Mechanical problems started in March with the Deepwater, setting the stage for the April 20 explosion.
More than five weeks before disaster, the rig was hit by several sudden pulsations of gas called “kicks” and a pipe had become stuck in the well. The blowout preventer, designed to seal the well in an emergency, had been discovered to be leaking fluids at least three times.
Dealing with these problems required teamwork, a challenge to the throng of different companies with responsibilities on the rig. Of the 126 people present on the day of the explosion, only eight were employees of BP. The interests of the workers did not always align.
In testimony to government investigators, rig workers repeatedly described a “natural conflict” between BP, which can make more money by completing drilling jobs quickly, and Transocean, which receives a leasing fee from BP every day that it continues drilling.
Halliburton was also on hand to provide cementing services, while a subsidiary monitored various drilling fluids. A different company provided drilling fluid systems, another provided technicians to operate the remote-control vehicles that are they eyes of the rig crew deep underwater, and yet another provided the well casing.
Amid this tangle of overlapping authority and competing interests, no one was solely responsible for ensuring the rig’s safety, and communication was a constant challenge.
“I don’t have a feeling that there is somebody who has a handle on the coordination of all the activities on this vessel, going from routine to crisis,” Captain Nguyen said during one hearing. “BP is in charge of certain things, Transocean is in charge of certain things.”
Financial concerns added pressures on the rig.
BP had fallen behind schedule and over budget, paying roughly $500,000 a day to lease the rig from Transocean. The rig was 43 days late for starting a new drilling job for BP by the day of the explosion, a delay that had already cost the company more than $21 million.
With the clock ticking, bad decisions went unchecked, warning signs went unheeded and small lapses compounded.
On April 1, a job log written by a Halliburton employee, Marvin Volek, warns that BP’s use of cement “was against our best practices.”
An April 18 internal Halliburton memorandum indicates that Halliburton again warned BP about its practices, this time saying that a “severe” gas flow problem would occur if the casings were not centered more carefully.
Around that same time, a BP document shows, company officials chose a type of casing with a greater risk of collapsing.
Despite noticing cementing problems, BP skipped a quality test of the cement around the pipe. Federal regulators also gave the rig a pass at several critical moments. After the rig encountered several problems, including the gas kicks and the pipe stuck in the well, the regulators did not demand a halt to the operation. Instead, they gave permission for a delay in a safety test of the blowout preventer.
An initial investigation by BP points to a range of missteps.
Tests shortly before the well blew out found a buildup of pressure that was an “indicator of a very large abnormality,” BP concluded and disclosed to Congress in a preliminary report last month. Yet, the rig team was satisfied after another test was deemed successful, and it proceeded.
About 10 hours before the explosion, the challenges of trying to keep the pressure in the well under control led to an argument among the workers about how best to finish the well and move the rig to the next site.
Douglas Brown, a Transocean mechanic on the rig, told investigators that an unnamed BP official whom he called “the company man” had instructed rig workers to execute a new plan for removing the riser and sealing the well. Mr. Brown testified that workers thought the plan was too risky. But he could not hear details of the argument that ensued.
“The company man was basically saying, ‘Well, this is how it’s going to be,’ ” Mr. Brown told investigators at a hearing on May 26 near New Orleans, adding that the Transocean rig workers “reluctantly agreed.”
When the explosion occurred around 9:50 p.m. on April 20, there was pandemonium on the rig. Most workers headed for lifeboats. Others rescued shipmates trapped under equipment. On the bridge, Captain Kuchta gathered with at least eight other managers and crew members to decide on an emergency plan.
Steve Bertone, the chief engineer for Transocean, wrote in his witness statement that he ran up to the bridge where he heard Captain Kuchta screaming at a worker, Andrea Fleytas, because she had pressed the distress button without authorization.
Mr. Bertone turned to another worker and asked him if he had called to shore for help but was told he did not have permission to do so. Another manager tried to give the go-ahead, the testimony said, but someone else said the order needed to come from the rig’s offshore installation manager.
A Strained Partnership
After the spill, the government and BP were supposed to cooperate, partly a consequence of laws written after the 1989 Exxon Valdez spill that were intended to make polluters more accountable for cleaning up their own messes.
One example of what was supposed to be a unified front was the Joint Information Center. Housed in a Shell-owned training and conference center in Robert, La., the center includes roughly 65 employees, 10 of whom work for BP. Together, they write and issue news releases and coordinate posts on a Web site, Facebook and Twitter.
But the partnership between BP and the government has strained along with the failure of efforts to plug the well. Mr. Salazar, for example, assured the public on May 2 that the administration was keeping its “boot on the neck” of BP. Next he was being publicly chastised by President Obama for using antagonistic language.
BP’s chief executive, Tony Hayward, told reporters at one point that the spill was “relatively tiny.” Federal officials soon released estimates indicating that the spill had far outpaced the Exxon Valdez disaster.
Under intense media scrutiny, at least a dozen federal agencies have taken part in the spill response, making decision-making slow, conflicted and confused, as they sought to apply numerous federal statutes.
In one stark example of government disputes, internal e-mail messages from the minerals agency obtained by The Times reveal a heated debate over whether to ignore some federal environmental laws about gas emissions in an effort to speed the drilling of relief wells.
One agency official, Michael Tolbert, warned colleagues on April 24 that emissions of nitrous oxide from the well were “pretty far over the exemption level,” an issue that his colleague Tommy Broussard said could result in “BP wasting time” on environmental safeguards in a way that would be “completely stupid.”
But a third colleague, Elizabeth Peuler, intervened to demand that the agency take “no shortcuts.”
“Not even for this one,” she said. “Perhaps even especially for this one.”
Debates over the speed — or lack thereof — of the government response have also played out in Louisiana, where state officials spent much of May repeatedly seeking permission from the federal government to construct up to 90 miles of sand barriers to prevent oil from reaching the wetlands.
For three weeks, as the giant slick crept closer to shore, officials from the White House, Coast Guard, Army Corps of Engineers, Fish and Wildlife Service, National Oceanic and Atmospheric Administration and Environmental Protection Agency debated the best approach.
They ultimately approved the use of only one barrier, called a berm, to be paid for by BP.
Comparing the federal government’s response to “telling a drowning man to wait,” Gov. Bobby Jindal of Louisiana asked: If one berm is safe, then why not the 23 others that he had requested? Slowly, the federal government approved more berms.
From the start, BP had played down the extent of the problem in miscalculating the rate of the leak and in denying the existence of underwater oil plumes. By deferring to the company, federal officials underestimated the problem they were facing and thus what was needed to respond to it.
It took more than a week after the explosion for the homeland security secretary, Janet Napolitano, to declare, on April 29, “a spill of national significance” a legal categorization that was needed before certain federal assistance could be authorized.
Because of such delays, critics have charged, more coastline will be hit, more animals will die, more habitats will be ruined and more money will be lost in tourism, fishing and real estate.
And yet, the administration is limited in its ability to divorce itself from BP, because federal officials rely on the company for technology, personnel and financing for the cleanup. The relationship reached a turning point last week when the administration said the national incident commander, Adm. Thad W. Allen of the Coast Guard, would start giving solo briefings. He will no longer share a podium with BP, which will offer its own briefings.
That move, however, does not resolve the matter of who is actually in charge in the gulf — of ensuring safety and regulating the dangerous extraction of vast riches under the deepest waters there, as well as of handling the continuing emergency.
The question is proving equally vexing as investigators try to place blame for events on the rig the day of the explosion— as was clear on Tuesday when Attorney General Eric H. Holder Jr. announced that he had begun a criminal investigation.
Citing “a wide range of possible violations,” Mr. Holder declined to specify the target of the investigation, because, he said, the authorities were still not clear on “who should ultimately be held liable.”
Robbie Brown contributed reporting from New Orleans, and Tom Zeller from New York.
By IAN URBINA
Copyright by The New York Times
Published: June 5, 2010
http://www.nytimes.com/2010/06/06/us/06rig.html?th&emc=th
NEW ORLEANS — Over six days in May, far from the familiar choreography of Washington hearings, federal investigators grilled workers involved in the Deepwater Horizon disaster in a chilly, sterile conference room at a hotel near the airport here.
Oil in the Gulf of Mexico off East Grand Terre Island near the Louisiana coast on Thursday. Critics say delays in the response to the spill will result in greater environmental and economic damage.
The six-member panel of Coast Guard and Minerals Management Service officials pressed for answers about what occurred on the rig on April 20 before it exploded. They wanted to know who was in charge, and heard conflicting answers.
They pushed for more insight into an argument on the rig that day between a manager for BP, the well’s owner, and one for Transocean, the rig’s owner, and asked Curt R. Kuchta, the rig’s captain, how the crew knew who was in charge.
“It’s pretty well understood amongst the crew who’s in charge,” he said.
“How do they know that?” a Coast Guard investigator asked.
“I guess, I don’t know,” Captain Kuchta said. “But it’s pretty well — everyone knows.”
Looking annoyed, Capt. Hung Nguyen of the Coast Guard, one of the chief federal investigators, shook his head. The exchange confirmed an observation he had made earlier in the day at the hearing.
“A lot of activities seem not very tightly coordinated in the way that would make me comfortable,” he said. “Maybe that’s just the way of business out there.”
Investigators have focused on the minute-to-minute decisions and breakdowns to understand what led to the explosion of the Deepwater Horizon, killing 11 people and setting off the largest oil spill in United States history and an environmental disaster. But the lack of coordination was not limited to the day of the explosion.
New government and BP documents, interviews with experts and testimony by witnesses provide the clearest indication to date that a hodgepodge of oversight agencies granted exceptions to rules, allowed risks to accumulate and made a disaster more likely on the rig, particularly with a mix of different companies operating on the Deepwater whose interests were not always in sync.
And in the aftermath, arguments about who is in charge of the cleanup — often a signal that no one is in charge — have led to delays, distractions and disagreements over how to cap the well and defend the coastline. As a result, with oil continuing to gush a mile below the surface in the Gulf of Mexico, the laws of physics are largely in control, creating the daunting challenge of trying to plug a hole at depths where equipment is straining under more than a ton of pressure per square inch.
Tad W. Patzek, chairman of the Petroleum and Geosystems Engineering Department at the University of Texas, Austin, has analyzed reports of what led to the explosion. “It’s a very complex operation in which the human element has not been aligned with the complexity of the system,” he said in an interview last week.
His conclusion could also apply to what occurred long before the disaster.
Exceptions Are the Rule
Deepwater oil production in the gulf, which started in 1979 but expanded much faster in the mid-1990s with new technology and federal incentives, is governed as much by exceptions to rules as by the rules themselves.
Under a process called “alternative compliance,” much of the technology used on deepwater rigs has been approved piecemeal, with regulators cooperating with industry groups to make small adjustments to guidelines that were drawn up decades ago for shallow-water drilling.
Of roughly 3,500 drilling rigs and production platforms in the gulf, fewer than 50 are in waters deeper than 1,000 feet. But the risks and challenges associated with this deeper water are much greater.
“The pace of technology has definitely outrun the regulations,” Lt. Cmdr. Michael Odom of the Coast Guard, who inspects the rigs, said last month at a hearing.
As a result, deepwater rigs operate under an ad hoc system of exceptions. The deeper the water, the further the exceptions stretch, not just from federal guidelines but also often from company policy.
So, for example, when BP officials first set their sights on extracting the oily riches under what is known as Mississippi Canyon Block 252 in the Gulf of Mexico, they asked for and received permission from federal regulators to exempt the drilling project from federal law that requires a rigorous type of environmental review, internal documents and federal records indicate.
As BP engineers planned to set certain pipes and casings for lining the well in place in the ocean floor, they had to get permission from company managers to use riskier equipment because that equipment deviated from the company’s own design and safety policies, according to internal BP documents obtained by The New York Times.
And when company officials wanted to test the blowout preventer, a crucial fail-safe mechanism on the pipe near the ocean floor, at a lower pressure than was federally required, regulators granted an exception, documents released last week show.
Regulators granted yet another exception when BP sought to delay mandatory testing of that blowout preventer because they had lost “well control,” weeks before the rig exploded, BP e-mail messages show.
The Minerals Management Service, which regulates offshore drilling, went along with these requests partly because the agency has for years had a dual role of both fostering and policing the industry — collecting royalty payments from the drilling companies while also levying fines on them for violations of law.
Its safety inspections usually consist of helicopter visits to offshore rigs to sift through company reports of self-administered tests.
Even Ken Salazar, the interior secretary, who oversees the minerals agency, has said that oil companies have a history of “running the show” at the agency, a problem he has vowed to correct.
The minerals agency shares responsibility for oversight of drilling in the gulf with many others. The Environmental Protection Agency and others review offshore drilling for potential damage to wildlife and the environment. The Coast Guard inspects vessels for seaworthiness and licenses crew members to work on the rigs. The National Oceanic and Atmospheric Administration monitors dangerous weather conditions over deep seas.
And regulatory duties extend even past the federal government. Foreign countries, or “flag states,” where many oil rigs are registered, have their own sets of safety requirements and inspections.
Regulations have not kept up with the risks that deepwater drilling poses.
On the Deepwater Horizon, for example, the minerals agency approved a drilling plan for BP that cited the “worst case” for a blowout as one that might produce 250,000 barrels of oil per day, federal records show. But the agency did not require the rig to create a response plan for such a situation.
If a blowout were to occur, BP said in its plan, the first choice would be to use a containment dome to capture the leaking oil. But regulators did not require that a containment dome be kept on the rig to speed the response to a spill. After the rig explosion, BP took two weeks to build one on shore and three days to ship it out to sea before it was lowered over the gushing pipe on May 7. It did not work.
(The rig’s “spill response plan,” provided to The Times, includes a Web link for a contractor that goes to an Asian shopping Web site and also mentions the importance of protecting walruses, seals and sea lions, none of which inhabit the area of drilling. The agency approved the plan.)
More broadly, regulators have not required technology and strategies for dealing with deepwater spills to be improved.
Engineers trying to control the blowout are using the same tactics they used in 1979 when the Ixtoc I well blew up in the Bay of Campeche off the coast of Mexico. In the earlier blowout, they first tried lowering a containment dome over the leak. When that failed, they unsuccessfully tried to inject golf balls and other material in a move called a junk shot, which was also tried and abandoned for the Deepwater Horizon.
Questions of oversight also came up in the New Orleans hearings last month. For example, Michael J. Saucier, an official with the Minerals Management Service, said that his agency “highly encouraged” — but did not require — companies to have backup systems to trigger blowout preventers in case of an emergency.
“Highly encourage?” Captain Nguyen of the Coast Guard asked. “How does that translate to enforcement?”
“There is no enforcement,” Mr. Saucier answered.
Problems Early On
In some ways it was jinxed from the start.
As early as June 2009, BP engineers had expressed concerns in internal documents about using certain casings for the well because they violated the company’s safety and design guidelines. But they proceeded with those casings.
Mechanical problems started in March with the Deepwater, setting the stage for the April 20 explosion.
More than five weeks before disaster, the rig was hit by several sudden pulsations of gas called “kicks” and a pipe had become stuck in the well. The blowout preventer, designed to seal the well in an emergency, had been discovered to be leaking fluids at least three times.
Dealing with these problems required teamwork, a challenge to the throng of different companies with responsibilities on the rig. Of the 126 people present on the day of the explosion, only eight were employees of BP. The interests of the workers did not always align.
In testimony to government investigators, rig workers repeatedly described a “natural conflict” between BP, which can make more money by completing drilling jobs quickly, and Transocean, which receives a leasing fee from BP every day that it continues drilling.
Halliburton was also on hand to provide cementing services, while a subsidiary monitored various drilling fluids. A different company provided drilling fluid systems, another provided technicians to operate the remote-control vehicles that are they eyes of the rig crew deep underwater, and yet another provided the well casing.
Amid this tangle of overlapping authority and competing interests, no one was solely responsible for ensuring the rig’s safety, and communication was a constant challenge.
“I don’t have a feeling that there is somebody who has a handle on the coordination of all the activities on this vessel, going from routine to crisis,” Captain Nguyen said during one hearing. “BP is in charge of certain things, Transocean is in charge of certain things.”
Financial concerns added pressures on the rig.
BP had fallen behind schedule and over budget, paying roughly $500,000 a day to lease the rig from Transocean. The rig was 43 days late for starting a new drilling job for BP by the day of the explosion, a delay that had already cost the company more than $21 million.
With the clock ticking, bad decisions went unchecked, warning signs went unheeded and small lapses compounded.
On April 1, a job log written by a Halliburton employee, Marvin Volek, warns that BP’s use of cement “was against our best practices.”
An April 18 internal Halliburton memorandum indicates that Halliburton again warned BP about its practices, this time saying that a “severe” gas flow problem would occur if the casings were not centered more carefully.
Around that same time, a BP document shows, company officials chose a type of casing with a greater risk of collapsing.
Despite noticing cementing problems, BP skipped a quality test of the cement around the pipe. Federal regulators also gave the rig a pass at several critical moments. After the rig encountered several problems, including the gas kicks and the pipe stuck in the well, the regulators did not demand a halt to the operation. Instead, they gave permission for a delay in a safety test of the blowout preventer.
An initial investigation by BP points to a range of missteps.
Tests shortly before the well blew out found a buildup of pressure that was an “indicator of a very large abnormality,” BP concluded and disclosed to Congress in a preliminary report last month. Yet, the rig team was satisfied after another test was deemed successful, and it proceeded.
About 10 hours before the explosion, the challenges of trying to keep the pressure in the well under control led to an argument among the workers about how best to finish the well and move the rig to the next site.
Douglas Brown, a Transocean mechanic on the rig, told investigators that an unnamed BP official whom he called “the company man” had instructed rig workers to execute a new plan for removing the riser and sealing the well. Mr. Brown testified that workers thought the plan was too risky. But he could not hear details of the argument that ensued.
“The company man was basically saying, ‘Well, this is how it’s going to be,’ ” Mr. Brown told investigators at a hearing on May 26 near New Orleans, adding that the Transocean rig workers “reluctantly agreed.”
When the explosion occurred around 9:50 p.m. on April 20, there was pandemonium on the rig. Most workers headed for lifeboats. Others rescued shipmates trapped under equipment. On the bridge, Captain Kuchta gathered with at least eight other managers and crew members to decide on an emergency plan.
Steve Bertone, the chief engineer for Transocean, wrote in his witness statement that he ran up to the bridge where he heard Captain Kuchta screaming at a worker, Andrea Fleytas, because she had pressed the distress button without authorization.
Mr. Bertone turned to another worker and asked him if he had called to shore for help but was told he did not have permission to do so. Another manager tried to give the go-ahead, the testimony said, but someone else said the order needed to come from the rig’s offshore installation manager.
A Strained Partnership
After the spill, the government and BP were supposed to cooperate, partly a consequence of laws written after the 1989 Exxon Valdez spill that were intended to make polluters more accountable for cleaning up their own messes.
One example of what was supposed to be a unified front was the Joint Information Center. Housed in a Shell-owned training and conference center in Robert, La., the center includes roughly 65 employees, 10 of whom work for BP. Together, they write and issue news releases and coordinate posts on a Web site, Facebook and Twitter.
But the partnership between BP and the government has strained along with the failure of efforts to plug the well. Mr. Salazar, for example, assured the public on May 2 that the administration was keeping its “boot on the neck” of BP. Next he was being publicly chastised by President Obama for using antagonistic language.
BP’s chief executive, Tony Hayward, told reporters at one point that the spill was “relatively tiny.” Federal officials soon released estimates indicating that the spill had far outpaced the Exxon Valdez disaster.
Under intense media scrutiny, at least a dozen federal agencies have taken part in the spill response, making decision-making slow, conflicted and confused, as they sought to apply numerous federal statutes.
In one stark example of government disputes, internal e-mail messages from the minerals agency obtained by The Times reveal a heated debate over whether to ignore some federal environmental laws about gas emissions in an effort to speed the drilling of relief wells.
One agency official, Michael Tolbert, warned colleagues on April 24 that emissions of nitrous oxide from the well were “pretty far over the exemption level,” an issue that his colleague Tommy Broussard said could result in “BP wasting time” on environmental safeguards in a way that would be “completely stupid.”
But a third colleague, Elizabeth Peuler, intervened to demand that the agency take “no shortcuts.”
“Not even for this one,” she said. “Perhaps even especially for this one.”
Debates over the speed — or lack thereof — of the government response have also played out in Louisiana, where state officials spent much of May repeatedly seeking permission from the federal government to construct up to 90 miles of sand barriers to prevent oil from reaching the wetlands.
For three weeks, as the giant slick crept closer to shore, officials from the White House, Coast Guard, Army Corps of Engineers, Fish and Wildlife Service, National Oceanic and Atmospheric Administration and Environmental Protection Agency debated the best approach.
They ultimately approved the use of only one barrier, called a berm, to be paid for by BP.
Comparing the federal government’s response to “telling a drowning man to wait,” Gov. Bobby Jindal of Louisiana asked: If one berm is safe, then why not the 23 others that he had requested? Slowly, the federal government approved more berms.
From the start, BP had played down the extent of the problem in miscalculating the rate of the leak and in denying the existence of underwater oil plumes. By deferring to the company, federal officials underestimated the problem they were facing and thus what was needed to respond to it.
It took more than a week after the explosion for the homeland security secretary, Janet Napolitano, to declare, on April 29, “a spill of national significance” a legal categorization that was needed before certain federal assistance could be authorized.
Because of such delays, critics have charged, more coastline will be hit, more animals will die, more habitats will be ruined and more money will be lost in tourism, fishing and real estate.
And yet, the administration is limited in its ability to divorce itself from BP, because federal officials rely on the company for technology, personnel and financing for the cleanup. The relationship reached a turning point last week when the administration said the national incident commander, Adm. Thad W. Allen of the Coast Guard, would start giving solo briefings. He will no longer share a podium with BP, which will offer its own briefings.
That move, however, does not resolve the matter of who is actually in charge in the gulf — of ensuring safety and regulating the dangerous extraction of vast riches under the deepest waters there, as well as of handling the continuing emergency.
The question is proving equally vexing as investigators try to place blame for events on the rig the day of the explosion— as was clear on Tuesday when Attorney General Eric H. Holder Jr. announced that he had begun a criminal investigation.
Citing “a wide range of possible violations,” Mr. Holder declined to specify the target of the investigation, because, he said, the authorities were still not clear on “who should ultimately be held liable.”
Robbie Brown contributed reporting from New Orleans, and Tom Zeller from New York.
Saturday, June 05, 2010
Kirk's embellishments let foe wriggle back into race
Kirk's embellishments let foe wriggle back into race
By John Kass
Copyright © 2010, Chicago Tribune
1:48 a.m. CDT, June 4, 2010
http://www.chicagotribune.com/news/columnists/ct-met-kass-0604-kirk-20100603,0,6662848,full.column
Watching Republican U.S. Senate candidate Mark Kirk squirm before the Tribune editorial board on Thursday for embellishing his military record reminded me of something:
Watching Democratic U.S. Senate candidate Alexi Giannoulias squirm in the same chair a few months ago, for his role in his family's controversial and now failed Broadway Bank.
So now both candidates in the race for President Barack Obama's old Senate seat have problems.
On Thursday it was Kirk, a U.S. Naval Reserve officer, doing the wriggling, and it wasn't pretty.
He kept a stony face and carefully parsed his answers. After an hour or so, members of the editorial board and other questioners, such as me, finally got an "I'm sorry" out of him. But even though he maintained a military resolve, it was agonizing.
It looked as if there were about a hundred angry meerkats roiling around inside him, just under the skin, trying to escape.
So I asked him: Haven't you embellished your service?
"I didn't need to," Kirk said, prattling on about having to be more "precise" with his language, but he didn't answer the question.
A few others asked him the same thing about the embellishing. He didn't answer them either.
If you've been following Illinois' Senate campaign, you know that Kirk basically Blumenthaled himself.
Richard Blumenthal, a Democrat who is Connecticut's attorney general, is campaigning to replace outgoing Sen. Chris Dodd. Blumenthal had a penchant for bragging about his combat service in Vietnam. Trouble was, he'd sought a series of deferments and served stateside in the U.S. Marine Corps. He never got close to combat.
Kirk's embellishments weren't totally Blumenthalish. He joined the Naval Reserve in 1989 and for the last decade has served in the military without pay, due to a federal law denying military pay to members of Congress.
But his embellishment troubles center around his claiming he'd won a naval intelligence officer of the year award. Turns out, it was a different award, and Kirk didn't win it by himself. Instead, the award belonged to his unit.
Other issues arose. His campaign bio claimed he served in Operation Iraqi Freedom, which wasn't true. A letter sent by his office to constituents last year stated he served in Operation Desert Storm, which also was untrue. Instead, he served in Operation Northern Watch, enforcing the no-fly zone over parts of Iraq.
And there was the question as to whether he'd actually been under fire while in a jet during Northern Watch. He previously claimed he had; on Thursday, he said he couldn't be sure but assumed so.
Then there was the matter of Kirk bragging that he'd been in "command" of the Pentagon's war room. Kirk said he meant to say he was briefly in command of the intelligence section in the war room, and regretted his imprecise comments.
"Oftentimes, talking to a civilian audience, you try to translate from Pentagonese into Civilian," Kirk said. "Given the precision with which you need to describe your record, I feel that moving forward, I should refer to, solely, the military terms and the documented record."
He may not want to translate from Pentagonese into Civilian, but how about translating it into a language every Illinois taxpayer understands: Chumbolonese.
And here's what it means:
"Jeepers! I just Blumenthaled my pinky toe right off my foot. I do hope it grows back, and in the meantime I'll be referring only to the official record, my military fitness reports."
Getting caught embellishing a military record is not good form, especially for Republicans. Democrats don't seem to care much about such issues, at least in Connecticut.
Blumenthal — who is king of all embellishers — is leading his Republican challenger in Connecticut by 23 points, according to a new Rasmussen poll this week. A guy who repeatedly lies about combat service is leading any campaign?
Kirk admits his mistakes.
"It's my fault," said Kirk. "When you're in an environment like this, every word will be parsed. And the safest, best place to be is the documented military record."
This might go away. But just a few weeks ago, he was sailing past Giannoulias, who looked politically dead.
That was after the Tribune reported that Giannoulias — as a senior loan officer for his family bank — approved millions of dollars in loans to Chicago Outfit-connected businessmen.
The tough guys put some of the bank's money back out on the street themselves, in what amounted to legal juice loans.
Even in Illinois it might be tough to ask voters to put you in the Senate — to recommend federal judges and prosecutors — while you're a proven enabler of legal juice loans.
The assumption that Giannoulias' campaign tipped The Washington Post about the Kirk embellishment is a mitigating factor to some. But I don't think voters care about how the story gets out.
Voters care about what the story says, and how a candidate reacts to it.
Kirk reacted to it all by saying it was his responsibility, and that it shouldn't have happened. But he wouldn't admit to embellishing his record for his political benefit. He apologized for not speaking with "utter precision."
"I am sorry," he said at the end of the tortured hour.
I'm sure he is sorry indeed. He just let Alexi Giannoulias sail right back into the campaign.
jskass@tribune.com
By John Kass
Copyright © 2010, Chicago Tribune
1:48 a.m. CDT, June 4, 2010
http://www.chicagotribune.com/news/columnists/ct-met-kass-0604-kirk-20100603,0,6662848,full.column
Watching Republican U.S. Senate candidate Mark Kirk squirm before the Tribune editorial board on Thursday for embellishing his military record reminded me of something:
Watching Democratic U.S. Senate candidate Alexi Giannoulias squirm in the same chair a few months ago, for his role in his family's controversial and now failed Broadway Bank.
So now both candidates in the race for President Barack Obama's old Senate seat have problems.
On Thursday it was Kirk, a U.S. Naval Reserve officer, doing the wriggling, and it wasn't pretty.
He kept a stony face and carefully parsed his answers. After an hour or so, members of the editorial board and other questioners, such as me, finally got an "I'm sorry" out of him. But even though he maintained a military resolve, it was agonizing.
It looked as if there were about a hundred angry meerkats roiling around inside him, just under the skin, trying to escape.
So I asked him: Haven't you embellished your service?
"I didn't need to," Kirk said, prattling on about having to be more "precise" with his language, but he didn't answer the question.
A few others asked him the same thing about the embellishing. He didn't answer them either.
If you've been following Illinois' Senate campaign, you know that Kirk basically Blumenthaled himself.
Richard Blumenthal, a Democrat who is Connecticut's attorney general, is campaigning to replace outgoing Sen. Chris Dodd. Blumenthal had a penchant for bragging about his combat service in Vietnam. Trouble was, he'd sought a series of deferments and served stateside in the U.S. Marine Corps. He never got close to combat.
Kirk's embellishments weren't totally Blumenthalish. He joined the Naval Reserve in 1989 and for the last decade has served in the military without pay, due to a federal law denying military pay to members of Congress.
But his embellishment troubles center around his claiming he'd won a naval intelligence officer of the year award. Turns out, it was a different award, and Kirk didn't win it by himself. Instead, the award belonged to his unit.
Other issues arose. His campaign bio claimed he served in Operation Iraqi Freedom, which wasn't true. A letter sent by his office to constituents last year stated he served in Operation Desert Storm, which also was untrue. Instead, he served in Operation Northern Watch, enforcing the no-fly zone over parts of Iraq.
And there was the question as to whether he'd actually been under fire while in a jet during Northern Watch. He previously claimed he had; on Thursday, he said he couldn't be sure but assumed so.
Then there was the matter of Kirk bragging that he'd been in "command" of the Pentagon's war room. Kirk said he meant to say he was briefly in command of the intelligence section in the war room, and regretted his imprecise comments.
"Oftentimes, talking to a civilian audience, you try to translate from Pentagonese into Civilian," Kirk said. "Given the precision with which you need to describe your record, I feel that moving forward, I should refer to, solely, the military terms and the documented record."
He may not want to translate from Pentagonese into Civilian, but how about translating it into a language every Illinois taxpayer understands: Chumbolonese.
And here's what it means:
"Jeepers! I just Blumenthaled my pinky toe right off my foot. I do hope it grows back, and in the meantime I'll be referring only to the official record, my military fitness reports."
Getting caught embellishing a military record is not good form, especially for Republicans. Democrats don't seem to care much about such issues, at least in Connecticut.
Blumenthal — who is king of all embellishers — is leading his Republican challenger in Connecticut by 23 points, according to a new Rasmussen poll this week. A guy who repeatedly lies about combat service is leading any campaign?
Kirk admits his mistakes.
"It's my fault," said Kirk. "When you're in an environment like this, every word will be parsed. And the safest, best place to be is the documented military record."
This might go away. But just a few weeks ago, he was sailing past Giannoulias, who looked politically dead.
That was after the Tribune reported that Giannoulias — as a senior loan officer for his family bank — approved millions of dollars in loans to Chicago Outfit-connected businessmen.
The tough guys put some of the bank's money back out on the street themselves, in what amounted to legal juice loans.
Even in Illinois it might be tough to ask voters to put you in the Senate — to recommend federal judges and prosecutors — while you're a proven enabler of legal juice loans.
The assumption that Giannoulias' campaign tipped The Washington Post about the Kirk embellishment is a mitigating factor to some. But I don't think voters care about how the story gets out.
Voters care about what the story says, and how a candidate reacts to it.
Kirk reacted to it all by saying it was his responsibility, and that it shouldn't have happened. But he wouldn't admit to embellishing his record for his political benefit. He apologized for not speaking with "utter precision."
"I am sorry," he said at the end of the tortured hour.
I'm sure he is sorry indeed. He just let Alexi Giannoulias sail right back into the campaign.
jskass@tribune.com
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