A Place in the Auvergne, Wednesday, 24th December 2008

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Company at core of China's milk scandal is declared bankrupt
By Edward Wong
Wednesday, December 24, 2008
BEIJING: The Chinese dairy company at the center of a tainted milk scandal that shook consumer confidence in China this fall was declared bankrupt by a court on Wednesday, according to a statement by a New Zealand company that owns a substantial portion of the dairy company.
The dairy company, Sanlu Group, has suffered financially since the contamination became public in September and is being sued by parents hoping to be paid as compensation for the illnesses or deaths of their children. Six infants died and almost 300,000 fell ill after consuming milk or other dairy products tainted with melamine, a toxic chemical that was added to the products to give them the false appearance of higher protein counts to meet nutrition standards.
China has grappled with many scandals involving tainted food, but the melamine scare was the worst in years, leading to product recalls around the world.
Fonterra Group, a New Zealand company that owns 43 percent of Sanlu, released a statement on Wednesday that said a receiver would take over management of Sanlu, one of the largest dairy companies in China. The receiver has six months to sell off the company's assets and pay the creditors, Fonterra said.
"We were aware that Sanlu was in a very difficult situation and faced mounting debts as a result of the melamine contamination crisis," Andrew Ferrier, chief executive of Fonterra, said in the statement. "This bankruptcy order is not a surprise."
The government has been paying hospital bills for children who fell ill from drinking the tainted products. It is unclear whether any parents will receive compensation payments during the bankruptcy process. The melamine scandal has become a politically sensitive issue — government officials were involved in covering up the contamination and have close ties to the company — so courts have yet to allow the lawsuits to be heard.
The bankruptcy order was issued by a court on Wednesday in the city of Shijiazhuang, in Hebei Province, where Sanlu is based.
Sanlu is only one of many Chinese dairy companies that were affected by the milk scandal. Two other large companies, Mengniu and Yili, had products found with melamine, and both have also suffered immense financial losses as a result, but neither has sought bankruptcy.
The discovery of tainted milk in September led to the firing of executives at Sanlu as well as local officials in Hebei Province. Arrests have included low-level suppliers suspected of adding the melamine to milk after buying milk from farmers. The adulterated milk was then resold to large companies like Sanlu.
Melamine has also been regularly added to animal feed and is thus suspected of being in much of the food that people in China consume.

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Gulf Arabs may suspend EU free trade talks
Reuters
Wednesday, December 24, 2008
MUSCAT: The Gulf Cooperation Council (GCC), which includes Saudi Arabia, has suspended talks with the European Union over a free trade agreement, the bloc's secretary-general said on Wednesday.
A Saudi newspaper last week quoted Qatar's Prime Minister Sheikh Hamad bin Jassem al-Thani as saying the EU was seeking to include political clauses in the accord, without elaborating. He called on the GCC to suspend the talks.
Aimed at boosting trade and investment between the two blocs, the agreement would make it easier for Gulf Arab states to export products, such as petrochemicals, to Europe, which currently imposes taxes on some imports from the region.
"We have suspended talks with the EU," the GCC's Abdul-Rahman al-Attiyah told Reuters by telephone in Muscat, where he is taking part in meetings to prepare for a Gulf Arab leaders summit next week.
"We will have no objection to resuming talks with them once they are ready to look at all angles of negotiation."
There was no immediate response from the European Union.
The GCC -- a loose political and economic alliance which also includes the United Arab Emirates, Qatar, Kuwait, Oman and Bahrain -- has been at odds with the EU in recent weeks over the deal, which has been under discussion for nearly two decades.
At a meeting of Gulf finance ministers last month, Attiyah said the Gulf would discuss a possible slowdown in free trade talks with foreign partners, pending further studies. The region signed an FTA with Singapore this month.
Talks between the group and the EU began in 1990 but were slowed by the GCC agreeing only in 1999 to move towards forming a customs union and a new EU negotiating strategy adopted in 2001 to include the services sector in the talks.
(Reporting by Saleh al-Shaibany; Writing by Daliah Merzaban; Editing by Alison Williams)

U.S. court reinstates clean-air rule
By Felicity Barringer
Wednesday, December 24, 2008
A federal appeals court in Washington reversed itself on Tuesday and temporarily reinstated a Bush administration plan to reduce pollution from coal-fired power plants.
In July, the court had struck down the rule, saying the Environmental Protection Agency had exceeded its authority in designing a new emissions-trading system to reduce that pollution, and must rewrite the rule to fix its "fundamental flaws." Environmentalists criticized the decision as a major setback for clean air.
In Tuesday's decision, the court said that having a flawed rule temporarily in place was better than having no rule at all. The agency must still revise the rule but has no deadline for doing so.
The regulation, known as the Clean Air Interstate Rule, had been the centerpiece of the Bush administration's re-engineering of the Clean Air Act, which set significant targets to reduce pollution around the power plants and in the downwind states whose air quality was affected by the emissions.
Tuesday's decision, by the Court of Appeals for the District of Columbia Circuit, means that levels of smog-forming nitrogen oxides must be reduced in 28 eastern states and the District of Columbia beginning Jan. 1. Levels of sulfur dioxide, closely associated with the formation of deadly fine soot particles, must be reduced beginning a year later.
Environmentalists applauded the decision, saying it could form the basis for stronger controls to be drafted by the new administration. Industry groups were relieved to know what rules would cover their operations for the moment, but were pleased that the court's original objections to the rule were unchanged.
The court's second thoughts about striking down the rule came in response to complaints from state regulators, environmental groups, some utilities and the EPA itself.
Judge Judith Rogers, concurring with the court's decision, said eliminating the rule "would have serious adverse implications for public health and the environment," because "the rule has become so intertwined" with the overall architecture of current Clean Air Act protections.
Both the new Congress and President-elect Barack Obama are expected to tackle the problem of nitrogen oxides and sulfur dioxide. That will include determining how the new controls on those emissions should dovetail with controls for mercury, a toxic pollutant, and with the carbon dioxide emissions that are associated with climate change.
Bob Meyers, who heads the Air and Radiation office at the EPA, said that he was disappointed that the court did not reconsider its underlying objections to the rule. The regulation, he said, "was one of the main programs the administration was able to put forward to improve public health and the environment."
He added, "To the extent that today's hearing restores it — by removing immediate threat of vacating a rule — it is a good day."
Dan Riedinger, a spokesman for the Edison Electric Institute, a utility trade group, said in an e-mail message that his group applauded the court for "providing greater near-term certainty for pollution reduction programs and emission markets, and maintaining important health and environmental benefits."
But, he added, "It's impossible to predict what comes next."
Vicki Patton, the deputy general counsel with the Environmental Defense Fund, said that, while the EPA must redesign the rule to meet the court's objections, "the baton has been handed off to President-elect Obama and his team."
The rule, Patton said, "provides a foundation for building a more comprehensive program that protects human health from the full sweep of pollutants that are emitted from coal-fired power plants."
On Monday, the EPA issued a report on fine-particle pollution that showed that the number of geographic areas failing to meet federal standards had nearly doubled, to 58, including part or all of 211 counties in 25 states.

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Further confusion in Guinea after coup attempt
By Jeffrey Gettleman and Alan Cowell
Wednesday, December 24, 2008
NAIROBI, Kenya: The junior military officers who claimed they had seized power in a coup attempt in the impoverished West African nation of Guinea said Wednesday that they may not relinquish control of the country for two years and even went ahead to name one of their own as president.
In an apparent attempt to justify a security crackdown, the officers claimed that foreign mercenaries had already invaded their country.
As the country sank into deeper confusion, the junior officers appeared on national television wearing camouflage fatigues and red berets, and insisted in a statement that they had acted simply "to save a people in distress." After initially promising elections in 60 days, they said they would hold "free, credible and transparent elections before December 2010."
Events in Conakry have been moving swiftly. By Wednesday afternoon, the junior officers announced that Capt. Moussa Dadis Camara, who had acted as their spokesman, was Guinea's new president.
While the coup attempt has thus far unfolded seemingly without bloodshed, Conakry, Guinea's steamy, seaside capital, seemed to be balanced on a knife-edge between calm and chaos.
Bands of roving soldiers ransacked the homes of several ministers and gunshots rang out, residents reported. The junior officers were apparently tightening their grip on strategic buildings, with their supporters firmly ensconced in the national broadcasting headquarters across the street from the American Embassy. There were no immediate reports of casualties.
The national radio station blared martial music, including a war song called "The Guinean Army." Many shops across the city were closed, though street vendors continued to sell mangoes, bananas and pineapples.
Guinea was plunged into its current political turmoil after Lansana Conté, 74, its strongman ruler for 24 years, died on Monday with no publicly-announced plans in place for a successor. Junior and mid-ranking officers sought to fill the resulting power vacuum by seizing the state broadcasting institutions early on Tuesday and announcing what a senior lawmaker called a "putsch."
Despite the seeming confidence of the mutinous officers, civilian officials and some senior army officers continued to deny on Wednesday that the coup attempt had succeeded. The army chief, Gen. Diarra Camara, appealed to the leaders of the attempted take-over to maintain calm so that a state funeral for Mr. Conté could be held on Friday, The Associated Press reported from Conakry.
But there were growing signs of alarm among civilian leaders.
One senior lawmaker was quoted as urging outside intervention to block the coup attempt. "The international community must mobilize to prevent the military from interrupting the democratic process as laid down by the Constitution," Aboubacar Somparé, the president of the National Assembly, told Reuters.
Speaking by telephone, he said the coup plotters were searching for him, but that he was in "a safe place."
But the junior officers seemed to be trying to stir up anti-foreigner sentiment by saying that mercenaries were "already inside our territory" and that anyone caught helping them would pay a heavy price. It was not clear how they substantiated their claim.
Another civilian official, who asked not to be identified because he was in hiding, said that the new proclamation of elections by 2010 "just proves these guys are going to insinuate themselves in power."
The civilian official in hiding said that the upper-ranks of the military, including the army chief of staff, the defense minister and 10 generals, still backed the civilian government and its ranking representative, Mr. Somparé.
"The loyalist troops are supporting the president of the assembly," the official said. "We don't recognize the coup leaders. The chief of staff of the army, the defense minister and more than 10 generals are supporting us."
Asked why loyalist troops had not used force to dislodge rebels from the national broadcasting headquarters, the official said they were "holding off on attacking the building because it is across the street from the American embassy. That's the only reason they're not attacking."
Civilian leaders, the official said, were "safe, they're not arrested and they are communicating with each other but they're not all in the same place."
The developments spread alarm across the continent and into Europe.
The African Union, Africa's biggest representative body, announced emergency talks in Addis Ababa, the Ethiopian capital, to see how the continent could respond to what the organization has labeled a "flagrant violation of the Guinea constitution."
Guinea's neighbors — Liberia, Sierra Leone and Ivory Coast — are only just emerging from their own conflicts and are desperate to forestall further chaos if Guinea descends into violence. France, which currently holds the presidency of the European Union, said it would oppose an unconstitutional seizure of power in Guinea, its former colony.
While Guinea's 10 million people are among the world's poorest, their land is rich in minerals, particularly bauxite used to make aluminum.

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Activist charged in anti-Mugabe plot
Reuters
Wednesday, December 24, 2008
By MacDonald Dzirutwe
A Zimbabwean High Court judge ordered the immediate release on Wednesday of local human rights campaigner Jestina Mukoko and nine other activists charged with plotting to overthrow President Robert Mugabe's government.
Mukoko, a former newscaster who headed the Zimbabwe Peace Project, was picked up at gunpoint in Harare on December 3. If found guilty the activists could face the death penalty, lawyers said.
Judge Yunus Omarjee ordered police to release 32 activists in total, including Mukoko and the other nine accused. Police deny having 11 of the 32 activists in their custody.
"Their continued detention by whosoever is holding them be and is hereby declared unlawful, and they should be released forthwith," Omarjee said.
Mukoko and eight other activists would also be treated in hospital and allowed access to lawyers and relatives. Lawyers said there were allegations the activists had been tortured.
The case could fuel more doubts about implementation of a power-sharing agreement between Mugabe and opposition leader Morgan Tsvangirai, seen as a chance of rescuing the once relatively prosperous country from economic meltdown.
The opposition says abductions of activists have continued since a June presidential election run-off in which Mugabe was re-elected unopposed after Tsvangirai withdrew, complaining of attacks on his supporters.
Mukoko's independent organisation monitored human rights and had compiled reports of violence at this year's elections.
The activists were brought to a tightly-secured court in the capital Harare. They included a husband and wife and their two-year-old child.
The state-run Herald newspaper said the activists were accused of recruiting or attempting to recruit people for military training to topple the government. Citing a police statement, it said some of the activists had recruited people for training in Botswana, including a police constable.
It said the plan was to "forcibly depose" Mugabe's government and replace it with one headed by Tsvangirai.
DEADLOCK
Magistrate Mishrod Guvamombe said the case would be referred to the High Court. "The accused persons will be in custody, unfortunately," he said.
Tsvangirai has threatened to suspend negotiations on a September 15 power-sharing agreement if arrests do not stop. He won a first round election in March, but without an absolute majority.
Talks on sharing power have been deadlocked over control of key ministries, pushing Zimbabwe deeper into crisis. Hyper-inflation means prices double every day and a cholera epidemic has killed nearly 1,200 people.
South African Nobel peace laureate Desmond Tutu accused his country, the continent's main power, of betraying its legacy of struggling against apartheid by failing to take strong action against Mugabe.
The archbishop told the BBC in an interview that military force against Mugabe's government should not be ruled out.
"He must be asked to step down, and if he refuses I really believe that we have to invoke this new doctrine of responsibility to protect," Tutu told BBC radio.
Asked whether that meant going in by force, Tutu said: "Yes, yes -- or certainly the threat of it... He needs to be warned and his cronies must be warned that the world is not just going to sit by and do nothing."
South Africa's ruling African National Congress leader Jacob Zuma, describing Zimbabwe's situation as "utterly untenable," said it had to be resolved in the New Year.


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General Assembly ups U.N. budget for 2008-09
Reuters
Wednesday, December 24, 2008
By Patrick Worsnip
The U.N. General Assembly increased the world body's two-year core budget by about one sixth on Wednesday, reflecting higher costs of missions in trouble spots and plans for new U.N. jobs.
The budget for 2008-09 was set a year ago at $4.17 billion (2.8 billion pounds). Halfway through that 24-month period the Assembly, after talks that lasted through the night from Tuesday to Wednesday, raised it to more than $4.86 billion.
U.N. budget negotiations typically pit developing countries that want to see higher spending against major contributors such as the United States, Japan and Western Europe that seek to rein in costs.
The United States voted against the original budget because it contained funding for a racism conference due to take place in Geneva next April that Washington sees as anti-Israel. But Wednesday's increase went through by consensus without a vote.
General Assembly official Luis Guilherme Nascentes told reporters the main reasons for the increase were higher costs of 27 U.N. missions around the world, especially those in Afghanistan, Iraq and Sudan.
The assembly also agreed to fund 92 extra U.N. posts to promote development, which developing countries had pushed for, and 49 for the U.N. political section to back Secretary-General Ban Ki-moon's strategy of "preventive diplomacy."
Both figures were less than Ban had sought. Ban nevertheless said in a statement he was "deeply appreciative" of the assembly's action.
The assembly also agreed to guidelines for Ban's next budget, to be presented next year and cover the two-year period 2010-11, setting a ceiling of just over $4.87 billion.
The core budget does not cover peacekeeping or the costs of major U.N. agencies, and by some estimates only accounts for 20 percent to 25 percent of total U.N. spending.
The United States has criticized the "piecemeal" approach to budgeting.
(Editing by Xavier Briand)
Correction:





Tumbling gas prices offer relief for American consumers
By Jack Healy
Wednesday, December 24, 2008
Tumbling gasoline prices gave consumers more purchasing power last month, and led to a rise in real spending, even as personal income slips and Americans worry about their jobs in a rapidly weakening economy .
The Commerce Department reported on Wednesday that consumer spending, when adjusted for inflation, rose 0.6 percent in November, its largest gains in two years. The increase followed a 0.5 percent decline in October.
While the unadjusted rate of consumer spending declined 0.6 percent last month, following a 1 percent drop in October, economists suggested that the relative increase in spending was a rare piece of good news for the faltering economy.
"The declines in gasoline prices have been extremely large, larger than anything we've seen in the past," said Dean Maki, chief United States economist at Barclay's Capital. "That's providing a lot of spending power to households."
Gasoline prices have plunged to $1.66 a gallon from their July peak of $4.11 as Americans drove less, construction projects were halted and the global appetite for oil waned in the economic slowdown. Filling up a 15-gallon tank now costs about $25, compared with $60 this summer.
"It's a very substantial amount of money that's been freed up," said Abiel Reinhart, North American economist at JPMorgan Chase. "That's a definite positive for consumers. It's probably the only positive at this point."
Financial markets in New York took the mixed news in stride on a shortened trading day before Christmas. At 10:30 a.m., the Dow Jones industrial average was 27 points higher while the broader Standard & Poor's 500-stock index was up a fraction of 1 percent.
American retailers are bracing for a bruising holiday season as Americans bargain-hunt and trim their budgets. Many have slashed their earnings outlooks and are offering deep discounts and "doorbuster" sales simply to entice shoppers into their stores.
Households continue to save more money as many Americans adjust to stagnant wages and reduced working hours and brace for the possibility of layoffs. The Commerce Department reported that personal savings increased 1 percent in November compared with 0.7 percent in October.
Personal incomes dropped by 0.2 percent last month after increasing 0.1 percent in October.
Meanwhile, weekly jobless claims continued to hit new highs, reflecting a bleak picture for American workers. Unemployment has risen 6.7 percent this year and employers cut 533,000 jobs in November.
The Labor Department reported on Wednesday that the number of people filing for unemployment insurance for the first time rose to 586,000 in the week ending on Dec. 20, up from a revised 556,000 a week earlier.
"The labor markets remain weak, that's the clear message," Maki said.
America's manufacturing sector marked another weak month, with new orders to factories for durable goods falling 1 percent to $186.9 billion, the Commerce Department reported. While it was the fourth consecutive month of declines, the drop was actually smaller than Wall Street's expectations of a 3-percent decline.
Helping to drive down that November number was a 37.7 percent drop in demand for commercial aircraft. Industrial production has declined 5.5 percent so far this year as automotive assembly lines shut down and home construction grinds to a near standstill.
The country's production of cars, machinery, furniture, appliances and a range of other goods has all tumbled this year, according to Federal Reserve data.
Many officials expect the economic downturn, already the longest since the Depression, to continue through 2009, and say that unemployment could reach 8 percent to 10 percent.
The Commerce Department reported on Tuesday that the economy shrank by 0.5 percent from July to September, and economists say the economy is now contracting at a rate of 4 to 6 percent.

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It's the end of the line for SUV plants in the United States
By Nick Bunkley and Bill Vlasic
Wednesday, December 24, 2008
JANESVILLE, Wisconsin: Even a U.S. government bailout could not save three of the last remaining plants in the United States still making sport utility vehicles.
Reeling from its financial problems and a collapsing SUV market, General Motors on Tuesday closed its factories in this city and in Moraine, Ohio, marking the passing of an era when big SUVs ruled the road. The moves followed the shutdown last Friday of Chrysler's factory in Newark, Delaware, which produced full-size SUVs.
The last Chevrolet Tahoe rolled off the line here in Janesville shortly after 7 a.m. in the 90-year-old plant, which had built more than 3.7 million big SUVs since the early 1990s.
Most of the plant's 1,100 remaining workers were not scheduled to work the final day, but many showed up for an emotional closing ceremony. Dan Doubleday, who had 22 years on the job, broke down in the plant's snowy parking lot afterward.
"I was a fork lift driver," he said, glancing at his watch through welling tears. "Until about seven minutes ago."
At the Mocha Moment coffee shop around the corner, two co-workers, Michael Berberich and Lisa Gonzalez, exchanged Christmas presents just as they had most years since they were both hired in 1986.
"For a while we had it made," Gonzalez said. "I just wish it would have lasted."
The fate of the Janesville, Moraine, and Newark plants was sealed this spring, when rising gas prices suddenly made SUVs unpopular, and long before President George W. Bush approved $17.4 billion in emergency loans last week to keep GM and Chrysler out of bankruptcy.
While the overall new vehicle market has dropped 16 percent so far this year, sales of big SUVs have plummeted 40 percent.
With consumers shifting rapidly to smaller, more fuel-efficient cars, GM no longer needed to produce big SUVs in Janesville as well as in a plant in Texas.
Still, some Janesville workers felt GM broke a pledge in its 2007 contract with the United Automobile Workers to keep the factory running.
"We didn't deserve this," said John Dohner Jr., shop chairman at UAW Local 95. "We've all put a lot of hard work into trying to secure a future here."
Shrinking market shares have forced GM, Chrysler and the Ford Motor Company to close more than a dozen assembly plants and shed tens of thousands of workers in recent years. The moves have devastated communities from Georgia to New Jersey and from Michigan to Oklahoma.
Even so, GM and Chrysler are likely to close more manufacturing facilities as they overhaul their operations to meet conditions of the federal loans.
"The companies are moving very fast now to close plants, but it may be too little, too late," said John Casesa, a principal in the Casesa Shapiro Group, a consulting firm. "They're doing now what they should have done 15 or 20 years ago."
GM's Moraine plant was the last to build the midsize Chevrolet Blazers and GMC Envoys that were once among the best-selling vehicles in the country.
The Janesville factory built three of the biggest and most profitable vehicles in GM's lineup, the Chevrolet Tahoe and Suburban and GMC Yukon. The Chrysler plant in Newark also made big SUVs — the Dodge Durango and Chrysler Aspen.
Their closings leave the Big Three with only one factory each still devoted to making traditional big SUVs — Ford in Kentucky, GM in Texas, and Chrysler in Detroit.
The Janesville plant once employed more than 5,000 workers and turned out 20,000 Tahoes, Yukons and Suburbans each month. With its closing, residents worried about the future of this city of 64,000 people, about 75 miles southwest of Milwaukee.
"Janesville will lose a lot," said Patti Homan, as she finished a strawberry-topped waffle at the nearby Eagle Inn restaurant. "I expect my electricity to go up, water rates to go up, property taxes to go up, and the value of my home to go down."
Homan worked in the plant for 23 years, and her father, brother and husband all retired from the factory. "It's generation after generation for so many families here," she said.
The empty feelings in Janesville were echoed in Moraine, a suburb of Dayton and last week at the Chrysler plant in Newark.
More than 1,000 workers were laid off at the Moraine plant. Under terms of the UAW contract for all its members, they and the workers in Janesville and Newark will collect unemployment checks and payments from GM that together equal about 80 percent of their take-home pay.
But those payments will only last about a year. And with the UAW prepared to suspend its "jobs bank" program as a condition of the federal loans, there will be no safety net after that.
Some workers will have an opportunity to transfer to other plants. But with the industry contracting so quickly, there is little job security in making a move.
"I can't risk transferring," said David Williams, one of the remaining 1,100 workers at the Newark plant when it closed. "I don't want to go 1,200 miles away to get laid off again."
Williams installed a sunroof on the last Dodge Durango to come down the assembly line in Newark. Now he plans to take massage-therapy classes and pursue a new career far from the factory floor.
"Enough with the concrete," he said. "It's time for some carpet and climate control."
On the last day for the Newark plant, 84-year-old Woody Bevans unlocked the weight room at the UAW union hall and began brewing coffee for a handful of retirees who passed the time there.
A Texan who started work at the plant when it opened in 1952, Bevans recalled how the factory was first used to build tanks for the Korean War. He retired in 1983, but thought the plant would go on forever.
"We had hope right up until the last," Bevans said. "We're really going to feel it when it shuts down. There's a big chain reaction, believe me."
The University of Delaware is negotiating with Chrysler to buy the plant and redevelop the 270-acre site with academic buildings and a technology park.
After the plant closed, one of the workers, Merle Black, drove directly to a Delaware Department of Labor office and registered for job openings. He is hoping to become a heavy equipment operator, and possibly be involved in the demolition of the factory where he used to install airbag parts.
"If I can get in there to help take it apart, I don't mind," Black said. "That's where I spent the last 19 years. That's what I know."
The closing of an auto plant draws a crowd, with some people somber and nostalgic and others defiant and energized.
Outside the Janesville plant on Tuesday, a few workers posed for pictures in front of the building while others said their goodbyes as they loaded gear in their snow-covered SUVs.
One man had two small children with him on the last day. Another man wearing an orange ski mask waved a large American flag as departing workers drove by.
Many of the workers trudged over to a one-story, cinder-block building on the grounds of the factory, a bar called the Zoxx 411 Club. A sign said "customers only" and forbade reporters and media from entering.
Outside, a cluster of reporters, including a documentary film crew from Japan, tried to interview workers about the last days of the SUV plant.
"It's been a good ride, man," said Frank Hereford, a body shop worker, as he left the plant with a microwave oven that heated up countless lunches during many of his 38 years with GM "Good people worked down here."


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Ukraine faces gas cutoff over debt owed to Russia
The Associated Press
Wednesday, December 24, 2008
MOSCOW: Russia's President Dmitry Medvedev sternly urged Ukraine on Wednesday to fully pay its $2.1 billion debt for Russian natural gas supplies or face sanctions, as a Jan. 1 deadline for payment loomed.
Medvedev's statement was the strongest indication to date that Ukraine may face a repeat of January 2006 cutoff of Russian gas shipments which led to a reduction of supplies in Europe. It will likely raise worries in the European Union, which depends on Russia for 40 percent of its gas imports.
"If Ukraine fails to pay, we will use a whole arsenal of possible measures, there must be no illusions on this score," Medvedev said in televised remarks. "They must pay the debt to the last ruble if they do not want their economy to face sanctions."
Russia's state gas monopoly Gazprom on Wednesday reaffirmed its warning to turn off the taps on Ukraine, if the neighbor doesn't pay off the entire debt by the end of the year.
Gazprom spokesman Sergei Kupriyanov said Ukraine's gas company Naftogaz told Gazprom officials that they wouldn't be able to pay the debt.
"We asked them a straight question — will you pay up by the end of the year and we received the answer 'no'," Kupriyanov said at a news conference. He said that Ukraine's debt for November and December together with fines amounts to some $2.1 billion.
Naftogaz declined to comment saying talks were still ongoing.
But in a sign that both countries did not want to upset European consumers, Kupriyanov voiced hope that Ukraine wouldn't siphon gas intended for Europe from a transit pipeline crossing its territory as it did three years ago. He said Ukraine this time has enough gas saved in storage facilities to fulfill its transit obligations.
Ukrainian President Viktor Yushchenko made a similar statement earlier in the day, saying that supplies to Europe would be uninterrupted, as Ukraine has some gas saved up.
Ukraine is scrambling for the money amid a devastating financial crisis and relentless political turmoil. The country is relying on a $16.4 billion emergency loan from the International Monetary Fund to mitigate a meltdown as it buckles under a halving of exports and a sharp devaluation of the national currency.
The financial crisis is made worse by a messy tug-of-war between Yushchenko and Prime Minister Yulia Tymoshenko, who accused the president Wednesday of seeking to usurp power by canceling upcoming presidential elections.
Russian Energy Minister Sergei Shmatko has urged European countries to put pressure on Kiev to avoid a repeat of the 2006 gas war. The other transit country for Russian gas to Europe is Belarus.

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Toshiba to build lithium-ion battery plant
Reuters
Wednesday, December 24, 2008
TOKYO: Toshiba said on Wednesday it would spend tens of billions of yen (hundreds of millions of dollars) to build a lithium-ion battery plant in Japan to meet growing demand, pushing its shares up by as much as 6 percent.
The Japanese electronics maker plans to start producing its Super Charge ion Batteries (SCiBs) at the plant in the fall of 2010 with an initial output capacity of several million cells a month.
SCiBs can be recharged faster than conventional lithium-ion batteries and are less prone to catching fire, the company said.
Toshiba, which competes with bigger rivals Sanyo Electric and Sony in the rechargeable battery market, eventually plans to boost monthly capacity at the plant to more than 10 million cells.
The Nikkei business daily reported earlier that Toshiba would spend up to 30 billion yen (224.7 million pounds) to build the factory.
The Tokyo-based company already makes SCiBs at another Japanese plant, which has a monthly capacity of 150,000 cells.
A typical battery pack is made up of several battery cells.
Demand for lithium-ion batteries, widely used in mobile phones, digital cameras and laptop PCs, is expected to expand rapidly due to growing use of hybrid and electric vehicles.
Toshiba expects the global lithium-ion battery market to reach 1.7 trillion yen by the year ending in March 2016, and it aims to take at least 10 percent of that market.
Shares of Toshiba pared earlier gains and were up 1.6 percent at 322 yen in early afternoon trade, outperforming the Nikkei average , which fell 2.5 percent.
(Reporting by Ted Kerr, Kiyoshi Takenaka; Editing by Chris Gallagher)






Where a Yule log is so much more than Christmas cake
By Steven Erlanger and Basil Katz
Wednesday, December 24, 2008
PARIS: There is an economic crisis here this Christmas, but you can't really see it. Paris glitters like a fashion model, lighted with flashing bulbs and studded with diamonds, drinking Champagne and eating cake.
Even if more of the jewels are rhinestones, it is only fitting — the Champagne company Moët et Chandon has a curvy bottle dressed in rhinestones, too, and not just any rhinestones: Swarovski crystal. The bottle can be yours, in an elegant chiller, for about $125.
"We are into the starification of the product, turning it into a gem," said Marie Mascré, who spent four years at the rival Veuve Clicquot Ponsardin and now runs a wine-marketing company. She pointed to a bottle of 1999 Piper-Heidsieck in a darkly illuminated window, with the word "Rare" running in sexily cursive letters on the shimmering bottle.
"These bottles represent a dream, a fantasy, imagination," she said. "You're almost no longer interested in the taste! Maybe you don't have access to a share on a private jet, but you can have your own little moment of luxury, of escape."
Every French holiday or celebration is associated with Champagne, but Christmas and New Year's represent a major part of the market, especially because a gift of Champagne is both easy and socially safe.
But Christmas is even more important for the Bûche de Noël, the Yule log popular wherever France put down its roots. It is traditionally a spongy cake bound with chocolate butter cream and decorated to look like a chunk of tree cut from the forest, often adorned with marzipan mushrooms and other bucolic delights, like spun sugar moss.
In Paris, however, the bûche is another opportunity for creativity, commerce, competition and consumption. Every bakery has bûches, large and small, but the big houses like Dalloyau and Lenôtre, and the artisan pastry and chocolate shops, like Jean-Paul Hévin and Pierre Hermé, all produce special bûches every year.
Of course, it's not just the endless variety of flavors but also the quality of the ingredients and the imagination of the designs. Some look like beds, others like suitcases or ice-cream bars. It can be a long way from the forest.
Lenôtre actually hires a prominent designer — this year, Hubert de Givenchy — to create a special bûche. Given that St. Hubert is the patron saint of hunters (and of mathematicians, by the way, but of course you knew that), Givenchy designed a cake with two stag heads at each end, cast in clear sugar like crystal, their antlers festooned with gold leaf like a Buddha and lighted from underneath by two tiny LED lamps that last 12 hours.
The flavor is chocolate, sourced from Tanzania, Ghana and São Tomé and Príncipe, with a hint of Earl Gray tea.
There is a golden ribbon of pulled sugar, "like Murano glass," and, of course, the Givenchy signature on a chocolate plaque. Don't forget the light dusting of 22-karat gold.
Only 700 are made for sale, and the cost is $160, compared to $60 to $75 for an "ordinary" Lenôtre bûche. The company, which also has a thriving catering business, expects to sell 15,000 bûches this Christmas.
At the high end is Jean-Paul Hévin, selling 2,500 to 3,000 bûches, including an odd and whimsical one of a woman's stiletto-heeled shoe made of chocolate, with even a small scuff mark at the heel, called the "Cinderella." It is filled with three round Christmas tree ornaments of red and gold, also made of chocolate. The price: a little over $100.
He also makes a Bûche Maison, in the shape of a house, with a chocolate roof, and smaller bûchettes looking like Eskimo ice-cream bars, with wooden sticks, and a Bûche du Voyage, with a red coating and a detailed handle somehow fashioned out of chocolate.
At 50, Hévin employs 70 people, having started 20 years ago with his wife and a third person. "We all want to create something special," he said. "But there is one rule above all, I have to take pleasure in it, and then my clients will find pleasure."
There are worries at the huge Parisian wine shop Lavinia, where more than 500 different kinds of Champagne from dozens of producers all compete for the festive euro. Wholesale Champagne sales turned down in October by 16.5 percent compared to last year, according to industry figures, but 2008 will be a good year, the buyers agree, if not quite the record sales of 338.7 million bottles in 2007.
"When things go well, people drink to celebrate, and when things go badly, they drink to console themselves," said Yannick Branchereau, Lavinia's director in France. Lavinia has a full range, but also stocks some of France's most revered Champagnes, like the 1982 Salon Blanc de Blancs, Le Mesnil, for $2,800, or the simple 1997 for $420, and Bollinger's 1999 Blanc de Noirs, made from some of the few vines that survived the phylloxera plague of the mid-19th century, for about $1,100.
Of course there are French scrooges appalled by all the excess.
Périco Legasse, the food critic, said angrily that prices now defined quality. "For Champagne we've arrived at these total price aberrations, and you have to dress them up to attract people's attention with the image, with fashion, with sex."
He hated the designer bûches, he said. "In selling these disgusting things at the price of gold, we are coming to the end of the system. This is the sub-primes transposed to consumption."
Raphaël Gimenez, the owner of Les Caprices de l'Instant, a wine store, exploded like, well, a shaken bottle of bubbly. "Champagne? Man, that's all about smashing the bottle on your Lamborghini or ripping a thousand-euro bill for the hell of it. It's party, show, not wine," he said. "With the collapse of the price of oil, of gas, of gold and of lead, this kind of crazy superficiality has to end. Why not just say we're broke, and that's it?"

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Humble souls, richly nourished
By A. O. Scott
Wednesday, December 24, 2008
Slimane Beiji, the sad, still center of "The Secret of the Grain," Abdellatif Kechiche's bustling and brilliant new film, might be described as an accidental patriarch. A stubborn, taciturn immigrant from Tunisia, Slimane (Habib Boufares) has spent 35 years working in the shipyards of Sète, a rough little French port city on the Mediterranean coast.
The other members of his large, cantankerous family — his former wife, Souad (Bouraouïa Marzouk), and their assorted children and grandchildren — live mostly in a battered high-rise housing project. Slimane, meanwhile, keeps a modest room in the blue-collar hotel run by his lover, Latifa (Hatika Karaoui), and her 20-year-old daughter, Rym (the amazing Hafsia Herzi), on whom he dotes as if she were his own.
The chief token of his benevolence is the fish Slimane collects from his fisherman buddies and dutifully delivers on his motorbike to the important women in his life: Souad; his older daughter, Karima (Faridah Benkhetache); and Latifa. Their freezers are overflowing with the mullet that is, in Tunisian tradition, served with couscous, the grain of this film's title. (In France, where the movie won four César awards earlier this year, the secret is omitted, and the film is known simply as "La Graine et le Mulet.") When Souad cooks up a batch to feed various kids, friends and in-laws, she puts aside a serving for Slimane, who eats it in the spartan quarters he shares with a semimetaphorical caged bird.
Kechiche started out as an actor and has established himself, after directing three features ("La Faute à Voltaire" and "L'Esquive" before this one), as one of the most vital and interesting filmmakers working in France today. In "The Secret of the Grain" he immerses us in the hectic, tender, sometimes painful details of work and domesticity. The camera bobs and fidgets in crowded rooms full of noisy people, so that your senses are flooded with the warmth and stickiness of Slimane and Souad's family circle. The scenes, though they feel improvised, at times almost accidentally recorded, have a syncopated authenticity for which the sturdy old word realism seems inadequate.
Not many directors would linger so long, for example, over a toilet-training-related battle of wills between a mother and her 2-year-old, and then pause later to observe a discussion of the same subject among a group of adults at a party. But when Kechiche does just that, you may wonder why so few have bothered before. After all, the messy particulars of child rearing preoccupy every family in every culture and provide an inexhaustible vein of humor, anxiety and contention.
And the richness of "The Secret of the Grain" — the secret, as it were, of its deep and complex flavor — lies in the close, tireless, enthusiastic attention it pays to the most mundane daily tasks, especially those involving food.
The depth of Kechiche's humanism and his subtle insights into the political dimensions of ordinary experience link his film to the great works of late-period Neo-Realism, even if his anarchic methods have more in common with those of a post-'60s skeptical realist like Mike Leigh than with the old Italian masters. "The Secret of the Grain" is in some ways the descendant of a movie like "Rocco and His Brothers," Luchino Visconti's long, gloriously novelistic 1960 melodrama about a family of migrants that travels from southern Italy to work in the factories of the north.
In the background of "The Secret of the Grain" is a similar migration that began in the 1960s, when men and women like Slimane and Souad left the newly liberated North African French colonies to seek their fortunes in metropolitan France, a country they regarded as both benefactor and oppressor. In the decades since, France has reluctantly claimed them and their children as citizens, even as it has stigmatized and marginalized them, and this mutual ambivalence is the implicit subject of this movie and its unstated context. ( Kechiche was born in Tunis in 1960.)
But as he did in "L'Esquive," in which the exalted idiom of Classical French literature collided and commingled with the polyglot vernacular of the modern French suburbs, Kechiche declines to dole out obvious, easily assimilated lessons.
Life is just too complicated, too unpredictable, too hard and too fascinating. Even as Slimane's story is one of frustration and unfulfilled ambition — after his hours at the shipyard are cut back, he pursues the quixotic dream of converting an abandoned boat into a dockside couscous restaurant — "The Secret of the Grain" bursts with exuberance and irrepressible sensuality. This is mostly thanks to the women in the movie, who through charm, guile and sheer force of will turn the austere fable of their melancholy paterfamilias into a party. It is not that they are naturally carefree but rather that their cares are so tightly woven into their lives that the only practical alternative to despair is an unruly, militant joy.
Karima, Souad and Rym are at once Slimane's foils — their bodies are as curvy as his is gaunt, while their frank, abundant talk serves as counterpoint to his decorous silence — and the pillars on which he leans for support. They protect his dignity by declining to point out just how much he depends on them, and allowing him to believe that the opposite is true.
The pathos of Slimane's story (as well as the accomplishment of Boufares's performance) arises partly from the understanding that this man, so committed to the idea of his own strength and resilience, is in the end so fragile.
To put it in slightly different terms, you could say that Slimane's tragedy is that, having worked so hard for so long, he is left with so little. The couscous restaurant represents his last stand, his grand gesture of protest against a hard fate, and its opening night, teetering on the tightrope between triumph and calamity, is Kechiche's tour de force.
An entire family chronicle, along with four decades of French social and economic history, is recapitulated as a lavish, hectic dinner, complete with music and belly dancing. It will leave you stunned and sated, having savored an intimate and sumptuous epic of elation and defeat, jealousy and tenderness, life and death, grain and fish.





Looking back, Bush and Cheney reveal different views
By Sheryl Gay Stolberg
Wednesday, December 24, 2008
WASHINGTON: President George W. Bush and Vice President Dick Cheney have been unusually talkative in recent weeks, sharing candid thoughts in a string of exit interviews. But after eight years of a tight partnership that gave Cheney powerful influence inside the White House, the two are sounding strikingly different notes as they leave office, especially on one of the most fundamental issues of their tenure: their aggressive response to the Sept. 11 terrorist attacks.
Bush defends his decisions as necessary to keep the nation safe, yet sounds reflective, even chastened. He has expressed regrets about not achieving an overhaul of immigration laws and not changing the partisan tone in Washington. And the man who got tangled up in a question about whether he had made any mistakes — he could not come up with one in 2004 — recently told ABC News that he was "unprepared for war," and that "the biggest regret of all the presidency has to have been the intelligence failure in Iraq."
Cheney, by contrast, is unbowed, defiant to the end. He called the Supreme Court "wrong" for overturning Bush policies on detainees at Guantánamo Bay; criticized his successor, Vice President-elect Joseph Biden Jr.; and defended the harsh interrogation technique called waterboarding, considered by many legal authorities to be torture.
"I feel very good about what we did," the vice president told The Washington Times, adding, "If I was faced with those circumstances again, I'd do exactly the same thing."
The difference in tone, friends and advisers say, reflects a split over Bush's second-term foreign policy, which Cheney resisted as too dovish. It also reveals their divergent approaches to post-White House life. Bush, who is planning a public policy center in Dallas, is trying to shape his legacy by offering historians a glimpse of his thinking, while Cheney, primarily concerned about the terrorist threat, is setting the stage for a new role as a standard-bearer for conservatives on national security.
"The president's interviews are about creating a basis for historians to evaluate the context of his decisions differently, with more input from him," said Wayne Berman, who has advised Bush and is a longtime friend of Cheney. "Cheney is living in the moment of, 'There's a serious ongoing threat,' and I believe he sees himself more in a Churchill-like role, as the sentinel issuing the call for vigilance."
Bush and Cheney still have lunch together once a week, administration officials say, and the vice president remains the president's staunchest defender. But while Cheney has been "loyal to a fault," said John Bolton, the former ambassador to the United Nations whose views often reflect those of the vice president, he is also "increasingly in a beleaguered position."
In the first term, Cheney, backed by his close ally, Donald H. Rumsfeld, who was then the defense secretary, was ascendant, and his views about the aggressive use of executive authority and military might held great sway. But after Bush fired Rumsfeld in 2006 — the only presidential decision Cheney has publicly disagreed with — the vice president took a back seat to Secretary of State Condoleezza Rice, who pushed the president to pursue greater diplomacy with two countries he once called "rogue nations," Iran and North Korea.
"Our ability to explain what we've been doing in the national security field for eight years has been wholly inadequate," Bolton said, "and part of that is because too many high officials in the administration were embarrassed by the decisions. Cheney has never been embarrassed by it, and now, in the last months, he is freer to make the kind of forceful and emphatic case for it that others were unwilling to make."
Bush and Cheney appear to be giving more interviews than their recent predecessors. Dan Quayle, the last vice president not to seek the presidency while in office, gave three exit interviews; Cheney has so far given four. President Ronald Reagan gave five interviews during his last two months in office; President Bill Clinton gave seven. Bush has already given 10, to outlets as varied as Real Clear Politics, the Pentagon Channel, an Arabic television channel and a sportswriter for The Washington Post; the White House says more are to come.
Historians say presidents, especially those who serve two terms, often grow reflective at the end of their tenure. "They tend to be exhausted, they're worn out, they're trying to make some sense of their administrations, and there's a natural tendency for them to want to give their own perspective," said Jay Winik, who got to know Bush and Cheney after they read his book, "April 1865," an account of the closing month of the Civil War.
Never the introspective type, Bush has been freely answering "how do you feel" queries, which he once routinely dismissed as "goo-goo questions," said his first press secretary, Ari Fleischer. He has also used his interviews to reveal his softer side. He has spoken of "my relationship with the Good Lord," joked about his wife's cooking and spotlighted social programs he regards as achievements, like education reform and his global plan to fight AIDS.
If he has criticisms of President-elect Barack Obama, Bush has not shared them; rather, he has hewed to the Bush family credo of graciousness in departure or defeat. ("I think he's discovered his inner Bush," Berman, the adviser, said.) He also opened the door to a possible role for himself in the Obama presidency, citing his own decision to ask his father, the first President Bush, and Clinton to spearhead a fund-raising effort for tsunami victims.
"President-elect Obama, I am confident, will call upon presidents to take on a mission," Bush told C-Span. "I will be happy to do it, particularly if I agree with the mission."
Cheney has been less diplomatic. Like Bush, he has praised Obama for keeping Robert Gates as defense secretary. But on "Fox News Sunday" this week, Cheney shot back at Biden for calling him "the most dangerous vice president in history." And asked by The Washington Times for his advice for Obama, Cheney talked of the importance of personnel decisions, then volunteered, "Senator Clinton as secretary of state — I would never pick her to be my secretary of state."
Both men say they look forward to private life. For Cheney, who has served in four Republican administrations, transitions are nothing new. "It's not my first time at the rodeo," he told The Washington Times.
Bush, who became Texas governor 14 years ago, told ABC News that he was eager to "live life without the limelight." Yet both will have more to say. Cheney is likely to write a book. Bush is contemplating a farewell address, and says he will definitely write a book, to give Americans, as he told The Washington Times, "one man's point of view that happened to be in the center of it all."

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Names of those Bush pardoned
The Associated Press
Wednesday, December 24, 2008
In addition to issuing a posthumous pardon to Charles Winters, Bush granted 18 other pardons and one commutation on Tuesday.
Pardons were given to:
William Alvis III, Flushing, Ohio, possession of an unregistered firearm and cocaine distribution
John Aregood, Riviera, Texas, conspiracy to harbor and transport illegal aliens
Eric Blanke, Parker, Colorado, counterfeiting
Steve Cavender, The Villages, Florida, conspiring to import, possess, distribute and dispense marijuana
Marie Eppens, Lynden, Washington, conspiracy to distribute and to possess with intent to distribute marijuana
Lydia Ferguson, Sun City, Arizona, aiding and abetting possession of stolen mail
Eduviges Gonzalez-Matsumura, Clovis, California, aiding and abetting embezzlement of bank money
George Greene Jr., Gray, Georgia, mail fraud
James Won Hee Kang, South Barrington, Illinois, trafficking in counterfeit goods
Alan Maiss, Reno, Nevada, concealing knowledge of a crime
Richard Miller, Tallahassee, Florida, conspiracy to defraud the United States
Delano Nixon, Neosho Rapids, Kansas, forging the endorsement on a United States. Treasury check
John Overholt, Black Hawk, South Dakota, concealment of information affecting Social Security benefits
Morris Parker, Georgetown, South Carolina, concealing knowledge of a crime
Robert Reece, Redondo Beach, California, unauthorized absence and missing the movement of a navy ship
Donald Roessler, Harrison, Ohio, embezzlement of mail matter
Issac Toussie, Brooklyn, New York, false statements to the United States Department of Housing and Urban Development and mail fraud
David Woolsey, St. George, Utah, aiding and abetting violation of the Archaeological Resources Protection Act.
Bush commuted the prison sentence of Reed Prior of Des Moines, who was convicted of possession of methamphetamine with intent to distribute.

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A new spotlight on Libby, the name not on the pardon list
By Neil A. Lewis
Wednesday, December 24, 2008
WASHINGTON: The most notable feature of the Justice Department file containing hundreds of formal applications beseeching President George W. Bush to be merciful and grant some sort of clemency before he leaves office may be the one name that is not there.
I. Lewis Libby Jr., the former chief of staff to Vice President Dick Cheney, has not applied for a pardon, Justice Department officials have said. Libby was convicted of four felony counts in March 2007 for his role in the investigation of the leak of Valerie Wilson's employment with the Central Intelligence Agency.
Libby, known as Scooter, has been at the top of the speculative lists that accompany the holiday season, especially in the last year of a presidency, of who might receive a White House gift of clemency, which can take the form of an outright pardon or a commutation of a sentence. Bush had already used his constitutional authority in July 2007 to commute Libby's sentence, wiping out the 30-month prison term imposed by a judge, but leaving intact the conviction and lesser penalties including a $250,000 fine.
The conviction means that Libby cannot practice law because he had to surrender his bar membership. Many of his friends have hoped that he might be given a pardon on top of the commutation, not only to allow him to practice law but also to wipe out what they regard as an injustice. Libby was not convicted of leaking Wilson's name, but of obstruction of justice and lying to a grand jury and agents of the Federal Bureau of Investigation who were looking into the disclosure of her identity.
He became the most senior White House official convicted of a felony since the Watergate scandal of the Nixon administration.
Since his conviction, Libby has spent his working days as a senior adviser at the Washington office of the Hudson Institute, a policy research organization. Kenneth Weinstein, the organization's chief executive, said Libby had been an invaluable asset.
"Everyone here has immense admiration and respect for him," Weinstein said. Libby had advised the institute's fellows on an array of issues, he said, notably the future of Asia, northeast Asian security and terrorism.
Although he began working at the institute after his conviction, he took a furlough to fulfill a sentencing obligation of 400 hours of community service at a local organization that provides shelter and support for homeless families and adults. Court officials said his duties from September 2007 to February 2008 involved assisting people in finding shelter and helping the group draft an emergency preparedness plan.
Hudson officials would not disclose Libby's salary, which is being underwritten by several of his friends and supporters. Libby declined to comment.
Although Libby has not applied for a pardon through Justice Department channels, there is nothing that would bar Bush from using his constitutional authority to grant one.
But many in Washington, including one Republican lawyer with a deep knowledge of the pardon process and its politics, said it would be surprising if Bush did so. For one thing, these people said, when Bush commuted Libby's sentence he made a point of saying his action had made the results of the trial just.
"The consequences of his felony conviction on his former life as a lawyer, public servant and private citizen will be long-lasting," Bush said at the time. "I respect the jury's verdict. But I have concluded that the prison sentence given to Mr. Libby is excessive."
In one sign that Libby's allies may be lobbying on his behalf, The Wall Street Journal's lead editorial on Tuesday called on Bush to give him a full pardon. "In this dark episode, an honest man became the fall guy in a larger political war over the war," the editorial said.
To grant a pardon, especially given that Libby has not asked for one publicly, would most likely expose Bush to criticism that he had shown undue favoritism and was exploiting his authority just before departing the White House. When President Bill Clinton left office eight years ago, he was barraged with criticism for the pardons of 140 people he issued in his final hours including Marc Rich, a fugitive financier whose former wife, Denise Rich, had been a major contributor to Clinton causes.
Rich had not applied formally to the Justice Department but had representatives take up the matter directly with the White House.
While Libby has not put in an application, the roster of those who have filed with the Justice Department includes other notable names including Michael Milken, the former junk bond king turned philanthropist; Edwin Edwards, a former Democratic governor of Louisiana; John Walker Lindh, the so-called American Taliban, and Marion Jones, the former Olympic sprinter.
Senator Ted Stevens, Republican of Alaska, is barred from applying to the Justice Department for clemency involving his recent conviction for violating ethics laws because he has not been sentenced yet. Bush could, however, issue a pre-emptive pardon or commutation of sentence for Stevens.
Bush has been more sparing in his authority to grant some kind of clemency than most recent presidents. The beneficiaries of his decisions have typically been people without any public profile who were convicted of minor crimes.


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SEC chief defends response to economic turmoil
Reuters
Wednesday, December 24, 2008
WASHINGTON: U.S. Securities and Exchange Commission chairman Christopher Cox, responding to heavy criticism, said in an interview published on Wednesday he takes pride in his response to the U.S. financial crisis.
"What we have done in this current turmoil is stay calm, which has been our greatest contribution -- not being impulsive, not changing the rules willy-nilly, but going through a very professional and orderly process that takes into account unintended consequences and gives ample notice to market participants," Cox told The Washington Post.
This caution "has really been a signal achievement for the SEC," said Cox.
"When these gale-force winds hit our markets, there were panicked cries to change any and every rule of the marketplace: 'Let's try this. Let's try that.' What was needed was a steady hand," he said.
The SEC, created after the 1929 stock market crash to police markets and restore investor confidence, has come under heavy criticism after the Wall Street meltdown and financial scandals exposed lapses in its oversight.
Cox last week acknowledged that the SEC had failed to detect the alleged $50 billion (33.8 billion pound) fraud by disgraced Wall Street investment manager Bernard Madoff, despite many warnings.
Cox told The Washington Post the biggest mistake of his tenure was agreeing in September to an extraordinary three-week ban on short selling of financial company stocks.
Cox told the newspaper he had been under intense pressure from Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke to take this action and did so reluctantly.
They "were of the view that if we did not act and act at that instant, these financial institutions could fail as a result and there would be nothing left to save," Cox said.
Cox, a former California Republican congressman, argued that the SEC has carefully defined responsibilities and that it was unfair to blame it for every problem on Wall Street.
Cox became SEC chairman in mid-2005. He plans to step down early next year before his five-year term expires.
President-elect Barack Obama has chosen Mary Schapiro, chief executive of the Financial Industry Regulatory Authority and a former SEC commissioner, to replace him.
(Reporting by Joanne Allen; Editing by Alan Elsner)

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Russia's liberal opposition loses its voice
By Clifford J. Levy
Wednesday, December 24, 2008
MOSCOW: Vladimir Putin was sitting behind his desk. Before him was a prominent opposition leader named Nikita Belykh, a beefy and bearded liberal with a fondness for scribbling poems on the side. In one, each stanza began with a word that he said characterized Putin's Russia: Autocratic. One-Party. Authoritarian. Aggressive.
Yet there Belykh was, ready to abandon it all.
Putin had invited Belykh to his office on Dec. 5 to make an offer. Renounce the opposition. Come work for the Kremlin.
Belykh was feeling beaten down, "a sense of my own degradation," as he explained in an interview last week.
He said he was tired of being vilified in the state-controlled news media, of being hounded by the state security forces, of being arrested at demonstrations, of having his political party thwarted at every turn.
And so Belykh, 33, who represented the future of the liberal opposition, said yes. He accepted an appointment as one of the Kremlin's regional governors, turning his back on his party allies and becoming emblematic of the opposition's difficulties this year.
A man who had once declared, "I have no intention of doing deals with the Kremlin" was doing just that. His turnabout raised a stark question for those he left behind. If Nikita Belykh cannot take it, who can?
"When you have nothing at all, when you cannot even get close in the elections, when all your paths are being cut off, then you just can't have a political party," Belykh said.
"A year or two ago, I still had hopes of the possibility of a certain public political life. The elections of 2007 and 2008 showed that those were just illusions."
With Belykh's appointment and the liberal opposition in disarray, some of its leaders have sought to band together in a new movement, called Solidarity after the Polish anti-Communist movement. It is being organized by Garry K. Kasparov, the former chess champion, and Boris Nemtsov, a former deputy prime minister.
The two have said they will attract a following from Russians disgruntled by the Kremlin's handling of the financial crisis. Still, political analysts said the movement had little public support, and it has already become ensnared in disputes with other liberal factions.
"The problem that Solidarity faces is that while many of its criticisms are true, its leaders are not perceived by the vast majority of the population as representing the average person's interests," said Boris Makarenko, chairman of the Center for Political Technologies, a research organization in Moscow.
In the fall, Belykh said he would embrace Solidarity. Then the message arrived from the Kremlin.
Belykh's pact with the Kremlin was a milestone in its lengthy campaign to all but stamp out the liberal opposition. Polls show that roughly 10 to 20 percent of Russians back the agenda of the liberals, which includes a pro-Western, free-market orientation and far less government regulation of industry and the news media.
Even so, the party that Belykh used to lead, the Union of Right Forces, received only 1 percent of the vote in parliamentary elections last year, after being subjected to intense pressure by the government. It did not even run a candidate in the presidential election this year. In October, the party disbanded.
From its remains, the Kremlin created a new party, the Right Cause. The party is intended to espouse liberal ideas and serve as an outlet for public discontent caused by the financial crisis without challenging the Kremlin's authority.
The new party's leaders said they had no choice but to agree to exist under the Kremlin's umbrella. They said that these days, liberals must cooperate if they wanted to attain even modest success in Russia — meaning the ability to raise money for campaigns and garner a few seats in the national and regional legislatures.
"It's a shame, it's a very negative thing, but it's reality," said Leonid Gozman, a former leader of the Union of Right Forces who leads the new party. His arm was broken by the police during a demonstration last year.
The new party points up the wide-ranging control that the Kremlin has established over the political system. It now oversees the dominant governing party, United Russia; a populist-socialist party, called A Just Russia, that it set up to siphon votes from the Communist Party; and the Right Cause.
Belykh did not join the Right Cause, calling it an imitation of an opposition party. Still, in hindsight, his former colleagues said, the damage was done when Belykh agreed to abolish the Union of Right Forces. "People are bought here, people are easily corrupted," said Maria Gaidar, a former senior official of the Union of Right Forces. "To be in the opposition is very difficult in Russia, when you don't have support and money, and you don't see any clear future. Nikita is quite a sensitive and romantic person, but when it comes to his career, he is very cynical and pragmatic."
Belykh was holding court last week in the lobby of the Baltschug Kempinski Hotel in Moscow, where the coffee is $10 a cup, meeting with officials and others to prepare for his new life. He is soon to move 500 miles to the east to become governor of Kirov, an economically depressed region.
He was wearing a purple buttoned-down shirt, jeans and hiking boots. On a table was a notebook in which he composes poetry. He often sends text messages with snippets of verse to his friends' cellphones.
He said he had been stung though not surprised that some opposition politicians had called him a traitor. He sought to explain his decision by arguing that he could do more good by working with the Kremlin. He said he would prove that someone with progressive ideas could succeed in the government.
"There should be no fighting for the sake of fighting," he said. "There should be results, a change in the situation in the country."
Despite all his attacks on the Kremlin in recent years, he refrained from criticizing Putin, the former president and the current prime minister, and his protégé, President Dmitri A. Medvedev. He suggested that by appointing him, they were seeking to be more inclusive.
Asked about the future of the liberal opposition, he said, "Of course, it will be difficult for them."
Aleksei Pavlov, a Kremlin spokesman, said Belykh was appointed not because of politics but because he was considered a good manager. Pavlov said Belykh had demonstrated his skills when he served in 2004 and 2005 as a vice governor in Perm, a region near Kirov.
"This was a good argument for him to receive the job," Pavlov said.
Governors in Russia used to be popularly elected, but Putin did away with that system beginning in 2005, seeking to centralize authority. The president now chooses governors, who are supposed to enforce political order in the regions and round up votes for the ruling party in elections.
Belykh insisted that he would not play that role. He said he had told Putin and Medvedev that he would not enter the governing party. They agreed, but only if Belykh did not help the opposition.
"Do you understand that your work is focused on managing the region, and not on political statements on behalf of a political party?" Putin asked, according to Belykh.
Belykh's former allies said he was being either naïve or disingenuous. They questioned what he would do if the opposition tried to conduct protests in Kirov and the security services wanted to disrupt them.
Belykh responded that he would abide by the law, saying that above all, he would be an apolitical governor. When asked whether he would vote for Putin or Medvedev in the next presidential election, Belykh, who typically talks very fast, paused and seemed to choose his words cautiously.
"Ah, tough question, yes?" he said. "I don't see any alternative. Given the political landscape, there is nobody else."


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Madoff dealings tarnish a private Swiss bank
By Nelson D. Schwartz
Wednesday, December 24, 2008
PARIS: For generations, the calling card of Swiss private bankers has been the promise of prudence and discretion.
Now, as the links between Bernard Madoff and elite private banks like Geneva-based Union Bancaire Privée emerge, this well-polished reputation has been tarnished by the $50 billion Ponzi scheme that Madoff has been arrested for and accused of running.
L'Affaire Madoff, as it has become known here and in Geneva, has cast an unwanted spotlight onto the normally shadowy world of private bankers in Switzerland and other cozy hiding places of offshore wealth, like the Cayman Islands and Luxembourg.
And while there are many Swiss victims in terms of total exposure, UBP is the best-known private bank to get hit, with $700 million of its clients' money invested with Madoff.
Founded in 1969 by Edgar de Picciotto, UBP quickly became a giant in the conservative world of Swiss banking, where partnerships like Pictet and Lombard Odier stretch back more than 200 years.
With assets of $125 billion and a client base of wealthy individuals, families and institutions that reach from Qatar to Uruguay to Russia and throughout Europe, it is one of Switzerland's biggest pipelines for channeling client money into hedge funds worldwide.
About six years ago, that business, known as a fund of funds, began to rake in larger fees when it decided to set up a vehicle called M-Invest Ltd to funnel cash to Madoff's firm.
Through this relationship, UBP claimed it was able to gain close insight into Madoff's investment operations, through copies of trade tickets and an unusual degree of access granted by Madoff himself to UBP's representatives, according to a confidential internal letter sent to investors on Dec. 17, obtained by The New York Times.
The memorandum, while seeking to reassure investors, could raise questions about why UBP, unlike others who claimed to have seen red flags, did not use its access to delve more deeply into the unusually consistent annual returns that Madoff's funds were reporting.
According to the memo, "We have met with Bernard Madoff and various principals several times at Madoff's office, twice within the last year, and have had numerous conversations in between." The letter stated that several of UBP's senior investment professionals met with Madoff in 2004 and 2007, and that UBP's structured risk analysis unit "had a full review in 2006 and recently in 2008 with Madoff himself."
The UBP letter acknowledges some concerns over how Madoff's firm combined investment management and brokerage services. But the Geneva bank said it "found comfort" in the fact that the firm was subject to "routine" audits by the Securities and Exchange Commission and Finra, another securities regulator, as well as "Madoff's longstanding reputation in building Wall Street's markets infrastructure." M-Invest was regulated by the Cayman Islands Monetary Authority, where it was incorporated.
UBP was also closely tied to Fairfield Greenwich Group, the New York investment company that was the single biggest gatherer of money for Madoff, sending $7.3 billion his way and collecting more than $500 million in fees as a result.
Michael de Picciotto, a nephew of the founder and a top executive of UBP, is a close friend of Andrés Piedrahita, a son-in-law of Walter Noel, the founder of Fairfield Greenwich. Piedrahita played a key role in raising much of the money from Europe and South America that ended up with Madoff.
UBP was the also main investment adviser, custodian and leverage provider to Fairfield's huge fund of funds business and De Picciotto in turn was a key adviser to Fairfield, according to an internal document prepared by Fairfield last year for a potential buyer of the firm. In addition, UBP is listed as the sixth-largest investor in Fairfield's funds, for which the bank provided "qualitative and quantitative research and operational due diligence," according to the letter.
At one point, the letter boasted that De Picciotto could provide insight into UBP's investment and asset allocation strategy. Through these connections, UBP became entwined with Madoff's investments even as competitors like Société Générale, which turned up a series of red flags during routine due diligence in 2003 at Madoff's New York headquarters, steered clear.
"Ultimately, these people were blind to what was going on," said Michel Dominicé, a veteran Geneva hedge fund manager with $200 million under management.
He said the links between UBP, Fairfield Greenwich and Madoff, as well as the hundreds of millions in fees the firms earned by steering money to Madoff investments, pointed to conflicts of interests that penalize investors.
Dominicé was himself approached by a salesman for Madoff investments three years ago but declined to invest, saying he could not figure out how Madoff earned such steady returns, month after month. "It just didn't make sense," he said.
As for the fees earned by UBP and Fairfield Greenwich, Dominicé said: "If you're nasty, you call it corruption. If you want to be more polite, you can call it a lack of professional consciousness."
A spokesman for UBP declined to comment. But Christophe Bernard, a top executive responsible for asset management at UBP, told a Swiss newspaper last week: "We did what was necessary."
As recently as Nov. 25, representatives of UBP met with Madoff himself in New York according to the interview, which appeared in Le Temps, a Geneva newspaper. "So how can we be reproached?," Bernard asked. "We are victims of a massive fraud, like several other banks and financial companies throughout the world."
He went on to defend the bank's financial soundness and said UBP, which did not invest in Madoff's fund on its own behalf, was "not affected and remains top class."
To be sure, $700 million in exposure cited by UBP is only a tiny fraction of the $125 billion under management by the bank. UBP also reported a $331 million gross profit in the first half of 2008, up 5.8 percent from a year ago.
But for UBP, the headlines have cast a shadow on a reputation that seemed to soar as high as the nearby Alps.
For all of its growth — UBP has roughly 1,300 employees worldwide — the bank remains a family affair. Edgar de Picciotto is the chairman and principal shareholder, although he has given day-to-day responsibilities to his son Guy de Picciotto, the chief executive, and several other family members.
On Tuesday, as many Swiss bankers prepared to head for the slopes for vacation until after New Year's, a Christmas tree glimmered beside the gold colored entrance to UBP, where visitors are greeted in a reception area of black marble, red leather benches and a large golden globe.
In the tight-knit world of Swiss wealth management, experts acknowledged it was a public relations disaster for UBP, but defended the bank's decision-making.
"It's not the kind of publicity you seek," said Michel Derobert, secretary general of the Swiss Private Bankers Association. Because it is a private corporation rather than a partnership, Derobert's association does not include UBP, but works with the bank from time to time.
"It's not nice," he said. "But it would be surprising in a city like Geneva, where people take of care of clients who seek low risk and steady returns, not to be affected by this kind of case."

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Financier is found dead in a Madoff aftermath
By Zachery Kouwe and Michael Wilson
Wednesday, December 24, 2008
Around 4 a.m. on Monday, a prominent hedge fund manager who apparently had lost $1.4 billion with Bernard Madoff, telephoned a longtime client in Paris, sounding upset.
"I have to fight for my clients and myself," the money manager, R. Thierry Magon de la Villehuchet, told the client, who spoke on the condition of anonymity because of investigations into the $50 billion Ponzi scheme Madoff is suspected of orchestrating. "It's a complete nightmare."
A little more than 24 hours later, De la Villehuchet was found dead in his office on Madison Avenue. The evidence pointed to suicide, the police said on Tuesday.
Security officers discovered the body of De la Villehuchet, a co-founder of Access International Advisors, in a chair, with one of his legs propped on his desk. His wrists and his left biceps were slashed, said Paul Browne, a New York police spokesman. A wastebasket had been placed under his bleeding biceps, Browne said.
No suicide note was found, but sleeping pills and a box cutter were discovered under his desk.
De la Villehuchet, 65, was in his office at 7 p.m. on Monday and had asked the cleaning staff to clean up early because he would be working late.
Later that evening, one of the firm's partners asked a security guard to see if De la Villehuchet was still in his office, but the door was locked, and the guard had no key, the police said.
During the last week, as the scale of the scheme came to light, De la Villehuchet had tried unsuccessfully to recover his clients' money, the client said. De la Villehuchet told the client in Paris on Monday morning that he felt that he had betrayed clients and friends.
"He said he felt robbed," the client said.
A native of the Brittany region of France, De la Villehuchet was described by friends as a man who was devoted to his firm. He founded Access International Advisors in 1994 with Patrick Littaye after his tenure as chairman and chief executive of the United States investment banking arm of the French bank Crédit Lyonnais.
De la Villehuchet, an avid sailor and a member of the New York Yacht Club, lived in Westchester County with his wife. The couple also owned a home in Brittany. No one responded to a telephone call to De la Villehuchet's home or to messages left at Access International's offices.
Early Tuesday afternoon, several reporters and photographers gathered in front of the narrow entrance to Access International's office on Madison Avenue, a few blocks from Rockefeller Center.
Access International is one of several so-called feeder funds that funneled money from investors across the globe into Madoff's collapsed firm. The news of De la Villehuchet's death came as investors in other feeder funds with exposure to Madoff, including Fairfield Greenwich Group and Tremont Group Holdings, began suing those funds alleging negligence and breach of fiduciary duty.
Access International managed $3 billion, but its Luxalpha American Selection fund invested all of its assets with Madoff. In a letter to fund investors last week, the New York-based firm called Madoff's arrest "a shocking development" and said it was assessing the situation.
Investors in the Luxalpha fund were mostly wealthy European clients of Rothschild investment bank and UBS, which was the custodian and administrator of the Luxalpha fund until this year, when Access International took over.
UBS has said that wealthy European clients, attracted by Madoff's stellar returns, had asked the bank to set up a fund to invest with him.

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Obama report outlines talks on Senate seat
By Jeff Zeleny
Wednesday, December 24, 2008
HONOLULU: In the days after Barack Obama's election as president, Rahm Emanuel, a top adviser, suggested to Governor Rod Blagojevich of Illinois that Obama's Senate seat should be filled by Valerie Jarrett, a confidante of Obama.
In that same week, as word of her potential interest in the Senate seat spread throughout the Chicago political world, Jarrett spoke with a labor union official in Illinois who said he had spoken to the governor about the possibility of appointing her to the seat. During that conversation, the union leader mentioned that Blagojevich had his eye on a possible cabinet position in the Obama administration.
The contact was among the findings of an internal report released Tuesday, compiled by lawyers for the president-elect. The report concluded that Emanuel had as many as six conversations with the governor's office about the Senate vacancy, but that Obama had none, and that neither Emanuel, Jarrett, nor any other Obama associates had any talks about a deal in which Blagojevich would benefit from appointing someone to the Senate seat.
Blagojevich was charged by federal prosecutors in Chicago this month on a variety of corruption counts, including an alleged effort to trade the appointment to the Senate seat for a job or money. The report also disclosed that Obama, Emanuel and Jarrett were questioned by federal prosecutors last week in the corruption inquiry of the governor. Obama's two-hour interview took place in his Chicago office, aides said, and he was not under oath or considered more than a witness in the case.
Obama did not speak about the matter on Tuesday. He continued his vacation in Hawaii, where he attended a memorial service for his grandmother, who died just before the election.
Jarrett, a longtime Chicago friend of the Obama family who will serve as a senior adviser in the White House, had no communication with Blagojevich or his aides, the report said. But it said that three days after the election, she spoke with Tom Balanoff, president of the Illinois chapter of the Service Employees International Union, about the Senate seat and the governor's ambitions to serve in the Obama administration as secretary of health and human services.
This conversation, outlined for the first time, could be of interest in the criminal case against Blagojevich, who was recorded on the same day as the Jarrett-Balanoff meeting in wiretapped phone calls expressing an interest in a job with an arm of the union in exchange for a possible Senate appointment. According to an affidavit, Blagojevich was also captured on tape that day telling an unidentified adviser that he was willing to "trade" the appointment for the cabinet post.
"Ms. Jarrett did not understand the conversation to suggest that the governor wanted the cabinet seat as a quid pro quo for selecting any specific candidate to be the president-elect's replacement," Greg Craig, who has been designated by Obama as his White House counsel, wrote in the report. "At no time did Balanoff say anything to her about offering Blagojevich a union position."
The Obama transition team delayed the report's release at the request of Patrick Fitzgerald, the United States attorney for the Northern District of Illinois, who wanted to interview prospective witnesses before it was made public. The delay prolonged questions on whether any Obama aides acted improperly in dealing with the governor's office.
In the conversations with Blagojevich immediately after the election, Emanuel recommended Jarrett for the Senate seat, the report said, a position that later turned out to be contrary to Obama's wishes.
"In those early conversations with the governor, Emanuel recommended Valerie Jarrett because he knew she was interested in the seat," the report said. "He did so before learning, in further conversations with the president-elect, that the president-elect had ruled out communicating a preference for any one candidate."
Emanuel was not available to answer a reporter's questions on Tuesday, aides said, because he had left for a planned holiday trip to Africa with his family.
The report suggested that Obama had been more involved in thinking about his Senate successor than his public statements about the topic had indicated.
The report said that after Jarrett took herself out of the running for the Senate seat, citing Obama's preference that she work for him in the White House, Obama authorized Emanuel to pass on the names of four people he considered highly qualified to take over his seat: Daniel Hynes, the state comptroller; Tammy Duckworth, the state veterans affairs director; and Representatives Jan Schakowsky and Jesse Jackson Jr., Chicago Democrats.
Obama later offered two other names, it said: Attorney General Lisa Madigan of Illinois and the Chicago Urban League president, Cheryle R. Jackson.
Those names were passed along by Emanuel in four calls to John Harris, the governor's chief of staff, from early November through Dec. 8, one day before Blagojevich and Harris were arrested.
Emanuel, an Illinois congressman, was one of the few members of Obama's inner circle who had a working relationship and talked occasionally with Blagojevich. But his contact with the governor was "totally appropriate," Craig told reporters on Tuesday afternoon.
The only other name mentioned in the report was Dr. Eric Whitaker, a close friend of Obama, who was approached by a Blagojevich aide immediately after the election. The aide, the report said, "wanted to know who, if anyone, had the authority to speak for the president-elect."
"The president-elect told Dr. Whitaker that no one was authorized to speak for him on the matter," the report said. "The president-elect said that he had no interest in dictating the result of the selection process, and he would not do so, either directly or indirectly."

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A Kennedy juggernaut? Not quite, some Democrats say
By Nicholas Confessore
Wednesday, December 24, 2008
ALBANY: Resistance is emerging among Democratic officials against Caroline Kennedy as she pursues Hillary Rodham Clinton's seat in the United States Senate, with Governor David Paterson bristling over suggestions that her selection is inevitable, according to his advisers, and other leading Democrats concerned that she is too beholden to Mayor Michael Bloomberg.
The governor is frustrated and chagrined, the advisers said, because he believes that he extended Kennedy the chance to demonstrate her qualifications but that her operatives have exploited the opportunity to convey a sense that she is all but appointed already. He views this as an attempt to box him in, the advisers said.
"You have people going around saying, 'Oh yeah, it's a done deal,' " said one of the advisers, who requested anonymity because they were not authorized to speak publicly about the selection process and did not want to anger the governor. "The quickest way to not get something you want is to step into somebody's face."
The governor's frustration follows reports last week that Kevin Sheekey, a top deputy for Mayor Michael Bloomberg who has been advising Kennedy, had called a labor leader and told him that Kennedy was going to be senator, "so get on board now," and that a member of Senator Edward Kennedy's staff was helping Caroline Kennedy reach out to unions.
It was not clear on Tuesday whether the governor's reaction would seriously damage Kennedy's chances to win the appointment or if it merely reflected Paterson's desire to regain control of the selection process after Kennedy's very public political debut.
But Kennedy's ties to Bloomberg's political team and her waffling over whether she would support a Democrat in next year's mayoral race appear to be angering some Democrats. On Tuesday, Sheldon Silver, the Assembly speaker, became the most senior elected official in the state to say that that Paterson should not select Kennedy to the Senate seat.
"If I were the governor, I would look and question whether this is the appointment I would want to make, whether her first obligation might be to the mayor of the City of New York rather than the governor who would be appointing her," Silver said during an interview on WGDJ, an Albany radio station.
Silver has long had a testy relationship with Bloomberg, fueled by battles over mayoral initiatives like congestion pricing.
A spokeswoman for Kennedy declined to comment. Kennedy's advisers, speaking anonymously because they did not want to inflame the situation further, rejected any suggestion that they had portrayed her selection as inevitable and insisted that they had been respectful of the governor's desire for a decorous selection process.
The criticism over her bid has also frustrated those advisers, who feel that Kennedy has been whiplashed by assertions that she is at once protected and presumptuous. Both the governor and Kennedy's advisers appear to have been thrown, in part, by Kennedy's overwhelming personal celebrity.
Kennedy made dozens of calls to elected officials and other leaders to build interest in her candidacy, and many of those with whom she spoke call her thoughtful and self-effacing.
But her refusal to say over the weekend whether she would back a Democratic candidate next year, when Bloomberg will seek re-election as an independent, set off intense reaction among some in the party.
A follow-up statement — in which her spokesman, Stefan Friedman, said that Kennedy "fully intends to support the Democratic nominee" — did not assuage those concerns.
Moreover, her ties to Bloomberg's operatives have aroused suspicions among Democrats and labor officials that she would be beholden to the mayor. Kennedy hired the consulting firm Knickerbocker SKD, which includes Bloomberg as one of its biggest clients.
Those suspicions appeared to be compounded by a comment Bloomberg made on Monday defending Kennedy and suggesting that, though the choice was Paterson's, the governor should move quickly to select a replacement for Clinton, who is expected to be confirmed next month as secretary of state.
"We didn't tell him to hurry up on term limits," said another Paterson adviser, referring to Bloomberg's move this fall in which he marshaled votes on the City Council to nullify a city referendum so that he could run for another term.
In a conference call on Tuesday, Paterson, who was traveling, declined to address Silver's or Bloomberg's comments. But he reiterated that he had made no selection and would not do so until Clinton was confirmed.
"What I'm trying to keep away from is lobbying, coercion and distracting information," he said. He added later: "I don't feel rushed by any of this process. I have said from the very beginning what I thought the right way to do this would be."
Silver also praised several other potential appointees to the Senate seat, including Andrew Cuomo, the attorney general. Should Paterson pick Cuomo, the Legislature would be responsible for choosing his successor, and Silver would have by far the most influence over that choice.
A spokesman for Silver declined to say whether the speaker had consulted with Paterson before speaking publicly about Kennedy.
Even some of Kennedy's potential rivals for the seat expressed some sympathy for her quandary.
"Any true Democrat loves Caroline Kennedy," said Thomas Suozzi, the Nassau County executive, who has said he is also interested in the Senate appointment. "I think the way that her handlers and strategists are pushing her and trying to box in the governor is damaging the reputation of someone that we all care about."


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Wal-Mart settles 63 lawsuits over wages
By Steven Greenhouse and Stephanie Rosenbloom
Wednesday, December 24, 2008
Wal-Mart Stores, the nation's largest retailer, said Tuesday that it would pay up to $640 million to settle some 63 wage-and-hour lawsuits that accused it of forcing employees to work off the clock and go without meal and rest breaks.
Some of the cases date back to 2000.
"Many of these lawsuits were filed years ago and the allegations are not representative of the company we are today," Tom Mars, executive vice president and general counsel for Wal-Mart Stores said in a statement.
The cases, which were brought by different groups of lawyers in various states, involved hundreds of thousands of current and former hourly employees. The total amount to be paid will depend on the number of claims submitted, but it will be at least $352 million, Wal-Mart said.
Several lawyers said Wal-Mart had reached the settlement to help turn an embarrassing page as its current chief executive, Lee Scott, turns the job over to Michael Duke.
David Nassar, of Wal-Mart Watch, a union-financed advocacy group, said: "They're throwing this weight overboard to lighten their load."
Frank Azar of Franklin D. Azar & Associates, co-lead counsel in 14 states, said in a statement Tuesday that he was pleased with the settlement and thought it was fair.
"We are equally pleased that Wal-Mart has made tremendous strides in wage and hour compliance," Azar said, "and that it has implemented and agreed to continue to follow state of the art compliance programs so that these improvements will continue into the future."
Wal-Mart announced the settlement less than two weeks after it reached a $54.25 million settlement covering 100,000 current and former employees in Minnesota who asserted they were due money over missed breaks and off-the-clock work.
In a case still pending, Wal-Mart has appealed a 2005 verdict in which a California jury ordered the retailer to pay $172 million for making employees miss meal breaks.
In 2006, a jury in Pennsylvania awarded $78 million against Wal-Mart in a lawsuit over rest breaks and off-the-clock work. Last year, a judge increased that award to $188 million to include damages, interest and lawyers' fees. Wal-Mart has also appealed that ruling.
The dozens of wage-and-hour lawsuits have accused Wal-Mart and its managers of various illegal stratagems, among them forcing employees to work unpaid off the clock, erasing hours from their time cards and preventing workers from taking their lunch breaks and rest breaks.
Robert Bonsignore of Bonsignore and Brewer, co-counsel in a group of 35 cases consolidated in Nevada and cases covering four other states, said that as a result of the settlement, "Wal-Mart can now say that it has taken action to make its stores a great place to shop and work."
Wal-Mart said it expects a related after-tax charge from continuing operations in its fiscal fourth quarter of about $250 million, or 6 cents a share.

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Somali president to resign, officials say
By Jeffrey Gettleman and Mohammed Ibrahim
Wednesday, December 24, 2008
NAIROBI, Kenya: The president of Somalia's beleaguered transitional government, a former warlord who has been steadily marginalized over the past few months and widely blamed for his country's deepening crisis, is expected to resign over the weekend, several Somali officials said on Wednesday.
President Abdullahi Yusuf Ahmed faces a litany of challenges: a powerful Islamist insurgency; a rancorous Parliament that is threatening to impeach him; a united front of Western diplomats who say he has gone from the being the solution for Somalia to being the problem; and neighboring countries, such as Kenya, that have gotten so fed up with him for blocking peace efforts that they are preparing sanctions against Yusuf and his family.
"Yusuf was an obstacle to peace," said Ibrahim Isaaq Yarow, the transitional government's deputy information minister. "The parliamentarians were congratulating one another today when they heard the news that the president is resigning."
The question is, will his resignation, if it indeed takes place, make a difference?
Somalia's government controls no more than a few city blocks in a country nearly the size of Texas. Islamist insurgents with varying agendas control much of the rest. Famine is steadily creeping toward millions of people, the victims of drought, displacement and nearly 18 years of anarchy.
Since 1991, Somalia hasn't had a functioning central government. The 13 previous attempts at forming one all failed, disappearing down a vortex of clan-driven violence and suspicion. A further problem is Somalia's deeply entrenched war profiteers – the gun runners, the importers of expired baby formula, the squatter landlords renting out former government property – who will most likely resist any government because they don't want to pay taxes or deal with regulations.
Yusuf struggled with all this. He often favored military might versus negotiations, which increasingly seemed out of sync with what many analysts have said Somalia needs. While many other Somali leaders recently agreed to share power with moderate Islamist insurgents, Yusuf refused, calling the Islamists terrorists. He tried to block a measure that would bring moderate Islamists into the government and double the size of Parliament, from 275 seats to 550. Ethiopia, which has several thousand troops inside Somalia, had recently fallen out with Yusuf and the Ethiopians have said they will withdraw all their firepower in the next few weeks.
One of Yusuf's aides said the president had had enough.
"He has been thinking of resigning for some time but decided that now is the opportune moment," said the aide, who asked not to be identified because he was not authorized to speak to journalists. "Everyone is talking about peace. Maybe this will help."
Yusuf, who is in his late 70s and in delicate health, was selected president in 2004 by his colleagues in the government. His expected exit now kicks off what is surely to be clan-based succession battle. Under the transitional government's charter, the speaker of the Parliament assumes the presidency for a maximum of 30 days until Parliament selects a new leader.

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Young Jordanians rebel, embracing conservative Islam
By Michael Slackman
Wednesday, December 24, 2008
AMMAN, Jordan: Muhammad Fawaz is a very serious college junior with a stern gaze and a reluctant smile that barely cloaks suppressed anger. He never wanted to attend Jordan University. He hates spending hours each day commuting.
As a high school student, Fawaz, 20, had dreamed of earning a scholarship to study abroad. But that was impossible, he said, because he did not have a "wasta," or connection. In Jordan, connections are seen as essential for advancement and the wasta system is routinely cited by young people as their primary grievance with their country.
So Fawaz decided to rebel. He adopted the serene, disciplined demeanor of an Islamic activist. In his sophomore year he was accepted into the student group affiliated with the Muslim Brotherhood, Jordan's largest, most influential religious, social and political movement, one that would ultimately like to see the state governed by Islamic law, or Shariah. Now he works to recruit other students to the cause.
"I find there is justice in the Islamic movement," Fawaz said one day as he walked beneath the towering cypress trees at Jordan University. "I can express myself. There is no wasta needed."
Across the Middle East, young people like Fawaz, angry, alienated and deprived of opportunity, have accepted Islam as an agent of change and rebellion. It is their rock 'n' roll, their long hair and love beads. Through Islam, they defy the status quo and challenge governments seen as corrupt and incompetent.
These young people — 60 percent of those in the region are under 25 — are propelling a worldwide Islamic revival, driven by a thirst for political change and social justice. That fervor has popularized a more conservative interpretation of the faith.
"Islamism for us is what pan-Arabism was for our parents," said Naseem Tarawnah, 25, a business writer and blogger, who is not part of the movement.
The long-term implications of this are likely to complicate American foreign policy calculations, making it more costly to continue supporting governments that do not let secular or moderate religious political movements take root.
Washington will also be likely to find it harder to maintain the policy of shunning leaders of groups like the Brotherhood in Egypt, or Hamas in Gaza, or Hezbollah in Lebanon, which command tremendous public sympathy.
Leaders of Muslim countries have tried to appease public sentiment while doing all they can to discourage the West from engaging religious movements directly. They see the prospect of a thaw in relations with the West, and see these groups as a threat to their monopoly on power.
Authoritarian governments view relative moderation as more of a political challenge than extremism, which is a security problem that can be contained through harsh methods.
"What happens if Islamists accepted the peace process and became more pragmatic?" said Muhammad Abu Rumman, research editor at the newspaper Al Ghad in Amman. "People see them as less corrupt and as the only real opposition. Israel and the U.S. might look at them differently. The regime is afraid of the Brotherhood when it becomes more pragmatic."
The financial crisis only adds to the anxiety of governments in the Middle East that had hoped economic development could appease their citizens, create jobs for legions of unemployed and underemployed young people and dilute the appeal of Islamic movements. But the crisis and the drop in oil prices have hit hard, throwing the brakes on once-booming economies in the Gulf region, and modest economic growth elsewhere in the region.
In this environment, governments are forced to confront a reality of their own creation. By choking off democracy and free speech, the only space where groups could gather and discuss critical ideas became the mosque, and the only movements that had room to prosper were religion-based.
Today, the search for identity in the Middle East no longer involves tension between the secular and religious. Religion has won.
The struggle, instead, is over how to define an Islamic society and government. Zeinah Hamdan, 24, has traveled a typical journey in Jordan. She says she wants a more religious government guided by Shariah law, and she took the head scarf at a younger age than anyone else in her family.
But when she was in college, she was offended when an Islamist student activist chastised her for shaking a young man's hand. She wants to be a modern religious woman, and she defines that as working and socializing in a coed environment.
"If we implement Shariah law, we will be more comfortable," she said. "But what happens is, the people who come to power are extremists."
Like others here, she is torn between her discomfort with what she sees as the extreme attitudes of the Muslim Brotherhood and her alienation from a government she does not consider to be Islamic enough. "The middle is very difficult," she said.
Focus on popular causesUnder a bright midday sun one recent day, Fawaz and his allies in the Islamic student movement put on green baseball caps that read, in Arabic, "Islamic Current of Jordan University" and prepared to demonstrate. Fawaz carried a large poster board reading, "We are with you Gaza."
The university protest reflected the tactics of the Muslim Brotherhood in the country as a whole: precisely organized, deliberately nonthreatening and focused on popular causes here such as the Palestinians. The Brotherhood says it supports democracy and moderation, but its commitment to pluralism, tolerance and compromise has never been tested in Jordan.
Fawaz and about 200 other students stood in a straight line, extending nearly two city blocks, parallel to the traffic on the major roadway in front of the university. More than half of the students were women, many with their faces veiled.
State security men in plain clothes hurried up and down the line. "Brother, for God's sake, when will you be angry?" one security agent screamed into his phone, recording for headquarters the slogan on a student's placard.
At 12:30 p.m., the male students stepped into the road, blocking traffic, while the women rushed off to the sidewalk and melted back into the campus. One minute later, they walked out of traffic, took off their caps and folded up their signs, tucked them into computer bags and went back to school.
"I want to be able to express what I want; I want freedom," Fawaz said, after returning to the campus. His glasses always rest crooked on his face, making him look younger, and a bit out of sorts. "I don't want to be afraid to express my opinion."
Fawaz grew up in a small village called Anjara, near Ajloun, about 50 miles from Amman. His father grew up in the Jordan Valley and worked as a nurse in Irbid. Fawaz said he was 8 years old he was first invited to "leadership retreats" with a youth organization of the Brotherhood.
When he was 13, the youth group took him on a minor pilgrimage to Mecca. So, he said, he had been enticed by religion at an early age. But he only decided to become politically active — and to join the Brotherhood — when he was denied a scholarship to study abroad.
While there are no official statistics on student membership in the Brotherhood, only a fraction of Jordan University students are formally affiliated. Yet many others say they share the same vague sense of discontent and yearning, the same embrace of the Brotherhood's slogan, "Islam Is the Solution," a resonant catchall in the face of many problems.
The university, with about 30,000 students from across the country, has long served as a proxy battlefield for Jordan's competing interests.
Competing loyalties
In Jordan, unlike Egypt, the Muslim Brotherhood is legal, with a political party and a vast network of social services. It also has a political party, called the Islamic Action Front. While some fear it as too extreme, others argue that it has sold out by working within a political system they see as corrupt and un-Islamic. On campus, the Islamists try to build sympathy, handing out study sheets or copying notes for students.
Fawaz decided this year to run as an Islamist candidate for the student council, an influential organization with its own budget and the right to put up posters, distribute fliers and hold on-campus events.
The Islamic students' movement had boycotted the elections for years to protest a change of election rules that called for appointing — not electing — half of the council's 80 members. The rule change, decreed by the former university president, was made in order to block the Islamists, who were the most organized group on campus, from controlling the council.
That is a direct echo of how the state has long tried to contain the Islamist movement in Jordan. The Brotherhood is allowed to operate, but the government and the security services broadly control the outcome of elections.
Indeed, as Islamist movements have swelled, governments across the Middle East have chosen both to contain and to embrace them. Many governments have aggressively moved to roll back the few democratic practices that had started to take root in their societies, and to prevent Islamists from winning power through the voting booth. That risks driving the leaders and the followers of Islamic organizations toward extremism.
At the same time, many governments have tried to appease popular Islamist fervor. Jordan recently granted a Muslim Brotherhood-aligned newspaper the right to publish daily instead of weekly; held private talks with Hamas leaders; arrested a poet, saying he had insulted Islam by using verses of the Koran in love poems; and shut down restaurants that had served alcohol during Ramadan, though they had been licensed by the state to do so.
This year, the new president of Jordan University permitted all student council seats to be elected, but with rules in place that would, again, make it nearly impossible for the Islamist bloc to have control.
Two days before the voting took place, Fawaz was campaigning on the steps of the education building, dressed in his best suit and tie. His campaign message to the students was simply, "For your sake."
Running as an Islamist risks consequences: Fawaz said that he was approached by a student in his class who he believed was delivering a message from the security services. "He told me that they will write about me; I will never get a job," Fawaz said.
But even when the police ordered him to take down his posters on election day, he remained resolute and confident.
"Everybody knows that I am going to win," Fawaz said, without sounding boastful. "Because I represent the Islamic movement."
But he did not win. Instead, a candidate representing a large tribe from the city of Salt won, reflecting the loyalty to bonds of kinship and family heritage even as tribal culture has begun to absorb more conservative Islamic practices and beliefs.
Yet Fawaz was untroubled. "What is important for me," he said, "is to serve the movement by spreading the word among the students."
Amjad al-Absy, 28, remembers the moment when he pledged to join the Muslim Brotherhood. He was 15 and he was identified by Brotherhood recruiters when he was playing soccer in a Palestinian refugee camp. He described how the Brotherhood monitors young men — when they play soccer, go to school, to mosque, to work, as well as in the street and singles out those who appear receptive.
"Once you say yes, they put you in a ring, in a family," said Absy. "Outside of the Brotherhood, there is no concern for young men, there is no respect. You are alone."
Absy and his friend Tarak Naimat, 24, said that while they were students at the university, they had helped to recruit other young men.
"In the computer lab, in the mosque, you buddy up," Naimat said. "Then you participate in events together. Then he becomes a member. If he's advanced, it can take six months. If less, maybe two years."
The appeal, Naimat said, was simple: "It gives you the feeling you can change things, you can act, you can be a leader. You feel like you are part of something important."
Recruiters to the movement operate in a social atmosphere far more receptive than in the past. Every one of five young men talking near the cafeteria of the university recently insisted that the only way Jordan would have democracy was under an Islamic government, which is what the Brotherhood says it wants to achieve.
Muhammad Safi is a 23-year-old with neatly gelled hair and a television-white smile who described himself as the least religious student at the table. He said he had lived in the United States for five years and was eager to marry an American so he could return. Yet he declared: "An Islamic state would be better. At least it would take care of people."
A political crossroads
The task facing Middle East governments and Islamic leaders is to figure out how to harness the energy of the Islamic revival. The young — the demographic bulge that is defining the future of the Islamic world and the way the West will have to engage it — have embraced Islam with all the fervor of the counterculture.
But the movement is still up for grabs — whether it will lead to greater extremism, even terrorism in some cases, and whether the vague dissatisfaction of young people will translate into political engagement or disaffection.
So the cycle is likely to continue, with religious identification fueled not only by the Islamic movements, but also by governments eager to use religion to enhance legitimacy and to satisfy demands of their citizens. That, in turn, broadens support for groups like the Brotherhood, while undermining support for the government, said many researchers, intellectuals and political scientists in Jordan.
The battle lines are clear on the campus of Jordan University. Bilal Abu Sulaih, 24, is a leader in the Islamic student movement. He returned to school this year to study Islamic law after being suspended for one year for organizing protests, he said. During the year off, he said, he worked as a student organizer for the political party office of the Brotherhood. "We are trying to participate," he said of the movement's role on campus. "We do not want to overpower everyone else."
But his reassurances were brushed aside as another student confronted him. "It's not true," shouted Ahmed Qabai, 28, who was seated on a nearby bench. He thrust a finger in Sulaih's direction.
"You want to try to control everything," Qabai said. "I've seen it before, your people talking to women and asking them why they're not veiled."
Sulaih, embarrassed by the challenge, said, "It's not true."
Qabai made it clear that he detested the Muslim Brotherhood, getting more and more worked up, until finally he was screaming. But what he said summed up the challenge ahead for Jordan, and for so many governments in the region: "We all know Islam is the solution. That we agree on."

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Few steps left to finish Iraq-UK troop deal
Reuters
Wednesday, December 24, 2008
BAGHDAD: Several steps are needed before Britain and other countries with small troop forces remaining in Iraq can secure final deals permitting their presence after December 31, a British military official said on Wednesday.
The clock is ticking on the U.N. mandate that authorises Britain's 4,100 troops, along with smaller contingents from Australia, Estonia, El Salvador and NATO, to be in Iraq.
A British military spokesman, who asked to go unnamed, said Iraq's president and two vice-presidents must ratify a measure parliament passed on Tuesday empowering the government to take any steps needed to allow the troops to stay through July 2009.
"There will thus be an exchange of letters between each of the governments of the countries who will have troops remaining after 31 December and the government of Iraq," he said.
"These will outline the tasks to be performed, the number of troops and the time lines for withdrawal. This exchange of letters can take place as soon as the law is ratified."
Britain, the main U.S. ally in the 2003 invasion and which once had 45,000 troops in Iraq, intends to keep about 400 advisers and trainers in the country after the July deadline.
With a week left before the U.N. mandate expires, the last-minute manoeuvring was due to parliament's rejection last week of a draft law governing foreign troops.
Lawmakers had argued the law needed to be replaced with some sort of treaty or agreement similar in format to the bilateral pact that Washington concluded with Iraq allowing its 140,000 troops to remain through the end of 2011.
British officials have said they don't expect Britain to whisk its troops, mostly stationed around the southern oil port of Basra, out of Iraq even if there is no agreement by January 1.
(Reporting by Missy Ryan, Editing by Michael Christie)

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Jailed for aiding Israel, but pardoned by Bush
By Eric Lichtblau
Wednesday, December 24, 2008
WASHINGTON: Charlie Winters was an unlikely soldier in the fight for a Jewish state 60 years ago. An Irish Protestant from Boston, he took up the clandestine cause from his perch in Miami and helped ferry military planes to Israeli fighters, even flying a B-17 bomber across the Atlantic Ocean himself in 1948.
The Israelis have long considered him a hero; Prime Minister Golda Meir hailed his efforts. Yet in the United States, he was a criminal, imprisoned for 18 months for violating the 1939 Neutrality Act and breaking an embargo on weapons to Israel.
But on Tuesday, President George W. Bush pardoned Winters nearly a quarter-century after his death. In recent months, prominent Jews including Steven Spielberg and members of Congress mounted a campaign for clemency in Winters's memory.
"This is a present for my father," said Jim Winters, 44, a Miami businessman who knew nothing about his father's imprisonment until after his death.
"This was a monumental challenge, but my dad's favorite saying was 'Keep the faith,' and we did," Winters said.
Bush issued 18 other pardons on Tuesday, as well as one sentence commutation, to people convicted for largely run-of-the-mill crimes. There were no big names on the list, despite speculation that the president might consider leniency for figures like I. Lewis Libby Jr., the former White House aide.
Others whose names had been speculated about for pardons but who were not on the list included the financier Michael Milken, the sprinter Marion Jones and Bernard Ebbers, the former chief executive of WorldCom.
For Winters's survivors and supporters, the unexpected appearance of his name on the pardon list loomed large.
"This is a very good day," said Reginald Brown, a Washington lawyer who represented the Winters family in the clemency petition to the Justice Department. "He did a heroic thing, and, at the time, the law didn't reflect our values. The pardon allows the law to catch up with history."
Winters, who died in 1984 at the age of 71, becomes only the second person on record to be granted a pardon posthumously, administration officials said. In 1999, President Bill Clinton issued a pardon to Lieutenant Henry Flipper, who was the first black graduate of the United States Military Academy at West Point in 1877 and then was convicted of thievery four years later on charges that appeared racially fueled.
Winters was among a group of several hundred Americans and Canadians referred to by the Israelis by the Hebrew acronym of "machal," or "volunteers from outside Israel." They secretly helped in Israel's war of independence in 1948, a year after its creation as a Jewish state.
The United States banned the sale of weapons to Israel and to other countries in the Middle East, and Israel found itself isolated militarily as it struggled to hold on to its fledgling independence. Winters was rejected by the American military because of a limp left by polio, but he worked during World War II as a government purchasing agent — a trade he would put to use in helping the Israelis in 1948.
Winters, then 38, was recruited to the cause apparently by Al Schwimmer, a flight engineer who led American efforts to aid Israel's military. Winters sold three B-17 "Flying Fortress" bombers to Schwimmer's group to help fortify Israel's air defenses, and he was credited with personally flying one of the planes to Czechoslovakia.
His motives remain something of a mystery, even to his family and friends.
In Winters's obituary in The Miami Herald in 1984 — under the headline "Charles Winters, 71, Aided Birth of Israel" — one friend and fellow bomber pilot, Sy Cohen, said: "To the Jewish people in Palestine, this deed that he did was phenomenal. Why should an Irishman from Boston do such a thing?"
Whatever his motives, the Israelis recognized Winters's efforts with a formal letter of appreciation from Meir, and they buried his ashes in the ancient Templars Cemetery in Jerusalem.
The United States was less appreciative. Winters, Schwimmer and a third American, Hank Greenspun, were prosecuted and convicted for violating the Neutrality Act in their support of Israel.
Winters was the only one of the three to be imprisoned for his crime and, until Tuesday, he was the only who had not received a pardon. ( Schwimmer went on to lead Israeli's biggest aviation company; Greenspun became a crusading Las Vegas newspaper publisher.)
Jim Winters said his father never said anything about his time in prison or his work for the Israelis, and he would never explain to his son why he was not allowed to own a gun. Only after his father died — and Jim Winters noticed the blue-and-white flowers sent to the funeral by the Israeli government — did the younger Winters begin to learn of his past.
"I think the whole prison sentence turned him off from talking about it," Jim Winters said. "But he did what he did because he thought it was right."
William Daroff, director of the Washington office of the United Jewish Communities, called Winters "a righteous gentile, a non-Jew who was looking to help out the state of Israel and was one of the unsung heroes of Israel's war of independence."
His pardon, Daroff added, should serve "to wipe away the stain of his conviction."



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Gaza rocket fire intensifies
By Isabel Kershner
Wednesday, December 24, 2008
JERUSALEM: Palestinian militants from Gaza increased the range and intensity of their rocket fire against Israel on Wednesday as the Israeli security cabinet weighed options that include broader military action or efforts to renew a truce that recently expired.
More than 60 rockets and mortars were fired at southern Israel by the afternoon, the Israeli military said. The rockets slammed into the Israeli border town of Sderot, the yard of a house and a water park in the coastal city of Ashkelon, an Israeli factory at Nir Oz near the Gaza border, and hit a house outside the Western Negev town of Netivot.
The strikes caused extensive damage and widespread panic among the residents, but no serious injuries. Scores of adults and children were treated for shock, the emergency medical service said.
The security cabinet meeting lasted about five hours, but no details were made public regarding any decisions about Gaza. An official spokesman for the Israeli government, Mark Regev, suggested that a renewal of mutual calm was still possible but that Israel's patience was running out.
Israel "will answer quiet with quiet," Regev said, "but will answer attacks with a response designed to protect our people." Apparently preparing public opinion abroad for possible military retaliation, he said the sole responsibility for the deterioration in the south lay with Hamas.
The military wing of Hamas, the Islamic group that controls Gaza, said in a statement that the rocket fire was "a response to Zionist aggression in Gaza and West Bank" and to the economic embargo Israel has imposed on Gaza.
An Israeli force killed three Hamas gunmen on Tuesday in a clash close to the border fence in northern Gaza. The military said they were spotted laying explosives. Hamas said two more members of its military wing were killed after carrying out a "jihadi" mission on Wednesday near Khan Yunis in southern Gaza. The Israeli military denied that there had been any army activity at that time, and it seemed that the two were killed by their own explosives.
A six-month Egyptian-brokered truce between Israel and Hamas in Gaza expired last Friday. On Tuesday, Hamas said that Egypt and other mediators had been in touch to discuss another period of calm. Mahmoud Zahar, a senior Hamas official, suggested that Hamas would consider renewing the truce if border crossings were opened to allow the regular transfer of goods into Gaza.
The intensified rocket fire on Wednesday might have been intended to pressure Israel and Egypt to step up efforts for a new truce.
At the same time, Hamas and other Palestinian militant groups have warned of a harsh response should Israel decide to embark on a broad military operation in Gaza, and Wednesday's fire gave a taste of what could come.
Some Israeli officials have called for tough military action, but Prime Minister Ehud Olmert and Defense Minister Ehud Barak have so far maintained a policy of restraint. Defense officials have repeatedly warned that a military invasion of Gaza would be costly in lives on both sides and would not even guarantee an end to the rocket fire.
Most of the rockets fired out of Gaza are locally made, short-range projectiles that fall within a few miles of the border. At least two of those fired on Wednesday were imported Katyusha-type rockets with a longer range. Ashkelon, which lies about 10 miles north of Gaza, has been hit occasionally in the past. Attacks on Netivot, about six miles east of the Gaza border, have been rare.
Yuval Diskin, an Israeli security chief, said while briefing the Israeli cabinet earlier this week that the Hamas military wing had used the six-month lull to improve its firing capabilities and was now able to reach the outskirts of Beersheba and the port city of Ashdod.
The goods crossings on the Gaza border have been almost completely sealed since the truce began to break down in early November. Israel had said it would allow about 40 trucks of humanitarian aid to enter Gaza on Wednesday, but it canceled those plans as a result of the heavy rocket and mortar fire.

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Voting ends in Indian Kashmir amid heavy security
The Associated Press
Wednesday, December 24, 2008
SRINAGAR, India: Hundreds of protesters chanting pro-independence slogans clashed with soldiers in the main city of Indian-controlled Kashmir on Wednesday, the last day of voting in state elections.
At least nine people were injured when troops fired tear gas shells and used bamboo batons to stop the protesters marching to the center of Srinagar, a police officer said on condition of anonymity in keeping with department policy.
Separatists have urged residents to protest and boycott the poll, saying the election will only strengthen India's hold on the Himalayan region. Anti-India sentiment runs deep in Kashmir, where most people favor either independence or a merger with Pakistan. Kashmir is divided between India and Pakistan and claimed by both.
The elections, which began Nov. 17, were being held in seven phases. The results are expected to be announced on Dec. 28.
The staggered balloting allowed the government to deploy thousands of security forces in each area in a bid to prevent the deadly violence sparked by elections in 2002 and thwart separatist attempts to enforce the boycott.
Voting in earlier stages of the election was largely peaceful, with a higher-than-expected turnout of more than 60 percent, though scattered anti-India protests have continued throughout.
Nevertheless, voter turnout was low Wednesday in Srinagar, where authorities banned gatherings of more than five people to thwart possible anti-India protests, the police official said. Troops also sealed off neighborhoods with steel barricades and razor wire to prevent people from congregating.
Thousands of government troops wearing bulletproof jackets and carrying assault rifles patrolled the streets and guarded polling stations. Troops outnumbered voters outside the polling stations in several neighborhoods.
"How can we vote for the candidates who are being protected by soldiers who have killed thousands of Kashmiris," said Shabir Ahmed, a protester in Srinagar.
In Muslim-majority areas in Srinagar, voter turnout was about 20 percent. It was about 70 percent in Hindu-majority areas in Jammu, said B.R. Sharma, the state's chief election officer.
Some 1.6 million of the state's roughly 6.5 million eligible voters live in the areas voting Wednesday.
Police arrested three men Tuesday they say were planning suicide bombings during polling in Hindu-majority Jammu city. They said the three were Pakistanis, including one who was an active soldier.
A Pakistan military official said the man whom Indian police identified as Ghulam Farid had deserted the army in June 2006.
Relations between longtime rivals India and Pakistan have been especially tense since last month's shooting attacks in Mumbai, which killed at least 164 people. Indian authorities have blamed Pakistan-based Kashmiri separatist group, Lashkar-e-Taiba.
India has urged Pakistan to crack down on Lashkar and other militants operating out of Pakistan.
Pakistan has arrested several senior members of the banned group and moved against a charity that India and others say is a front for Lashkar, but also urged India to provide further evidence.
Separatist groups have been fighting since 1989 to end Indian rule. The uprising and a subsequent Indian crackdown have killed about 68,000 people, most of them civilians.

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Pakistan says banned group helped plan attack on hotel
By Richard A. Oppel Jr. and Salman Masood
Wednesday, December 24, 2008
ISLAMABAD, Pakistan: A Sunni Muslim extremist group believed to have been involved in the 2002 abduction and murder of the journalist Daniel Pearl helped carry out the Marriott Hotel bombing in Islamabad three months ago that killed more than 50 people, according to a top Pakistani official.
The official, Rehman Malik, the government's senior interior adviser, said that the group, Lashkar-e-Jhangvi, which was banned by Pakistan in 2001 and classified by the State Department as a foreign terrorist organization, helped organize the Sept. 20 bombing, which deeply shook the confidence of Pakistanis by demonstrating that extremists could perpetrate large-scale attacks close to the seat of power in Islamabad, the capital.
Malik's comments on the bombing to the Pakistani National Assembly on Monday represented the first time that the government had formally laid blame for the attack with a specific organization. He had previously suggested that Taliban militants operating from Pakistan's lawless western tribal lands might have been behind the bombing.
Malik also told the legislators that two men from Toba Tek Singh in Punjab Province had been taken into custody and that the investigation was complete.
According to an investigator, a man associated with Lashkar-e-Jhangvi drove the truck used in the bombing from the town of Jhang, where it had been loaded with explosives, to Islamabad, where the keys were given to a suicide bomber.
The motive for the attack was hatred for Americans, said the investigator, who spoke on condition of anonymity because of the secrecy involved in the inquiry. Other officials have speculated that the bombing was in retaliation for airstrikes in Taliban-held western tribal areas by remotely controlled American planes, or for recent Pakistani military operations against militants there.
The driver drove the truck to Islamabad slowly, according to the investigator, making frequent stops to avoid detection. Once in Islamabad, he gave the keys to the suicide bomber, a 22-year-old Afghan named Zakirullah, who drove the truck to the hotel, the investigator said.
The militants chose the Marriott as the target because they thought a large number of American marines were staying there, but most of the marines had checked out the day before the attack, the investigator said.
Lashkar-e-Jhangvi has long had a reputation for carrying out bloody attacks, especially against Shiite Muslims in Pakistan. In 2003, when Secretary of State Colin Powell designated the group as a foreign terrorist organization, he said that its involvement in the kidnapping and killing of Pearl, a Wall Street Journal correspondent, in 2002 "has been confirmed."


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Pakistan parliament urges India to accept help offer
Reuters
Wednesday, December 24, 2008
By Zeeshan Haider
Pakistan's parliament called on India on Wednesday to respond positively to Pakistani offers of cooperation in investigating the Mumbai attacks and condemned "war hype" between the nuclear-armed neighbours.
Tension has been simmering between Pakistan and India since 179 people were killed in last month's attacks in India's financial hub that India has blamed on Pakistan-based militants.
Pakistan has condemned the Mumbai attacks, denied any role in the assault and offered to cooperate with India in investigations but at the same warned that its desire for peaceful coexistence should not be taken as weakness.
The National Assembly, Pakistan's lower house of parliament, unanimously passed a resolution expressing support for the government and urged New Delhi to reciprocate Islamabad's efforts to defuse tension.
"The National Assembly of Pakistan ... calls upon India to respond to the constructive proposals made by the government of Pakistan," Minister of State for Foreign Affairs Malik Emad Khan said while tabling the resolution.
The house also urged India to exercise restraint and not to promote activities that harmed regional peace.
"(The house) condemns the war hype in a situation where war is not an option given the nuclear capabilities of both countries," the assembly said.
Fiery rhetoric has been coming from various quarters on both sides, much of it from media commentators, since the attacks.
Pakistan and India have fought three wars since independence from British rule in 1947 and went to the brink of a fourth after an attack on the Indian parliament in December 2001, also blamed on Pakistan-based militants.
India has put a pause on a five-year-old peace process that Pakistan had been trying to push forward. Indian officials have said they were keeping all options open, comments the Indian media have widely interpreted to mean that a military response was possible.
"INTELLIGENCE FAILURE"
India's army chief General Deepak Kapoor visited disputed Siachen, the world's highest battlefield, and bordering areas of Jammu and Kashmir to assess the army's preparedness on Tuesday, but army officials described the visit as routine.
"It is important to review the operational preparedness in the region and he has done just that," an army spokesman said.
Pakistan's air force on Monday scrambled fighter jets over several cities as part of what the force calls increased vigilance following the rise in tension with India.
But most analysts believe the tension is unlikely to descend into war.
Retired Indian Major General Ashok Mehta, a security analyst, said he expected sharp exchanges of words to continue until India gave Pakistan the proof it says it has that Pakistan-based militants were involved.
"It will go like that until the government of India provides the evidence to the government of Pakistan through diplomatic channels, which India is hesitant about since they do not want to compromise their sources," Mehta told Reuters.
Pakistani Prime Minister Yousaf Raza Gilani said the country was prepared for any eventuality though war seemed unlikely.
"There's tremendous public pressure on the Indian government because of their intelligence failure (to stop the Mumbai attacks) and now they want to make someone a scapegoat," he told reporters in the eastern city of Lahore.
"I don't think there will be a war but if they try to do such an adventure then the Pakistani nation is united. All forces in Pakistan are united."
Indian Foreign Minister Pranab Mukherjee on Tuesday asked Pakistan to avoid "war hysteria" and act against militants. Prime Minister Manmohan Singh told reporters: "The issue is not war, the issue is terror and territory in Pakistan being used to promote, aid and abet this terror."
India has called off a cricket tour of Pakistan and the president of the Pakistan Hockey Federation said its team was pulling out of a four-nation series in India starting next month.
"Our government said 'don't go' so we're not going. That's it," federation president Qasim Zia told Reuters.
(Additional reporting by Bappa Majumdar in New Delhi, Kamran Haider in Islamabad; Editing by Robert Birsel and Sugita Katyal)


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Car bomb kills 1 near India-Pakistan border
The Associated Press
Wednesday, December 24, 2008
LAHORE, Pakistan: A bomb-rigged truck with government plates exploded in Lahore on Wednesday, killing one person in a heavily guarded neighborhood that is home to many government officials in the eastern Pakistani city.
Two TV stations quoting anonymous intelligence officials reported that authorities had arrested an Indian national in connection with the blast in the city, which is around 30 kilometers, or 19 miles from the Indian border. Lahore's police chief said his force had not detained an Indian, but said intelligence agencies could have done so without his knowledge.
Tensions between nuclear-armed India and Pakistan have risen sharply over the deadly terror attacks in Mumbai last month, which Indian authorities have blamed on Pakistan-based militants. Islamabad has promised to cooperate with New Delhi, but has said it has yet to share any evidence with it.
Dawn TV identified the Indian citizen as Satish Anand Shukla, of Calcutta, and said he was arrested after a cell phone intercept.
Pakistan and India have fought three wars over the last 60 years and their relationship is strained by mistrust.
India has long accused militants with links to Pakistani intelligence of terrorism on its soil. Islamabad has also alleged India is sponsoring terrorism in Pakistan.
Earlier, Umer Virk, the head of Lahore's Crime Investigation Department, said the target of the Lahore blast was likely a police officer who headed an operation that led to the death of a leader of the al-Qaida linked militant group Lashkar-e-Jhangvi in 2002, said
The officer escaped the explosion near his home, but it killed a Christian woman and wounded four of her relatives as they drove together to a Christmas function, Virk said.
The truck was obliterated, with pieces scattered for 200 yards (meters), while the wall of a nearby house collapsed.
Police officer Pervez Rathore said the truck apparently gained access to the neighborhood because of its official plates. The area is walled off and filled with guards.
Lashkar-e-Jhangvi is a Sunni Muslim militant group blamed for killing scores of minority Shiites across Pakistan. Its members have also been accused of attacks against Westerners in Karachi, the slaying of U.S journalist Daniel Pearl in 2002 and the September truck bombing of the Marriott Hotel in Islamabad.
Separately, suspected extremists shot and wounded a Chinese engineer as he shopped at a market in the northwest, where a wave of militant attacks has taken place.
Islamist militants have carried out hundreds of bombings in the past two years, seeking to destabilize Pakistan's U.S.-allied secular government. Most of the attacks occur in its northwest regions bordering Afghanistan, where the army is fighting al-Qaida and Taliban militants.



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Afghans and U.S. plan to recruit local militias
By Dexter Filkins
Wednesday, December 24, 2008
KABUL, Afghanistan: Taking a page from the successful experiment in Iraq, American commanders and Afghan leaders are preparing to arm local militias to help in the fight against a resurgent Taliban. But along with hope, the move is raising fears here that the new armed groups could push the country into a deeper bloodletting.
The militias will be deployed to help American and Afghan security forces, which are stretched far and wide across this mountainous country. The first of the local defense forces are scheduled to begin operating early next year in Wardak Province, an area just outside the capital where the Taliban have overrun most government authority.
If the experiment proves successful, similar militias will be set up rapidly across the country, senior American and Afghan officials said.
The formation of Afghan militias comes on the heels of a similar undertaking in Iraq, where 100,000 Sunni gunmen, many of them former insurgents, have been placed on the government payroll. The Awakening Councils, as they are known, are credited by American officials as one of the main catalysts behind the steep reduction in violence there.
But the plan is causing deep unease among many Afghans, who fear that Pashtun-dominated militias could get out of control, terrorize local populations and turn against the government. The Afghan government, aided by the Americans, has carried out several ambitious campaigns since 2001 to disarm militants and gather up their guns. A proposal to field local militias was defeated in the Afghan Senate in the fall.
"There will be fighting between Pashtuns and non-Pashtuns," said Salih Mohammad Registani, a member of the Afghan Parliament and an ethnic Tajik. Registani raised the specter of the Arbaki, a Pashtun-dominated militia turned loose on other Afghans early in the 20th century.
"A civil war will start very soon," he said.
The plan, approved this month by President Hamid Karzai, is being pushed forward anyway, to help stem the deteriorating security situation here. The proposal to field what amounts to lightly trained gunmen reflects the sense of urgency surrounding the fight against the Taliban, who were removed from power after the terrorist attacks of Sept. 11, 2001, but who have staged a remarkable resurgence in recent years.
American commanders say that while they would prefer to field Afghan Army and police forces, they are simply not available.
"We don't have enough police," said Major General Michael Tucker, the deputy commander of American forces in the country. "We don't have time to get the police ready."
One survey, by the International Council on Security and Development, found that the Taliban had established a permanent presence in 72 percent of Afghanistan, up from 54 percent a year ago.
In recent months, the Taliban have moved into the provinces around Kabul, including Wardak to its west. In addition to setting up the first local Afghan militias there, American commanders are sending several hundred American soldiers to the province, the first of which have already arrived. Wardak Province is bisected by the country's national highway, which has been the scene of numerous ambushes of supply convoys by Taliban insurgents.
The plan for the militias coincides with the arrival of General David Petraeus, who presided over the reduction in violence in Iraq and who has since become overall commander for American forces in Afghanistan and the rest of the region. The Americans are sending 20,000 to 30,000 additional troops over the next year, in addition to the nearly 70,000 American and NATO troops who are already here. President-elect Barack Obama has declared that he will redouble America's efforts to win.
The formation of the militias represents at least a partial answer to the question of how American commanders intend to wrest back the initiative from the Taliban over the next 12 months. While some elected officials in the United States have suggested that the Americans and Afghans might try to exploit fissures in the Taliban, possibly breaking off some groups that can be reconciled, the plan for the militias — coupled with the influx of fresh American forces — suggests that American commanders intend to squeeze the Taliban first.
American and Afghan officials say they intend to set up local militias of 100 to 200 fighters in each provincial district, with the fighters being drawn from the villages where they live. (Wardak has eight districts.)
To help ensure the dependability of each fighter, the Americans and Afghans are planning to rely on local leaders, like tribal chiefs and clerics, to choose the militiamen for them. Those militiamen will be given a brief period of training, along with weapons like assault rifles and grenade launchers, and communication gear, said Abdul Rahim Wardak, the Afghan defense minister.
In Iraq, American commanders relied almost exclusively on tribal leaders to put Sunni gunmen at their disposal. But in Afghanistan, 30 years of war have left the tribes scattered and attenuated. American and Afghan leaders say they are instead trying to cobble together councils made up of a wider range of leaders.
American and Afghan officials say they are confident that they can keep the militias under control, and they said they hoped the militias could carry out a range of duties, like providing intelligence on Taliban movements that American and Afghan forces could act on.
"We don't know when bad people move into town," Tucker said. "But the local people know. They know everything."
One tribal leader from Wardak Province said that while the Taliban were deeply unpopular in his province, people were worried that local militias could make the situation worse.
In an interview, Mohammed Naim Haqmal, a leader of the Nuri tribe, said the Taliban controlled about 80 percent of Wardak Province — essentially everything except the centers of each district. At night, Haqmal said, the Taliban range freely, setting up checkpoints and laying bombs for American convoys traveling on the highway from Kabul to Kandahar.
But for all that, Haqmal said, the Taliban were unpopular in Wardak, mainly because their constant attacks prevented people from leading normal lives. Two months ago, Haqmal said, a group of locals in a village called Jajatoo rioted when the Taliban blocked a local road in order to stage an attack on some American forces. Taliban fighters opened fire on the villagers, killing five.
"The Taliban want to fight, and that causes problems for the people," Haqmal said. "People just want to live their lives."
Still, Haqmal said he was skeptical that the government-backed militias could succeed because the Afghan and American officials were bypassing the traditional leaders of the province. So far, he said, they had selected leaders in the community who lacked credibility with the local people. Moreover, Haqmal said he was worried that the militias would fail to receive proper support and guidance from the government, and end up starting tribal feuds with members of the Taliban.
"We already have the Afghan Army and police — they should stick with them," Haqmal said.
A Taliban commander based in Wardak Province, who spoke on the condition of anonymity for fear that he would become a target, predicted that the government militias would find it hard to put down roots in the area, if only because the Taliban had already done so.
"We are living in the districts, in the villages — we are not living in the mountains," the Taliban chief said. "The people are with us."







Insights both fresh and tested
By David Leonhardt
Wednesday, December 24, 2008
In keeping with an unusual year, this column's annual list of the economics books of the year is going to be a little unorthodox.
The typical books-of-the-year list is confined, with good reason, to books that were published during that year. But the crush of recent economic news means that several older books suddenly have a new relevance. So while 2008 books still dominate my choices, you will also find a prophetic book from 2003 and a classic from the late 1950s. The idea is to create a reading list for anyone trying to make sense of the world right now.
The obvious place to start is the financial crisis, and the clearest guide to it that I've read is "Financial Shock" by Mark Zandi, a founder of the research firm Moody's Economy.com.
Zandi's name may sound familiar. He is probably the most quoted economist in the country. His ubiquity sometimes causes journalists to be afflicted by Zandi syndrome — a sudden onset of fear that we are quoting him too much. But we inevitably get over it because he is a master of digging up data and then explaining it in a language foreign to most economists: plain English.
In "Financial Shock," he walks through the three great causes of the crisis — the housing bubble, Wall Street's underestimation of risk and regulators' failure to intervene. He notes that more than 30 percent of homeowners with adjustable rate mortgages were not even aware of crucial terms of their loan, like how much their rate could rise, the Federal Reserve found.
He compares Wall Street managers, who believed that the slicing and dicing of mortgages into securities somehow meant the mortgages couldn't go bad, to SUV owners who speed down the highway believing that they are protected from injury. And he explains exactly what Alan Greenspan and other regulators could have done differently.
The book is very much a first draft of history. It doesn't attempt historical sweep or dramatic narrative. But it is an impressively lucid guide to the big issues — akin to a slim encyclopedia.
For historical sweep, you will need to do what Barack Obama and some of his aides have been doing and read up on the country's last great financial crisis, the Great Depression.
I recently read the early parts of Arthur Schlesinger Jr.'s trilogy, "The Age of Roosevelt," written more than a half-century ago. It is a bit triumphalist, but its age offers an advantage I hadn't anticipated: you can draw the historical analogies for yourself. The debt-fueled business excesses of the 1920s sound especially, and chillingly, familiar.
I also asked Barry Gewen, an editor at The New York Times Book Review, if he would put together a canon of Depression books, and we have posted the list on our economics blog, nytimes.com/economix. At the top is "Freedom From Fear," David Kennedy's 1999 Pulitzer Prize winner (which, at almost 1,000 pages, is still 1,000 pages shorter than the Schlesinger trilogy).
To try to keep the current crisis from turning into a depression, the Obama administration is going to spend hundreds of billions of dollars next year, much of it on a vast infrastructure program. And it so happens that one of the better-reviewed nonfiction books of 2008 was, in large part, about infrastructure.
The book is "Traffic" by Tom Vanderbilt. The reviews focused on Vanderbilt's entertaining tour through the anthropology of driving. But "Traffic" also has a larger message.
Vanderbilt begins a chapter by telling a story about the 710 freeway in Los Angeles. In 2002, a labor dispute had caused about 1,000 trucks a day to disappear from the highway. Yet overall traffic didn't decline by nearly so much. Other drivers, knowing the trucks were gone, rushed in to fill some of the void.
The same thing, in effect, happens when a government builds a new road. Why? Because the current traffic system resembles "a state-subsidized all-you-can-eat salad bar," Vanderbilt writes.
People aren't charged for the costs that their driving imposes on others, like time spent waiting in traffic. As a result, the book explains, "the collective result of everyone's smart behavior" — deciding to drive on that new road — "begins to seem, on a larger scale, stupid." The good news is that modest rush-hour tolls can cause significant declines in traffic, mostly by pushing traffic to other parts of the day. And even a 5 percent or 10 percent drop in traffic can cause an enormous reduction in delays, which makes everyone better off in the end.
The next book was written more than five years ago, but it's still the closest thing to an obituary for the Big Three car companies, as they once were. It was written by Micheline Maynard, a longtime automobile journalist who now works for The Times, and it's called "The End of Detroit."
"Detroit's long reign as the dominant force in the American car industry is over," she wrote, in the first sentence of the first chapter. She predicted that one of the Big Three could collapse within a decade. "The ultimate irony," Maynard continues, is that Detroit "has been defeated by companies that did the job Detroit once did with unquestioned expertise: turn out vehicles that consumers wanted to buy and vehicles that captured their imaginations." The Big Three's ability to solve this problem, quickly, will largely determine their postbailout fate.
The other huge story of the year, of course, was politics, and each side of the political spectrum produced a thought-provoking economic book.
From the left, Larry Bartels, a Princeton political economist, explained in "Unequal Democracy" that the economy has consistently performed better under Democratic presidents than Republican ones over the last 60 years. For middle-class families, incomes have risen more than twice as fast under Democrats as under Republicans.
Bartels makes a strong case that the pattern is more than coincidence. I'm not sure that cause and effect are as tightly linked as he suggests. But his critics have yet to come up with an argument as strong as his.
From the right, Ross Douthat and Reihan Salam pleaded with their fellow Republicans to come up with an economic strategy beyond tax cuts. In "Grand New Party," Douthat and Salam lay out an alternate agenda, for overhauling taxes, lowering health care costs, improving schools and reducing the number of single-parent families.
The unifying theme, they say, "is a vision of working-class independence — from bosses, from bureaucracy, from entrenched interests of all kinds." Their agenda isn't fully worked out, and it isn't likely to take over the Republican platform anytime soon. But it is an admirable start.
Finally, I will mention a book that I already recommended once this year — "The Race Between Education and Technology," a history of American education by Claudia Goldin and Lawrence F. Katz.
That's my 2008 list. If anything, I expect next year's crop of books to be even stronger. By then, we are likely to have several more thoughtful books about the economic crisis and perhaps a good yarn or two about Lehman Brothers, Bear Stearns or Bernard Madoff.

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Fed approves GMAC request to become a bank
Stocks edge up in light, Christmas Eve trading
New leader expected at Toyota next year
Macao gloomy as more layoffs hit once-booming casinos
Mexican shoppers go north, seeking bargains
Stocks mixed on the eve of Christmas
Weakness in U.S. spending and factory orders persists
Taylor Wimpey gets time to arrange refinancing
Zavvi joins list of retail casualties
Hot small caps: Anglo Irish slides despite bailout
Global markets slide after gloomy U.S. economic data
Germany may cap new stimulus plan at 24 billion
Fortis makes forex loss after BNP deal frozen
The Officers Club in administration
FTSE gets no Christmas cheer as down on oils
Honda suspends 700 workers due to slow sales
House prices expected to fall 10 percent
Economy shrinking faster than first thought
U.S. falls deeper into recession
Mortgage approvals slump 61 percent
U.S. stocks end up as oil skids 9 percent

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Thrifty consumers to boost value-led small caps in 2009
Reuters
Wednesday, December 24, 2008
By Rhys Jones
Pawnbrokers, online retailers and takeaway food chains could be among the small-cap winners in 2009, bucking the downward trend after a challenging year that saw smaller stocks lose around a third of their value.
"I can see companies in this kind of territory being pretty defensive in 2009," said FinnCap analyst Duncan Hall.
Over the past year turmoil in the financial sector has eroded confidence in the wider economy but value-led firms should trade well in 2009 as consumers become increasingly thrifty and companies across Britain slash jobs and investment.
Thrift-based operations like Christmas savings club Park Group , pawnbrokers Harvey & Thompson and Albemarle & Bond should do well, as will home credit groups like S & U , Hall said.
CORPORATE RESCUE
Business rescue and asset recovery company Begbies Traynor also looks set to perform well in the year ahead with its insolvency division likely to trade strongly as casualties from the credit crunch mount.
"The fact is that Begbies Traynor does well when smaller businesses do badly and I would expect that to carry on," said Teathers analyst Stephen Thomas. "The company is national and has all regions of Britain covered and the pipeline seems to be full of struggling companies that will need their services."
ONLINE RETAIL
The downturn has also hit the high street as consumers cut spending amid fears of unemployment and falling house prices.
But AIM-listed online fashion retailer ASOS has been bucking this trend, benefiting from the migration of retail spending from the high street to the Internet.
"ASOS is a genuine growth story and with clear revenue drivers at home and overseas, underpinning strong growth prospects over the coming years there is a strong likelihood of earnings upgrades," said KBC Peel Hunt analyst John Stevenson.
Home shopping firm N Brown is also likely to be boosted by increasing internet penetration, added Stevenson.
TAKEAWAY FOOD
Consumers are also shunning nights out, preferring to stay in and order takeaway food.
Dominos Pizza , which has outperformed the FTSE All Share index by over 50 percent since the start of 2008, will likely continue to pick up trade as consumers choose to stay in rather than go out in response to the economic downturn.
"People are trading down, staying at home, and Dominos is taking market share," said Altium leisure analyst Greg Feehely. "We've knocked about 60 percent off the sector this year but have upgraded Dominos by 15 percent, which I think will continue because it has real and continuing momentum."
Spain's biggest pizza-delivery chain, Telepizza is also trading well and expects sales to grow during the economic downturn as more people opt to order in.
While the takeaway food businesses thrive, its once-booming construction industry continues to flounder as house prices and commercial property values keep falling.
London-focussed property developer Telford Homes could be one of the sector's only winners in 2009 with a raft of projects for the 2012 Olympic Games and strategic partnerships set to insulate it from the economic downturn.
"Telford is well positioned in east London, an area boosted by high immigration and job creation, which should see them do well in 2009," said Shore Capital property analyst Jon Bell.
(Editing by Sharon Lindores)

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Banks deposits at ECB rise to 205 billion
Reuters
Wednesday, December 24, 2008
LONDON: Banks deposited 216.149 billion euros (204.9 billion pounds) at the European Central Bank's overnight account as of December 23, the ECB reported on Wednesday, up from the 215.691 billion euros reported on Tuesday.
On the other side of the operation, banks borrowed 1.914 billion euros from the ECB's emergency overnight loan facility, compared with 1.690 billion euros previously.
Banks have regularly been parking in excess of 200 billion euros at the ECB in recent weeks, something which is worrying policymakers.
The amounts are well above levels when interbank lending markets are functioning properly and a sign that jittery banks are opting to hoard their cash rather than lend it on to each other as fears about the health of the banking sector persist.
The overnight loans currently charge an interest rate of 3.0 percent and deposits pay 2.0 percent and compare with the ECB's key interest rate of 2.5 percent.
However, the ECB said last week that from January 21 it would increase the gap between the main rate and the overnight deposit and lending rates from 50 basis points to 100 basis points.
It means that if the refi rate were left at 2.5 percent, the overnight deposit rate would drop to 1.5 percent and the overnight borrowing rate would rise to 3.5 percent.
(Reporting by Marc Jones; editing by David Stamp)

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Egypt competing with Spain for dwindling tourists
Reuters
Wednesday, December 24, 2008
By Alaa Shahine
Egypt's tourism industry, the country's top hard currency earner, has started to feel the pinch of the global financial crisis, with hotel bookings down 30 percent in January 2009 compared to the same month in 2008.
Fathi Nour, chairman of state-owned Misr Hotels, one of the country's biggest hotel firms, said Wednesday the global nature of the turmoil has placed Egypt in competition with top tourist destinations that may slash prices to attract visitors.
"Spain has become a competitor. It will reduce prices to attract people. Spain now is looking at Egypt as a competitor. We were not competitors before," Nour, who is also a board member of the Egyptian Hotels Association, told Reuters.
The number of visitors arriving in Egypt, home to some of the world's most famous ancient monuments such as the Pyramids of Giza, is expected to reach 13 million in 2008, 19 percent more than in 2007, the tourism ministry said in November.
In Spain, meanwhile, the number of tourist arrivals declined by 2 percent to 54.6 million people in the 11 months to November, marking another blow to the country during the collapse of residential construction and real estate sectors.
Egyptian Tourism Minister Zoheir Garrana said Monday initial signs show that future reservations will slow down in the first few months of 2009, but he refused to give a forecast for the number of tourists expected for the whole year.
"There are still reservations that come in the last minute. But as for the reservations five or six months in advance, there is a slowdown in that," he told reporters.
Europeans account for more than 70 percent of tourists visiting Egypt every year. Nour said European destinations may now appear more attractive to tourists within the continent because of their proximity.
"For Egypt, 99 percent of the tourists who visit arrive by plane. It is a cost."
The Egyptian Central Bank said Sunday revenue from tourism in the first quarter of the 2008/09 fiscal year, which started in July, rose 15.2 percent to some $3.3 billion (£2.2 billion).
The Egyptian government has set its target for economic growth for the two years starting July 2008 at 5.5 percent, after a 7.2 percent growth in the 2007/08 fiscal year.
Reham El-Desouki, a senior economist at investment bank Beltone Financial, said tourism revenue for the entire fiscal year could stay unchanged at $10.6 billion.
Tourism represents 6.6 percent of Egypt's gross domestic product and is the Arab country's main hard currency earner, followed by worker remittances at $8.4 billion, Desouki said.
Nour said the expected slowdown in the number of visitors in 2009 should force a shift in policy to focus on promoting Egypt as an affordable destination for middle-class families.
A television advertisement that appears on key networks such as CNN promotes Egypt as a land whose best feature is its warm and sunny weather.
"Will the European who got fired, or is afraid of being fired, or got a pay cut ... will he think of coming because I am telling him the sun here is nice? He will not come," Nour said. "This concept has to be changed."
(Writing by Alaa Shahine; editing by Tony Austin)

A light-filled cathedral radiates hope
By Keith Schneider
Wednesday, December 24, 2008
OAKLAND, California: One of only two cathedrals completed this year in the United States, the Cathedral of Christ the Light is a wonder of religious architecture.
Designed by Craig Hartman, a partner in the San Francisco office of Skidmore, Owings & Merrill, the $190 million cathedral, which seats 1,300, is a 12-story oval structure. Its light-filled nave, laced together with a web of hidden steel bars, is supported by long timbers of Douglas fir and enclosed by wooden louvers and more than 1,000 panes of glass. The combination of wood, glass, concrete and brushed aluminum somehow creates the sensation of serenity and transcendence.
But for residents, city leaders and neighbors, the development is more than just the sanctuary. The 253,000-square-foot complex, on a $32.7 million, 2.5-acre site in Oakland's downtown, also offers a spacious plaza, below-ground parking for 200 cars, a conference center that seats 500 people and an aggressive ministry in free health and law clinics.
Oakland's mayor, Ronald Dellums, put it succinctly when he addressed an interfaith service at the cathedral on Sept. 26, a day after its dedication. "Thank you for placing this crown on our city," he said. "Thank you for choosing Oakland."
The opening of the Cathedral of Christ the Light, after three years of construction, comes at a moment of economic and cultural reckoning for this uncertain city of 400,000 residents and for more than 500,000 Roman Catholics in the two-county diocese it serves.
The economic downturn threatens to reverse years of steady growth in population, as well as improvement in Oakland's downtown housing, office and retail markets. Housing values in and around the city continue to slump — more than 40 percent over the last two years in many suburbs, almost 20 percent in parts of Oakland. Joblessness is nearly 9 percent in the city and is approaching 8 percent in the surrounding communities.
Another pernicious fact of life is violent crime. Oakland contends with one of the highest rates of homicide in the nation. Last year, 127 people were murdered in Oakland. As of Dec. 1 this year, 118 killings have occurred, including three within 15 blocks of the cathedral.
Some people are leaving. "If you can't protect residents from random violence and crime, then it doesn't matter how walkable a city it is," wrote Susan Glass, the director of media relations at the University of California, Berkeley, School of Law, in an essay in The San Francisco Chronicle this month.
Nine years ago, when planning for the new cathedral began, Bishop John Cummins and members of the planning committee considered sites in the suburbs. They decided that Oakland was the center of the East Bay region and the hub of the diocese, one of the fastest-growing in the country. The new cathedral, opened the same year as the Co-Cathedral of the Sacred Heart in Houston, replaces the Cathedral of St. Francis de Sales, which was seriously damaged in the 1989 Loma Prieto earthquake and demolished five years later.
The cathedral's provost, the Rev. Paul Minnihan, said at the September interfaith service that the location was central to the cathedral's mission of "outreach, advocacy and concern for social justice." The Cathedral of Christ the Light, he said, "brings light and hope to this city and the streets of all of our communities."
Just as light is a defining metaphor of Oakland diocese's mission, it is also the central design element of the new cathedral.
For more than 1,000 days, people here could watch the ornate choreography of the construction process. The cathedral was built from the top down in order to set the 110-foot laminated timber ribs. From the outside, it looked as if tiny men were swarming through the body cavity of a giant whale.
By day, natural light warms the nave of the completed cathedral. It also shines through 94,000 perforations in an angular aluminum screen above the altar, revealing a 58-foot-high image of Christ, reproduced from a sculpture above the Royal Portal at the Chartres Cathedral in France.
By night, the cathedral, lighted from the inside, looks like a white crystal, perched on a raised plaza and flanked by much taller office buildings.
The cathedral's site along Lake Merritt, a tidal estuary in the city's downtown that has served since the late 19th century as a wildlife sanctuary and a popular recreation area, is crucial, diocese leaders say. "Cathedrals historically were located at the center of the community," said Mike Brown, a diocese spokesman. "They served as gathering place, market, the center of civic and religious activity."
To some extent, the Cathedral of Christ the Light is already serving that role. The project generated such a powerful response in and around Oakland that the diocese raised $115 million of the total cost of $190 million from foundations and private donors, many from Oakland.
Its presence is influencing the surrounding Uptown Lake Merritt neighborhood, which could very well become the new center of Oakland. An active station stop of the Bay Area Rapid Transit system, the commuter rail network that serves the San Francisco region, is only a few blocks away. Lake Merritt's nearby neighborhoods are among the nicest in downtown Oakland. A Whole Foods Market recently opened on Harrison Street, two blocks from the cathedral.
Along Broadway, three blocks from the cathedral in the other direction, two restored theaters — the Fox and the Paramount — anchor the recovering Uptown neighborhood, which has a new 25,000-square-foot park.
Forest City Enterprises, a Cleveland-based developer, is finishing a 665-unit rental apartment building, part of a 14-acre redevelopment. Signature Properties, based in Pleasanton, California, completed a 132-unit condominium project a few blocks away last year. Slow sales have prompted the company to offer some units as rentals.
Forest City also has an exclusive agreement with Oakland to build 250 condominiums in the Uptown district; it plans to start the work when the market picks up. A separate 80-unit affordable rental apartment building is under construction by Resources for Community Development, a Berkeley-based developer.
"How often does somebody build a stunning new cathedral right in the middle of an up-and-coming neighborhood?" asked Jeanne Myerson, the president and chief executive of the Swig Company, a San Francisco-based real estate investment and development company that owns the 28-story Kaiser Center office building a block from the new cathedral. "The market is down, but there is still a lot happening in a place becoming a mixed-use transit-oriented district. The cathedral is a once-in-a-lifetime jewel crowning the renaissance of that area."
Actually more than one lifetime. With the cathedral in an active earthquake zone, the Oakland diocese asked Hartman to design a building that could last 300 years. The entire cathedral rests on a nest of casters that enable it to move four feet in any direction.
Mark Sarkisian, the firm's director of structural engineering, asserts that with regular maintenance, the Cathedral of Christ the Light has a design life of at least 1,000 years. "This building was meant for longer life," he said.

Los Angeles museum to receive $30 million rescue
By Edward Wyatt and Jori Finkel
Wednesday, December 24, 2008
LOS ANGELES: The Museum of Contemporary Art, known for its impressive collection of postwar paintings and sculpture but also for an ambitious exhibition program that has driven it to the brink of financial collapse, said Tuesday it had negotiated a $30 million bailout with Eli Broad, this city's leading cultural patron.
The museum said the rescue plan, which involves a restructuring of its management, would allow it to maintain its current headquarters, seen as a linchpin in the revitalization of downtown. It will also prevent the museum from selling off artwork.
The plan avoids a painful embarrassment for Los Angeles, which has promoted itself as a leading force in contemporary art.
Institutions here have long struggled to raise adequate endowment and operating funds from local business and entertainment leaders. But with the rescue plan now in place, the museum said Tuesday, its trustees have pledged to give more than $20 million over the next five years to support the endowment and operations.
Broad's foundation has offered to match the first $15 million as the money is received and to provide an additional $3 million per year for exhibitions for five years.
"Today is a great day — it's really the rebirth of MOCA," Broad said at a news conference at the museum, known by that acronym. The president of the Los Angeles City Council, Eric Garcetti, said, "We've known for years that MOCA loves LA, but today we know that LA loves MOCA as well."
But the official celebratory tone was undercut by artists in attendance who voiced frustration with the secrecy in which the deal was brokered. Diana Thater and Cindy Bernard, two artists who started an online Facebook group, MOCA Mobilization, to press for the museum's survival, lamented the timing of the announcement — on the cusp of a long holiday — and the absence of a question-and-answer session at the news conference.
"It's like at 5 p.m. on a Friday making major announcements," Ms. Bernard said. "It undercuts our ability to have a real discussion, and it underscores MOCA's lack of transparency."
As part of the overhaul, Jeremy Strick, the museum's director since 1999, has resigned, and a new chief executive, Charles Young, has been named. Young, 76, a chancellor emeritus of the University of California, Los Angeles, has little museum experience but is known to be friendly with Broad. Young will oversee the museum's day-to-day operations.
The museum also announced the creation of an advisory committee whose members are John Lane, the former director of the Dallas Museum of Art; Joel Wachs, the president of the Andy Warhol Foundation in New York; John Walsh, the former director of the J. Paul Getty Museum; and Gary Cypres, a financial adviser. Cypres is married to Kathi Cypres, a museum trustee.
David Johnson, a co-chairman of the Museum of Contemporary Art's board, said the committee "has no fiduciary duty" but would "help the board to think about directions and leadership." He said he played an instrumental role in assembling the group.
Young, a longtime colleague of Broad, was the UCLA chancellor when Broad served on the board of what was then called the UCLA Hammer Museum. Young said his first challenge at the museum would be "to see what budget cuts can be made most quickly" without jeopardizing programming. "We have to use a scalpel and not a sledgehammer," he said.
Broad said he would not be involved in the museum's search for a new director. Asked about his potential role in choosing Strick's successor, Young said, "I think I will be involved — that's the board's decision.
"My advice will be to postpone it for some time," he continued, "until things get to a point where you have an attractive opportunity to offer, where you could attract a better candidate than you could now."
Under the rescue plan, the museum said it would also begin a $75 million fund-raising campaign, hire "reputable investment advisers" to manage the endowment, and exhibit its seldom-seen permanent collection "widely, consistent with customary museum practices."
Such steps are intended to address severe criticisms that have been leveled at the museum as its financial condition worsened in recent years. Its endowment has declined to about $6 million from roughly $40 million at the beginning of the decade, in large part because the museum has drawn on it to pay for operations, a frowned-upon practice in the nonprofit world.
The museum chose Broad's offer over a competing offer to merge with the Los Angeles County Museum of Art, a larger institution that in February opened a new building devoted to contemporary art that was paid for — and named after — Broad.
Many museum supporters opposed the Museum of Contemporary Art's being subsumed into the county museum. But many also expressed doubt about the offer from Broad, a former businessman known for maintaining strict control over his ventures.
To address concerns about his power in the city's cultural world, Broad and the Museum of Contemporary Art agreed that "any responsible party" who would agree to the same terms of support for the museum could replace him within 90 days.
Paul Schimmel will remain in place as the museum's chief curator. Also remaining are the board's co-chairmen, Johnson and Tom Unterman, who served in oversight roles when the museum repeatedly spent restricted endowment funds to pay for daily operations.
The California attorney general is conducting an audit of the museum's finances to determine whether the museum violated any of the restrictions on gifts it received that were used to pay for operating expenses.

Bethlehem fills up with Christmas pilgrims
Reuters
Wednesday, December 24, 2008
By Mustafa Abu Ganeyeh
Thousands of Christian pilgrims gathered in Bethlehem's Manger Square on Wednesday to celebrate Christmas under the protection of security forces loyal to Palestinian President Mahmoud Abbas.
About 500 security men arrived from the West Bank cities of Ramallah and Jericho to provide security for the holiday. Similar deployments have taken place across the West Bank over the past year with U.S. backing.
"We expect about 40,000 visitors in Bethlehem this week," said Khouloud Daibes-Abu Dayyeh, the Palestinian Authority's minister of tourism.
The estimate includes Christians from the West Bank, the Gaza Strip, Israel and the rest of the world. About 900 from Gaza applied for Israeli permission to go to the site where Christians believe Jesus was born, but only 300 got it.
"It's better to spend Christmas in Bethlehem because we are close to the church. It's important to visit where Jesus was born," said 58-year-old Italian tourist Messimo Silzestri beneath a giant Christmas tree and decorations in Manger Square.
While Gaza teeters on the brink of a major crisis following the end of a six-month truce between Israel and Hamas Islamists in control of the strip, a decline in violence in the West Bank has tempted back tourists who no longer fear gunbattles in the streets.
Israel attributes this partly to the barrier it is building in and around the occupied West Bank. For Bethlehem, the barrier takes the form of a daunting concrete wall 4 meters (13 feet) high with watchtowers.
MUCH-NEEDED REVENUE
Tourism collapsed here when a Palestinian uprising against Israeli occupation began in 2000. But this Christmas, the Palestinian tourism minister says, hotel occupancy is rising.
"The increase in security and easier movement means we have our largest numbers, and we are making great efforts to restore tourist activity," she told Reuters in Ramallah.
"The numbers themselves are not as important as the length of stay," she added. The direct contribution of tourism to the Palestinian economy is reckoned at about $480 million a year.
Palestinians say the Israeli barrier is a major obstacle to peace that cripples trade and turns off foreign tourists.
Many visitors see the wall between Jerusalem and Bethlehem as an ugly scar defiling a Christian holy site.
"Going to the checkpoint and the barrier is really crazy. But being here, it is totally worth it," said 20-year-old Emma Serienni who was on her first visit from the United States.
Israeli Prime Minister Ehud Olmert Tuesday said the Jewish state must press on with plans to complete the barrier around key parts of Jerusalem, which could be divided in a future deal to create a Palestinian state.
There is little prospect of an Israeli-Palestinian peace deal by the time Pope Benedict visits Bethlehem in mid-May 2009.
(Additional reporting by Ali Sawafta; Writing by Douglas Hamilton; editing by Jon Boyle)

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Egypt ignores appeals and repatriates 25 Eritreans
Reuters
Wednesday, December 24, 2008
CAIRO: Egypt repatriated on Wednesday 25 Eritreans caught in Egypt while on their way to Israel as migrants, ignoring appeals from human rights groups that the U.N. refugee agency UNHCR first assess their asylum claims.
Airport sources said police had put the Eritreans on an EgyptAir plane for Asmara and had handed them over to EgyptAir security.
The Eritreans were caught on the Egyptian-Israeli border a few days ago while trying to slip across into Israel.
Hundreds of African migrants have attempted the journey in recent years. This year alone Egyptian police have shot and killed 28 of them and Egypt has deported up to 1,200.
The New York-based group Human Rights Watch said on Saturday that Egypt must not deport Eritrean asylum seekers without giving the office of the U.N. High Commissioner for Refugees (UNHCR) an opportunity to assess their claims.
It said that Egypt was holding around 98 Eritrean migrants in a detention centre in Sinai, and UNHCR had no access to them.
The London-based rights group Amnesty International said that in Eritrea the asylum seekers would probably be held incommunicado in inhumane conditions for long periods of time.
"Any member of the current group, if forcibly returned, could also face torture or other ill-treatment, particularly as many of them are believed to have left Eritrea to avoid forced conscription," it added.
The UNHCR office in Cairo said it was investigating the report that Egypt had repatriated the Eritreans. "It seems that this is a group we did not know about," said one official.
(Writing by Jonathan Wright)

U.S. denies its volunteers fought with Georgia
The Associated Press
Wednesday, December 24, 2008
MOSCOW: The U.S. Embassy has denied Russian investigators' claims that American volunteers fought on Georgia's side in its war against Russia.
The embassy press office issued a statement Wednesday saying it did not know of any U.S. citizens serving as mercenaries in the Georgian armed forces during the war.
The embassy also repeated past statements that no American military personnel were in the war zone or involved in the fighting.
Russian investigators said Tuesday that volunteers from the U.S. took part in the August fighting over the separatist province of South Ossetia.
Russia says 162 South Ossetia residents were killed along with 48 Russian servicemen. Georgia says it lost 169 soldiers and police, and 69 civilians.

Sport meets survival: An Iditarod without dogs
By Michael Brick
Wednesday, December 24, 2008
SUSITNA FLATS STATE GAME REFUGE, Alaska: From Mint Glacier to the Cook Inlet, an eight-inch frozen crust sealed the deep waters of the Little Susitna River. A snowstorm had buckled the ice with a foot of fresh powder, forcing plumes of frigid water up through the crevices to form layers of crisp slush. To the trained eye, such sinkholes appeared as shadows on the ice.
"You see those dark patches, and you avoid them," said Bill Merchant, the man responsible for 1,100 miles of voluntary frozen torture known as the Iditarod Trail Invitational.
The icy river was serving as a training ground for the contest, which is not the famous annual sled-dog mush, although it uses a similar route. Rather, in this competition the qualifiers, as determined by Merchant's judgment, navigate the trail on their own power: no dogs or motors allowed. Some ski, some bicycle and others run.
It is promoted as the longest, most remote winter ultrarace in the world, a slog across century-old marshland trails from the outpost of Knik over the Farewell Hills, up the Yukon River, through the ghost towns of the Kuskokwim Mountains and on to the Bering Sea.
The race's start date has been set for March 1, 2009, a week in advance of the Iditarod Trail Sled Dog Race.
To train aspiring competitors, Merchant set up a camp here on the Susitna Flats, about 28 miles southwest of Wasilla. At a cost of $750, he promised five days of survival training designed to toughen the qualified and to break the rest.
Merchant, 55, has taken to calling his race an invitational so he can refuse entry to the unfit. The participants will pay $900 to compete. First prize is free entry the next year. There is no second prize. Along the way the racers can expect little more than three 10-pound food drops. They are required to haul their own survival gear.
The invitational evolved from a collection of shorter skiing, hiking and biking contests promoted under names like the Iditasport and the Extreme. By eliminating overnight stops and tripling the distance, organizers of the invitational reimagined the race as a largely unattended free-for-all intended to restore a sense of adventure.
"After I did it the first time it turned into almost an obsession, one of those things you think about year-round," said Peter Basinger, 28, who won the Iditarod Trail Invitational last year with a time of 18 days 4 hours 33 minutes. Speaking by telephone from his home in Land O' Lakes, Wisconsin, Basinger added: "People need to come into it knowing that it's unlike anything else, in that you really could get hurt out there. You really are on your own."
In nine years of racing, only 28 men and 2 women have completed the full route to Nome, including Tim Hewitt, a lawyer from Latrobe, Pennsylvania, who reached the finish on foot in 2001, 2004 and 2008. About 90 percent of the entrants have dropped out along the trail.
Only seven racers have registered for the 2009 contest, including Hewitt and Basinger. Partly to generate future entries, the organizers have continued to operate a simultaneous 350-mile race ending in the village of McGrath, about a third of the way to the finish. For this shorter course, 43 men and women have entered under the flags of Britain, Japan, Spain, Australia, Italy, Germany, the United States and (separately) Alaska.
For the early December training session, four racers arrived. There was Aidan Harding, 30, a mountain biker from Princes Risborough, England. Despite his lack of experience on snow, Harding was considered a serious racing prospect. There was George Azarias, a young Morgan Stanley banker from New York. A practiced hiker, Azarias had little cycling experience.
And there were Jon and Denise Whyte, a married couple in their early 50s with five children from previous marriages. The Whytes, veteran distance racers, intended to ride a tandem bicycle of their own design. Though Merchant had sought to dispel them of that notion, he could not bring himself to refuse entry outright, largely on account of Jon Whyte's reputation.
Whyte, a successful veteran of Formula One auto racing crews, had left that sport to design a renowned line of full-suspension mountain bikes bearing his name. For the Iditarod trail, he had built a two-seated silver contraption with a single-wheeled trailer meant to bear the survival gear of a second rider without the additional drag of carving a second rut in the snow.
As the late-November snowfall blanketed the strip malls of Wasilla, Merchant drove his charges in an unheated van to a remote parking lot. The racers piled rucksacks and bicycles into an eight-foot plastic bin hitched to the rear of a snowmobile. As the machine kicked up powder and exhaust, the racers made their way to a hilltop, where piles of snow had buried picnic tables.
In warmer months this place would provide sanctuary for northern phalaropes, green-winged teal, sandhill cranes, godwits, whimbrels, snipe, dunlin and sandpipers. Its waters would yield hundreds upon hundreds of king salmon. But now the Matanuska-Susitna Valley was quiet. Moose and bard owls, hardy creatures, kept watch from a distance. Now and again a propeller plane flew overhead. The daytime temperatures failed to exceed zero.
Merchant, a onetime cowboy and mechanic by trade, cut a blithe figure, seemingly oblivious to the icicles in his salt-and-pepper mustache. He deferred at times to his wife, Kathi Hirzinger-Merchant, a German immigrant more than two decades his junior and a fearless athlete who had cycled the course to Nome. Training camp opened with instructions on trail safety and etiquette.
"The key to being safe if it's really cold or the wind is blowing really bad," Merchant said, "is having everything packed in a logical order, where you can find everything in the order you need it. It's not just an inconvenience out here to not be able to find your stuff. It can cause you to lose fingers."
The racers practiced unpacking their bikes, melting snow for water and drying their clothes. They ate chocolate and pasta. At night they slept under the stars in thermal bags.
On the third morning of camp Denise Whyte lost consciousness in her sleeping bag. Merchant carried her into the kitchen tent, where the racers assembled a makeshift convalescence bed of backpacks, sleeping bags and coats beside a portable wood stove.
Jon Whyte bent over his wife.
"Feel her cheek," he said.
Merchant did.
"This one's warm, but this one's cold," he said. "Strange."
Jon Whyte said, "She's taking a long time to wake up."
Merchant said: "I'm not a doctor, but I've been a guide since 1979. Honestly, I believe what is wrong with her is nerves. Coming out here in the cold, and responding to it, out of her comfort zone."
The men touched her cheek again. No change.
As a few hours of daylight backlighted the cloud cover, Hirzinger-Merchant led Harding and Azarias out for a 35-mile bike ride. The riders wore lamps on their foreheads like miners. Past a sign that read, "Do Not Enter," they descended to a steep boat launch.
Following the frozen river, the riders passed gnarled saplings that leaned inward from the banks. They turned uphill, over a narrow passage of chunky ice that narrowed again before opening to the whitewashed tundra. In the distance was a field of spindly pines. The grade of the trail rose, giving way to the grandeur of Mount Susitna. The riders stared down at the snow, pressed their gloves into the thermal bags attached to their handlebars and deposited their weight on their pedals.
Back at the tent, Denise Whyte was stirring. Her husband offered a cup of melted snow. Together they decided to disassemble the tandem bicycle, catch a ride to Anchorage and fly home.
"Well, this wasn't quite the way we thought we'd be leaving this camp," Jon Whyte said, packing his bags. "We've got five children. When I dragged you out of our bivy this morning, I thought, 'What am I going to tell Doug?' We can't have that."
Denise Whyte took a long drink of the murky water.
"We thought this would be the next challenge, so to speak," she told her husband. "But it's not, for me."
Outside the tent, Merchant was loading their tandem bicycle into the plastic bin hitched to his snowmobile.

Indexed trove of Kissinger phone transcripts is completed
By Scott Shane
Wednesday, December 24, 2008
WASHINGTON: It was April 1972, and American B-52 bombers were pummeling North Vietnam. President Richard Nixon got on the phone with his national security adviser, Henry Kissinger, for an update on the air assault on the port city of Haiphong. The men struggled to persuade each other that the war might still be won.
"They dropped a million pounds of bombs," Kissinger said.
Nixon was pleased. "Goddamn, that must have been a good strike!" he said.
Then the president had a moment of doubt, recalling the dismal experience of his immediate predecessor, Lyndon Johnson: "Johnson bombed them for years, and it didn't do any good."
Kissinger reassured his boss, saying: "But, Mr. President, Johnson never had a strategy. He was sort of picking away at them. He would go in with 50 planes, 20 planes. I bet you we will have had more planes over there in one day than Johnson had in a month."
What the two men said 36 years ago can be known with such precision today because they worked in what was, in retrospect, the golden age of White House taping. Both Nixon and Kissinger had given secret orders to record their calls, each evidently without the other's knowledge.
On Tuesday, the National Security Archive, a nonprofit research group at George Washington University, published an online edition of transcripts of 15,000 Kissinger phone calls from 1969 to 1977, fully indexed and searchable for the first time. A selection was posted on the archive's Web site, nsarchive.org, and the full collection is available to subscribers, which include many university libraries.
Some Kissinger transcripts are posted on the State Department's Web site, but for a comprehensive look at the collection, researchers have had to travel to the National Archives, in College Park, Maryland.
"They were in 30 more-or-less chronological boxes," said William Burr, who has overseen the publication for the National Security Archive. "It was pretty daunting."
Burr said the Kissinger calls "rank right up there with the Nixon tapes as the most candid, revealing and valuable trove of records on the exercise of executive power."
The indexing, the work of three researchers for more than two years, presented some puzzles. Names dropped casually in conversation — "Hal" or "Fred" — had to be identified. And what a government transcriber had heard as "Nelson's tongue," in a 1971 call, turned out to be "Mao Zedong."
The collection covers many serious policy matters, like Vietnam strategy, but includes a few calls memorable because they are so bizarre.
In April 1971, Kissinger accepted a call from the beat poet Allen Ginsberg, who hoped to arrange a meeting between top Nixon administration officials and antiwar activists.
"Perhaps you don't know how to get out of the war," Ginsberg ventured.
Kissinger said he was open to a meeting. "I like to do this," he said, "not just for the enlightenment of the people I talk to, but to at least give me a feel of what concerned people think."
Then Ginsberg upped the ante. "It would be even more useful if we could do it naked on television," he said.
Kissinger's reply is transcribed simply as "Laughter."
In 1977, after completing his tenure as secretary of state at the end of the Ford administration, Kissinger left his telephone records to the Library of Congress as private papers, not to be opened until after his death.
But after the National Security Archive threatened litigation to open them up, the National Archives and the State Department asked Kissinger for copies, which he turned over in 2002.
The transcripts have gradually been declassified and released since then, although those of some 800 Kissinger calls from the Ford years are still being withheld by the State Department.
The presidential historian Robert Dallek, who drew heavily on the Kissinger materials for his 2007 book, "Nixon and Kissinger: Partners in Power," said the tapes made by Presidents John F. Kennedy, Johnson and Nixon had been an indispensable source for historians. He said there was nothing comparable from the presidencies of Jimmy Carter, Ronald Reagan, George Bush, Bill Clinton or, so far as he knows, George W. Bush.
The earlier tapes scared off later presidents from risking the candor of recordings, Dallek said, but at a cost to history.
"I worry that we're going to see a somewhat impoverished record on Clinton and Bush," he said. "There's no substitute for having their exact words."

Luxury brands a tough sell in wealthier India
Reuters
Thursday, December 25, 2008
By Rina Chandran
On a recent evening at a luxury Mumbai hotel, shoppers tried on sequined sandals and handmade moccasins at Joy Shoes, an Indian family business that has sold out of its only shop for nearly 70 years.
Around the corner, a Moschino store with stylish displays of apparel and accessories off the Milan runways stood empty.
Starting at 3,500 rupees (47 pounds) for a pair of men's shoes, Joy is not cheap. But the key to its enduring popularity, says Munna Javery, the third-generation owner, is knowing what customers want and maintaining relationships with them over the years.
These are just two of the already considerable challenges facing global luxury retailers in India.
Despite its growing number of millionaires, India lags emerging market peers China and Brazil because of a lack of quality retail space, high import duties on luxury goods, a cap on ownership in local units, excessive red tape and piracy.
India had 123,000 millionaires in 2007 and showed the fastest pace of expansion, a Merrill Lynch/Capgemini report said, but that was the smallest number in the "BRIC" emerging markets quartet, with China already having more than triple that number of super-rich. BRIC comprises Brazil, China, India and Russia.
Luxury goods in India also make up the smallest proportion of the overall retail market, just 0.4 percent, according to a Bain & Co report, compared to 2.7 percent of China's retail market.
"For luxury in India, the path is bumpy and long," said Mohan Murjani, chairman of the Murjani Group which launched Gloria Vanderbilt jeans and Tommy Hilfiger globally, and partners such brands as Gucci, Calvin Klein and Jimmy Choo in India.
"You need size, experience and patience for the long haul."
Allowing global retailers access to India has long been a controversial topic because of concerns of job losses, and it was only in 2006 that foreign single-brand retailers were permitted to take up to 51 percent in a local venture, opening the doors to brands such as Gucci, Versace, Chanel and Burberry.
But most brands have been forced to curtail their grand ambitions despite an economy that grew about 9 percent in the last three years, with Louis Vuitton only having four shops to show for its five years in the country, compared to 25 in China, already the world's No. 3 market for high-end goods.
"In any emerging market you can only target a very small part of the market for luxury," said Claudia D'Arpizio, a partner with Bain & Co in Milan, who authored a recent report on luxury.
"In India, in addition to that challenge is the regulatory framework and the undeveloped retail infrastructure," she said.
STRONG TRADITION
Once the exclusive preserve of maharajas and business tycoons, luxury brands in India have found new customers in an increasingly wealthy middle-class, the growing ranks of working women and a youthful population that is not afraid to splurge.
But challenges abound, such as high store rentals and taxes.
New Delhi's small Khan Market, with its decrepit buildings, was recently ranked among the world's most expensive retail real estate, where monthly rental is 1,200 rupees ($25) per square foot, higher than better equipped retail areas in Amsterdam and Stockholm.
The absence of quality locations has forced luxury brands to set up shop in top-end hotels, which is not ideal, said Murjani, who has just two Gucci stores in India, compared to 16 in China.
Add to that the high tariffs on imported goods, which can bump up prices by more than 25 percent compared to Dubai or Singapore, and a long-abiding suspicion of foreign brands from a time when local importers sold overpriced, outdated products.
For this, brands have only themselves to blame, Murjani said.
"Brands have to satisfy the consumer on the price point, the offering, the total experience -- a small store in a corner of a hotel is not going to do the trick," said Murjani, who last year opened India's largest luxury space, a 3,400-sq ft Gucci store.
"Consumers will simply shop in Paris or Singapore," he said, noting Indians still splashed out about $500 million on luxury brands abroad a year, nearly the same amount they spend at home.
The money goes mainly on watches, fragrances, sunglasses, leather goods and menswear, with Indian women still favouring traditional apparel and jewellery, despite the growing numbers of Bollywood stars who get decked out in Western designer wear.
"India has a strong tradition in luxury apparel and jewellery so it should be easier to sell the concept," D'Arpizio said.
"But the preference is for the intrinsic value of the jewellery rather than the brand, so a Cartier or a Tiffany's will have a hard time cracking the market," she said.
OWN CONCEPT
There is hope for luxury retailers, though.
India's trade minister recently said he was "seriously considering" allowing foreign retailers to fully own their units in the country, a legislation analysts say is not so controversial as it does not threaten small mom-and-pop shops and traders.
There is pressure from the EU to cut taxes to meet WTO requirements, and high-end retail spaces are coming up in Mumbai, Bangalore and New Delhi, including the Emporio Mall, the first all-luxury complex, with gold-plated ceilings and marble floors.
Over the long term, the rising incomes and expanding economies of emerging markets such as India will provide plenty of opportunity for luxury retailers, D'Arpizio said.
India's luxury market is likely to grow at an average annual rate of 25 percent over the next five years, she said, trailing only China's 30 percent growth and Brazil's 35 percent.
But while India's super-rich may seem better insulated from the financial crisis that has curbed the appetite for luxury goods elsewhere, they will be harder to entice.
"India has her own concept of time for absorbing change," said Neville Tuli, chairman of auction house Osian's in Mumbai.
"It's not enough to just throw a nice party and talk about the glamour of your brand. It can take 10 years, maybe more to build something, and most companies don't want to wait 10 years."
($1=49 rupees)
(Editing by Miral Fahmy)

*******************

Casualties expected in Ukraine building gas blast
Reuters
Wednesday, December 24, 2008
SIMFEROPOL, Ukraine: An explosion almost certainly caused by gas struck an apartment building in southern Ukraine Wednesday, sending concrete cascading down on two entrances and officials said there could be casualties.
Local officials in Yevpatoria, in Ukraine's Crimea peninsula, said two entrances in the five-storey building were engulfed in rubble after the 9.30 p.m. local time explosion.
Rescue teams dispatched to the scene, along with two cranes, said four people had been pulled alive from the rubble and cries and moans were heard from underneath.
The explosion could have affected about eight apartments, with dozens of residents.
Gas explosions in often crumbling apartment buildings, with high casualty rates, are common occurrences in ex-Soviet states, particularly in the winter, when residents use more heating.
One such blast in October 2007 killed 15 residents in the central city of Dnipropetrovsk.
(Writing by Ron Popeski; Editing by Jon Boyle)

Log: The directors' cuts
By Alessandra Stanley
Wednesday, December 24, 2008
It seems like cheating, or bad karma, but it's possible to have a yule log crackling on the television screen anytime, even several days before Christmas — or on Halloween or Presidents' Day, for that matter.
With titles like "Ambient Fire" and "The Happy Holiday Hearth," yule log DVDs offer a dizzying array of flaming options, from stately baroque plumes to crispy, woodsy campfires. There is even a soft-core porn Christmas log: on "Yule a Go-Go," dancers like Ms. Tickle and Bunny Love perform tassled, spangled burlesque-style stripteases to Christmas carols in front of a roaring fire. (Actually, those flames are quite subdued, for perhaps obvious reasons.)
There used to just be one yule log on television in the United States. Viewers had to wait for it, and it didn't come with naughty features or special effects. The WPIX Christmas yule log was first shown in New York in 1966, in black and white, and for several uninterrupted hours, apartment dwellers could stare at flames flickering in a hearth as Christmas songs played in the background. Later, other stations around the country began offering yule logs, but in New York the WPIX log, a kitschy tribute to television as the family hearth — not just metaphorically but literally — became a fiercely cherished local tradition, like the Biltmore clock or egg creams. (The flames were reshot in 1970, and that 6-minute, 3-second loop, has been the authentic yule log ever since.)
When WPIX decided to stop showing it in 1989, the station was flooded with complaints and in 2001 it brought the log back.
Every Christmas, fans fret that this is the year WPIX will cancel the tradition again (or worse, retape and update the fire), and this year there was cause for real concern: WPIX is owned by the Tribune Company, which filed for bankruptcy this month. They worried needlessly. WPIX is planning to show the log on Christmas Day from 9 a.m. to 1 p.m., with the same ferocious flame work and sentimental songs by Mantovani, Bing Crosby and Nat King Cole.
Still, if the current financial crisis has taught the public anything, it's that it is wise to hedge bets. WPIX does not offer a DVD of its yule log, mostly because of the prohibitive copyright costs of the music. Some people make their own recordings, and clips are available on YouTube. But for those who wish to have a yule log in reserve, there are those DVDs, so many in fact that hard choices must be made.
Not all yule logs are alike. "Fireplace: Visions of Tranquility," made by the Richard Diercks Company, has intense, almost Bergmanesque cinematography. One of its options, "Night Music," begins with a menacing close-up of a match being struck, and for the first few minutes the camera is so close to the log that it looks like a telescopic image of the moon's surface.
"Fireplace" also offers less alarming choices, including "Christmas Goes Baroque," which has a gentle fire and an orchestration of "Jingle Bells" that is so grand it almost sounds like Bach.
"The Original Christmas Yule Log Fireplace" is really more of a copy, and that title is likely to offend WPIX loyalists, who know that the original was the brainstorm of Fred Thrower, the president of WPIX Inc. This version, created more than 20 years ago by Steve Siporin, a Californian, has a more lavish Ralph Lauren-style fireplace setting — horse paintings and chintz armchairs — though once the camera closes in on the fire, the flames are quite soothing.
This DVD, like most others, has many choices. It also comes with a director's cut: Siporin, in a turtleneck and windbreaker, poses against a backdrop of ocean waves lapping gently on the shore and answers so-called frequently asked questions, starting with how he came up with the idea. Siporin gives WPIX credit, explaining that he saw its log at a friend's apartment while visiting New York in 1981. He then talks at such length about his life and oeuvre that before he's finished, the sun sets in gold and pink stripes behind him.
The "Happy Holiday Hearth," from Rhino Home Video, bucks convention with thin logs piled in a triangle, like a teepee, backed by bricks laid at a downward slant. That modernist touch is belied by the highly traditional music, sung by a big chorus with cheesy '50s-style flourishes. My DVD did not allow fast-forwarding, a fatal flaw.
Of all, "Ambient Fire," from Jumby Bay Studios, is probably the most practical, because it offers viewers the option of creating their own playlist from nine fireplace images, ranging from an almost Victorian "Holiday Fire," to "Candles," "Just Logs," "Just Flames" and even "Saucy Flames," which looks a lot like "Just Logs," only the saucy logs undulate and even blur, as if to convince viewers that they have had one too many eggnogs.
"Yule a Go-Go," a two-disc holiday set from a company by the same name that promises to put "the boob back in the boobtube," is not quite as faithful to the Christmas spirit, but it is likely to make many merry gentlemen all the merrier.

Germany sues Italy in Hague over massacre
Reuters
Wednesday, December 24, 2008
AMSTERDAM: Germany filed a lawsuit against Italy at the Hague-based International Court of Justice (ICJ), arguing that an Italian court erred in ordering Berlin to pay damages for a Nazi massacre during World War Two.
Germany is contesting an October ruling by Italy's top court ordering Germany to pay around 1 million euros (948,630 pounds) in compensation to the families of nine victims killed by the German army in Civitella, Tuscany in 1944.
"In recent years, Italian judicial bodies have repeatedly disregarded the jurisdictional immunity of Germany as a sovereign state," Germany said in its application, announced by the court late on Tuesday.
The ICJ, set up in 1945, is a world court for disputes between nations.
Germany argues it should be immune from prosecution by private citizens, and allowing the ruling to stand could mean "hundreds of additional cases may be brought against it" by private individuals.
German also asked the ICJ to intervene if Italy moved to seize any state assets.

Canadian 7-year-old killed by younger brother
Reuters
Wednesday, December 24, 2008
CALGARY, Alberta: A five-year-old boy in the Western Canadian city of Edmonton, Alberta, stabbed his seven-year-old brother to death in a family squabble earlier this week but will not face charges, media reports said.
The Edmonton Journal reported that the older brother died of stab wounds to the chest after a fight between the two children on Sunday.
Under Canadian law, the boy is too young to face charges.
Reports said the children's parents were Iraqi Kurds who came to Canada as refugees 15 years ago. They have not commented on the incident publicly.
(Reporting by Scott Haggett; editing by Peter Galloway)

Washington Post and Baltimore Sun will share news content
By Richard Pérez-Peña
Wednesday, December 24, 2008
The Washington Post and The Baltimore Sun announced on Tuesday that they would share some of their articles and pictures. The move adds two major players to the fast-growing roster of newspapers that are cooperating with their regional competitors to get more coverage out of their diminished news staffs.
The Sun and The Post have, in effect, divided up responsibility for much of the local and sports news in their region. In addition, they will be able to use each other's national and international work for the first time.
In the last few months, papers around the country have struck several content-sharing agreements of varying degrees, including The Miami Herald, The Palm Beach Post and The Sun-Sentinel of Fort Lauderdale; The Dallas Morning News and Star-Telegram of Fort Worth; and a group of eight major papers in Ohio.
"This is something that, as recently as two years ago, you really wouldn't have seen papers doing at all," said Rick Edmonds, a media business analyst at the Poynter Institute, a nonprofit school for journalists that owns the St. Petersburg Times. "In the current climate where there's such urgency to get savings to keep pace with the falling ad revenue, I think this is snowballing from one place to another."
Under the new agreement, The Post and The Sun will share most local news coverage in Maryland, though not their exclusives.
"They will give us coverage of the Baltimore suburbs and Baltimore, and we will give them coverage of the Maryland suburbs of Washington," said Robert McCartney, assistant managing editor for metropolitan news at The Post.
On news from remote areas like western Maryland or the Eastern Shore, the papers will confer to decide whether to have one of them cover the story for both. In sports, The Post will be responsible for covering the Redskins football team, the Nationals baseball team and the teams of the United States Naval Academy at Annapolis. The Sun will cover the Ravens football team, the Orioles baseball team and horse racing.
In some areas, they will not share their work, continuing to compete head-to-head, including coverage of Maryland state government and of University of Maryland sports.
"This allows both newspapers to really use their resources to pursue stories that are unique to them, to play to their own strengths," said J. Montgomery Cook, who will become the editor of The Sun next week. "Budgets are tight everywhere, and it helps us to put our resources where we can use them best, and avoid duplication."
The two papers' parent companies for years have cooperated to run The Los Angeles Times-Washington Post News Service, sharing articles on national and international news, and selling the work to other papers. The Sun, like The Los Angeles Times, is owned by the Tribune Company, and contributes to the news service.
Until now, The Post and The Sun have been barred from publishing each other's work from the news service. Under the new agreement, that prohibition will end.

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