Flexible Reality
Saturday, April 17, 2004
From: Resource Recycling Magazine
Australian TV recovery system
With the support of major television manufacturers, the state environment ministers in Australia have under consideration a plan to impose an $18.75 recycling fee ($US) on the sale of new TVs.
The collected funds would be used to develop and operate a nationwide recycling scheme. Industry members expect the fee level to drop once the recycling system has taken care of the units currently backlogged.
Kerry hits back at his accusors: He accuses Dick Cheney and Karl Rove of avoiding the Vietnam draft, as the debate on national defense turns bitingly personal.
By Matea Gold, Times Staff Writer
PHILADELPHIA — Sen. John F. Kerry, responding to Republican adversaries who call him weak on defense, lashed out Friday at Vice President Dick Cheney and White House political advisor Karl Rove, accusing them of avoiding military service.
The Massachusetts senator made the remark during a raucous rally attended by an estimated 10,000 people at the University of Pittsburgh. "I'm tired of these Republicans who spend so much time denigrating Democrats and other people's commitment to the defense of our nation," said Kerry, a Vietnam veteran, in what appeared to be an unplanned comment.
"I'm tired of Karl Rove, Dick Cheney, [Saxby Chambliss] and a bunch of people who went out of their way to avoid their chance to serve when they had the chance." "I went," he added. "I'm not going to listen to them talk to me about patriotism and how asking questions about the direction of our country somehow challenges patriotism. Because asking questions about the direction of our country is patriotism."
As the debate over the war in Iraq has taken center stage in the election, heated exchanges between the campaigns about national security policy have quickly morphed into arguments about patriotism.
"It's going to be one of those polarizing issues that I suspect is not going to go away in a very intense, charged election," said University of Pennsylvania political science professor Marie Gottschalk. "The question of who sacrificed and what they sacrificed will be central to this election."
Cheney had several student deferments and, after the birth of his first child, a marriage deferment. Rove drew a low draft number when he graduated from high school in 1969, and then received a student deferment when he entered the University of Utah, the Bush campaign said.
Rove lost his deferment when he transferred schools and was for a short period at the front of the line to be drafted, the campaign said. But he was never called up for service.
Kerry, pressed later Friday on why he believed Rove tried to avoid going to war, the candidate said merely, "He didn't serve."
"I'm just not going to be accused by any of these people of not being strong on defense, period," he said on his campaign plane on a flight from Pittsburgh to Philadelphia.
Given his record, it's not surprising Kerry is using it to connect with voters, said Jack Pitney, who teaches political science at Claremont McKenna College. "His service in Vietnam is something very clear that people can relate to."
Kerry promised in February that he would not raise questions about Bush's service in the Texas Air National Guard.
But a week later, after being heavily criticized about his defense record, he said Republicans had no business questioning his commitment to the country's security.
"I don't know what it is … these Republicans who didn't serve in any war have against those of us who are Democrats who did," the senator told reporters in Atlanta on Feb. 21.
Asked if he was alluding to Bush's National Guard service, Kerry said at the time he was referring to Georgia Sen. Saxby Chambliss, Cheney "and a whole bunch of people [who] are so busy challenging the patriotism of Democrats."
At the rally in Pittsburgh on Friday, Kerry offered an invocation of his tour in Vietnam.
"You see that great Stars and Stripes back there?" he asked the audience, pointing to a massive American flag draped on a stage behind the crowd.
"I fought under that flag. I fought under that flag and I saw that flag draped over the coffin of friends.
"…. Well, I'll tell you something: The political bombs may be bursting in air today around us as they try to distort the truth, but when I look up, that flag is still there," he said. "And it belongs to all of Americans, not to them … it belongs to us."
Kerry completed his daylong swing through Pennsylvania with a fundraiser in Pittsburgh and two in Philadelphia, which raised $1.5 million for his campaign, bringing his total for the week to nearly $15 million.
World leaders condemn Bush-Sharon agreement
By Times Online - UK
April 16th, 2004
International leaders have condemned President Bush and Ariel Sharon today for excluding the Palestinians from an agreement which would see Israel retain large swaths of the West Bank as part of any Middle East peace accord.
Mr Bush endorsed the Israeli Prime Minister's plan yesterday for a unilateral withdrawal from the Gaza Strip, but the closure of only four of the 140 Jewish settlements in the West Bank. The President also implicitly rejected the "right of return" to Israel of Palestinians.
Kofi Annan, the UN Secretary-General, said that final status issues should be resolved between Israel and the Palestinians, based on relevant UN Security Council resolutions. "He strongly believes that they [the US and Israel] should refrain from taking any steps that would pre-empt the outcome of such talks," Mr Annan's spokesman said.
Javier Solana, the EU Foreign Minister, cautioned: "The EU remains committed to a negotiated agreement resulting in two viable, sovereign and independent states, Israel and Palestine, as the only way to achieve a permanent peace and an end to the occupation that began in 1967.
"Final status issues can only be resolved by mutual agreement between the parties."
Palestinian leaders, who have been excluded from negotiations, reacted with fury after the US and Israeli leaders exchanged letters of agreement at the White House.
Yassir Arafat, the Palestinian leader, declared that no peace deal would be possible with the Israelis until the "complete end" of the occupation of the West Bank and Gaza Strip.
Mr Arafat said: "Our destiny is to defend our land, holy sites, Jerusalem and our right to freedom, independence and the right of refugees to return to their homeland."
He also requested an emergency meeting of the 57-member Organisation of the Islamic Conference (OIC), the world's largest grouping of Muslim states, to discuss the change in US policy.
Malaysia, which currently holds the OIC chair, brought forward its planned meeting in the light of the request. Syed Hamid Albar, the Malaysian Foreign Minister, said: "We want to organise the meeting earlier because we now feel the urgency of the new development."
Ahmed Qureia, the Palestinian Prime Minister, who was excluded from the negotiations, said: "We as Palestinians reject that, we cannot accept that, we reject it and we refuse it."
Mr Qureia also accused the US President of an "unacceptable" violation of the US-backed "road map" peace plan, saying issues such as borders and the status of refugees must be decided in negotiations involving all sides, not just the US and Israel.
"It cannot be decided by the President of the United States what is realistic and what is not realistic … This is a real violation of the roadmap."
Tony Blair last night welcomed the agreement and urged the Palestinians to accept it. But he was urged by Nabil Shaath, the Palestinian Foreign Minster, today to tell Mr Bush to change his mind when they meet in Washington on Friday.
In Gaza today, an Israeli helicopter fired a rocket at a crowd of Palestinians during an army incursion into the refugee camp at Rafah, leaving 20 Palestinians wounded, some seriously.
The helicopter opened fired after a crowd gathered while Israeli troops were bulldozing their houses and destroying them with dynamite.
Israeli radio reported the troops were trying to destroy tunnels which run into Gaza from neighbouring Egypt, and which Israel claims are used to smuggle weapons.
Mr Sharon must now persuade his Likud Party to accept his "disengagement plan" in a vote on May 2. Some hardliners in his own party are openly hostile to the unilateral withdrawal from Gaza.
SignOnSanDiego.com > News > Military -- Retired Marine Corp. General Zinni assails U.S. policy on Iraq
Friday, April 16, 2004
The Housing Bubble
There Goes the NeighborhoodWhy home prices are about to plummet--and take the recovery with them.
By Benjamin Wallace-Wells
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In Washington, where words are the currency, where imprecise verbs threaten the loss of a political career and misapplied nouns can doom a movement, there remain a few figures who get a general pass not just for a certain degree of verbal imprecision, but for a fairly deep-seated degree of intellectual wackiness, a penchant for regularly saying very odd things. Newt Gingrich is one of these public figures, Robert Byrd another; Helen Thomas has her moments, too.
You'll be sitting in the audience listening to a sensible speech by, say, Gingrich, and all of a sudden you get the notion that aliens have captured his brain. Befuddled, you'll turn to your friend next to you, the libertarian true-believer, and he'll shrug his shoulders and whisper back: "Oh, it's just Newt." And then, a few minutes later, the speaker's episode will subside, the aliens return the brain, and the speech continues on its before-we-were-so-rudely-interrupted track.
No one says a word. The capital's press gives these folks a pass from its usual lawyerly scrutiny because they are regarded as sages who can be relied upon to speak some kind of unusual and valuable truth, whose occasional episodes of profound intellectual oddness are thought to stem from the same deep source as their general brilliance.
One of these spells flared up during the last week in February, when Greenspan recommended that the home-owning public take a good hard look at switching from fixed-rate mortgages, under whose terms payments stay the same no matter what interest rates do, to adjustable rate mortgages (ARMs), where payments fluctuate along with interest rates--which, right now, makes close to zero sense. Interest rates are lower than they've been in 30 years, and, with all economists predicting a general economic upturn, and Bush's budget deficit and the weak dollar sucking up capital, little doubt exists that interest rates must rise, in which case, switching from a fixed-rate to adjustable-rate mortgage would be pretty costly for any family naïve enough to take Greenspan at his word.
The episode did not pass completely without critical notice. It was "the strangest bit of advice ever to be proffered by an American central banker," Jim Grant, publisher of Grant's Interest Rate Observer, told the San Francisco Chronicle. Then the press moved on: "Oh, it's just Greenspan."
But sometimes wacko ideas can betray deeper truths. It is tempting to ask what stake the chairman might have in trying to convince millions of people to do something so contrary to their own interest. One theory floated by Fed-watchers is that the chairman is trying to help out his classic institutional constituency, the big banks, which hold trillions of dollars in fixed-rate mortgage paper. There may be something to that theory, but there is almost certainly a deeper and more important motive behind this curious advice. Quite simply, Greenspan is trying to keep a wobbly and fragile recovery alive--and using mortgage refinancing to do it.
There are many strange things about the choppy recovery we're in, but among the most curious is that it is being fueled largely by consumer spending. Why consumers should continue to spend, and why they've done it throughout the recession, is not immediately obvious. After all, average income growth has been puny in the last few years. There's been a big falloff in jobs. Health care and tuition costs have only been going up. And the stock market has spent the last three years unsuccessfully huffing and puffing to get back to the level where it was in early 2001. Why have consumers been spending so much?
Economists have advanced two main reasons. One is that Americans have so lost their moorings that they've had few qualms about going deep into debt. That's certainly true. The average person's debt as a percentage of his income is now higher than it's ever been. But there's another reason, too: Americans have been using their homes as ATM machines, refinancing their mortgages in order to fund their spending. This, of course, makes sense. The one sector of the economy that has consistently swelled has been housing prices. This has intrigued and surprised many economists, because housing is supposed to operate in sync with the economy, expanding during flush times and contracting when things go poorly. But even in a down economy, prices have soared.
Because of these rising prices, people have felt that despite all the ups and downs in stocks and salaries, that their overall situation was okay. Homes are the biggest asset most families own, and their value has been rising nicely. For that reason, Americans have felt more comfortable buying big-ticket items, from SUVs to new computers to Disney World vacations. Much of that spending has gone right onto the VISA card. But that debt has been kept somewhat manageable by another factor in housing prices: mortgage refinancing.
With home prices rising and the Fed keeping rates low, a mortgage refinancing industry that barely existed 15 years ago exploded into one of the fastest growing sectors of the financial services industry. Last year, one-third of all homeowners used cash-out mortgages to refinance their homes, a rate roughly consistent over the past five years. Savvy investors, says Harvard economist William Apgar, are likely to have refinanced "two or three times in the last two years." Each time they do, they have either been able to lower their monthly payments, or walk away with a chunk of cash. And where does that extra cash go? The ubiquitous Ditech TV ads say it all: "I just refinanced my home and paid off my credit cards!" American homeowners have gained $1.6 trillion in cash from refinancing in the last five years, and those gains have flowed almost wholly into purchases of consumer goods. The resulting spending, says Wharton's Susan Wachter, is "propping up" the American economy.
Greenspan has played enabler to this boom. But with the Fed fund's rate at 1 percent, the chairman can't do much more to sustain it. Tens of millions of Americans have already refinanced their mortgages, and at current rates, can't be induced to do so again. This small window is closing, fast: For six months, refinancing has been tapering off, and economists expect it to narrow further--many economists have argued the gains from refinancing are likely to halve ths year. Moreover, as soon as interest rates rise (as Greenspan himself has said they will within the next year), virtually all refinancing will cease.
Greenspan's rather ham-handed effort to get them to go for ARMs, is a sign not of the chairman's own eccentricity or advanced age, but, instead, of the economy's current unsteadiness. Greenspan knows, perhaps better than anyone, that this economy is perched nervously on top of a wobbly, Dr. Seuss-like tower. Our recovery is propped up by consumer spending, which is in turn propped up by mortgage refinancing, and if that refinancing dries up before more props can be put in, the whole edifice could fall. "Since long-term interest rates cannot fall low enough to facilitate another wave of fixed-rate refinancings, he is trying to encourage homeowners to refinance one last time: fixed to ARM," Peter Schiff, president of Euro Pacific Capital in Los Angeles told the San Francisco Chronicle.
Let's assume for a moment that enough people get fooled, and the refinancing boom gets extended for another year. Then what? The real problem hits. Because if you think Greenspan's being cagey on refinancing, the truth he's really avoiding talking about is that we're in the midst of a huge housing bubble, on a scale only seen once before since the Depression. Worse, the inflated housing market is now in an historically unique position, as the motor of the rest of the economy. Within the next year or two, that bubble is likely to burst, and when it does, it very well may take the American economy down with it.
House bound
Whether or to what extent American home prices will plummet soon is open to some debate, but not much. Even the professionally optimistic housing economists employed by the real-estate industry are now admitting that the good times may be over: "What we would ask for is kind of a slow slowdown," Jeff Culbertson, president of Coldwell Banker-Northern California, told Knight Ridder at the beginning of March. Virtually every housing economist is concerned that prices may be unstable, and growing numbers are becoming outright alarmed. To understand why that is--and why warnings of a coming housing collapse haven't been front-page news--just look at the numbers.
Truth is, in most of the country there's no housing bubble. Perhaps the crucial ratio from which economists determine whether housing markets are out of whack is the ratio of home prices to annual income. In most of the country, it is modest, 2.4:1 in Wisconsin, 2.2:1 in Kentucky, 2.9:1 in Illinois.
Only in about 20 metro areas, mostly located in eight states, does the relationship of home price to income defy logic. The bad news is that those areas contain roughly half the housing wealth of the country. In California, the price of a home stands at 8.3 times the annual family income of its occupants; in Massachusetts, the ratio is 5.9:1; in Hawaii, a stunning, 10.1:1. To some extent, there are sound and basic economic reasons for this anomaly: supply and demand.
Salaries in these areas have been going up faster than in the nation as a whole. The other is supply: These metro areas are "built out," with zoning ordinances that limit the ability of developers to add new homes. But at some point, incomes simply can't sustain the prices. That point has now been reached. In California, a middle-class family with two earners each making $50,000 a year now owns, on average, an $830,000 home. In the late 80s, the last time these eight states saw price-to-income ratios this high, the real estate market collapsed.
By other measures, too, the market is badly bloated. One index of housing inflation is the difference between house prices and rents. In a healthy market, driven by demand, rents and sale prices ought to track roughly together. But while sale prices have soared, rents have stayed flat; and in some of the most overheated markets, like San Francisco and Seattle, they have actually been declining.
Such a gap, the economist and New York Times columnist Paul Krugman has written, suggests "that people are now buying houses for speculation rather than merely for shelter," evidence that he called a "compelling case" for a housing bubble. "Within the next year or so," The Economist argued in a May 2003 editorial, these regional "bubbles are likely to burst, leading to falls in average real home prices of 15-20 percent" across America. And, of course, in the most heated markets the drop is likely to be steeper yet.
When housing bubbles burst, they can hurt more than their sector of the economy. Studies have shown that they exercise twice the effect on consumer spending as comparable declines in stock prices. So, a 20 percent drop in housing prices would have the same, shriveling effect on the economy as a 40 percent crash in the stock market. When investors lose value in their houses, many of them pull money out of other investments, like stocks. Then, too, jobs in construction, real estate, and other fields that depend on new home sales die off.
What can Alan Greenspan or anyone else do about this? The answer is, not much. Prices are so stratospheric that even modest hikes in long-term interest rates could burst the bubble. And with federal deficits soaking up so much capital, interest rates are likely to rise as the economy heats up and demand for capital increases. Of course, Greenspan could argue for rescinding some of President Bush's tax cuts, which he's long defended, to bring down the deficit. But even that probably won't forestall a collapse in home prices.
Given the lateness of the hour, and the near-inevitability of the coming crash, there's really only one thing left for concerned citizens to do. Start assigning blame.
Blowing bubbles
Fortunately, the bad actors responsible for this manic inflation are pretty easy to recognize. They look remarkably like the ones who puffed up the tech bubble in the late 90s. In both cases, the unfettered optimism of the buying public was fueled by a brokerage industry almost wholly concerned with making a sale, independent analysts with an incentive to hype prices, and major accounting fraud.
What drives most appreciation in housing prices is the universal human desire to own a slightly larger and more expensive place than one can really afford; a desire restrained in normal times by the universal desire of those who lend money to get paid back.
Getting a home loan used to be a particularly nerve-wracking and unpleasant process. A stern loan officer behind a big mahogany desk would pore over your income and credit, suspiciously probing your portfolio for weaknesses. And sensibly enough: The bank that lent you the money would have to collect on the mortgage for the next 30 years and had to make sure you were really good for it. It hired independent appraisers to make sure the price was in line. This process was a little stingy, and meant some people on the low end of the income scale couldn't buy a home and many others got less home than they might have wanted, but the system usually kept prices in check.
The one exception to this general process was mortgages sold on the secondary market. In the 1930s, Congress created the Federal National Mortgage Corporation (Fannie Mae) to encourage banks to make loans to low-income Americans by agreeing to purchase those mortgages from the banks. In 1970, Congress created a second agency, the Federal Home Loan Mortgage Corporation (Freddie Mac), to do much the same thing. By the late 1980s, these two entities, which belong to the category known as Government Sponsored Entities (GSEs), were buying up and reselling 30 percent of new mortgages and packaging the mortgages to be sold as securities.
Fannie and Freddie's market share was limited by their ability to attract investment capital. But in 1989, Congress instituted some modest-seeming technical changes that made Freddie and Fannie much more attractive to investors, and able to draw much more capital. Under the new rules, for instance, they were allowed to customize securities at different levels of risk and return to meet more precisely the demands of different sectors of the capital market. Then, too, bank regulators let pension funds and mutual funds class Fannie's debt as low-risk.
As a consequence, during the 1990s, investors practically threw money at Fannie Mae and Freddie Mac, which became enormously, steadily profitable. The GSEs used the new capital to buy up every mortgage they could, and banks were only too happy to sell off the mortgage paper. The price cap on the mortgages Fannie and Freddie could insure was raised. As a result of all these changes, Fannie and Freddie went from buying mostly mortgages for low-end homes to those of the middle- and upper-middle class. And the share of the nation's conventional mortgage debt which they insure has swelled, to more than 70 percent today, double its share in 1990.
This shift has had two crucial, if under-appreciated, consequences. First, in little more than a decade, Fannie Mae and Freddie Mac have gone from handling one trillion dollars in mortgages to four trillion, with virtually no changes in oversight. Second, their dominance of the mortgage market has profoundly undermined the discipline that once kept housing prices in check.
Once banks knew they could automatically hand off the mortgages they wrote to Fannie and Freddie with basically no risk, the old incentive system dissolved. "Banks and other mortgage lenders are not watching home prices carefully because they rarely hold onto the mortgage paper they create--they just sell it upstream to mortgage investors," John R. Talbott, a housing researcher at UCLA's Anderson School of Business, has argued. "It is a dangerous situation indeed when neither home buyers nor the institutions that finance them are concerned with the ultimate price being paid for the housing asset."
In most markets, buyers and sellers rely on independent experts to bring sanity to prices. In the stock markets during the 1990s, that role had traditionally been played by stock analysts, whose opinions were famously bought off by the investment banks they worked for. Something similar has happened to appraisers, the independent contractors banks hire to determine the worth of a home for the purposes of a mortgage loan. In a recent survey conducted by the October Research Group, more than half of all appraisers said that they personally felt pressured to overstate loans, and "nearly all" said they knew a colleague who had actually done so. The pressure to inflate, October's publisher Joe Casa said, "is much worse now than it's ever been." Industry analysts have estimated that between 15 and 30 percent of houses nationally are over-valued.
It's not just the discipline of banks that keeps people from buying more than they can afford, but also the buyers' own fear and guilt. But in an environment where home prices continue to spiral up, fear and guilt are replaced by a sense that you're a fool not to buy the most house you can possibly get away with.
A particular kind of speculative frenzy ensues, captured in a recent story in The Washington Post which detailed a new phenomenon: home buyers camping out overnight for the chance to be the first in the next morning's open house, ready to buy $700,000 houses in built-out, lush-lawned suburbs like Arlington. The phenomenon has created temporary, yuppie tent cities. The story's authors interviewed several buyers in the tented line who planned to sell their purchases back into a steadily rising market, and concluded, dryly: "There is an element of speculation to the lines."
What makes the current frenzy especially dangerous is that every relevant institution has an incentive to play along. Who, after all, is likely to say stop? Not the realtors. Not the banks, any longer. Not Fannie and Freddie or the private secondary-mortgage operators, who are turning vast profits on the backs of the bubble. Certainly not the Federal Reserve or the Treasury Department, while the economy depends on a sustained housing boom.
By 2000, some acute observers, like Jane D'Arista, a former chief economist for the House Financial Services committee and now a federal funds researcher with the Financial Markets Center, had begun to warn that the situation was untenable. By 2002, a few major players, like Steve Roach, Morgan Stanley's chief economist, had picked up on the concerns about a bubble and Fannie and Freddie's sprawling influence. But Greenspan, Treasury, and GSE officials, in interviews and testimony, denied that housing inflation posed a problem. And, sure enough, in the next year, not only did the bubble fail to deflate, but it also expanded--the housing sector posted its best year ever.
Then, last summer, came a warning no one should have missed: news of major accounting fraud at Freddie Mac. In stocks, corporate accounting scandals appeared after the market plunged, too late to signal danger. But the fraudulent accounting at Freddie Mac was, or should have been, a wake-up call, though the details of this scandal were distinctly different. Instead of hiding losses, as happened at Worldcom and Enron, the accountants at Freddie Mac had been hiding embarrassingly large profits.
They feared that higher-than-expected returns might incite more risk-taking and a more volatile housing market than investors in Freddie Mac would like. A number of senior executives were canned, and spooked foreign investors sold off Freddie and Fannie's debt. A sense was emerging, among politicians as well as economists, that Fannie and Freddie were not just running amok, says Tom Stanton, an attorney specializing in government sponsored enterprises, but that they "were showing a combination of high leverage, fast growth, and weak oversight of just two companies that held or guaranteed several trillion dollars of mortgages between them and posed potential systemic risk to the American economy."
Testifying before Congress on July 16, Greenspan did not discuss any of this, nor did he mention a bubble. Instead, he chose to praise the economic benefits of low interest rates and home refinancing. The boom continued unabated. By October, homebuyers were able to refinance to a 30-year fixed-rate loan with a rate of just 4.99 percent.
Eleventh-hour warnings
Still, the accounting scandals, carrying with them a vague, unsavory whiff of Enron, made reforms in the housing market impossible to ignore. Even Franklin Raines, Fannie Mae's chairman, admitted that the GSEs needed to be reined in. In the fall, the House dipped its toes into the water, with a bill that established a single regulator in the Treasury Department with broader authority to make sure the GSEs had their finances in order. At the White House's behest, the Senate Banking Committee began hearings on the same issue in February. The goal of most of the debate in Congress has so far been how to ensure the GSEs financial viability; there has been very little talk about how to reduce their role in the housing markets.
That job fell to Greenspan: Finally, on Feb. 24, testifying before the Senate Banking Committee, he came clean about the risks of the housing market, in a speech reminiscent of his 1996 warning about "irrational exuberance" in the stock market. In his familiar, glum posture, his bald head slouching low over the table, he warned that the GSEs weren't just unstable, but also posed a "systemic risk" to the economy of the United States. He suggested debt caps, to reduce Fannie and Freddie's role in the market, and urged stricter regulation.
The chairman's proposals were both brave and right, the best plan for resolving the structural problems with GSEs that's been put forward yet. But given the political situation, his reforms won't be enacted anytime soon. The day after his testimony, his suggestions were brushed off by everyone from Fannie and Freddie's chief executives to Republicans and Democrats on the Hill. Oh, it's just Greenspan.
Both political parties have bought into the idea that a vast, unfettered Fannie and Freddie are good for the country, and have only amplified the GSEs' "American Dream" rhetoric. Republicans are still invested in the deregulation of Fannie and Freddie they helped engineer in the late 1980s. Democrats, generally the party of more regulation, have historically been Fannie and Freddie's best friends, and the GSEs' lush executive suites are packed with former Democratic staffers: Raines was Clinton's director of the Office of Management and Budget, and his predecessor, James A. Johnson, a longtime aide to Walter Mondale, is now leading John Kerry's search for a running mate. In the hearings on the Hill, neither Democrats nor Republicans have seemed favorably disposed to strict regulation of Fannie and Freddie, and American Banker has concluded that the GSEs' lobbying power is strong enough that no regulatory bill will pass without their okay.
Greenspan, of course, knows all this. He knows his reform initiatives stand little chance politically right now, and he knows that even if, miraculously, they were put into place, they likely won't keep the housing market from crashing. Why even bother to bring it up? Two reasons, say Fed-watchers. First, though he didn't explicitly warn against the housing bubble, Greenspan wants to be able to claim, after the bubble bursts, that he gave fair warning, even though these warnings came at the eleventh hour. But at a less cynical level, the chairman knows that in the American political process real reforms only get put into place after a crisis and not before, but that you stand a better chance of getting them if you publicize them early.
So, why then didn't he bring these issues up even earlier? The answer may be that he simply couldn't afford to--he was relying on a supercharged housing sector to get the economy as a whole through the recession. Indeed, he still is. On the very day that he suggested his reforms of the secondary market, he was trying to squeeze a little more juice out of refinancing with his bizarre advice to consumers about ARMs. And that, ultimately, is the ironic and uncomfortable position that this economy has forced Greenspan into. To get out of the recession, he had to rely on, stay mum about, and even encourage a housing bubble. Now, that very bubble may be the thing that destroys the recovery he has sought to create.
The Vietnam Analogy
By PAUL KRUGMAN
NY Times Op-Ed
Published: April 16, 2004
Iraq isn't Vietnam. The most important difference is the death toll, which is only a small fraction of the carnage in Indochina. But there are also real parallels, and in some ways Iraq looks worse.
It's true that the current American force in Iraq is much smaller than the Army we sent to Vietnam. But the U.S. military as a whole, and the Army in particular, is also much smaller than it was in 1968. Measured by the share of our military strength it ties down, Iraq is a Vietnam-size conflict.
And the stress Iraq places on our military is, if anything, worse. In Vietnam, American forces consisted mainly of short-term draftees, who returned to civilian life after their tours of duty. Our Iraq force consists of long-term volunteers, including reservists who never expected to be called up for extended missions overseas. The training of these volunteers, their morale and their willingness to re-enlist will suffer severely if they are called upon to spend years fighting a guerrilla war.
Some hawks say this proves that we need a bigger Army. But President Bush hasn't called for larger forces. In fact, he seems unwilling to pay for the forces we have.
A fiscal comparison of George Bush's and Lyndon Johnson's policies makes the Vietnam era seem like a golden age of personal responsibility. At first, Johnson was reluctant to face up to the cost of the war. But in 1968 he bit the bullet, raising taxes and cutting spending; he turned a large deficit into a surplus the next year. A comparable program today — the budget went from a deficit of 3.2 percent of G.D.P. to a 0.3 percent surplus in just one year — would eliminate most of our budget deficit.
By contrast, Mr. Bush, for all his talk about staying the course, hasn't been willing to strike anything off his domestic wish list. On the contrary, he used the initial glow of apparent success in Iraq to ram through yet another tax cut, waiting until later to tell us about the extra $87 billion he needed. And he's still at it: in his press conference on Tuesday he said nothing about the $50 billion-to-$70 billion extra that everyone knows will be needed to pay for continuing operations.
This fiscal chicanery is part of a larger pattern. Vietnam shook the nation's confidence not just because we lost, but because our leaders didn't tell us the truth. Last September Gen. Anthony Zinni spoke of "Vietnam, where we heard the garbage and the lies," and asked his audience of military officers, "Is it happening again?" Sure enough, the parallels are proliferating. Gulf of Tonkin attack, meet nonexistent W.M.D. and Al Qaeda links. "Hearts and minds," meet "welcome us as liberators." "Light at the end of the tunnel," meet "turned the corner." Vietnamization, meet the new Iraqi Army.
Some say that Iraq isn't Vietnam because we've come to bring democracy, not to support a corrupt regime. But idealistic talk is cheap. In Vietnam, U.S. officials never said, "We're supporting a corrupt regime." They said they were defending democracy. The rest of the world, and the Iraqis themselves, will believe in America's idealistic intentions if and when they see a legitimate, noncorrupt Iraqi government — as opposed to, say, a rigged election that puts Ahmad Chalabi in charge.
If we aren't promoting democracy in Iraq, what are we doing? Many of the more moderate supporters of the war have already reached the stage of quagmire logic: they no longer have high hopes for what we may accomplish, but they fear the consequences if we leave. The irony is painful. One of the real motives for the invasion of Iraq was to give the world a demonstration of American power. It's a measure of how badly things have gone that now we're told we can't leave because that would be a demonstration of American weakness.
Again, the parallel with Vietnam is obvious. Remember the domino theory?
And there's one more parallel: Nixonian politics is back.
What we remember now is Watergate. But equally serious were Nixon's efforts to suppress dissent, like the "Tell It to Hanoi" rallies, where critics of the Vietnam War were accused of undermining the soldiers and encouraging the enemy. On Tuesday George Bush did a meta-Nixon: he declared that anyone who draws analogies between Iraq and Vietnam undermines the soldiers and encourages the enemy.
SCO, BayStar, Microsoft - Three Stooges At Play
BayStar Seeks to Pull SCO InvestmentBy Matt Hicks
April 16, 2004
UPDATED: The SCO Group says BayStar is alleging a breach in the companies' investment agreement and wants 20,000 of its SCO shares redeemed.
In the latest twist in The SCO Group Inc.'s funding saga, BayStar Capital Management LLC is trying to pull out its SCO investment, claiming a breach in the terms of the agreement between the companies. Lindon, Utah-based SCO said Friday that it has received a letter from BayStar requesting that it redeem BayStar's 20,000 shares of SCO's series A-1 convertible preferred stock. BayStar is alleging that SCO breached sections of February agreement among SCO, BayStar and the Royal Bank of Canada.
SCO spokesman Blake Stowell said the letter points to four different sections of the agreement that were violated and that deal mainly deal with misrepresentations of SCO's past and present business finances and its future plans.
SCO has no immediate plans to redeem the shares, which would amount to BayStar's $20 million investment, Stowell said, because SCO does not believe it violated any sections of the agreement. SCO also has not received details about how it allegedly broke the agreement, he said. "It's our belief that they'd have to prove we breached the agreement before we'd redeem those shares," Stowell said. "We're still in an information gathering mode ourselves, and we're trying to find out where we stand."
BayStar spokesman Bob McGrath, reached late Friday, said that BayStar had no comment on the letter or its allegations.
In October, SCO announced that BayStar was leading a $50 million cash infusion for SCO that would help it shore up its finances and fund its intellectual property initiatives.
SCO, which owns the license to Unix code, has sued, among others, IBM and two enterprises over their use of the Linux operating system in one of the most-watched IT legal battles. SCO alleges that Linux contains portions of its Unix code.
At that time, BayStar of Larkspur, Calif., was to own an aggregate of about 2.95 million shares of SCO common stock, or 17.5 percent of the company's outstanding shares.
In March, BayStar confirmed that Microsoft Corp. had led it to SCO following widespread speculation that Microsoft had played a role in the investment. Microsoft in the past year has been stepping up its battle against Linux, which is a threat to its Windows operating system.
Here's a Picture...
Imagine Bush, Rice, Tenet, And the Others Across the Table from Trump on 'The Apprentice.' After Hearing Their Excuses, What Would He Say?By Joe Rothstein
Editor, USPoliticstoday.com
On one of the most popular current TV shows, wannabe young business types are given such mundane assignments as figuring out how to sell lemonade. Teams compete against one another, and the show closes with Donald Trump telling someone that he’s (or she’s) “fired.”
Why are they fired? Because they didn’t do the job. Or maybe they did do the job, but not as well as someone else. It’s a tough business. But as Trump keeps telling the contestants, if you want to succeed you have to be accountable for your mistakes.
This week the latest in a long line of witnesses is scheduled to appear before the commission investigating 9/11. So far we have heard that the people who run the airlines and the airports were not accountable for letting terrorists board their flights because no one told them to be more careful. The FAA’s leaders have assured us they feel just terrible about what happened, and they might have taken stronger measures to prevent it, but existing laws, restrictions, lack of financing and a lack of urgency from the top got in the way.
George Tenet and others from the CIA have warded off responsiblity because the CIA’s principal job is foreign intelligence operations and there were restrictions on their activities inside the U.S. The Immigration Service wasn’t responsible for permitting the hijackers to enter the U.S. and remain here for a whole laundry list of reasons.
Last week we heard from Condoleezza Rice that she wasn’t accountable for the 9/11 tragedy because her office was doing everything it could to develop a new and better strategy for dealing with al Qaeda than the previous administration had.
Now we’re about to hear from the FBI about why, even though the President was told by the Washington office that 70 ongoing al Qaeda investigations were under way, the FBI officers in the field didn’t think so. And, of course, we will have the Bush-Cheney tag team appearance before the commission. They already have disclaimed responsibility, even though they received the famous August 6, 2001 Presidential Briefing Document entitled, “Bin Laden Determined to Strike in U.S.”
In her testimony, Condoleezza Rice said the memo was a “historical” document. She testified that the memo revealed “no new threat information, it was not a warning.”
Here are the exact words of the memo, as released by the White House:
“FBI information indicates patterns of suspicious activity consistent with preparations for hijackings or other types of attacks, including recent surveillance of federal buildings in New York. The FBI is conducting approximately 70 full field investigations throughout the U.S. that it considers bin Laden related. CIA and the FBI are investigating a call to our embassy in the UAE in May saying that a group of bin Laden supporters were in the U.S. planning attacks with explosives.”
If this information was not new, then we have to assume that Rice and the President knew all this before August 6. Whenever they learned it, there’s no evidence they treated it with any sense of urgency.
If this was not a threat warning, how much closer to the mark did they expect the warning to be? Is it only “actionable intelligence,” if the information includes the exact targets, the day of the planned attack and the names and addresses of the conspirators?
The U.S. spends upwards of $50 billion a year on intelligence gathering and covert activities for the express purpose of digging out information from leads like those in the PBD and then following up to stop the threat before it succeeds. Isn’t that what we pay them to do?
The only person so far who has admitted failure is Richard Clarke. As the counter-terrorism chief, his job was to stop 9/11 or anything like it. The terrorists defeated every defense we had in place. It was his job to protect us. Why shouldn’t he apologize? Why should his be the only apology?
And it’s ironic that of all the people in responsible positions on 9/11, Clarke seems to be the one who was most alert to the danger, and now he’s the only one no longer on the bridge. From the President on down, those who had the responsibility for protecting us from such attacks as 9/11, and failed, and are unapologetic, are all still in place---disclaiming responsibility.
If you take their arguments at face value, there was nothing anyone could have done to anticipate the attacks or to have defeated them.
None of those wannabe business executives would get by Donald Trump with that argument. Those on TV lose their jobs for failing to place their lemonade stand on the right street corner. What would Donald Trump say if Bush, Cheney, Rice, Rumsfeld, Tenet, Mueller, and the others in charge on 9/11 were sitting across the conference table giving him the same story they are giving the 9/11 commission and the rest of us?
What would Trump say?
Come on. You know. All together now, “You’re _ _ _ _ _!”
Wednesday, April 14, 2004
Definitions: [???] A true believer
dogmatic:adj., Relating to, characteristic of, or resulting from dogma. Characterized by an authoritative, arrogant assertion of unproved or unprovable principles.Definition: [???] A religious conservative
fundamentalism: n., A usually religious movement or point of view characterized by a return to fundamental principles, by rigid adherence to those principles, and often by intolerance of other views and opposition to secularism. An organized, militant Evangelical movement originating in the United States in the late 19th and early 20th century in opposition to Protestant Liberalism and secularism, insisting on the inerrancy of Scripture. Adherence to the theology of this movement.Definition: [???] Person who sees themselves as being always right
autocratic: 1: offensively self-assured or given to exercising usually unwarranted power; "an autocratic person"; "autocratic behavior"; "a bossy way of ordering others around"; "a rather aggressive and dominating character"; "managed the employees in an aloof magisterial way"; "a swaggering peremptory manner" [syn: bossy, dominating, high-and-mighty, magisterial, peremptory] 4: characteristic of an absolute ruler or absolute rule; having absolute sovereignty; "an authoritarian regime"; "autocratic government"; "despotic rulers"; "a dictatorial rule that lasted for the duration of the war"; "a tyrannical government" [syn: authoritarian, dictatorial, despotic, tyrannical]Definition: [???], an earnest supporter of existing royal and ecclesiastical authority
Tory \To"ry\, n.; pl. Tories. [ Properly used of the Irish bogtrotters who robbed and plundered during the English civil wars, professing to be in sympathy with the royal cause; hence transferred to those who sought to maintain the extreme prerogatives of the crown; probably from Ir. toiridhe, tor, a pursuer; akin to Ir. & Gael. toir a pursuit.] 1. (Eng.Politics) A member of the conservative party, as opposed to the progressive party which was formerly called the Whig, and is now called the Liberal, party; an earnest supporter of existing royal and ecclesiastical authority.Note: The word Tory first occurs in English history in 1679, during the struggle in Parliament occasioned by the introduction of the bill for the exclusion of the duke of York from the line of succession, and was applied by the advocates of the bill to its opponents as a title of obloquy or contempt. The Tories subsequently took a broader ground, and their leading principle became the maintenance of things as they were. The name, however, has for several years ceased to designate an existing party, but is rather applied to certain traditional maxims of public policy. The political successors of the Tories are now commonly known as Conservatives. --New Am. Cyc.
Sharon Comes to Washington - Leaves with Bush's support in expropriation of Palestinian land
Palestinians Assail Bush for New Stand Backing IsraelBy GREG MYRE
NY Times
Published: April 15, 2004
JERUSALEM, April 14 — Palestinian leaders were sharply critical of President Bush on Wednesday, saying his support for Israeli positions dealt a crippling and perhaps fatal blow to what remains of current Middle East peace efforts.
The Palestinian prime minister, Ahmed Qurei, and other prominent Palestinians said Mr. Bush had now gone further than any American president in backing Israel on the most contentious issues — Jewish settlements, future borders and the fate of Palestinian refugees. "I believe President Bush declared the death of the peace process today," said Yasser Abed Rabbo, a former Palestinian information minister.
Mr. Bush met with Israel's prime minister, Ariel Sharon, at the White House and afterward reaffirmed his support for an Israeli withdrawal from the Gaza Strip and the establishment of a Palestinian state.
But Palestinians focused on new positions that Mr. Bush articulated: that Israel should not have to return to borders it held before the 1967 war, suggesting it could retain some settlements built on West Bank land, and that Palestinian refugees should be settled in a future Palestinian state, which would undercut their demand to return to their former land, which is now part of Israel.
President Bush "is the first president who has legitimized the settlements in the Palestinian territories," Mr. Qurei said in Abu Dis, just outside Jerusalem. "We as Palestinians reject that, we cannot accept that."
Reactions elsewhere in the Arab world were also hostile to Mr. Bush.
In Syria, Imad Fawzi Shueibi, a professor of political sociology at Damascus University, called Mr. Bush's statements "a bad declaration, especially at this time."
President Hosni Mubarak of Egypt, who arrived in Texas last week to visit President Bush, spoke Wednesday at Rice University. Though his remarks were warmly supportive of Mr. Bush, he was critical of the president's support of Israel's plans, saying, "Unilateral steps can't be substituted for international solutions."
Palestinians said Mr. Bush's comments broke with longstanding United States policy not to prejudge such sensitive issues. "For the first time, American policy violates the basic conditions for peace," said Hanan Ashrawi, a leading Palestinian legislator and spokeswoman.
Mr. Abed Rabbo contrasted Mr. Bush's statements with a letter that George H. W. Bush sent to the Palestinians when he was president in 1991. "The letter contained a very clear statement that key issues would be determined through negotiations, and not through unilateral Israeli decisions," Mr. Abed Rabbo recalled. Palestinians said Mr. Bush's remarks would encourage Mr. Sharon to continue building settlements in the West Bank. They say large clusters of Jewish settlers will make it difficult, if not impossible, to create a viable Palestinian state.
Another sensitive issue for the Palestinians is the status of Palestinian refugees who fled or were driven from their homes in the 1948-49 war, which erupted just after Israel's founding. Along with their descendants, they now total some four million.
Israel says a flood of refugees would undermine the Jewish character of the state, and has always firmly resisted any large-scale return. Mr. Bush sided with the Israelis, saying the refugees should be accommodated in a Palestinian state. Mr. Bush "wants the refugees to return to a Palestinian state that will not exist," said Mr. Abed Rabbo.
President Bush spends 40% of time out of the office.
Note: In a Corporate environment, a CEO that approaches his position in that manner would not have a job before long, especially when his attendance is combined with his abysmal record on "being a uniter, not a divider", strategic and tactical planning for National Security, job creation, economic stewardship of the Nations wealth, adherence to rules of international law, and a host of other concerns.
We're not talking either about Bush busily working on the nations business on his ranch...instead the press reports he: "cleared some brush...went fishing...cut down some trees, etc". Yetch ! Just what we need, a figurehead President with the Administratiion being run by the Vice President. Kinda like what we had under Reagan it's it?
But all that doesn't matter, since Bush can count on the support of Southern whites, evangelical Christians, financial manipulators, and other Tories to hinder progressive governance. And given his support for fundamentalist concerns maybe it's better he say out of Washington longer. Most likely, that's exactly what will happen after November 04.
Tuesday, April 13, 2004
Missed; but not forgotten
The-Darwin-Awards-A-Complete-Archive.htmlPosted By Richard (04 August, 2003)
The Darwin Award Nominees
The Darwin Awards are awarded to individuals who through acts of extreme stupidity kill themselves and thus remove their defective gene from the human gene pool. Here are some of the nominees:
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A young Canadian man, searching for a way of getting drunk cheaply, because he had no money with which to buy alcohol, mixed gasoline with milk. Not surprisingly, this concoction made him ill, and he vomited into the fireplace in his house. This resulting explosion and fire burned his house down, killing both him and his sister.
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A 34-year-old white male found dead in the basement of his home died of suffocation, according to police. He was approximately 6'2" tall and weighed 225 pounds. He was wearing a pleated skirt, white bra, black and white saddle shoes, and a woman's wig. It appeared that he was trying to create a schoolgirl's uniform look. He was also wearing a military gas mask that had the filter canister removed and a rubber hose attached in its place. The other end of the hose was connected to a one end of a hollow wooden tube approx. 12" long and 3" in diameter. The tube's other end was inserted into his rear end for reasons unknown, and was the cause of his suffocation. Police found the task of explaining the circumstances of his death to his family very awkward.
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Three Brazilian men were flying in a light aircraft at low altitude when another plane approached. It appears that they decided to moon the occupants of the other plane, but lost control of their own aircraft and crashed. They were all found dead in the wreckage with their pants around their ankles.
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A police officer in Ohio responded to a 911 call. She had no details before arriving, except that someone had reported that his father was not breathing. Upon arrival, the officer found the man face down on the couch, naked. When she rolled him over to check for a pulse and to start CPR, she noticed burn marks around his genitals. After the ambulance arrived and removed the man - who was declared dead on arrival at the hospital - the police made a closer inspection of the couch, and noticed that the man had made a hole between the cushions. Upon flipping the couch over, they discovered what caused his death. Apparently the man had a habit of putting his penis between the cushions, down into the hole and between two electrical sanders (with the sandpaper removed, for obvious reasons). According to the story, after his orgasm the discharge shorted out one of the sanders, electrocuting him.
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A 27-year-old French woman lost control of her car on a highway near Marseilles and crashed into a tree, seriously injuring her passenger and killing herself. As a commonplace road accident, this would not have qualified for a Darwin nomination, were it not for the fact that the driver's attention had been distracted by her Tamagotchi key ring, which had started urgently beeping for food as she drove along. In an attempt to press the correct buttons to save the Tamagotchi's life, the woman lost her own.
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A 22-year-old Reston, VA man was found dead after he tried to use octopus straps to bungee jump off a 70-foot railroad trestle. Fairfax County police said Eric Barcia, a fast-food worker, taped a bunch of these straps together, wrapped an end around one foot, anchored the other end to the trestle at Lake Accotink Park, jumped and hit the pavement. Warren Carmichael, a police spokesman, said investigators think Barcia was alone because his car was found nearby. "The length of the cord that he had assembled was greater than the distance between the trestle and the ground", Carmichael said. Police say the apparent cause of death was "Major trauma".
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A man in Alabama died from rattlesnake bites. It seems that he and a friend were playing a game of catch, using the rattlesnake as a ball. The friend - no doubt, a future Darwin Awards candidate - was hospitalized.
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Employees in a medium-sized warehouse in west Texas noticed the smell of a gas leak. Sensibly, management evacuated the building, extinguishing all potential sources of ignition lights, power, etc. After the building had been evacuated, two technicians from the gas company were dispatched. Upon entering the building, they found they had difficulty navigating in the dark. To their frustration, none of the lights worked (you can see what's coming, can't you?). Witnesses later described the sight of one of the technicians reaching into his pocket and retrieving an object, that resembled a cigarette lighter. Upon operation of the lighter-like object, the gas in the warehouse exploded, sending pieces of it up to three miles away. Nothing was found of the technicians, but the lighter was virtually untouched by the explosion. The technician suspected of causing the blast had never been thought of as 'bright' by his peers.
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James Brian Wise, 20, of 390 Davenport Ave., Valparaiso, was twirling a gun at some friends' house in Fort Walton Beach on Friday night when it went off and shot him in the head, according to a report from the Okaloosa County Sheriff's Office.
The incident occurred at 1821 Whispering Oaks Lane, Fort Walton Beach. The Sheriff's Office responded at about 9:40 p.m. Jessica Nicole James, 18, was the primary witness cited in the report.
According to the report, James said Wise was in the kitchen of her home when she noticed a gun sticking out of his waistband. When she commented about it, he unloaded the gun and handed it to her for examination. She gave it back; he reloaded it and began twirling it in his right hand. The gun went off and shot him in the head. Wise died the next day. Wise, an employee at Brooks Auto Body in Crestview, was born in Tampa and graduated from Niceville High School this year.
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A Jacksonville, Florida woman recently had to summon emergency help after dragging her husband down the street behind their pickup truck. Chief Petty Officer Roman Styles, U.S. Coast Guard Station Jacksonville, was treated and released with a slight concussion and scrapes and bruises. It seems that Styles decided to repair damaged shingles on his house himself, instead of paying a contractor to do it for him. Prior to climbing up on his steep roof, Officer Styles tied a safety rope to the trailer hitch of his truck. Once on the peak of his roof he secured the other end of the line around his waist. He then slid over the top of the roof to repair the shingles. As luck would have it, right after he started to work, his teenage son called for a ride home from a Boy Scout trip. Jane Styles yelled to her husband she'd be right back and pulled away. "I didn't see the rope," Mrs. Styles said, "until I saw it in the rear-view mirror. By then I was half-way down the street." Bill Schlimm, a next door neighbor, said, "I'll never forget the look on Roman's face as he came sailing over the peak of that house. If it hadn't been for that tall cedar tree he would have been really hurt."
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A would-be shoplifter in London attempted to steal two lobsters. The ingenious felon stuffed the lobsters into his trousers and headed for the door of the supermarket. Near the exit, our larcenous Londoner doubled over in excruciating pain and lay on the floor screaming. It seems that the lobster's claws were not tied down and one of the tasty crustaceans decided to have the thief's family jewels for lunch. The paramedics were called in to remove the carnivorous crustacean from the very sensitive portion of this thief's anatomy. After they stopped laughing, a pair of pliers successfully accomplished the removal much to the relief of our suffering suspect. No information was available on the extent of the member's (sic) injuries or his future fatherhood potential.
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San Jose, CA. March 26, 1999: 1923hrs. Police, Fire and ambulance respond on a call for unknown medical emergency - turns out to be a DOA. Further investigation reveals it to be a suicide. Quite successful. Further investigation reveals this sequence of events:
27 yr old male gets a circular saw blade, cuts holes in the side to fit the lug nuts on his car. He mounts the saw blade to one of the front wheels in place of the tire.
Jacks the car up with a hydraulic jack. Starts the motor and puts something on the accelerator to spin the front wheels. Lays down below the spinning saw blade, which is above his neck.
Reaches out and unlocks the hydraulic jack.
You can guess the rest.
Thanks to Dave Larton
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An Iraqi terrorist , Khay Rahnajet, didn't pay enough postage on a letter bomb. It came back with "return to sender" stamped on it. Forgetting it was the bomb, he opened it and was killed in the resulting explosion.
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BUCHAREST (Reuters) - Romanian first division soccer player Mario Bugeanu and his girlfriend died of carbon monoxide poisoning in his car after making love, police said Tuesday. Gloria Bistrita midfielder Bugeanu, 24, and his 23-year-old girlfriend Mirela Iancu died after having sex Sunday in a garage with the car running, police colonel Dumitru Secrieru said. "They appeared to be unaware of the dangers of carbon monoxide," Secrieru said. The couple was discovered by the player's father Monday morning.
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In Van Nuys, California, Anita French, an aspiring zoo keeper, loved reptiles. She kept 10 deadly snakes and six piranhas as pets in her mobile home. She wasn't afraid of them; apparently she had been bitten several times without fatal consequences. Finch trusted her snakes so much that she would let them loose as she cleaned their cages.
Her reptilian friends included a Gabon Viper, a Hog-Nosed Sand Viper a 3-foot Western rattler, two 4-foot Eastern diamondback rattlers, a South Pacific rattlesnake, considered extremely rare, one King snake, a gopher snake, and two copperheads.
Anita Finch, 33, was found dead in her mobile home by a friend and the lot manager Wednesday, Dec 15, evening. Charlene McMorris, manager of the Vicabob Trailer Park Village at 7560 Woodman PLace, said her tenant loved her snakes and feared city inspectors would confiscate them. She believes Finch was searching for a missing snake because her home was turned "upside down", with the refrigerator moved and pans scattered around the kitchen.
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"The government must crack down on this disgusting craze of 'Pumping'", a spokesman for the Nakhon Ratchasima hospital told reporters. "If this perversion catches on, it will destroy the cream of Thailand's manhood."
He was speaking after the remains of 13 year-old Charnchai Puanmuangpak had been rushed into the hospital's emergency room. "Most 'Pumpers' use a standard bicycle pump," he explained, "inserting the nozzle far up their rectum, giving themselves a rush of air, creating a momentary high. This act is a sin against God."
It appears that the young Charnchai took it further still. He started using a two-cylinder foot pump, but even that wasn't exciting enough for him, so he boasted to friends that he was going to try the compressed air hose at a nearby gasoline station. They dared him to do it, so, under cover of darkness, he snuck in. Not realizing how powerful the machine was, he inserted the tube deep into his rectum, and placed a coin in the slot. As a result, he died virtually instantly, leaving passers-by still in shock.
One woman thought she was watching a twilight fireworks display, and started clapping. "We still haven't located all of him", say the police authorities. "When that quantity of air interacted with the gas in his system, he nearly exploded. It was like an atom bomb went off or something."
"Pumping is the devil's pastime, and we must all say no to Satan," Ratchasima concluded. "Inflate your tires by all means, but then hide your bicycle pump where it cannot tempt you."
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Ljubljana, Slovenia - A passionate angler at an eastern Slovenian lake caught a fish so big that he drowned trying to reel it in, the state-run news agency reported Tuesday.
Determined to land the sheatfish, a typoe of catfish, the 47-year-old fisherman walked into the lake after hooking it and refused to let go when it pulled him under, the STA news agency, quoted a friend of Franc Filipic as saying.
The friend, who was not identified, said Filipic's last words before he drowned were: "Now I've got him!" Police and divers found his body after a two-day search. The fish was not found.
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In unincorporated Fox Lake, Illinois, 28-year-old Daniel Wyman drowned after he and a companion inadvertently blew a hole in the bottom of their boat with an M-250 firecracker. The M-250 firecracker is the equivalent of one-fourth of a stick of dynamite. Daniel Wyman and his friend threw the firecracker into the water near their 14-foot aluminum rowboat. The boat was caught by a gust of wind that pushed the boat over the explosive. The boat was not equipped with life preservers; Wyman, who could not swim, drowned when the boat sank. His companion swam to shore and was taken to Northern Illinois Medical Center in McHenry for observation.
Fox Lake Fire Capt. Thomas Preidis said that the device probably had floated back to the surface when it exploded; otherwise the cushion of water between the explosive and the boat probably would have prevented a breach of the hull.
"We really don't know why it happened," Preidis said. "It's getting close to the 4th of July, and people like to blow off fireworks. When you throw an M-250 in the water it makes a nice big geyser. Then again, they may have been trying to scare fish to the surface."
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BUXTON, N.C. A man died on a beach when an 8-foot-deep hole he had dug into the sand caved in as he sat inside it. Beachgoers said Daniel Jones,21, dug the hole for fun, or protection from the wind, and had been sitting in a beach chair at the bottom Thursday afternoon when it collapsed, burying him beneath 5 feet of sand. People on the beach on the Outer Banks used their hands and shovels, trying to claw their way to Jones, a resident of Woodbridge, Va., but could not reach him. It took rescue workers using heavy equipment almost an hour to free him while about 200 people looked on. Jones was pronounced dead at a hospital. You just wouldn't believe the outpouring of concern, people digging with their hands, using pails from kids," Dare County Sheriff Bert Austin said.
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In February, Santiago Alvarado, 24, was killed in Lompoc, Calif., as he fell face-first through the ceiling of a bicycle shop he was burglarizing. Death was caused when the large flashlight he had placed in his mouth (to keep his hands free) crammed against the base of his skull as he hit the floor.
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According to police in Dahlonega, Ga., ROTC cadet Nick Berrena, 20, was stabbed to death in January by fellow cadet Jeffrey Hoffman, 23, who was trying to prove that a knife could not penetrate the flak vest Berrena was wearing.
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Sylvester Briddell, Jr., 26, was killed in February in Selbyville, Del., as he won a bet with friends who said he would not put a revolver loaded with four bullets into his mouth and pull the trigger.
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In February, according to police in Windsor, Ont., Daniel Kolta, 27, and Randy Taylor, 33, died in a head-on collision, thus earning a tie in the game of chicken they were playing with their snowmobiles.
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A 49-year-old San Francisco stockbroker, who "totally zoned when he ran," according to his wife, accidentally jogged off of a 200-foot-high cliff on his daily run.
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In Detroit, a 41-year-old man got stuck and drowned in two feet of water after squeezing headfirst through an 18-inch-wide sewer grate to retrieve his car keys.
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A 7-year- old boy fell off a 100-foot-high bluff near Ozark, Ark., after he lost his grip swinging on a cross that marked the spot where another person had fallen to his death in 1990.
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A WWII-vintage bomb dug up from under a house in the Philippines exploded Monday, December 7, 1998, killing the owner of the house and three others. Philippine police said that carpenters were installing a septic tank 15 DAYS AGO when the found a bomb under the house in Tacloban, 360 miles southeast of Manila. The 1,000-pound bomb went off as they were tinkering with it, instantly killing the four and destroying the house.
When someone "tinkers" with a 1,000 pound bomb for 15 days they deserve to be removed from the gene pool, and the great news is that four geniuses were removed!
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Police in George, WA issued a report on the events leading up to the deaths of Robert Uhlenake (24) and his friend, Ormond D. Young (27) at the Metallica concert last Friday. Uhlenake and Young were found dead at the Gorge Amphitheater after the show. Uhlenake was in pickup that was on top of Young at the bottom of a 20 ft drop. Young was found with severe lacerations, numerous fractures, contusions, and a branch in his anal cavity. He also had been stabbed and his pants were in a tree above him, some 15 ft off the ground; adding to the mystery of the heretofore unexplained scene.
According to Commissioner-In-Charge Inoye Appleton, Uhlenake and Young had tried to get tickets for the sold-out concert. When they were unable to get any tickets, the two decided to stay in the lot and drink. Once the show began, and after the two had consumed 18 beers between the two of them, they hit upon the idea of scaling the 7 foot wooden security fence around the perimeter of the site and sneak in. They apparently moved the truck up to the edge of the fence and decided that Young would go over first and assist Uhlenake later. They had not counted on the fact that while it was a 7 foot fence on the parking lot side, there was a 23 foot drop on the other side.
Young, who weighed 255 lbs and was quite inebriated, had jumped up and over the fence and promptly fell about half the 23 foot distance before a large tree branch broke his fall AND his left forearm; unfortunately, he also managed to get his shorts caught on the branch. Since he was now in a lot of pain and with no way to extricate himself and his shorts from the tree, he decided, seeing bushes down below, to cut his shorts off and fall to the ground. Upon cutting the last bit of fabric from himself, he suddenly plummeted to earth, losing grip of the knife. The "soft" bushes were actually holly bushes and landing in them caused a massive number of cuts. He also had the misfortune of landing squarely on a holly bush branch; effectively impaling himself. The knife, which he had accidentally released 15 ft up, now landed and stabbed him in his left thigh. Apparently, he was in a lot of pain.
Enter his friend Robert. Uhlenake had apparently observed the last bit of this and, despite his inebriated state, realized that Young was in trouble. He hit upon the idea of lowering a rope to his friend and pull him up and over the fence. This was complicated by the fact that Uhlenake was outweighed by his friend by a good 100 lbs. Again, despite his state he realized he could use their truck to pull Young out. Unfortunately, because of his state, Uhlenake put the truck in reverse, rather than drive, broke through the fence, landed on Young (killing him), was thrown out of the truck and subsequently died of internal injuries.
"So that's how a dead 255 lb man with no pants on, with a truck on top of him and a stick up his ass came to be" said Commissioner Appleton.
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[AP, Mammoth Lakes, CA] A San Anselmo man died yesterday when he hit a lift tower at the Mammoth Mountain ski area while riding down the slope on a foam pad, authorities said. Matthew David Hubal, 22, was pronounced dead at Centinela Mammoth Hospital. The accident occurred about 3 a.m., the Mono County Sheriff's Department said. Hubal and his friends apparently had hiked up a ski run called Stump Alley and undid some yellow foam protectors from the lift towers, said Lieutenant Mike Donnelly of the Mammoth Lakes Police Department. The pads are used to protect skiers who might hit the towers. The group apparently used the pads to slide down the ski slope and Hubal crashed into a tower. It has since been investigated that the tower he hit was the one with its pad removed.
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[AP, St. Louis, MO] Robert Puelo, 32, was apparently being disorderly in a St. Louis market. When the clerk threatened to call police, Puelo grabbed a hot dog, shoved it in his mouth, and walked out without paying for it. Police found him unconscious in front of the store: paramedics removed the six-inch wiener from his throat, where it had choked him to death.
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[UPI, Spain] To poacher Marino Malerba, who shot a stag standing above him on an overhanging rock - and was killed instantly when it fell on him.
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[Associated Press, Kincaid, W. VA] Man Loses Face at Party. A man at a party popped a blasting cap into his mouth and bit down, triggering an explosion that blew off his lips, teeth and tongue, state police said Wednesday. Jerry Stromyer, 24, of Dincaid, bit the blasting cap as a prank during a party late Tuesday night, said Cpl. M.D. Payne. "Another man had it in an aquarium, hooked to a battery, and trying to explode it," Payne said. "It wouldn't go off and this guy said, "I'll show you how to set it off." "He put it in his mouth and bit down. It blew all his teeth off, his tongue and his lips." Payne said. Stromyer was listed in guarded condition Wednesday with extensive facial injuries, according to a spokesman at Charleston Area Medical Division. "I just can't imagine anyone doing something like that," Payne said.
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[UPI, Portland, OR] Doctors at Portland's University Hospital said that Wednesday an Oregon man shot through the skull by a hunting arrow is lucky to be alive, and will be released soon from the hospital. Tony Roberts, 25, lost his right eye last weekend during an initiation into a men's rafting club, Mountain Men Anonymous, in Grants Pass, Ore. A friend tried to shoot a beer can off his head, but the arrow entered Roberts' right eye. Doctors said had the arrow gone 1millimeter to the left, a major blood vessel would have cut and Roberts would have died instantly. Neurosurgeon Dr. Johnny Delashaw at the university Hospital in Portland said the arrow went through 8 to 10 inches of brain, with the tip protruding at the rear of his skill, yet somehow managed to miss all major blood vessels. Delashaw also said had Robert tried to pull the arrow out on his own he surely would have killed himself. Roberts admitted afterwards he and his friends had been drinking that afternoon. Said Roberts, "I feel so dumb about this." No charges have been filed but the Josephine County district attorney's office said the initiation stunt is under investigation.
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[AP, Arkansas] Pillsbury DoughBoy Wanted for Attempted Murder. A woman named Linda went to Arkansas last week to visit her in-laws, and while there, went to a store. She parked next to a car with a woman sitting in it, her eyes closed and hands behind her head, apparently sleeping. When Linda came out a while later, she again saw the woman, her hands still behind her head but with her eyes open. She looked very strange, so Linda tapped on the window and said "Are you okay?" The woman answered "I've been shot in the head, and I am holding my brains in." Linda didn't know what to do; so she ran into the store where store officials called the paramedics. They had to break into the car because the door was locked. When they got in, they found that the woman had bread dough on the back of her head and in her hands. A Pillsbury biscuit canister had exploded, apparently from the heat in the car, making a loud explosion like that of a gunshot, and hit her in the head. When she reached back to find what it was, she felt the dough and thought it was her brains. She passed out from fright at first, then attempted to hold her brain in!
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Unknown, 25 March - A terrible diet and room with no ventilation are being blamed for the death of a man who was killed by his own gas. There was no mark on his body but autopsy showed large amounts of methane gas in his system. His diet had consisted primarily of beans and cabbage (and a couple of other things). It was just the right combination of foods. It appears that the man died in his sleep from breathing from the poisonous cloud that was hanging over his bed. Had he been outside or had his windows been opened, it wouldn't have been fatal. But the man was shut up in his near airtight bedroom. He was 22...a big man with a huge capacity for creating this deadly gas. Three of the rescuers got sick and one was hospitalized.
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Reuters, Mississauga, Ontario - Man slips, falls 23 stories to his death. A man cleaning a bird feeder on his balcony of his condominium apartment in this Toronto suburb slipped and fell 23 stories to his death, police said Monday. Stefan Macko, 55, was standing on a wheeled chair Sunday when the accident occurred, said Inspector Arcy Honer of the Peel regional police. It appears the chair moved and he went over the balcony, Honer said. One of those freak accidents. No foul play is suspected.
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UPI, Toronto - Police said a lawyer demonstrating the safety of windows in a downtown Toronto skyscraper crashed through through a pane with his shoulder and plunged 24 floors to his death. A police spokesman said Garry Hoy, 39, fell into the courtyard of the Toronto Dominion Bank Tower early Friday evening as he was explaining the strength of the building's windows to visiting law students. Hoy previously had conducted demonstrations of window strength according to police reports. Peter Lauwers, managing partner of the firm Holden Day Wilson, told the Toronto Sun newspaper that Hoy was one of the best and brightest members of the 200-man association.
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The Arizona Highway Patrol came upon a pile of smoldering metal embedded into the side of a cliff rising above the road at the apex of a curve. The wreckage resembled the site of an airplane crash, but it was a car. The type of car was unidentifiable at the scene. The lab finally figured out what it was and what had happened.
It seems that a guy had somehow gotten hold of a JATO unit (Jet Assisted Take Off - actually a solid fuel rocket) that is used to give heavy military transport planes an extra "push" for taking off from short airfields. He had driven his Chevy Impala out into the desert and found a long, straight stretch of road. Then he attached the JATO unit to his car, jumped in, got up some speed and fired off the JATO!
The facts as best as could be determined are that the operator of the 1967 Impala hit JATO ignition at a distance of approximately 3.0 miles from the crash site. This was established by the prominent scorched and melted asphalt at that location. The JATO, if operating properly, would have reached maximum thrust within 5 seconds, causing the Chevy to reach speeds well in excess of 350 mph and continuing at full power for an additional 20-25 seconds. The driver, soon to be pilot, most likely would have experienced G-forces usually reserved for dog-fighting F-14 jocks under full afterburners, basically causing him to become insignificant for the remainder of the event. However, the automobile remained on the straight highway for about 2.5 miles (15-20) seconds before the driver applied and completely melted the brakes, blowing the tires and leaving thick rubber marks on the road surface, then becoming airborne for an additional 1.4 miles and impacting the cliff face at a height of 125 feet leaving a blackened crater 3 feet deep in the rock.
Most of the driver's remains were not recoverable; however, small fragments of bone, teeth and hair were extracted from the crater and fingernail and bone shards were removed from a piece of debris believed to be a portion of the steering wheel.
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Who can repair journalism's image? | csmonitor.com: "Who can repair journalism's image?
By Randy Dotinga | Correspondent of The Christian Science Monitor
The past year has been the most miserable in the history of modern American journalism. First came Jayson Blair, the brash young New York Times reporter who made up details, pilfered prose and repeatedly snookered his bosses.
Then, like a long row of click-clacking dominoes, a rogue's gallery of other journalists fell to accusations of plagiarism and fakery. Reporters in Colorado, Georgia, and Missouri allegedly stole material from other publications. In Houston, a sportswriter copied one of his own old columns, and a Chicago Tribune correspondent changed a source's name to protect him.
And in the biggest blow to the industry since Mr. Blair, USA Today last month exposed star foreign correspondent Jack Kelley's long history of deceit in his travels from Cuba to Israel. 'It's bad right now,' says Kansas University journalism professor Peggy Kuhr. 'It's shocking.'
Bush May Accept a Settlement Plan
By STEVEN R. WEISMAN
NY Times
Published: April 14, 2004
WASHINGTON, April 13 — President Bush is planning to issue a declaration on Wednesday that his aides say will recognize Israel's right to retain some Jewish settlements in the West Bank as part of any peace accord with the Palestinians.
Bad Idea Mr. President !! Ask anyone other than the Israeli Government.
Monday, April 12, 2004
Snares and Delusions
By PAUL KRUGMAN
NY Times Op-Ed
Published: April 13, 2004
In his Saturday radio address, George Bush described Iraqi insurgents as a "small faction." Meanwhile, people actually on the scene described a rebellion with widespread support.
Isn't it amazing? A year after the occupation of Iraq began, Mr. Bush and his inner circle seem more divorced from reality than ever.
Events should have cured the Bush team of its illusions. After all, before the invasion Tim Russert asked Dick Cheney about the possibility that we would be seen as conquerors, not liberators, and would be faced with "a long, costly and bloody battle." Mr. Cheney replied, "Well, I don't think it's likely to unfold that way, Tim, because I really do believe that we will be greeted as liberators." Uh-huh.
But Bush officials seem to have learned nothing. Consider, for example, the continuing favor shown to Ahmad Chalabi. Last year the neocons tried to install Mr. Chalabi in power, even ferrying his private army into Iraq just behind our advancing troops. It turned out that he had no popular support, and by now it's obvious that suspicions that we're trying to put Mr. Chalabi on the throne are fueling Iraqi distrust. According to Arnaud de Borchgrave of U.P.I., however, administration officials gave him control of Saddam's secret files — a fine tool for blackmail — and are letting him influence the allocation of reconstruction contracts, a major source of kickbacks.
And we keep repeating the same mistakes. The story behind last week's uprising by followers of Moktada al-Sadr bears a striking resemblance to the story of the wave of looting a year ago, after Baghdad fell.
In both cases, officials were unprepared for an obvious risk. According to The Washington Post: "One U.S. official said there was not even a fully developed backup plan for military action in case Sadr opted to react violently. The official noted that when the decision [to close Sadr's newspaper] was made, there were very few U.S. troops in Sadr's strongholds south of Baghdad."
If we're lucky, the Sadrist uprising will eventually fade out, just as the postwar looting did; but the occupation's dwindling credibility has taken another huge blow.
Meanwhile, Mr. Bush, who once challenged his own father to go mano a mano, is still addicted to tough talk, and still personalizes everything.
Again and again, administration officials have insisted that some particular evildoer is causing all our problems. Last July they confidently predicted an end to the insurgency after Saddam's sons were killed. In December, they predicted an end to the insurgency after capturing Saddam himself. Six weeks ago — was it only six weeks? — Al Qaeda was orchestrating the insurgency, and Abu Musab al-Zarqawi was the root of all evil. The obvious point that we're facing widespread religious and nationalist resentment in Iraq, which is exploited but not caused by the bad guy du jour, never seems to sink in.
The situation in Falluja seems to have been greatly exacerbated by tough-guy posturing and wishful thinking. According to The Jerusalem Post, after the murder and mutilation of American contractors, Mr. Bush told officials that "I want heads to roll." Didn't someone warn him of the likely consequences of attempting to carry out a manhunt in a hostile, densely populated urban area?
And now we have a new villain. Yesterday Lt. Gen. Ricardo Sanchez declared that "the mission of the U.S. forces is to kill or capture Moktada al-Sadr." If and when they do, we'll hear once again that we've turned the corner. Does anyone believe it?
When will we learn that we're not going to end the mess in Iraq by getting bad guys? There are always new bad guys to take their place. And let's can the rhetoric about staying the course. In fact, we desperately need a change in course.
The best we can realistically hope for now is to turn power over to relatively moderate Iraqis with a real base of popular support. Yes, that mainly means Islamic clerics. The architects of the war will complain bitterly, and claim that we could have achieved far more. But they've been wrong about everything so far — and if we keep following their advice, Iraq really will turn into another Vietnam.
Sunday, April 11, 2004
Is Iraq our Next Vietnam?
Several articles have been written lately using the "q" word, quagmire, to describe America's occupation of Iraq, and to show certain similarities between the Vietnam War and Gulf War II. While there are some common strands, there appears to be a much more obvious, and ominous conflict parallel: Israel's defeat in Southern Lebanon by Hezbollah's resistance fighters.Incidentally, note also the predominate use of the word "arrest" when our Government speaks about the capture of any of the insurgents; yet refuses to acknowledge that the CPA and American forces in Iraq are attempting to do police work, not classically defined military conquest or pacification. And additional bad-sign occurred last week when the ICDC, (Iraqi Civil Defense Corp) refused to join with American forces in Nasiriyah and Falluja in controlling insurgent violence.
Whoever is responsible for the atrocious strategic and tactical planning for the War's aftermath should be relieved of command access immediately. Our country cannot afford to be guided in War or National Defense by such incompetents ! The insurgents appear to be geniuses compared to US forces in their ability to adapt to changing circumstances. Roadside bombs, abductions, RPG's, targeted assassinations, factional militias, hatred of occupiers, all this was eminently knowable long before the War started, yet the Administration took us into this quagmire with it's eyes wide shut, and now has the audacity to suggest we have no option other than to commit more US resources to a solution. If this War/Occupation were a football game, we would already be down twenty-one to zip, and it would still be the first quarter!
Gas prices climb to new record high
Lundberg: Drivers paying 31.5 cents more than in December
Sunday, April 11, 2004 Posted: 7:42 PM EDT (2342 GMT)
(CNN) -- Gas prices rose on average 2.5 cents a gallon in the past two weeks, with no near-term sign of relief, the publisher of a national survey on gas prices said Sunday. The national average for a gallon of regular unleaded gasoline sold at self-service pumps was $1.79, according to the Lundberg Survey of more than 7,000 U.S. filling stations taken on April 9.
Trilby Lundberg, publisher of the Lundberg Survey, said the new record high comes from an upward trend fueled by higher crude oil prices globally, increased demand for gas caused by economic growth in the United States and increased refinery costs resulting from seasonal changes in refinery processes mandated by environmental rules.
U.S. motorists are paying an average 31.5 cents per gallon more, [equivalent to 20.9%] since December 2003, Lundberg said.
Barring an unexpected drop in crude oil prices, more increases are possible as the high-demand summer driving season approaches, Lundberg said. As in the last survey, taken March 26, San Diego, California, remained the most expensive place to fill up a tank, with a gallon of self-serve regular now $2.22 -- 10 cents higher than two weeks earlier. Tulsa, Oklahoma, remained the cheapest city for gas, at $1.59 cents a gallon -- a penny less than two weeks before.
IRS is auditing fewer businesses, more individuals
Mary Dalrymple, Associated Press
April 12, 2004IRS0412
WASHINGTON, D.C. -- The Internal Revenue Service audited fewer corporations, small businesses and partnerships last year but more individual taxpayers, according to a study of government data.
Syracuse University's Transactional Records Access Clearinghouse, in its analysis of IRS data, concluded that the audit rate for businesses of all sizes slipped last year to 2.1 audits for every 1,000 businesses, down from 2.2 audits per 1,000 businesses the previous year.
At the same time, the IRS audited 14 percent more individual tax returns. The audit rate for individuals increased last year to 6.5 audits for every 1,000 taxpayers. Official audit rates released by the IRS last month show a similar trend.
Researchers said the declining audits of businesses exposes a flaw in the administration's tough stance against corporate wrongdoing.
"These and a number of other measures -- documented by the agency's own data -- indicate that the actual performance of the IRS differs in significant ways from some of the Bush administration claims when it comes to cracking down on corporate scofflaws," the report said.
Researchers point specifically to declining audits of the largest corporations and a type of business organization that passes income and taxes on to its shareholders or partners -- an arrangement found to have been improperly used in some corporate accounting scandals.
IRS Commissioner Mark Everson said that the agency's broad attack on corporate tax evasion does not show up in the audit numbers.
"Am I satisfied with the numbers? No. I want to see them go up," he said. "I'm not surprised that that's lagging the other indicators. And while I think it's an important indicator, it doesn't tell the whole story."
Some advocates said the trend appears troubling.
"What struck me first was the commissioner earlier this week said that they'd increased enforcement and then I look at these numbers and say, 'What is he talking about?' " said David Keating, senior counselor for the National Taxpayers Union. "It really opens up a credibility gap."
In a detailed written response, the IRS said the study ignores the reasons for the decline in corporate audits and other enforcement actions taken against businesses.
The IRS said the decline can be attributed partly to the explosive growth in tax shelters, which make audits more intricate and time-consuming. Tax collectors worked more than 2,200 corporate tax shelter returns in 2003. Each takes an average 7½ months longer than other corporate returns, and their number is growing.
Corporate vs Individual Income Tax
More corporations shirk their share of tax burdenUSA Today
Posted 4/11/2004 10:18 PM Updated 4/11/2004 10:32 PM
In his annual letter to shareholders earlier this year, Berkshire Hathaway Chairman Warren Buffett made an unusual admission: Next year, he hopes that his company will pay more than the $3.3 billion in corporate taxes it paid for 2003. Buffett sees higher taxes as the logical consequence of higher profits, which keep rolling into his Omaha-based holding company.
Although Buffett is widely admired for business acumen, his perspective on corporate taxes isn't shared in many corner offices nationwide. In fact, the percentage of federal tax receipts from corporate income taxes has been in decline since the 1950s, from over 30% to under 10%. And the General Accounting Office reported last week that 61% of U.S. corporations paid no taxes during the booming period from 1996 through 2000.
Here's a point to remember as you pay your taxes this week: When companies find ways to exploit the tax code to reduce or eliminate their tax liabilities, individuals pay more. And the public faith in the tax code's basic fairness is undercut when profitable companies opt out of their responsibilities.
Yet companies have convinced Congress to give them generous exemptions, credits and deductions. And repeated tinkering to provide narrowly targeted tax breaks has created a code that's so complex, it provides companies numerous ways to avoid taxes.
Among the causes of the decline in corporate taxes:
� The 2002 and 2003 tax cuts were billed largely as cuts for individuals. But they also slashed an estimated $175 billion in corporate taxes through 2005. Pending in Congress now are a transportation spending bill that contains an unrelated cut to the corporate alternative minimum tax and a trade bill with cuts for manufacturing firms.
�The Internal Revenue Service and congressional investigators have uncovered the widespread use of legal corporate tax-avoidance schemes. In one, companies pay to lease roads and bridges from municipalities and then charge the same municipalities for their use. The tactic has no purpose other than providing tax write-offs. Another popular practice, which is legal in most cases, is for companies to create paper transactions with offshore subsidiaries. That way, companies can claim that their profits were earned in countries with no income tax.
Business groups deny they are unfairly avoiding taxes. They say corporate taxes are down because more companies structure themselves as partnerships or other types of businesses not required to pay taxes. The profits of these firms are reported on their owners' individual returns.
While such companies are growing in number, they don't account for the precipitous decline in corporate tax receipts. Nor would they explain why companies such as Wachovia paid no income taxes in 2002, despite reported profits of $4.1 billion. A Wachovia spokeswoman says the company did nothing wrong and that the company paid more than $900 million in taxes in 2003.
Berkshire Hathaway is increasingly becoming the exception to a highly troubling rule. This year, it will pay 2.5 cents of every dollar the government collects in corporate income tax. The corporate tax burden is one that's best shared fairly and not left to a declining number of companies — even companies as successful as Buffett's.
