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Wednesday
Mar262008

Taxpayers May Be Liable From Bear, Mortgage Rescue!!!

Even as the Bush administration insists it won't risk public funds in a bailout, American taxpayers may already be liable for billions of dollars stemming from Federal Reserve and Treasury efforts to quell a financial crisis.

History suggests the Fed may not recover some of the almost $30 billion investment in illiquid mortgage securities it received from Bear Stearns Cos., said Joe Mason, a Drexel University professor who has written on banking crises. Treasury's push to have Fannie Mae and Freddie Mac buy more mortgage bonds reduces the capital the government-chartered companies hold in reserve at a time when foreclosures and defaults are surging. Senators are promising to investigate.

Officials ``are playing with fire,'' said Allan Meltzer, a Fed historian and economics professor at Carnegie Mellon University in Pittsburgh. ``With good luck, none of these liabilities will come due. We can't expect that good luck, and we haven't had it.''

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson were forced to respond after capital markets seized up and Bear Stearns faced a run by creditors. In an emergency action that jeopardizes the dividend it pays the Treasury, the Fed authorized a $29 billion loan against illiquid mortgage- and asset-backed securities from Bear Stearns that will be held in a Delaware corporation. JPMorgan Chase & Co. contributed $1 billion.

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Wednesday
Mar262008

FDIC Plans for Rise In Bank Failures

Anticipating a surge in troubled financial institutions, federal regulators aim to increase by 60 percent the number of workers who handle bank failures.

The Federal Deposit Insurance Corp. wants to add 140 workers in the division that handles bank failures, bringing the total to 360, said John Bovenzi, the agency's chief operating officer.

"We want to make sure that we're prepared," Bovenzi said yesterday, adding that most of the hires will be temporary and based in Dallas.

There have been five bank failures since February 2007 following an uneventful stretch of more than two years. The last time the agency was hit hard with failures was during the 1990-91 recession, when 502 banks failed in three years.

Analysts predict more failures but said they don't think they will reach early-1990s levels.

Gerard Cassidy, managing director of bank equity research at RBC Capital Markets, projects 150 bank failures over the next three years, with the highest concentration coming from states such as California and Florida where an overheated real estate market is in a fast freeze.

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Tuesday
Mar252008

Trustees: Social Security, Medicare Face Financial Trouble

Trustees for the government's two biggest benefit programs warned Tuesday that Social Security and Medicare are facing enormous financial challenges, with the threats to Medicare far more severe.

The trustees, issuing a once-a-year analysis of the government's two biggest benefit programs, said the resources in the Social Security trust fund will be depleted by 2041. The reserves in the Medicare trust fund that pays hospital benefits were projected to be wiped out by 2019.

Both those dates were the same as in last year's report. But the trustees warned that financial pressures will begin much sooner when the programs begin paying out more in benefits each year than they collect in payroll taxes. For Medicare, that threshhold is projected to be reached this year and for Social Security it is projected to occur in 2017.

The first year that payments will exceed income for Social Security will occur in 2017, just nine years from now, reflecting growing demands from the retirement of 78 million baby boomers. Medicare is projected to pay out more than it receives in income starting this year.

"The financial difficulties facing Social Security and Medicare pose enormous challenges," the trustees said in their report. "The sooner these challenges are addressed, the more varied and less disruptive their solutions can be."

Treasury Secretary Henry Paulson, one of the trustees, warned that the country was facing a fiscal train wreck unless something is done.

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Tuesday
Mar252008

Another Govt Data Security Breach

First it was the Department of Veterans Affairs. Then, the Internal Revenue Service. Now, the National Institutes of Health is the latest federal agency that failed to encrypt laptop computers containing sensitive private information.

The recent theft of a laptop that had medical test results for 2,500 patients in an NIH heart imaging study shows that the government is still not guarding private information, despite new rules, privacy specialists say.

"The issue isn't so much with the policy; it's with the policy being followed in practice," said Joy Pritts, a Georgetown University researcher who specializes in health care privacy.

The laptop was reported stolen from Dr. Andrew E. Arai's locked car trunk Feb. 23, but the National Heart, Lung and Blood Institute alerted patients to the data theft only last week.

Their names, birth dates and test results from an ongoing heart imaging study were not encrypted because the agency hadn't gotten around to securing Arai's laptop, said Dr. Susan Shurin, the institute's deputy director. Officials said there was a delay in informing patients of the breach of confidential information because it wasn't initially clear that the laptop held personal information.

"This justifies a hard look at the whole system as well as the individual," said Shurin, who said the institute had begun checking every laptop for encryption and reminding staff to avoid keeping private information on laptops unless necessary.

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Tuesday
Mar252008

21 Nations More Prosperous Than U.S.

The United Kingdom has been ranked as one of the most stable and prosperous countries in the world, beating the United States, France and even Switzerland in a global assessment of every nation’s achievements and standards.

A one-year investigation and analysis of 235 countries and dependent territories has put the UK joint seventh in the premier league of nations. The top ten comprise also the Vatican, Sweden, Luxembourg, Monaco, Gibraltar, San Marino, Liechtenstein, the Netherlands and the Irish Republic.

The US lies 22nd and Switzerland, normally associated with wealth and untouchable stability, is rated 17th, losing points in the assessment of its social achievements.

The bottom ten, surprisingly, do not include Iraq. They are listed as Gaza and the West Bank, Somalia, Sudan, Afghanistan, Ivory Coast, Haiti, Zimbabwe, Chad, the Democratic Republic of Congo and the Central African Republic.

The UK received high marks despite the deployment of combat troops in Iraq and Afghanistan, the suicide bombings in London on July 7, 2005, the continuing threat from home-grown terrorists and the collapse of the Northern Rock bank.

The global check on every country recognised as an individual state or territory by the United Nations was carried out by Jane’s Information Group and is published today.

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Tuesday
Mar252008

U.S. says Missile Parts Mistakenly Sent to Taiwan

The U.S. Defense Department accidentally shipped non-nuclear ballistic missile components to Taiwan, the Pentagon said Tuesday.

Four nose-cone fuses for intercontinental ballistic missiles were shipped instead of helicopter batteries that Taiwan had requested, Air Force Secretary Michael Wynne said.

The fuses were shipped to Taiwan in the fall of 2006 and kept in a warehouse there. The Taiwanese military informed the United States last week about their presence on the island.

"There are no nuclear or fissile materials associated with these items," Wynne said. "The United States is making all appropriate notifications in the spirit of candor and openness in an effort to avoid any misunderstanding."

An investigation is under way, he added.

"In an organization as large as DOD, the largest and most complex in the world, there will be mistakes. But they can not be tolerated in the arena in strategic systems, whether they are nuclear or only associated equipment, as was in this case," Principal Deputy Undersecretary of Defense Ryan Henry said.

He said the parts were 1960s technology, designed for use with Minuteman ballistic missiles.

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Tuesday
Mar252008

U.S. Consumers Most Pessimistic Since Nixon

US house prices have fallen at the sharpest rate in more than 20 years, and American consumers are now at their most pessimistic since Richard Nixon was in the White House, according to figures published today.

The S&P/Case-Shiller home price index showed that prices in 20 US metropolitan areas fell 10.7pc in January, compared with the same month last year.

That followed a 9pc decline in December and was the sharpest fall since the index was created in 1987.

In a further sign that the economic crisis appears to be is deepening, consumer confidence in the US fell to a five-year low of 64.5, as turmoil in the financial markets, the threat of recession, and falling housing prices heightened fear among Americans.

The survey's gauge of confidence for the next six months also showed consumers are more nervous about the future than at any time since December 1973, when Richard Nixon was President.

In January the housing market was worst affected in Las Vegas and Miami, where the average house price fell by 19.3pc. In New York house prices fell by 5.8pc, year-on-year.

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Tuesday
Mar252008

Americans Oppose Government Aid for Banks!

A majority of Americans are opposed to the federal government helping out banks that made bad loans or homeowners who borrowed more than they could afford, a Fox 5/The Washington Times/Rasmussen poll reported yesterday.

Despite moves by the Federal Reserve Board and other federal agencies to provide cash, low interest, short-term loans and other assistance to investment banks and a troubled mortgage industry, Americans opposed such actions 61 percent to 15 percent, the survey found. Another 23 percent were undecided on the issue.

The poll also found that Americans — 53 percent to 29 percent — were opposed to helping out people who bought homes they could not afford. The issue left 17 percent undecided.

Sharp differences about the topics were found between men and women, and whites and blacks.

On whether the government should help out credit-strapped financial institutions, 70 percent of men were opposed, compared with 53 percent of women, while 64 percent of whites were opposed compared with 45 percent of blacks.

Incomes also influenced responses, with opposition strongest among higher-income Americans. The survey found 53 percent of Americans earning less than $20,000 opposed any help for ailing banks, compared with 70 percent opposition among people making more than $100,000.

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Tuesday
Mar252008

MoD Using Propaganda to Lure Vulnerable Students into the Military

Teachers today vowed to oppose military recruitment campaigns in schools that are based on Ministry of Defense "propaganda".

The National Union of Teachers (NUT) voted to back any school staff who want to boycott Armed Forces recruitment campaigns.

Delegates at the union's annual conference in Manchester lined up to condemn the tactics of the MoD in targeting teenagers with "misleading" information that they said glamorizes war.

The union backed a motion committing the NUT to "support teachers and schools in opposing Ministry of Defence recruitment activities that are based upon misleading propaganda".

Paul McGarr, a delegate from east London, told the conference: "Personally I find it difficult to imagine any recruitment material that is not misleading."

He said: "Let's just try and imagine what that recruitment material would have to say were it not to be misleading.

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Tuesday
Mar252008

Supreme Court says Bush Overstepped in Texas

President Bush overstepped his authority when he ordered a Texas court to reopen the case of a Mexican on death row for rape and murder, the Supreme Court said Tuesday.

In a case that mixes presidential power, international relations and the death penalty, the court sided with Texas 6-3.

Bush was in the unusual position of siding with death row prisoner Jose Ernesto Medellin, a Mexican citizen whom police prevented from consulting with Mexican diplomats, as provided by international treaty.

An international court ruled in 2004 that the convictions of Medellin and 50 other Mexicans on death row around the United States violated the 1963 Vienna Convention, which provides that people arrested abroad should have access to their home country's consular officials. The International Court of Justice, also known as the world court, said the Mexican prisoners should have new court hearings to determine whether the violation affected their cases.

Bush, who oversaw 152 executions as Texas governor, disagreed with the decision. But he said it must be carried out by state courts because the United States had agreed to abide by the world court's rulings in such cases. The administration argued that the president's declaration is reason enough for Texas to grant Medellin a new hearing.

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