The CAP: Bank Stress Test Overview

From the NY Times:

Federal officials provided new details on Wednesday of the government’s plan to shore up major banks in the event of a sharper economic downturn and convert the government’s preferred shares into common bank stock.

Nineteen major banks worth more than $100 billion will face a mandatory “stress test” to judge whether they have enough capital to survive another steep drop in housing prices or a sharp increase in unemployment rates.

Those that fail would have six months to raise money from the private sector, or would receive additional capital injections from the government in the form of securities that could be converted into common stock at a 10 percent discount to the price before Feb. 9.

Common stock carries voting rights and could hand the government greater influence over the banks that take on additional money — or the executives who run them — but the government would no longer be in a more senior position to be paid dividends or paid back first in the event a bank collapsed.

Also, existing shareholders could have their stakes further diluted if the government converted preferred shares to common stock.

Release of the details came shortly after the Federal Reserve chairman, Ben S. Bernanke, testifying a second day on Capitol Hill, again played down the idea that the government might use the program to nationalize big banks.

Mr. Bernanke said the government could end up owning larger stakes in the banks, but that nationalization “is when the government seizes the bank, zeros out the shareholders and begins to manage and run the bank, and we don’t plan anything like that.”

Statements from the Treasury and Federal Reserve took pains to say that major banks were not on the verge of collapse, and had cushions large enough to be considered “well capitalized.” But the government acknowledged the toll of dwindling confidence on the financial system.

“The uncertain economic environment has eroded confidence in the amount and quality of capital held by some,” the Treasury Department said. “In turn, market participants’ concerns over the capital positions of some institutions is impairing the ability of the system overall to perform its critical role of credit origination and intermediation.”

The details on the bank stress tests were released two weeks after Treasury Secretary Timothy F. Geithner sketched out the government’s latest moves to address the crisis in banks and try to unlock frozen credit markets.

The Treasury and Fed are also expanding programs to unlock commercial credit and planning a $1 trillion public-private partnership to entice investors to buy troubled mortgage-related assets from banks.

The plan would require banks that take on additional government money to comply with executive pay limits passed under the $787 billion economic stimulus package, and would require banks to be more transparent about how they use taxpayer dollars.

“Banks must submit a plan for how they intend to use this capital to preserve and strengthen their lending capacity — specifically, to increase lending above levels relative to what would have been possible without government support,” the Treasury Department said in a statement.

The stress tests will use two economic situations to determine a bank’s health: consensus projections of how the economy will fare in the next two years, and more pessimistic outlooks.

Under the so-called baseline expectations of the economy’s performance, unemployment will rise to 8.4 percent this year, economic growth will contract 2 percent and home prices will fall 14 percent.

A worse outlook envisions home prices falling 22 percent this year, the gross domestic product contracting 3.3 percent and unemployment rising to 8.9 in 2009 and 10.3 percent in 2010.

The government said the stress tests would be finished as soon as possible, but no later than the end of April.

Website NUMBER?

In the interest of fairness, I have to point out when Joey slips up; because I was more than happy to do it when Bush Jr. did it to himself. This almost as funny as "the Internet is a series of tubes". I hope they don't expect too much out of the Bidenator (my new name for him, because according to the highest source in the land, "no one messes" with the Bidenator).

From USA Today:

So he's not such a Web guy.

Vice President Biden, in charge of making sure that the $787 billion economic stimulus package gets spent fast and spent well, last week gave mayors the wrong name for the website designed to track the money. Today he forgot the name entirely for a few seconds during an interview on CBS's Early Show with Maggie Rodriguez:

RODRIGUEZ: By the way, do you know the website?

BIDEN: You know, I am embarrassed. You know the website number? You know, I should have it in front of me, and I don't. I'm actually embarrassed.

RODRIGUEZ: All right. I'm going call your office, too, and get it.

BIDEN: It is recovery.gov. Recovery.gov.

RODRIGUEZ: Recovery -- is that up and running already?

BIDEN: That's up and running.

People do seem to be finding the site. Peter Orszag, director of the Office of Management and Budget, said today before a White House meeting with Biden that it's getting 3,000 hits per second.

Earl Devaney, a former inspector general now chairing the Recovery Act Transparency and Accountability Board, urged the public to keep tabs. "My goal will be for the average citizen to be able to go on that website and follow the money," he said. "I think I'll be hearing a lot from citizens ... if they see things that they don't like, and hopefully we'll get some attention to misuse of any of this money."

Sounds Like A Plan

Apparently, President Obama is going to ride this populist shift in opinion until the wheels fall off. After outlining an aggressive agenda in his speech to Congress, he is going to make Wall Street executives sweat a little bit. I don't think this tactic is going to help the economy in any way, at least not in the long run; but this tactic does put a smile on my face.

From the NY Daily News:

President Obama will unveil guidelines Wednesday afternoon for cracking down on Wall Street's abuses and protecting Americans' investments, the Daily News has learned.

Obama aides have been hinting broadly for weeks that The Street won't like what's about to happen to them in Obama's re-regulation plan for the financial industry, but Wednedsay's rollout is short on detail.

The particulars will be unveiled by the Treasury Department soon, according to Obama insiders. At a meeting Wednesday afternoon with Treasury Secretary Timothy Geithner and his economic team, Obama will order his advisers to work with Congress to craft tough legislation to reign in Wall Street in the next few weeks.

• The Federal Reserve and government will enforce "serious oversight" of financial institutions "that pose serious risks to our markets."

• "Modernizing and streamlining" regulation of all financial markets.

• Restoring trust in our markets with "openness, transparency and plain language throughout our financial system."

• Give regulators more power to enforce oversight and monitor investments.

• Demand "strict accountability" for top executives "who violate the public trust."

• Create a seamless system of regulations for institutions and markets.

• Convince other nations to impose strict regulation of their financial markets. "That is how we will stop financial crises from spilling across borders and prevent global crises of the kind we now face," Obama will say.

Murdoch Apologizes

I was wondering about what it would take to get Murdoch to come out and apologize for the Post's cartoon. I guess an official NAACP protest and a spotlight on the waiver that allows News Corp to own multiple news organizations in the same locality was just enough.

From CNN:

"Today I want to personally apologize to any reader who felt offended, and even insulted," said the statement from Murdoch, who is also chairman and chief executive of News Corporation, which owns the paper. "
I can assure you -- without a doubt -- that the only intent of that cartoon was to mock a badly written piece of legislation.

"It was not meant to be racist, but unfortunately, it was interpreted by many as such. We all hold the readers of the New York Post in high regard, and I promise you that we will seek to be more attuned to the sensitivities of our community."

The cartoon by Sean Delonas referenced the mauling of a Connecticut woman by a chimpanzee who was later shot and killed by police. In the caption, one of the officers says, "They'll have to find someone else to write the next stimulus bill." The cartoon was published on Wednesday, a day after President Obama signed the stimulus bill.

The Post issued a statement the following day, apologizing but noting that the cartoon was meant to mock what it called an "ineptly written" stimulus bill. Many critics said the cartoon played on historically racist images by appearing to compare Obama, the nation's first black president, to the chimpanzee.

Leaders of the NAACP on Saturday called for the firing of Delonas. Delonas called the controversy "absolutely friggin' ridiculous." "Do you really think I'm saying Obama should be shot? I didn't see that in the cartoon," Delonas told CNN.

Bank Fees for the Unemployed

Since we, the schleps who pay taxes, are funding the financial flotation devices that these banks are using to stay afloat, then I say it's about time for us to walk into our local branches and request convenience charge deposits into our accounts. After all, we're providing the same type of service that a lending institution performs for a borrower. My, how the tables would turn.

This incredible bit of news from my Comcast.net dashboard:

For hundreds of thousands of workers losing their jobs during the recession, there's a new twist to their financial pain: Even as they're collecting unemployment benefits, they're paying bank fees just to get access to their money.

Thirty states have struck such deals with banks that include Citigroup Inc., Bank of America Corp., JP Morgan Chase and US Bancorp, an Associated Press review of the agreements found. All the programs carry fees, and in several states the unemployed have no choice but to use the debit cards. Some banks even charge overdraft fees of up to $20 — even though they could decline charges for more than what's on the card.

"It's a racket. It's a scam," said Rachel Davis, a 38-year-old dental technician from St. Louis who was laid off in October. Davis was given a MasterCard issued through Central Bank of Jefferson City and recently paid $6 to make two $40 withdrawals.

The banks say their programs offer convenience. They also provide at least one way to tap the money at no charge, such as using a single free withdrawal to get all the cash at once from a bank teller. But the banks benefit from human nature, as people end up treating the cards like all the other plastic in their wallets.

The fees are raising questions from lawmakers who just recently voted to infuse banks with taxpayer money to keep them afloat.

Steven Adamske, spokesman for the U.S. House Financial Services Committee, said he wasn't aware of the debit card programs before he was contacted by the AP, but was concerned about card holder fees.

"Our hope ... would be that banks who are getting federal assistance would forgo these kinds of fees as we're trying to help everyone in society deal with this recession," Adamske said.

Some banks, depending on the agreement negotiated with each state, also make money on the interest they earn after the state deposits the money and before it's spent. The banks and credit card companies also get roughly 1 percent to 3 percent off the top of each transaction made with the cards.

Neither banks nor credit card companies will say how much money they are making off the programs, or what proportion of the revenue comes from user versus merchant fees or interest. It's difficult to estimate the profits because they depend on how often recipients use their cards and where they use them.

But the potential is clear.

In Missouri, for instance, 94,883 people claimed unemployment benefits through debit cards from Central Bank. Analysts say a recipient uses a card an average of six to 10 times a month. If each cardholder makes three withdrawals at an out-of-network ATM, at a fee of $1.75, the bank would collect nearly $500,000. If half of the cardholders also dial customer service three times in any given week (the first time is free; after that, it's 25 cents a call), the bank's revenue would jump to more than $521,000. That would yield $6.3 million a year.

Rachel Storch, a Democratic state representative, received a wave of complaints about the fees from autoworkers laid off from a suburban St. Louis Chrysler plant. She recently urged Gov. Jay Nixon to review the state's contract with Central Bank with an eye toward reducing the fees.

"I think the contract is unfair and potentially illegal to unemployment recipients," she said.

Central Bank did not return two messages seeking comment.

Glenn Campbell, a spokesman for Rep. Russ Carnahan, D-Mo., said the congressman would support a review of the debit card programs nationwide.

Another 10 states — including the unemployment hot spots of California, Florida and South Carolina — are considering such programs or have signed contracts. The remainder still use traditional checks or direct deposit.

With the national unemployment rate now at 7.6 percent, the market for bank-issued unemployment cards is booming. In 2003, states paid only $4 million of unemployment insurance through debit cards. By 2007, it had ballooned to $2.8 billion, and by 2010 it will likely rise to $10.5 billion, according to a study conducted by Mercator Advisory Group, a financial industry consulting firm.

The economic stimulus plan signed by President Barack Obama this week will increase federal unemployment benefits by $40 billion this year. Subsequently, there will be more money from which banks can collect fees. The U.S. Department of Labor allows the fees as long as states create a way for recipients to get their money for free, spokeswoman Suzy Bohnert said.

"Beyond that, the individual decides how to manage his drawdowns using the debit card," she said in an e-mail.

A typical contract looks like the agreement between Citigroup and the state of Kansas, which took effect in November. The state expects to save $300,000 a year by wiring payments to Citigroup instead of printing and mailing checks.

Citigroup's bill to the state: zero. The bank collects its revenue from fees paid by merchants and the unemployed.

"If you use your card the right way, you're not going to pay fees at all," said Paul Simpson, Citigroup's global head of public sector, health care and wholesale cards.

But that's not always practical.

Arthur Santa-Maria, a laid-off engineer who lives just outside Albuquerque, N.M., said he didn't pay any fees the first time he was laid off, for several months in 2007. His unemployment benefits were paid by paper checks. He found a new job last year but was laid off again last fall.

This time, he was issued a Bank of America debit card — a "prepaid" card in industry lingo — but he was surprised to learn he had to pay fees to get his money. He asked the bank to waive them. It said no. That's when Santa-Maria called back to ask how to check his account online. He logged on and saw that the call cost him a half dollar. To avoid more fees, Santa-Maria found a Bank of America ATM at a strip mall and withdrew $80 at no charge. When he got back to his car, he decided to take out the rest of his money — $250 — and deposit it in his bank account.

Afterward, Santa-Maria logged on to his account and saw a charge of $1.50 for two withdrawals in one day.

"They're trying to use my money to make money," Stanta-Maria said. "I just see banks trying to make that 50 cents or a buck and a half when I should be given the service for free."

New Mexico authorities bargained with Bank of America to get lower fees for unemployment recipients, said Carrie Moritomo, a spokeswoman for the state Department of Workforce Solutions. The state saves up to $1.5 million annually by switching from checks to debit cards.

Bank of America spokeswoman Britney Sheehan pointed out that the fees charged in New Mexico are similar to those charged in the 29 other states with unemployment debit cards. The bank believes "the fee schedule is reasonable and consistent with similar programs," she said.

Banks could issue unemployment debit cards with no fees for cardholders, but that would likely mean that states would have to pay more of the administrative costs, said Mark Harrington, director of marketing for Citigroup's prepaid card services. If a state demanded no cardholder fees and could pay the difference, Citigroup might enter such a contract.

"We would be open to that," Harrington said. "We're not looking to structure any programs where we would lose money, but we're definitely flexible."

Simpson noted that the cards can save money for jobless workers who have no bank accounts. In the past, these people had to use corner check-cashing shops that charged fees as high as 2 percent, or $6 for a $300 check. Now, they can swipe their cards at McDonald's, Wal-Mart or elsewhere for free.

Kenna Gortler, a laid-off paper mill worker in Oregon, said her union is advising members to avoid the debit cards and sign up to get their benefits through direct deposit. More than 300 of her fellow workers have lost their jobs at the mill in the last three months, and horror stories about ATM fees and overdraft charges are starting to filter back to others who are just now signing up for their benefits.

"It's discouraging," Gortler said. "People have limited funds and they don't need to be giving money to the banks. They need to be keeping that money to feed their families and pay bills."

Muntazer al-Zaidi In Court

Because this guy is worth the attention. From FT.com:

The Iraqi journalist who became an icon for critics of the U.S.-led invasion when he hurled his shoes at former President George W. Bush went on trial on Thursday, facing up to 15 years in prison.

Muntazer al-Zaidi, whose shoe-throwing protest overshadowed Bush’s final visit to Iraq in December and who also called the former U.S. leader a ”dog” -- both insults in the Middle East -- is charged with assaulting a visiting head of state.

Zaidi was handcuffed and surrounded by a pack of security guards when he was brought to Iraq’s Central Criminal Court in Baghdad’s fortified Green Zone.

Family members waiting for him inside the courthouse ululated wildly as he was brought in and draped an Iraqi flag across his shoulders.

Zaidi has been imprisoned for more than two months and his family complains he was beaten after being pounced on by security guards at Bush’s news conference.

The reporter for an Iraqi television station based in Cairo became a hero in much of the Middle East.

Bush, whose support of Israel and decision to invade Iraq in 2003 to oust Saddam Hussein made him passionately disliked in many parts of the Middle East, nimbly ducked out of the way of the first shoe and made light of the incident afterwards. The second shoe also missed.

The invasion plunged Iraq into six years of sectarian warfare and insurgency that killed tens of thousands of Iraqis.

Zaidi’s defence lawyers lost an appeal to have the charges reduced to insulting Bush, a lesser offence. They argued he could not have truly hurt Bush with a shoe.

Iraqi Detour Has Cost Us - Kyrgyzstan

The following article outlines the problems that we can expect in Afghanistan in the coming year. We've lost our supply routes. We've handed the Russians the perfect bargaining chip, and we've lost our momentum for the proposed missile shield. We've exposed our AF pilots to an unacceptable level of danger, and we've endangered our entire mission in Afghanistan. All because we had to divert attention to Iraq; a country we had no business invading; a war that's made us less prepared to meet our strategic objectives.
Good call, you bunch of idiots. Look at where we are now. From UPI.com:

The Central Asian nation of Kyrgyzstan has cut America's most important supply lifeline into Afghanistan right after President Barack Obama ordered 17,000 more U.S. troops to be sent there.

The Parliament of Kyrgyzstan voted Thursday to evict the United States from Manas Air Base outside the capital Bishkek. The United States will have 180 days to evacuate the facilities and lose its key refueling base to supply forces in Afghanistan.

This pending expulsion of U.S. forces from Manas is a huge humiliation for the United States in Central Asia and marks a sea change in Russia's attitude toward the long-running U.S. and NATO war against the Taliban and al-Qaida in Afghanistan. It also serves notice that Obama's "surge" policy in Afghanistan is in dire trouble even as he launches it.

The U.S. armed forces have enjoyed impregnable, secure air and sea supply lines in fighting wars around the world for almost 70 years since their involvement in World War II. So the idea that land and air supply lines could be threatened or cut is completely unthinkable to Pentagon generals and administration or think-tank armchair strategists alike.

But from the annihilation of the Athenian army

in the famous Syracuse campaign more than 2,400 years ago to the destruction of the German Sixth Army and Fourth Panzer Army at Stalingrad in the winter of 1942-43, cutting off an army's supply lines has marked the death knell of scores of thousands of soldiers or more every time it has happened.

The 50,000 -- soon to be 67,000 -- U.S. and NATO troops in Afghanistan are still getting their supplies, and Manas should stay open for another six months or so. But once it closes, those supplies will have to come through Pakistani land roads that run through some of the most mountainous terrain in the world, or they will have to be delivered by air in large, potentially vulnerable and easily detectable supply aircraft.

The U.S. Air Force has the finest military airlift capacity in the world, but none of its Boeing C-17 Globemasters or shorter-range Lockheed Martin C-130 Hercules air transports have stealth capability. And if Pakistan fell into hostile hands, no U.S. aircraft combat fighters operating from bases in the Persian Gulf or from U.S. aircraft carriers in the Indian Ocean would have the numbers or range to offer comprehensive protection against hostile Pakistan air force attacks, using the very F-16 fighters that the Bush administration supplied to Pakistan.

That nightmare scenario seemed unimaginable until this week. But Pakistan's weak and ineffectual government led by President Asif Ali Zardari has just signed an agreement with pro-Taliban forces that already control almost all of the sparsely populated but enormous North-West Frontier province allowing them to enforce Shariah Islamic law throughout that territory. President Obama has been reported to have privately approved the agreement in the hope that it will help stabilize Pakistan.

In 2005 the United States was expelled from its other key strategic foothold in Central Asia, Karshi-Khanabad Air Base in Uzbekistan, known as K-2. Without either K-2 or Manas, Obama now faces the quandary that the more troops he sends to Afghanistan to prove his determination to fight there, the greater the problems the U.S. Air Force will have in supplying them.

The land route through Pakistan is already extremely unreliable. The Khyber Pass -- a historic frontier for generations of the British Empire in India against the uncontrollable chaos of Afghanistan beyond it -- is now being periodically shut down by Taliban attacks on U.S.-organized supply convoys to American and NATO forces in Kabul and elsewhere in Afghanistan. That makes the air route crucial.

Even if the U.S. Air Force can supply U.S. forces in Afghanistan indefinitely, the cost would be prohibitive to the cash-strapped U.S. government. Also, the wear and tear on the U.S. transport aircraft involved will be enormous, and the USAF will be robbed of its ability to rapidly deploy troops to other trouble spots around the world while the airlift is going on.

The Air Force already has its hands full supplying the more than 150,000 U.S. troops in Iraq, and once they withdraw, Iraq will face the threat of major insurgency and possible rapid takeover by Iranian-backed extreme Islamists who are determined to proclaim their new caliphate in Baghdad.

U.S. policymakers owed Russia's former president and current prime minister, Vladimir Putin, much more than they usually publicly acknowledged in his support for U.S. military operations in Afghanistan from November 2001 to the present. But now Russia has decisively moved to cut the remaining supply lines to U.S. and NATO forces in Afghanistan. The Kremlin offered Kyrgyzstan $150 million in immediate aid and $2 billion more in credits right before Bishkek moved to evict the United States from Manas. Yet Russia is suffering a huge financial crisis, and the ruble has been plummeting in value against the far-from-strong dollar.

In other words, the United States can realistically expect no help whatsoever from Russia in opposing the Taliban and al-Qaida in Afghanistan. The Russians look ready to sit back happily with their arms folded and watch the United States flounder. Even if they offer a supply route, it is bound to come with expensive strings attached -- probably demands for the immediate cancellation of U.S. plans to build any ballistic missile bases in Poland and the Czech Republic to protect the U.S. Eastern Seaboard against a possible Iranian nuclear-missile attack.

The closure of Manas also comes as NATO defense ministers gather in Krakow, Poland, for a regular summit meeting. Obama wants his European allies to boost their forces in Afghanistan, but his prospects for getting this are not bright.

Obama, indeed, might do better to scrap his plans to boost U.S. forces in Afghanistan and slow down his plans to pull them from Iraq, making those moves contingent on real concessions from Iran. As things stand, the growing Afghan war crisis could make even Iraq look easy by comparison.

Finally On The Right Course

After years of stumbling and bumbling through the Middle East, our policy is finally shifting in the right direction. President Obama's focus on Afghanistan will ensure that we defeat those who actually helped the terrorists that attacked us on 9/11.

We have a lot of catching up to do, after our Iraqi detour. But this is a great first step.

From the NY Times:

President Obama said Tuesday that he would send an additional 17,000 American troops to Afghanistan this spring and summer, putting his stamp firmly on a war that he has long complained is going in the wrong direction.

The order will add nearly 50 percent to the 36,000 American troops already there. A further decision on sending more troops will come after the administration completes a broader review of Afghanistan policy, White House officials said.

Mr. Obama said in a written statement that the increase was “necessary to stabilize a deteriorating situation in Afghanistan, which has not received the strategic attention, direction and resources it urgently requires.”

At least for now, Mr. Obama’s decision gives American commanders in Afghanistan most but not all of the troops they had asked for. But the decision also carries political risk for a president who will be sending more troops to Afghanistan before he has begun to fulfill a promised rapid withdrawal of troops from Iraq.

Many experts worry that Afghanistan presents an even more formidable challenge for the United States than Iraq does, particularly with neighboring Pakistan providing sanctuary for insurgents of the Taliban and Al Qaeda.

Under Mr. Obama’s plan, a unit of 8,000 marines from Camp Lejeune, N.C., will be deployed in the next few weeks, aiming to be in Afghanistan by late spring, administration officials said, while an Army brigade from Fort Lewis, Wash., composed of 4,000 soldiers, will be sent in the summer. An additional 5,000 Army support troops will also be deployed in the summer.

Antiwar groups criticized Mr. Obama’s decision even before the White House announced it.

“The president is committing these troops before he’s determined what the mission is,” said Tom Andrews, director of the coalition organization Win Without War. “We need to avoid the slippery slope of military escalation.”

Mr. Obama said in his statement that “the fact that we are going to responsibly draw down our forces in Iraq allows us the flexibility to increase our presence in Afghanistan.”

American generals in Afghanistan had been pressing for additional forces to be in place by late spring or early summer to help counter growing violence and chaos in the country. Of the 30,000 additional troops that the commanders had initially sought, some 6,000 arrived in January after being sent by President Bush.

The administration’s review of Afghanistan policy is supposed to be completed before early April, when Mr. Obama heads to Europe for a NATO summit meeting at which he is expected to press American allies for more troops and help in Afghanistan.

In an interview with the Canadian Broadcasting Corporation on Tuesday, Mr. Obama said he was “absolutely convinced that you cannot solve the problem of Afghanistan, the Taliban, the spread of extremism in that region solely through military means.”

Sharia Expands in Pakistan

Who says we're winning the was on terror? I'm not quite sure, but this seems to be a step back, no matter what this move does for "judicial expediency".

From the CS Monitor:

In its latest effort to stem the spread of Taliban militancy, Pakistan is expanding the rule of Islamic law.

In a deal announced Monday, the government agreed to a suite of legal reforms, including the establishment of a religious court of appeals serving only the tribal region of Malakand. The area includes the Swat Valley, a strategic corridor first infiltrated in 2007 by Taliban militants and the scene of an Army counteroffensive. On the eve of the agreement, the Taliban operating in Swat announced a cease-fire with government troops.

Previous Pakistani truces have faced US criticism for merely giving militants space and time to rearm. This latest deal raises the added concern that the government is trading away secular traditions and taking a step toward Islamic law, or sharia.

However, political leaders and analysts here agree that this religious court system would not invoke some of the most draconian punishments often associated with sharia. And it is widely seen as a popular move to restore the efficient rule of law in a country where the secular court system often takes years to resolve cases.

"We are optimistic that this situation imposed on Malakand region will bring peace," says Wajid Ali Khan, a provincial assembly member for Swat. "It's not the demand of the Taliban, it's the demand of the people of the Malakand region."

Easing a bottleneck in the courts

Elements of the religious judicial system, called nizam-e-adl, have been in place in the region since 1994. While cases could be decided more quickly in these religious courts, they often could be bogged down by appeals to the secular court system.

Such an appeal could take more than a decade, driving legal fees beyond the means of many Pakistanis, meaning that justice delayed would often mean justice denied.

"If you see such economic and social injustice, then naturally your mind goes to Islamic justice," says Shah Farman, the provincial general secretary of the Tehreek e-Insaf, or party of justice. "People are looking for speedy and cheap justice."

The lack of an efficient justice system sparked political protests starting in the 1990s by Sufi Muhammad, the father-in-law of the current Taliban leader in Swat Valley, Maulana Fazlullah. Monday's deal was struck between the provincial government and Mr. Muhammad, with the blessing of Pakistan's federal government and military.

The deal sets time limits for trials: six months for civil cases, four months for criminal cases. And the new religious appellate court would remove the need for local cases to be appealed into the secular court system.

Krugman On Economic Woes

Read this and ask yourself, "Which parts of his assessment apply to my perception of the economy, savings, and financial planning for the last 10 years?". If you think you've side-stepped some of these gigantic landmines, then you're probably lying to yourself.
The hard part about this crisis is that my generation has been brought up in the spend-and-debt climate. So much of our perception of wealth-building and success has been influenced by the machinations of a system that seems about to collapse. This may be one aspect of the economic disaster that President Obama can try to mitigate.

From the NY Times:

Last week the Federal Reserve released the results of the latest Survey of Consumer Finances, a triennial report on the assets and liabilities of American households. The bottom line is that there has been basically no wealth creation at all since the turn of the millennium: the net worth of the average American household, adjusted for inflation, is lower now than it was in 2001.

At one level this should come as no surprise. For most of the last decade America was a nation of borrowers and spenders, not savers. The personal savings rate dropped from 9 percent in the 1980s to 5 percent in the 1990s, to just 0.6 percent from 2005 to 2007, and household debt grew much faster than personal income. Why should we have expected our net worth to go up?

Yet until very recently Americans believed they were getting richer, because they received statements saying that their houses and stock portfolios were appreciating in value faster than their debts were increasing. And if the belief of many Americans that they could count on capital gains forever sounds naïve, it’s worth remembering just how many influential voices — notably in right-leaning publications like The Wall Street Journal, Forbes and National Review — promoted that belief, and ridiculed those who worried about low savings and high levels of debt.

Then reality struck, and it turned out that the worriers had been right all along. The surge in asset values had been an illusion — but the surge in debt had been all too real.

So now we’re in trouble — deeper trouble, I think, than most people realize even now. And I’m not just talking about the dwindling band of forecasters who still insist that the economy will snap back any day now.

Can Immigration Be An Answer?

Thomas Friedman is a great author. And apparently, he feels strongly that what this country needs is innovation and a return to what made it great: its embrace of talent from all over the world, and its acceptance of new and bold ideas.
Who else feels protectionism closing in?Isn't that the exact wrong way to go.

From the NY Times:

Leave it to a brainy Indian to come up with the cheapest and surest way to stimulate our economy: immigration.

“All you need to do is grant visas to two million Indians, Chinese and Koreans,” said Shekhar Gupta, editor of The Indian Express newspaper. “We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate — no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans.”

While his tongue was slightly in cheek, Gupta and many other Indian business people I spoke to this week were trying to make a point that sometimes non-Americans can make best: “Dear America, please remember how you got to be the wealthiest country in history. It wasn’t through protectionism, or state-owned banks or fearing free trade. No, the formula was very simple: build this really flexible, really open economy, tolerate creative destruction so dead capital is quickly redeployed to better ideas and companies, pour into it the most diverse, smart and energetic immigrants from every corner of the world and then stir and repeat, stir and repeat, stir and repeat, stir and repeat.”

While I think President Obama has been doing his best to keep the worst protectionist impulses in Congress out of his stimulus plan, the U.S. Senate unfortunately voted on Feb. 6 to restrict banks and other financial institutions that receive taxpayer bailout money from hiring high-skilled immigrants on temporary work permits known as H-1B visas.

Bad signal. In an age when attracting the first-round intellectual draft choices from around the world is the most important competitive advantage a knowledge economy can have, why would we add barriers against such brainpower — anywhere? That’s called “Old Europe.” That’s spelled: S-T-U-P-I-D.

Obama's Challenge

Great analysis from the NY Times:

It is a quick, sweet victory for the new president, and potentially a historic one. The question now is whether the $789 billion economic stimulus plan agreed to by Congressional leaders on Wednesday is the opening act for a more ambitious domestic agenda from President Obama or a harbinger of reduced expectations.

Both the substance of his first big legislative accomplishment and the way he achieved it underscored the scale of the challenges facing the nation and how different a political climate this is from the early stages of recent administrations.

While it hammered home the reality of bigger, more activist government, the economic package was not the culmination of a hard-fought ideological drive, like Lyndon B. Johnson’s civil rights and Great Society programs, or Ronald Reagan’s tax cuts, but rather a necessary and hastily patched-together response to an immediate and increasingly dire situation. On the domestic issues Mr. Obama ran and won on — health care, education, climate change, rebalancing the distribution of wealth — the legislation does little more than promise there will be more to come.

In cobbling together a plan that could get through both the House and the Senate, Mr. Obama prevailed, but not in the way he had hoped. His inability to win over more than a handful of Republicans amounted to a loss of innocence, a reminder that his high-minded calls for change in the practice of governance had been ground up in a matter of weeks by entrenched forces of partisanship and deep, principled differences between left and right.

In the end, Congress did not come together to address what Mr. Obama has regularly suggested is a crisis that could rival the Great Depression. What consensus has been forged so far is likely to be tested in the months to come as he faces scrutiny over the effectiveness of the stimulus package and the likelihood that he will have to ask Congress for substantially more money to heal the fractures in the financial system.

So this was hardly a moment for cigars.

You All Know By Now

AN AGREEMENT ON THE STIMULUS HAS BEEN REACHED!!!!!


I'm going to hold all comments on this until I have a chance to read the new package.

Obama Conference Numbers

Like it or not, the stimulus package is on everyone's mind these days. And with numbers like these, President Obama appears to have everyone's attention. Let's hope his next news conference is a little livelier, and filled with MUCH shorter answers. The people are ready to be led; President Obama needs to step it up.

From The Media Life:

President Barack Obama’s first primetime news conference drew more viewers than his inauguration day festivities but fewer than tuned in to President Bill Clinton’s first chat in 1993.

Monday’s Obama talk drew 49.5 million total viewers across eight networks, airing from 8 to 9 p.m. It averaged a 30.8 household rating on ABC, CBS, Fox, NBC, Univision, CNN, Fox News Channel and MSNBC, according to Nielsen.

These figures do not include internet viewing, though the feed was carried live by several web sites.

That was well below the 64.3 million who tuned in for a similar Clinton conference in 1993 just weeks after his inauguration. That address, also focused on the economy, averaged a 42.1 household rating across the Big Four networks.

And it was well down from a similar address by President George Bush in 2001, though that was to be expected. That conference, airing a month after the 9/11 attacks and carried on seven networks, averaged 64.8 million total viewers and a 42.0 household rating.

Obama did manage to outdraw coverage for his inauguration, which drew 37.8 million total viewers.

It marked Obama’s first presidential address from the White House after taking office late last month. He focused on encouraging Congress to pass his $800 billion economic stimulus package, which the Senate approved yesterday.

61 - 37 Vote on Stimulus

From the NY Times:

The Senate approved an economic stimulus bill of some $838 billion on Tuesday, clearing the way for negotiations with the House and increasing the prospects that a final piece of legislation can be on President Obama’s desk within days.

The latest on President Obama, the new administration and other news from Washington and around the nation. Join the discussion.

The 61-to-37 vote was largely along party lines, as expected, and followed closing arguments with some sharp partisan edges. Senator Charles E. Schumer, Democrat of New York, called on Republicans to acknowledge not only that the country is in crisis but “to acknowledge that they actually lost the election.”

Senator Daniel K. Inouye, Democrat of Hawaii who is chairman of the Appropriations Committee, said the bleak statistics on unemployment will only get worse “if the federal government does not take action immediately.”

Senate Majority Leader Harry Reid of Nevada, alluding to the president’s remarks at a news conference on Monday evening, said: “Last night, President Obama brought his case for his economic recovery plan directly to the American people. He clearly explained that no new President relishes the thought of starting an administration with a major investment of public funds to clean up the economic mess left by the previous administration.

“Not one member of Congress or one single American family relishes the difficult choices left for us to make,” Mr. Reid added. “But with the growing likelihood that this crisis will grow into what the President termed a possible catastrophe, the worst decision would be indecision.”

Only a few Republicans voted for the bill. They were Senators Arlen Specter, of Pennsylvania, and Olympia J. Snowe and Susan Collins, both of Maine, whose support was vital when the bill narrowly cleared a procedural hurdle requiring 60 “yes” votes on Monday.

Mr. Obama, who traveled to Florida on Tuesday to promote the stimulus package, has pressed Congress to deliver him a bill by next Monday. But Representative Steny Hoyer of Maryland, the House majority leader, said Tuesday that negotiations may take longer — “Thursday, Friday, Saturday, Sunday, Monday, maybe Wednesday, Thursday of next week,” he told reporters, according to Reuters.

The House last week passed an $820 billion bill — without a single Republican vote in favor — that provides more aid to state and local governments than does the Senate version, which includes more tax cuts.

Iran Talks?

It seems, at least superficially, that Iran is signaling its willingness to sit down with us and talk. A pretty important step, considering that a few weeks ago Ahmadinejad was asking the US for a formal apology. Maybe this is what Obama needs. Maybe it isn't. We'll have to see how this 30 year drama plays out.

From the NY Times:

After the icy mutual hostility of the Bush era, President Mahmoud Ahmadinejad of Iran on Tuesday made a conditional offer of dialogue to the Obama administration, saying Tehran was ready for “talks based on mutual respect and in a fair atmosphere.”

But he coupled the offer with an attack on former President Bush, calling for him to be “tried and punished” for his policies and actions in the Middle East and the Persian Gulf region.

Mr. Ahmadinejad’s remarks came in a televised address to a rally marking the 30th anniversary of the Islamic Revolution in 1979 which deposed Shah Mohammed Reza Pahlavi, ended the close relationship between Washington and Tehran, and replaced it with decades of confrontation that culminated in former President Bush’s description of Iran as part of an “axis of evil.”

President Obama said Monday night that his administration was exploring ways to open a dialogue with Iran. “My expectation is, in the coming months, we will be looking for openings that can be created where we can start sitting across the table, face to face; of diplomatic overtures that will allow us to move our policy in a new direction," he said at a news conference.

Since the inauguration of Mr. Obama last month, Washington has sounded a more conciliatory tone, despite profound differences over Iran’s nuclear program and its support for political groups in the Middle East that the United States considers to be terrorists.

“The new U.S. administration has said that it wants change and it wants to hold talks with Iran,” Mr. Ahmadinejad said.

“It is clear that change should be fundamental, not tactical, and our people welcome real changes,” he said. “Our nation is ready to hold talks based on mutual respect and in a fair atmosphere.”

UK Defends Torture Ruling

"If you tell on us, then we won't play with you." That's essentailly what the greatest superpower on the planet tells its closest ally. To my amazement, the Brits bit down hard.

And with the UK's economy going down the drain, does that government need to be pissing off more people? This is incredible.

From the NY Times:

Facing criticism from political foes and human rights advocates, the British government on Thursday defended a court’s decision not to release information about a British terrorism suspect who says he was tortured in American custody. The court said it reached its decision because of what it called a threat from the United States to reconsider sharing intelligence with the country.
In a highly unusual criticism, the court on Wednesday expressed dismay that a democracy “governed by the rule of law” would seek to suppress evidence “relevant to allegations of torture and cruel, inhuman or degrading treatment, politically embarrassing though it might be.”
The case has been a source of considerable diplomatic tension between the United States and Britain.
At issue in Wednesday’s ruling were seven paragraphs that the court had redacted in an earlier opinion in the case, and that it suggested lent credence to the torture allegations by the suspect, Binyam Mohamed, who is now in prison at Guantánamo Bay, Cuba. Mr. Mohamed is an Ethiopian who had become a legal resident of Britain. The case has rekindled concerns among some Britons about the claimed use of torture in terrorism cases.
The court said the paragraphs summarize reports by the United States to Britain’s intelligence services about the treatment of Mr. Mohamed. It said it had removed the text at the request of the British Foreign Office, which was responding to a “threat” from the Bush administration.
The court said the Bush administration had made the threat in a letter to the Foreign Office last September. It called on the Obama administration to reverse that position.

Stimulus Bill Agreement

So it looks as though the stimulus bill has a good shot a passing over the weekend. I'm curious to see what the $80 billion in cuts is all about. I tried to read the 670pages or so of the bill, but it nearly put me to sleep.
Either way, President Obama needs this boost, after his recent selections for public office have been found to be, well, idiots. From the NY Times:

Spurred by a dismal unemployment report for January and prodded by President Obama, senators reached an accord on Friday evening on an economic stimulus program of some $780 billion.
Democrats succeeded, after a long day of private negotiations and intense public debate, in winning the support of enough Republicans to move the package toward a final Senate vote, where Democrats are confident of passage, given the support announced by several Republicans. Exact outlines of the accord, which is somewhat smaller than the amount originally sought by President Obama, were not immediately available, but the senators agreed to cut some spending and strip out some business tax cuts to gain enough Republican support.
Senator Harry Reid of Nevada, the Democratic majority leader, hailed the agreement. “This is a very critical juncture for our great country,” he said on the Senate floor.
The timing of the Senate vote was not clear, but Mr. Reid signaled that action could take place over the weekend. Once the package is approved, differences between the Senate legislation and a considerably different version passed recently by the House will have to be reconciled. President Obama has said he hopes all that can be accomplished in time for him to sign the measure within 10 days.
Three centrist Republicans, Arlen Specter of Pennsylvania and Olympia J. Snowe and Susan Collins, both of Maine, were among the senators wooed by Democrats, whose efforts were bolstered by Rahm Emanuel, the president’s chief of staff, who is a former Congressman from Illinois.
Senator Reid and Mr. Emanuel reportedly met with Ms. Collins and Mr. Specter Friday evening to smooth out any remaining wrinkles. Soon afterward, Mr. Reid conferred with his fellow Democrats to gain their approval.

Rockets Flying, Edition 2: North Korea

As if Iranian rockets weren't enough for TODAY, here's a gem coming out of North Korea. President Obama, consider yourself tested. As of right now. RIGHT now.

From the AFP:

North Korea seems to be preparing to test-fire its longest-range missile, a US official and reports said Tuesday, a move that would heighten tensions amid stalled disarmament talks and icy relations with South Korea.

"There are some signs that the North Koreans are preparing for a Taepodong-2 launch," the US counter-proliferation official said.

"But whether it will carry out the launch or not is entirely unclear, as is the timing for a possible launch," said the official, who spoke to AFP on condition of anonymity.

Earlier, a source quoted by Seoul's Yonhap news agency said US and South Korean intelligence agencies had recently spotted a train carrying a long cylindrical object believed to be a Taepodong-2 missile which is theoretically capable of hitting the United States.

Launch preparations were likely to be completed in a month or two at a new west coast site, the source said. South Korea's defence ministry and National Intelligence Service refused to comment.

Japan's Sankei Shimbun newspaper said spy satellites had detected a large container capable of housing a missile being delivered to the site at Tongchang, about 40 kilometres (25 miles) south of the border with China.

The paper said frequent truck movements had been spotted at the site and launch preparations could be completed in one or two months for what could be a remodelled version of the Taepodong-2.

The missile has a maximum range of 6,700 kilometres (4,150 miles), meaning it could theoretically target Alaska.

Analysts said the North was trying to push the new US administration back to the negotiating table and to strengthen its bargaining position.

Nuclear disarmament talks with the North, involving the US and four regional powers, are deadlocked over how the communist state's atomic disclosures should be verified.

Reports of the planned launch also come amid rising tensions with Seoul. The North announced Friday it was cancelling all peace accords with its neighbour and on Sunday warned of a possible military conflict.

Rockets Flying, Edition 1: IRAN

Oh good. Real good. While we here in the US try to extract ourselves from our numerous problems, Iran is sending satellites into space. So if they can attach a satellite to their missiles and launch them into our atmosphere.....then duct-taping a nuke to the nose of one of those rockets shouldn't be much of a problem. From Reuters:

Iran has launched its first satellite in a step that has important symbolism but does not itself alter the strategic balance in the region, a U.S. national security official said on Tuesday.

"The satellite technology they have deployed is probably not state of the art, but for the Iranians this is an important symbolic step forward," the official said, speaking on condition of anonymity.

Iran said earlier it had launched a domestically made satellite into orbit for the first time, a move which could further fuel worries by Israel and Western powers over its nuclear ambitions.

U.S. and British officials said the Iranian satellite program may use technology that could be used for ballistic missiles, and noted the United Nations has sought to discourage Iran's nuclear and missile programs. Iran has long said its nuclear program is purely for civilian energy purposes.

"That's of grave concern to us," State Department spokesman Robert Wood told reporters of the satellite.

British Foreign Office Minister Bill Rammell said the launch "underlines and illustrates our serious concerns about Iran's intentions," adding it sent the "wrong signal to the international community."

It is unclear what Iran intends to use the satellite for, and the United States is still trying to learn more about it, the U.S. security official said.

Guess Not

The title of this story is best understood by reading the story below. From The LA Times:

Tom Daschle, who paid more than $140,000 in owed taxes and interest, withdrew his nomination to head the department of Health and Human Services today.

The move came after leading newspapers questioned his ability to serve after the tax situation was revealed. It also came hours after Nancy Killefer, picked by President Obama to be the federal government's first chief performance officer, withdrew her nomination after reports that she had failed to pay employment taxes for household help.

Killefer was the third appointee by President Obama to have tax problems. Timothy Geithner was confirmed as Treasury secretary despite owing more than $34,000 in taxes that he paid.

"Now we must move forward," Obama said in a written statement accepting Daschle's request to be taken out of consideration. On Monday, Obama said he "absolutely" stood by Daschle, who apologized to the Senate Finance Committee for his tax situation.

Daschle, the former Democratic leader in the Senate, said he would have not been able to operate "with the full faith of Congress and the American people."

Daschle's Excuse Enough?

From Bloomberg:

Senator Max Baucus, chairman of the panel that must approve Thomas A. Daschle as Health and Human Services secretary, said he was satisfied that Daschle’s failure to pay more than $120,000 in back taxes wasn’t intentional and he would vote in favor of the nomination at next week’s hearing.

Baucus, talking to reporters after Daschle appeared at a closed-door meeting of the Senate Finance Committee, said the “regrettable” tax errors didn’t make Daschle, a former Senate Democratic leader who has written a book on revamping the U.S. health system, less qualified for the position. Other Democratic senators also expressed their support for the nomination.

Daschle’s nomination to the post faced delays after he amended three years of returns on Jan. 2 for unreported income, including personal use of a car and driver provided by Leo Hindery Jr., founder of the private-equity firm InterMedia Advisors. Daschle, who sat on the firm’s board, repaid $140,000 in back taxes and interest. President Barack Obama said yesterday he “absolutely” backed Daschle.

“My failure to recognize that a use of a car was income and not a gift from a good friend was a mistake and I deeply apologize,” Daschle said in Washington after meeting with the panel. “If confirmed, I look forward to working with my colleagues, Republican and Democrat, to ensure all Americans have low-cost, high-value health insurance.”