US admits raiding Syria to kill terrorist leader


Syrian men carry the body of a relative killed in the raid on Sukkariya yesterday

Senior US officials claimed last night that the head of a Syrian network responsible for smuggling foreign fighters, weapons and cash into Iraq had been killed in Syria during a raid by US special forces that sparked strong condemnation from Damascus.

The Syrian foreign minister, Walid al-Moualem said the raid had killed eight civilians and was an act of “criminal and terrorist aggression.” Speaking at a news conference in London, he warned that Damascus would defend itself against any such future attack.

Sunday’s raid, 10km from the Iraqi border, took place in daylight and therefore was “not a mistake,” he said.

The rare attack into Syria marks an unexpected expansion of the war in Iraq and comes as the level of fighting drops to its lowest level for four years.

“We are taking matters into our own hands,” said a US officer in Washington, confirming that American commandos had entered Syria on Sunday evening to attack a network of guerrillas linked to al-Qa’ida.

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Asian stockmarkets crash again


A trader at the Philippines stock exchange as business is halted. Photograph: Cheryl Ravelo/Reuters

Stockmarkets around the world crashed again today as the prospect of a deep worldwide recession continued to haunt investors.

Fears that the financial crisis is spreading to emerging nations sparked another day of panicky selling, despite speculation of another round of interest rate cuts to try to stimulate the global economy,

As the current crisis sparked by the failure of Lehman Brothers entered a seventh week, Japan’s Nikkei index fell 6.4% to its lowest level since 1982, extending its recent slump. It has now lost 20% of its value in the last week.

Hong Kong also saw shares routed, with the Hang Seng index plunging almost 12% in late trading – putting it on track for its biggest daily fall since 1997. And the Chinese stockmarket tumbled over 6%, bringing more pain to small investors who have watched the Shanghai Composite index fall 70% from last year’s peak.

With India’s stockmarket losing 8%, shares across Europe are also expected to fall sharply when trading begins. The Dow Jones index is tipped to fall by another 400 points, or 5%, later today.
(The Dow fell only 2,42% today.)

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Europe on the brink of currency crisis meltdown

The crisis in Hungary recalls the heady days of the UK’s expulsion from the ERM.

The financial crisis spreading like wildfire across the former Soviet bloc threatens to set off a second and more dangerous banking crisis in Western Europe, tipping the whole Continent into a fully-fledged economic slump.

Currency pegs are being tested to destruction on the fringes of Europe’s monetary union in a traumatic upheaval that recalls the collapse of the Exchange Rate Mechanism in 1992.

“This is the biggest currency crisis the world has ever seen,” said Neil Mellor, a strategist at Bank of New York Mellon.

Experts fear the mayhem may soon trigger a chain reaction within the eurozone itself. The risk is a surge in capital flight from Austria – the country, as it happens, that set off the global banking collapse of May 1931 when Credit-Anstalt went down – and from a string of Club Med countries that rely on foreign funding to cover huge current account deficits.

The latest data from the Bank for International Settlements shows that Western European banks hold almost all the exposure to the emerging market bubble, now busting with spectacular effect.

They account for three-quarters of the total $4.7 trillion £2.96 trillion) in cross-border bank loans to Eastern Europe, Latin America and emerging Asia extended during the global credit boom – a sum that vastly exceeds the scale of both the US sub-prime and Alt-A debacles.

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Volvo truck sales plunge 99.7%


Driven down: sales of Volvo trucks have dipped a staggering 99.7%

The depth of the recession was revealed today as truckmaker Volvo admitted demand across the Continent has crashed by 99.7% as it took orders for just 115 new lorries in the last three months.

That compares to orders totalling 41,970 in the third quarter of 2007. Global orders for Volvo slumped 55% in the last three months while Scania, of which Volvo has majority control, said its western Europe truck orders collapsed by 69%.

Volvo, which also makes trucks under the Renault and Mack brands, reported a 37% plunge in third-quarter earnings to £230m.

‘The downturn in the economy has been significantly exacerbated by the global financial crisis,’ the company said. ‘The important European market has declined significantly while North America and Japan continue to show weak demand.’

Volvo indicated that there could be thousands of job losses. It has already said 1400 jobs are going, and yesterday revealed that 850 jobs would be axed in its division making heavy construction vehicles.

24 October 2008, 2:19pm

Source: Evening Standard

FBI Probe of JPMorgan Fees Focuses on Swaps Roiling Muni Debt

Oct. 27 (Bloomberg) — Joseph Ambrosini says the deal looked so easy. JPMorgan Chase & Co. bankers told him there was really no risk. All he had to do was sign a public financing contract, and the bank would give $280,000 to his school district in New Castle, Pennsylvania.

“They basically said, unless the world goes under the sea, we’d be in good shape,” says Ambrosini, the district’s business manager.

In September, Ambrosini says, his 3,400-student district went underwater. On Sept. 25, the week after Lehman Brothers Holdings Inc. collapsed, the New Castle Area School District’s interest rate on $9.7 million of financing arranged by JPMorgan hit 10.6 percent, more than doubling since the month began, as investors demanded skyrocketing returns for municipal debt.

While JPMorgan has been relatively unscathed by the subprime crisis that hit Bear Stearns Cos., Merrill Lynch & Co., Lehman and other Wall Street firms, a little-known part of the largest bank in the U.S. made a tidy profit peddling a different kind of corrosive debt to hundreds of counties and school districts earlier this decade.

As the credit crunch froze lending globally, causing stock markets to plunge, local officials who say they trusted JPMorgan faced a crisis of their own. Wall Street’s drive for profits over the past decade has backfired on towns, cities and counties that borrow in the $2.7 trillion municipal bond market.

Financings arranged by JPMorgan and other banks are forcing hundreds of public agencies to spend billions of dollars they don’t have to pay for increased interest payments and penalties.

No Bailouts

These come in municipal bond and derivative deals that have turned poisonous. Unlike JPMorgan, which has benefited from federal bailouts, the towns and schools the bank has financed have received no help from Washington.

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Banks pull squeeze play on credit cards


J.L. Fish thought she was a fine credit card customer, and that Wells Fargo shared that high opinion. That’s why the Mankato retiree was stunned to see the bank raise the interest rate on her Platinum VISA from 5.2 percent on her June bill to 17.69 percent come July.

Companies cracking down, even on those with good credit, leaving customers to face interest rate leaps, lower credit limits and even canceled cards.

“I nearly fainted,” said Fish, 61, who lives on about $1,400 a month from Social Security and a small disability pension. She has made the minimum payment each month without fail on about an $8,000 balance, she said. But the interest rate jump nearly doubled her monthly minimum from $115 to $198 –more than she can cover. So, she took the bank’s offer for an “opt out” — which involved canceling the card and then setting up a new billing schedule until she pays off her entire debt.

“I have never been late in my payments,” said Fish, noting payments are automatically deducted from her bank account. “Why did Wells Fargo do this to me?”

The answer is bigger than Fish. Banks nationwide are sweeping across their credit card accounts and tightening lending standards — leaving customers to face interest rate leaps, lower credit limits, and even canceled cards. A Federal Reserve Bank survey showed 83 percent of major card issuers tightening their lending standards in the third quarter of this year, up from 45 percent in the second quarter.

Economists partly blame the credit markets — where banks buy money to lend — which came to a virtual standstill as the world’s stock markets crumbled. But others hear an ominous echo of the subprime mortgage meltdown — with banks now backpedaling from similarly lax lending with credit cards that have left them with exploding losses.

“There is a credit card equivalent of a toxic subprime mortgage,” concluded a report earlier this month by Gregory Larkin, senior analyst at Innovest Strategic Value Advisors, an investment advisory firm in New York. “This is precisely what we need to be looking at right now.”

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US public pension funds face big losses

Public pension funds in US states are facing their worst year of losses in history, exacerbating existing funding shortfalls and putting pressure on state governments to shore them up.

In the nine months to the end of September, the average state pension fund lost 14.8 per cent, according to Northern Trust, a fund company. The loss has grown since, as financial markets slumped further in October. The previous highest loss for state funds was 7.9 per cent for the full year in 2002.

California’s Calpers, the US’s biggest pension fund, last week reported a loss of 20 per cent of its assets, or more than $40bn, between July 1 and October 20 this year.

State and local pension funds comprise a patchwork of 2,700 funds that manage $1,400bn on behalf of 21m employees, including teachers, firefighters and other municipal workers.

About 40 per cent are underfunded, meaning that they would not be able to pay the future pensions that employees have been promised. State governments have lifted pension benefits – a move that is politically popular – but have often failed to put in more money to pay for them.

Richard Daley, mayor of Chicago, this year convened a taskforce to address the shortfalls in Illinois funds. For example, funding for the Police Fund has fallen to less than 50 per cent.

A Chicago police officer told the Financial Times: “We are risking our lives here every day, but we have no idea if the pension we have been guaranteed will be there when we retire.” The officer called on the city to start contributing more to the fund.

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Broken Securities Industry Still Has $20 Billion to Pay Bonuses

Oct. 27 (Bloomberg) — Five straight quarters of losses and a 70 percent slide in its stock this year haven’t stopped Merrill Lynch & Co. from allocating about $6.7 billion to pay bonuses.

Goldman Sachs Group Inc. and Morgan Stanley, both still on track for profitable years, have set aside about $13 billion for bonuses after three quarters, down 28 percent from a year ago. Even some employees at Lehman Brothers Holdings Inc., which declared the biggest bankruptcy in U.S. history last month, will get the same bonus they received a year ago.

The worst financial crisis since the Great Depression, a $700 billion taxpayer bailout, public outcry over excessive pay and the demise of three of the biggest securities firms won’t deter Wall Street from offering year-end rewards to employees on top of their salaries, compensation experts say.

“Critical producers and critical managers will be retained with the same bonus they had last year,” said Robert Sloan, head of U.S. financial-services recruiting at Egon Zehnder International, a New York-based executive-search firm. “The others will see sharp cuts.”

Goldman, the biggest and most profitable Wall Street firm until it opted to become a bank holding company last month, has set aside about $6.85 billion for bonuses, or an average of $210,300 for each employee, down 32 percent from $339,400 a year ago. Morgan Stanley, the second-biggest securities firm until it also converted to a bank, has $6.44 billion for bonuses, or $138,700 per person, down 20 percent from last year. Both firms accrue a fixed percentage of their revenue for compensation, so the decline in bonus pools matches the drop in revenue.

Merrill’s Compensation

The money Merrill has set aside for bonuses equates to an average $110,000 for each of its 60,900 people, up from $108,000 a year ago because more than 3,000 jobs have been cut.

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Police will use new device to take fingerprints in street

Civil rights campaigners say images must not be added to databases


Photograph: Roger Tooth

Every police force in the UK is to be equipped with mobile fingerprint scanners – handheld devices that allow police to carry out identity checks on people in the street.

The new technology, which ultimately may be able to receive pictures of suspects, is likely to be in widespread use within 18 months. Tens of thousands of sets – as compact as BlackBerry smartphones – are expected to be distributed.

The police claim the scheme, called Project Midas, will transform the speed of criminal investigations. A similar, heavier machine has been tested during limited trials with motorway patrols.

To address fears about mass surveillance and random searches, the police insist fingerprints taken by the scanners will not be stored or added to databases.

Liberty, the civil rights group, cautioned that the law required fingerprints taken in such circumstances to be deleted after use. Gareth Crossman, Liberty’s policy director, said: “Saving time with new technology could help police performance but officers must make absolutely certain that they take fingerprints only when they suspect an individual of an offence and can’t establish his identity.”

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Financial tempest spreads to the Gulf states

As stocks slid Sunday in Kuwait, a group of investors showed up at the Seif Palace, where they were met by the police, and tried to demand government intervention. (Gustavo Ferrari/AP)

The global economic crisis extended its reach into the Gulf states Sunday, as Kuwait suspended trading in shares of a major bank and the Saudi authorities announced a plan to help citizens receive credit.

The Central Bank of Kuwait halted trading in Gulf Bank, one of the country’s largest lenders, after a customer defaulted on a derivatives contract. The central bank said it would “strongly support the bank’s financial position” and protect depositors, to assure the public that Gulf Bank’s business “will not be affected.”

The central bank also said it was moving toward guaranteeing deposits at local banks. Many other countries have already taken that step, putting lenders in countries with no guarantee at a disadvantage.

In Saudi Arabia, always sensitive to potential unrest, King Abdullah said that 10 billion riyals, or $2.7 billion, would be placed in an account in the Saudi Bank of Credit & Saving to enable the bank to help hundreds of thousands of citizens get loans for family needs including marriages and home repairs.

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Daimler to halt output at 2 key plants 4 weeks

*Daimler halts output at two plants four weeks-works council *Daimler shares fall more than 10 percent

(Rewrites with works council and plant spokeswomen)

FRANKFURT, Oct 27 (Reuters) – German carmaker Daimler (DAIGn.DE: Quote, Profile, Research, Stock Buzz) will stop year-end production at two big German plants for four weeks, doubling the normal holiday stoppages given a sharp drop in demand, its works council said on Monday.

The Sindelfingen plant near Stuttgart that makes Mercedes-Benz C-, E- and S-Class models will shut down from Dec. 12 and reopen on Jan. 12, a works council spokeswoman said.

The Untertuerkheim motor and transmission plant will also halt most output from Dec. 15 to Jan. 12, a plant spokeswoman said.

Mercedes-Benz was not immediately available for comment.

On Sunday, Germany’s Frankfurter Allgemeine Sonntagszeitung said the carmaker had imposed a five-week Christmas break for its 36,000 workers at Sindelfingen. Workers normally get only two to three weeks off during the holiday season.

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Alaska’s largest newspaper endorses Obama

ANCHORAGE, Alaska (AP) – The Anchorage Daily News, Alaska’s largest newspaper, endorsed Democratic presidential candidate Barack Obama Sunday after declaring Gov. Sarah Palin “too risky” to be one step away from the Oval Office.

“Like picking (Republican presidential candidate John) McCain for president, putting her one 72-year-old heartbeat from the leadership of the free world is just too risky at this time,” The Daily News said.

The newspaper said Obama “brings far more promise to the office. In a time of grave economic crisis, he displays thoughtful analysis, enlists wise counsel and operates with a cool, steady hand.”

The Daily News said since the economic crisis has emerged, McCain has “stumbled and fumbled badly” in dealing with it.

“Of the two candidates, Sen. Obama better understands the mortgage meltdown’s root causes and has the judgment and intelligence to shape a solution, as well as the leadership to rally the country behind it,” the paper said.

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U.S. confirms strike on Syria that killed eight

A U.S. military official confirmed late Sunday an American helicopter attack in an area along Syria’s border with Iraq, which left 8 people dead and three people wounded.

Syria condemned the attack, which it called “serious aggression.”

The raid indicated the desert frontier between the two countries remains a key battleground, more than five years into the Iraq war. The U.S. official said the attack targeted elements of a robust foreign fighter logistics network and that due to Syrian inaction the U.S. was now “taking matters into our own hands.”

A government statement carried by the official Syrian Arab News Agency said the attack occurred at the Sukkariyeh Farm near the town of Abu Kamal, five miles (eight kilometers) inside the Syrian border. Four helicopters attacked a civilian building under construction, firing at the workers inside shortly before sundown, the statement said.

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Nouriel Roubini: The world economy was “at a breaking point”; Stock markets are now “essentially in free fall” and “we are reaching the point of sheer panic”

When this man predicted a global financial crisis more than a year ago, people laughed. Not any more…

As stock markets headed off a cliff again last week, closely followed by currencies, and as meltdown threatened entire countries such as Hungary and Iceland, one voice was in demand above all others to steer us through the gloom: that of Dr Doom.

For years Dr Doom toiled in relative obscurity as a New York University economics professor under his alias, Nouriel Roubini. But after making a series of uncannily accurate predictions about the global meltdown, Roubini has become the prophet of his age, jetting around the world dispensing his advice and latest prognostications to politicians and businessmen desperate to know what happens next – and for any answer to the crisis.

While the economic sun was shining, most other economists scoffed at Roubini and his predictions of imminent disaster. They dismissed his warnings that the sub-prime mortgage disaster would trigger a financial meltdown. They could not quite believe his view that the US mortgage giants Fannie Mae and Freddie Mac would collapse, and that the investment banks would be crushed as the world headed for a long recession.

Yet all these predictions and more came true. Few are laughing now.

What does Roubini think is going to happen next? Rather worryingly, in London last Thursday he predicted that hundreds of hedge funds will go bust and stock markets may soon have to shut – perhaps for as long as a week – in order to stem the panic selling now sweeping the world.

What happened? The next day trading was briefly stopped in New York and Moscow.

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Wall Street halts futures trading amid panic

Stock markets across the world cracked yesterday, forcing Wall Street to suspend trading on a key futures contract to stem panic-selling while Moscow shut for business altogether.

Sharp losses in New York, London, Europe and the Far East raised the spectre that governments may be forced to impose emergency holidays to avert a meltdown across world stock markets.

Before Wall Street opened yesterday, American regulators suspended all trading of Dow Jones futures contracts, which had plunged. Such contracts allow traders to bet on the future direction of the Dow Jones index. The plunge had triggered an automatic circuit breaker, which halts trading to prevent a market sliding into freefall.

Nouriel Roubini, Professor of Economics at New York University, said that his prediction earlier this week that markets would have to be shut down is already coming true.

He said: “This morning, even before the markets in the US opened, the S&P futures fell by more than their daily limit. What I said yesterday has already started.”

A forced closure of stock markets in America would respresent the first time that Washington would have shut Wall Street since the terrorist attacks of September 2001. It would also have echoes of the 1930s, when President Franklin D. Roosevelt shut American banks during an enforced holiday.

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Banks exploit legal loophole to seize homes

Banks and credit card companies are exploiting obscure legal powers to seize the homes of thousands of people who cannot pay their credit card bills.

In some cases, people owing as little as £1,000 have been served with charging orders – the legal instrument enabling a creditor to order the sale of a property.

The practice has emerged days after Yvette Cooper, chief secretary to the Treasury, called on banks to do more to allow people to keep their homes.

According to the Ministry of Justice, 97,026 charging orders were granted by courts in England and Wales last year, a tenfold increase since 2000.

They allow financial institutions to order the sale of a property to pay off unsecured debts on credit cards, personal loans, store cards and car finance. Some will have been used only to threaten the debtor, or to levy a surcharge on the mortgage to recoup the debts.

Nationwide, the building society, and Northern Rock, which was nationalised earlier this year, are among the most aggressive in using the court orders.

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Europe’s secret plan to boost GM crop production

Gordon Brown and other EU leaders in campaign to promote modified foods

GM corn growing in France, which has since suspended cultivation of modified cropsAFP/Getty Images
GM corn growing in France, which has since suspended cultivation of modified crops

Gordon Brown and other European leaders are secretly preparing an unprecedented campaign to spread GM crops and foods in Britain and throughout the continent, confidential documents obtained by The Independent on Sunday reveal.

The documents – minutes of a series of private meetings of representatives of 27 governments – disclose plans to “speed up” the introduction of the modified crops and foods and to “deal with” public resistance to them.

And they show that the leaders want “agricultural representatives” and “industry” – presumably including giant biotech firms such as Monsanto – to be more vocal to counteract the “vested interests” of environmentalists.

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BIODIVERSITY: Privatisation Making Seeds Themselves Infertile

News of the secret plans is bound to create a storm of protest at a time when popular concern about GM technology is increasing, even in countries that have so far accepted it.

Public opposition has prevented any modified crops from being grown in Britain. France, one of only three countries in Europe to have grown them in any amounts, has suspended their cultivation, and resistance to them is rising rapidly in the other two, Spain and Portugal.

The embattled biotech industry has been conducting a public relations campaign based round the highly contested assertion that genetic modification is needed to feed the world. It has had some success in the Government, where ministers have been increasingly speaking out in favour of the technology, and in the European Commission, with which its lobbyists have boasted of having “excellent working relations”.

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US chiefs plan troop surge in Afghanistan

American military chiefs are to send up to 9,000 troops to Helmand next year, potentially sidelining the UK’s 5,000-strong force in the southern Afghanistan province. The first of three US brigade combat teams is expected to be operational by the spring. Their main base is under construction alongside the British headquarters at Camp Bastion.

The move comes amid US frustration that the British have insufficient soldiers and helicopters to maintain security and reconstruct Helmand, with the Taliban acting freely in large tracts of the province.

President George W Bush is expected to announce a surge of US troops into southern Afghanistan after next month’s White House election.

General David McKiernan, the US commander of all allied forces in Afghanistan, has asked for at least four brigade combat teams for Afghanistan, but most will go into Helmand.

British sources said the revelation that the bulk of the troops were to be sent to Helmand made it doubtful the British could stay in charge.

There are also likely to be differences over tactics. US commanders are more inclined than the British to call in close air support, which heightens the risk of civilian deaths.

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Congress: What Bernanke and Hank Aren’t Telling You

Congress: Think.

Ben and Hank have both told you that the critical issue for the economy is for “lending to resume”, stating that it has dramatically contracted.

If this was the truth, then Ben and Hank would have come to you for $700 billion in the TARP, but instead of TARPing the money, they would have asked for permission to use it to capitalize 10 new banks which would be immediately IPO’d off to the public with the stake being in the form of some kind of super-senior debt that held a coupon high enough to encourage immediate (or nearly-so) replacement with private capital.

This would have resulted in an aggregate of seven trillion worth of new lending capacity in the economy, an amount that, incidentally, would allow the full replacement of Fannie and Freddie as holders of housing debt with about $2 trillion left over for credit cards, auto and business loans.

That would have immediately solved the “credit freeze” problem.

So why wasn’t this proposed?

This is the reason:

In short, it wouldn’t have done anything because the economy only grows at a rate of about 20 cents for every dollar of debt taken on. That is, it takes five dollars of debt to generate one new dollar of GDP.

The bad news is that once you reach the “$1 for $1” level you are no longer able to finance growth with debt, and it becomes inevitable that you will begin to finance debt with debt.

That, of course generates no GDP at all but precipitously tightens the spiral.

We crossed that Rubicon roughly around 1968, and you have had this fact concealed from you.

Congress, please listen:

The Truth is that we now require about $5 of debt to generate $1 of GDP.

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Frozen Funds: Tens of thousands of Australians, many of them retirees, are now unable to get immediate access to their capital

PRESSURE on the Federal Government over its bank deposit guarantee has escalated after three big financial institutions hit with a spate of withdrawals by customers last night froze their accounts.

Tens of thousands of Australians, many of them retirees, are now unable to get immediate access to their capital after AXA Asia Pacific, Perpetual Investment Management and Australian Unity suspended withdrawals from some funds.

Treasurer Wayne Swan responded last night by advising people adversely affected to go to Centrelink to see if they were eligible for income support.

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