Link: http://ac360.blogs.cnn.com/2009/03/26/financial-dispatch-geithner-calls-for-new-risk-watchdog/

Treasury Secretary Tim Geithner called for new rules today that would allow regulators to police the darkest corners of the financial markets, including hedge funds and derivatives trading.

The country also needs a single regulator to oversee the biggest financial firms, Geithner told the House Financial Services Committee.

“Our system failed in basic fundamental ways,” Geithner said in written testimony. “The system proved too unstable and fragile, subject to significant crises every few years, periodic booms in real estate markets and in credit, followed by busts and contraction.”

The comments came as Geithner testified before the congressional panel on the need for a sweeping overhaul of financial regulation in the wake of the worst financial crisis since the Great Depression.

The nation’s Gross Domestic Product, the broadest measure of economic activity, fell at an annual rate of 6.3% during the final three months of 2008, the government confirmed today in its final reading.

That’s slightly worse than the government’s previous estimate of a 6.2% drop in the period. Still, as we’ve reported with the two prior GDP readings, the drop is the biggest one-quarter decline in this key measure in 26 years.

The report showed broad based declines across various measures of economic activity.

Spending by consumers fell at a 4.3% rate, with purchases of big ticket items plunging 22%. Investment in housing fell 23% from already depressed levels, completing three straight years of declines in that sector.

The number of Americans filing initial claims for jobless benefits rose slightly last week while the number of people continuing to claim benefits set a record for the 9th straight week.

First-time claims for unemployment insurance rose by 8,000 to 652,000 from the previous week revised figure of 644,000.

The number of people receiving benefits for one week or more, however, increased by 122,000 to 5.56 million. That’s the highest number on records dating back to 1967.

Meanwhile, the unemployment rate in Michigan, suffering under the near-collapse of the auto industry, hit 12% in February, according to data released by the state on Wednesday.

Michigan had the highest unemployment rate of any state in January, the most recent month for which there is national data.

Mass layoffs, pay cuts and the credit crunch have limited Americans’ ability to buy cars and other big items. In turn, the suffering auto and manufacturing industries have battered Michigan.

Stocks on Wall Street opened to the upside, lifted by hopes that the economy may be starting to stabilize somewhat.

A late-session rally helped stocks finish in positive territory Wednesday with investors cheering better-than-expected readings on new home sales and durable goods orders, and a jump in financial stocks.

Gas prices are back above the $2 mark nationwide for the first time in four months.

The national average price for a gallon of regular unleaded gas rose 2.3 cents overnight to $2.009 a gallon. That’s the 9th consecutive increase.

Twenty-three states and the District of Columbia have regular unleaded gas prices of $2 and higher. 27 states have regular unleaded gas prices below $2.

The highest gas prices are in Alaska ($2.496). The cheapest gas prices are in Wyoming ($1.798).

Despite the recent run-up, gas prices are still more than 50% below the record high price of $4.114 that AAA reported on July 17, 2008.

Finally, do you remember the program called HOPE for Homeowners? The $300 billion foreclosure-prevention plan passed last summer?

Well CNNmoney.com has done a little digging and has discovered that in the five months since the program has been in effect, HOPE has helped exactly one homeowner to avoid foreclosure.source:http://ac360.blogs.cnn.com/2009/03/26/financial-dispatch-geithner-calls-for-new-risk-watchdog/#more-32427

Link: http://ac360.blogs.cnn.com/2009/03/27/the-war-crimes-debate-in-israel/

It was meant to be a private meeting in which Israeli soldiers talked with military school graduates about what it was like to fight in Gaza. They talked openly — more openly than anyone expected — about their frustrations and experiences that they compared to crimes. Some critics have now called them war crimes that should be prosecuted.

It was an extraordinary meeting.

“At first the specified action was to go into a house. We were supposed to go in with an armored personnel carrier called an Achzarit [literally, Cruel] to burst through the lower door, to start shooting inside and then … I call this murder … in effect, we were supposed to go up floor by floor, and any person we identified - we were supposed to shoot. I initially asked myself: Where is the logic in this?

That’s one of the statements from Israeli soldiers that that a leading Israeli newspaper, Ha’aretz, published under the headline “Shooting and Crying.” The soldiers’ names were changed to protect their identity. None claimed that they personally committed any excesses. But for many Israelis, their comments have been shocking.

One described an army commander ordering unarmed civilians “taken out” for no specific reason. Another story describes a woman and her two children being shot at when they took the wrong path.

Israel Defense Forces Chief Gabi Ashkenazi categorically denied that soldiers harmed Palestinians in cold blood. But the soldiers’ testimonies made headlines in Israel and around the Arab world.

The response from the Israeli press varied. An article in the daily Yedioth Ahronoth by Daniel Edelson provided accounts from other soldiers rebutting the claims generally- but not addressing the specific allegations. He quotes one soldier saying, “It is true that in war morality can be interpreted in many different ways, and there are always a few idiots who act inappropriately, but most of the troops represented Israel honorably.”

“It’s time to believe the war crimes allegations.” That’s the headline of an edtiorial by Amira Hass, a prominent Palestinian affairs reporter for Ha’aretz. Hass questions why most Israelis reacted to the published allegations as if they’re hearing them for the first time. IDF Chief “Ashkenazi, like other Israelis, could have read the Red Cross’ protest during the offensive, that the IDF prevented medical teams from reaching wounded Palestinians by shooting at them. He or his aides could have gone to the website set up by Israeli human rights organizations, which was full of reports and testimonies.”

Israeli human rights groups such as B’Tselem, known for their criticism of Israel’s activities in the Palestinian territories, called on the Israeli Attorney General to “Stop whitewashing suspected crimes in Gaza.”

Hersch Goodman is an Israeli military affairs analyst. He told CNN he didn’t consider the testimonies reliable and didn’t think they would harm Israel’s image. He told us, “There is a huge difference between a soldier misbehaving or three soldiers misbehaving or even a company of soldiers misbehaving because they are in an environment of killing and shooting and […] a State misbehaving.”

“If soldiers misbehave as per the newspaper article, you put them on trial,” Goodman said. “But if the army as an institution used forbidden weapons, if the army as an institution targeted medical personnel, if the army as an institution targeted medical facilities, these are charges or these are things that really Israel will have to work on defending.” It is unclear from the transcript Ha’aretz published whether the soldiers were alleging misconduct just by specific soldiers or also by the army itself.

In the view of Arab media, this is a case of we told so. Complaints of major human rights abuses during the Gaza offensive were a daily part of reporting by Arab networks such as Al-Jazeera and Al-Arabiya. Both networks deployed local reporters inside Gaza as well as in Israel and provided their audiences with daily reports from both sides of the conflict. Although they brought in Israeli officials as guests, their reporting was emotional and focused mainly on the suffering of Palestinians as a result of the incursion.

Now the focus is on the latest developments – Al-Jazeera hosted yesterday an official from the international organization Human Rights Watch to discuss his group’s latest report, which accuses Israel of “repeatedly firing white phosphorous shells over densely populated areas.”

The Israeli army says it will investigate, but says it only used phosphorous as a smokescreen - not a weapon.

On the Saudi-owned Al-Hayat newspaper, an editorial by legal analyst Mahmoud Mubarak condemns both Israel and Arab governments: “Israel should be condemned for its crimes in Gaza,” Mubarak wrote. “Arab governments should also be condemned for being silent.”

And then there are the political cartoons. On the Saudi-owned London-based Asharq Alawsat, a cartoon of an Israeli soldier pointing his finger to his head as if shooting himself in the head. The testimony of Israeli soldiers, it suggests, will prove most harmful to Israel.
source:http://ac360.blogs.cnn.com/2009/03/27/the-war-crimes-debate-in-israel/

Hundreds already have evacuated Fargo neighborhoods, hospitals and a nursing home. Officials across the Red River in Moorhead, Minnesota, also were urging residents to leave.

The river topped the 1897 record of 40.1 feet about 4 a.m. CT (5 a.m. ET), said National Weather Service spokesman Patrick Slattery in Kansas City, Missouri.

"It's expected to continue rising," he said. Forecasters have said the river will crest Saturday.

Record levels for the river mean uncertainty for officials and volunteers who are scrambling to mitigate the flooding in the area, Slattery said.

Emergency responders can extrapolate the effects of the rising river, he said, but they cannot know for sure what works because they have never witnessed the river so high and therefore have no previous data with which to work.

"You get above record levels, you don't know. You have nothing to reference it to," Slattery said.

The effectiveness of sandbagging and temporary levees, as well as the direction and extent of the flooding, are among the mysteries, he said.
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"At some point, especially when you're dealing with record levels, you reach a point when there's nothing else you can do," Slattery said. "Start alerting people to be ready to get out of there."

City officials evacuated a neighborhood of about 150 homes early Friday after they found cracks in a levee. Capt. Tod Dahle said the residents were evacuated because the neighborhood lies between a primary and contingency levee. See how levees can fail »

Fargo Mayor Dennis Walaker said late Thursday that about 100 people were evacuated from a nursing home and another 40 people from a nearby neighborhood. No one was in immediate danger, officials said.

MeritCare Hospital and MeritCare South University Hospital announced late Thursday they would begin evacuating 180 patients. Emergency services were to stay open, but patients were being transferred to hospitals in and out of state. Video Watch Fargo residents fight back »

"We do not want to give up yet. We want to go down swinging if we go down," Walaker said. "Does that put fear in everybody's heart? I hope it doesn't. We have to do everything possible to be successful. And I think that's what everybody is committed to."

The evacuation of the 150 homes in the Fargo neighborhood was ordered after "longitudinal cracks were found in the earthen levee built to protect the area from floodwaters," according to a city news release.

Fargo resident Kristy Fermstad spoke at a City Commission meeting late Thursday with tears in her eyes. She expressed fear that the river behind her home would spill over by morning. Photo See photos of flooding »

"If we wait until tomorrow morning, it's too late," she said, pleading for help from the city. Commissioners assured her that a portable dike would be constructed in time to safeguard her neighborhood.

The city plans to raise dikes to 44 feet on the south side of Fargo, and contingency dikes were being built in case of a major breach. See map of affected area »

"We are going to use all our resources to make [the changes] happen," Fargo Deputy Mayor Tim Mahoney said.

A number of streets were closed Thursday to allow more room for sandbag delivery and emergency crews. Officials advised residents to stay off roads in North Dakota's most populous city if possible.

Sandbags are used to bolster dikes in residential areas around Fargo, while the city dikes are reinforced with clay.

Across the river in Minnesota, officials urged residents in part of Moorhead to leave "immediately, tonight or in the morning," Clay County emergency center spokesman Dan Olson said.

He called it a "directed evacuation," rather than a mandatory one. It also would apply to large parts of nearby Oakport Township, he said. The emergency center is setting up a call center where evacuees can register to be tracked.

Olson added that 500 "vulnerable adults" were moved earlier Thursday to Moorhead High School, about 45 feet above the Red River. He expected more to arrive overnight.

The National Weather Service has said the Red River at Fargo could crest at 42 feet, with the potential of hitting 43 feet.
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The weather service calculates flood stage as the point at which the "rise in water surface level begins to create a hazard to lives, property, or commerce." The flood stage at Fargo is about 18 feet, the service said.

A 1997 flood saw the waterway hit 39.6 feet, according to the National Oceanic and Atmospheric Administration.
source:http://www.cnn.com/2009/US/weather/03/27/north.dakota.flooding/index.html

The casualty toll was expected to rise in the blast, which occurred near the Afghanistan border in the Bigiari area of Jamrod sub-division in Khyber Agency.

It's the latest in a long line of attacks in the region, some of them staged on days of political importance in the volatile Afghan and Pakistani region. This particular assault comes hours before President Barack Obama explains his new urgent strategy for fighting Islamic militants in Afghanistan and Pakistan.

Tariq Hayat Khan, the Khyber Agency's political agent, said the two-story mosque had been packed with about 250 worshippers attending Friday prayers when the bomber, thought to be among the worshippers, detonated the explosive.

The building collapsed as the explosion rippled through the structure, and rescue crews deployed to the scene were searching through the rubble for more victims. Video Watch how huge explosion brought down the mosque's roof »
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NATO supplies are carried from Pakistan into Afghanistan in the region, and officials say this is a mosque frequented by Pakistani security officials who work at checkpoints along the supply route.

NATO and the U.S.-led coalition have been battling Taliban and al Qaeda militants in Afghanistan, and many of the Islamic militants live in Pakistani safe havens along the Afghan border.

The blast follows other violence and fighting this week in Pakistan.

On Thursday, a suicide blast killed 11 people at a restaurant in the tribal region. That attack was most likely part of the ongoing fighting between militants loyal to Taliban leader Baitullah Mehsud and members of the Turkistan tribe, police said.

And on Wednesday, a suspected U.S. missile strike killed seven people in a South Waziristan village thought to be a Mehsud stronghold.

On Monday, a police officer was killed in a suicide bombing at the gate of a police station in Islamabad, authorities said.

The explosion occurred on Pakistan Day, a national holiday.

As for Obama, he is expected to announce new strategies in Afghanistan and Pakistan, part of an effort to defeat al Qaeda, prevent militant safe havens from developing in Pakistan and stop the militants from reasserting themselves in Afghanistan.

In a background briefing with reporters on Thursday, one administration official painted a somber picture of the al Qaeda threat.

"Al Qaeda's central leadership has been moved from Kandahar, Afghanistan, to a location unknown, somewhere in Pakistan," he said. "And in that location, they're plotting against the United States. They are working with their friends and partners, the Taliban, others, against American interests."

Senior administration officials said Obama plans to send another 4,000 troops to Afghanistan along with hundreds of civilian specialists. Obama also will call on Congress to pass a bill that triples U.S. aid to Pakistan to $1.5 billion dollars a year over five years, the officials said.
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The troops -- which are in addition to the 17,000 the president announced earlier would be sent to Afghanistan -- will be charged with training and building the Afghan Army and police force. The plans include doubling the Army's ranks to 135,000 and the police force to 80,000 by 2011, the officials said.

Earlier Thursday, Director of National Intelligence Dennis Blair told reporters that the United States needs to improve its level of intelligence support for military operations in Afghanistan. Blair also said a lot more work is needed to get Pakistan on the same page as the United States in fighting terrorists along the border.
source:http://www.cnn.com/2009/WORLD/asiapcf/03/27/pakistan.mosque.bomb/index.html

PARIS — The two top executives have resigned at the French unit of the American International Group’s financial products business, the insurer said Thursday, as part of an exodus of employees after an outcry over bonuses.
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Mauro Gabriele, the president and chief executive of Banque A.I.G., and his deputy, Jim Shephard, resigned because of “shared concerns regarding their ability to conduct business in the current hostile environment toward Banque A.I.G. and A.I.G. F.P. employees generally,” the company said in a statement from New York, referring to A.I.G. Financial Products.

The financial products division, based in London, helped to create the credit-default swaps that are blamed for causing A.I.G. to nearly collapse, necessitating a taxpayer rescue that so far has led to more than $170 billion in bailout funds from the federal government being pumped into the company. News of the Banque A.I.G. resignations was first reported Thursday by The Wall Street Journal.

The departure of the two executives could, in theory, have prompted a default on $234 billion of credit-default swaps. French regulators could have appointed provisional administrators to the job, a move with the potential to activate a “change of control” provision in the derivatives contracts. In practice, neither French regulators nor the American government would have allowed that to happen, officials say.

A.I.G. said it had cautioned Treasury Secretary Timothy F. Geithner in a March 14 letter “that resignations at Banque A.I.G. could raise risks with respect to derivatives written out of Banque A.I.G., and we are in ongoing discussions with French and U.K. regulators, as well as with the Federal Reserve Bank of New York and the U.S. Treasury Department, about this matter.”

The executives “are fully committed to ensure that Banque A.I.G. continues to operate normally and meet its obligations in these extraordinary conditions,” the A.I.G. statement said, “and, as a result, they remain in their roles and have committed to effect an orderly transition. “

Xavier Dubois, a spokesman for the Banque de France, the central bank, declined to comment.

An A.I.G. spokeswoman, Christina Pretto, said the financial products division continued to unwind derivatives contracts. It has reduced the number of trades outstanding by almost 40 percent, to 44,000, she said. The notional value of the outstanding derivatives contracts had fallen to $1.6 trillion by year-end, from $2.1 trillion a year ago, she said.
source:http://www.nytimes.com/2009/03/27/business/worldbusiness/27aig.html?ref=business