Patch_W_Adams's St Louis Blog

Senate Passes 'Sweetened' Economic Bailout Bill in Hopes of House Support

Obama, McCain Depart Presidential Campaign Trail for Economic Crisis

By JAKE TAPPER

Oct. 2, 2008

Now that the Senate has overwhelmingly approved the $700 billion Wall Street bailout -- fattened with "sweeteners " into an $800 billion bailout -- Congressional leaders are "cautiously optimistic" that the House won't reject it for a second time this week.

The economic rescue plan breezed through the Senate Wednesday night on a 75-24 vote, a move that was intended to put pressure on the House to also approve the measure. House rejection of an earlier version triggered a told ABC News' George Stephanopoulos that they are "cautiously optimistic" that the bill will pass. The White House said that Bush has made two dozen phone calls to House members who had initially voted no and pursuaded several of them to switch their votes to yes, Stephanopoulos said.

 A second rejection of the bill was "unthinkable," according to congressional leaders.

The House will be voting on a bill packed with $100 billion worth of extra incentives than Monday's proposal had.

Some of those additions have been assailed by spending watchdogs as "pork," like the $6 million for the makers of kids' wooden arrows, according to a summary of the bill released by the Senate Finance Committee.

Other goodies intended to attract the votes of individual members of Congress include $192 million for the rum producers of Puerto Rico and Virgin Islands, $128 million for car racing tracks, $33 million for corporations operating in American Samoa, and $10 million for small film and television productions.

The bill also now includes an extension of numerous tax breaks for research and development and renewable energy companies, as well as personal tax breaks for college tuition and disaster victims.

It proposes adjusting the Alternative Minimum Tax, so it doesn't hit more than 20 million middle class Americans in 2009.

Another key modification is a one-year increase in the limits of personal bank savings the government insures up to $250,000.

With the additions, the bill could achieve its goal of appealing to the 133 disapproving House Republicans. Rep. John Shaddeg, R-Ariz., who voted against the bill Monday, has changed his mind.

"At this point, I am assuming they don't change it, strongly leaning towards voting for it," Shaddeg said.

Nevertheless, Rep. Marcy Kaptur, D-Ohio, told "Good Morning America" that she will still vote "no," calling it "the wrong medicine."

"I think that the worst part is, this is adding over $1 trillion to our deficit," Kaptur said. She believes the crisis can be handled without saddling the voters with Wall Street's debts.

To Read the Whole Article Go T o:

http://abcnews.go.com/Politics/Business/story?id=59
31648&page=1

Wednesday, October 01, 2008

By Robert Roy Britt

If you've never heard of the exciting field of synthetic biology, you're not alone, but you might want to get wise to the field's controversial promise to create life from scratch.

About two-thirds of U.S. residents are clueless as well, having never heard of synthetic biology.

Only 2 percent in a new telephone survey of 1,003 adults said they have heard a lot about the work, which crosses biology with technology and promises to create forms of life that Nature never thought of.

Synthetic biologists engineer and build or redesign living organisms, such as bacteria, to carry out specific functions.

The field is a scientific playground for the genetic code, where previously nonexistent DNA is formulated in test tubes.

By taking genetic engineering to the extreme, synthetic biologists aim to make life in the lab.

The promise is that the novel organisms will fight disease, create alternative fuels or build living computers.

"We face daunting problems of climate change, energy, health, and water resources," a group of 17 leading scientists in the field stated last year. "Synthetic biology offers solutions to these issues: microorganisms that convert plant matter to fuels or that synthesize new drugs or target and destroy rogue cells in the body."

Now you know.

But why should you care?

For one, the field "is potentially controversial because it raises issues of ownership, misuse, unintended consequences and accidental release," according to a report earlier this year commissioned by the Biotechnology and Biological Sciences Research Council in England.

In a nutshell, some fear microscopic lab freaks might escape and wreak havoc.

To Read the Whole Article Go To:

http://www.foxnews.com/story/0,2933,431401,00.html

Foreign economists urge 'global plan'

Nicholas Kralev
Wednesday, October 1, 2008

Leaders and economists from Western Europe to East Asia Tuesday urged the United States to go beyond reviving a failed domestic bailout and start working on a new global financial system.

Associated Press Traders at MICEX, the Moscow Interbank Currency Exchange, watch and wait during a tense session in Moscow on Tuesday when stock indexes sank despite a two-hour trading halt.

"The Americans don't have a choice — they must absolutely have a global plan," Christian Noyer, head of the French central bank, said in Paris.

David Smick, a global strategist and author of "The World Is Curved: Hidden Dangers of the Global Economy," said the next U.S. president should immediately call for a second "Bretton Woods" conference to devise a new doctrine of international finance.

The tiny New Hampshire town hosted a conference shortly after World War II that established rules for economic interchange among the world's industrial powers and created the World Bank and International Monetary Fund.

"I am convinced that the sickness runs deep and that we need to rethink the entire financial and monetary system, as we did in Bretton Woods ... to create the tools for worldwide regulation made necessary by the globalization of trade," French President Nicolas Sarkozy said in the French city of Toulon on Monday.

He said that officials from France, Britain, Germany and Italy will meet next week in Paris with the Continent's top financial officials to prepare for a proposed global summit on the economic crisis. European Central Bank President Jean-Claude Trichet will participate.

The 27-nation European Union said Tuesday that the crisis "has become a global problem" and Washington has a "special responsibility" to resolve it.

To Read the Whole Article Got To:

http://www.washtimes.com/news/2008/oct/01/foreign-e
conomists-prod-us-on-global-plan/

Failed firms gave big to both parties

Both McCain and Obama, industry critics, got donations

Jim McElhatton and Jennifer Haberkorn
Friday, September 19, 2008

Before the government committed billions of taxpayer dollars to rescue troubled corporate giants, executives at those firms were directing millions of dollars in lobbying efforts and campaign donations to the very politicians who now blame Wall Street's excesses and greed for America's financial crisis.

The corporate largesse flowed to members of Congress, the political parties, the nominating conventions and the two presidential candidates through the summer, even as many of the companies and their executives were teetering toward collapse.

An analysis by The Washington Times found that both parties cashed in heartily, with Democrats slightly more likely to benefit.

For instance, executives of four companies bailed out by the government — American International Group, Fannie Mae, Freddie Mac and Bear Stearns — donated nearly $2 million to politicians, political action committees and political parties since last year, including nearly $369,000 to the major presidential candidates, according to Federal Election Commission data analyzed by the nonpartisan Center for Responsive Politics (CPR).

They also spent more than $7 million on lobbyists, Senate records show.

Democratic Sen. Barack Obama received $226,611 from employees of the failed companies, compared with $142,575 to Republican Sen. John McCain, the campaign reports showed.

To Read the Whole Article Go To:

http://www.washtimes.com/news/2008/sep/19/failed-fi
rms-directed-millions-to-politicians/

EXCLUSIVE: Pelosi paid husband with PAC funds $99,000 for rent, utilities, accounting fees

Jennifer Haberkorn (Contact)
Wednesday, October 1, 2008

 EXCLUSIVE:

House Speaker Nancy Pelosi has directed nearly $100,000 from her political action committee to her husband's real estate and investment firm over the past decade, a practice of paying a spouse with political donations that she supported banning last year.

Financial Leasing Services Inc. (FLS), owned by Paul F. Pelosi, has received $99,000 in rent, utilities and accounting fees from the speaker's "PAC to the Future" over the PAC's nine-year history.

To Read the Whole Article Go To :

http://www.washtimes.com/news/2008/oct/01/pelosis-p
ac-pays-bills-for-spouses-firm/

Fed puts extra $30bn into markets

The US Federal Reserve is making $30bn (£16.1bn) available to central banks in Australia, Denmark, Sweden and Norway, to ease money markets.

 The availability of credit has shrunk

The Fed said the aim was to "improve liquidity" globally, at a time when the availability of credit is limited.

The Fed made a similar move with central banks in the UK, Canada, Japan and the European Central Bank last week, making $180bn available.

The Federal Reserve said it would take "further steps" if necessary.

To Read The Whole Article Go To :

http://news.bbc.co.uk/2/hi/business/7632939.stm

Tensions rise over Russian navy fleet

Ukrainian politicians worry that Russia may stir sentiments in a bid to annex the Crimean region.

BY TOM LASSETER

McClatchy News Service

SEVASTOPOL, Ukraine -- As the Kremlin seeks to reassert its sphere of influence around its borders and beyond, this home port for Russia's Black Sea fleet -- marooned in the south of Ukraine after the breakup of the Soviet Union -- has moved to the center of tensions between Russia and U.S. allies in the region.

Some Ukrainian politicians worry that Russia will stoke anti-Western sentiments in Sevastopol and cities around it on the Crimean peninsula to create an opportunity to annex the area, the same way Moscow did with two breakaway provinces in Georgia last month, or at least use its influence here to push the central government in Kiev to drop plans to join the European Union and NATO.

Either move would heighten the rising tensions between Russia and the United States, which have returned to Cold War levels over the past year.

Georgia and Ukraine, with American backing, angered the Russian leadership with their NATO aspirations. If they were to join, Russia's Black Sea coastline would be surrounded by members of the military organization.

Sergei Zayats, the administrator of Sevastopol's largest district, said he thought the Russians would be willing to resort to force to keep their ships docked in Crimea, where their fleet has operated since the 1780s. ''The events in Georgia show that this may happen at any time,'' said Zayats, who was appointed by Kiev.

Russia has said it has no plans along those lines.

To Read the Whole Article Go To:

http://www.miamiherald.com/news/world/story/695103.
html

Russia to modernize Nicaraguan military's arsenal

 By FILADELFO ALEMAN

 Associated Press Writer

MANAGUA, Nicaragua -- Russia's ambassador to Managua said Wednesday that his country will replace the Nicaraguan army's aging weaponry.

Ambassador Igor S. Kondrashev said there are no plans, however, to expand the Central American country's military arsenal.

Nicaragua acquired most of its arms and military equipment from the former Soviet Union in the 1980s, when the leftist Sandinista government was fighting U.S.-backed rebels. The army has insisted it needs new helicopters and Navy ships to patrol Caribbean waters, where there is a boundary dispute with Colombia.

Kondrashev made the comments in an interview with Canal 8 TV station, but he did not say if Russia would ask for financial compensation or would simply replace the equipment as a gift to Nicaragua - which was one of the first nations to support Russia in its war against Georgia.

To Read the Whole Articel Go To:

http://www.miamiherald.com/news/americas/AP/story/7
00004.html

Subprime Mortgage Mess - Whose Fault Is it Anyway?

By Andy Sutton

Where does credit come from?

In the bygone days of more sound credit policy, Mr. and Mrs. Smith would take a drive to their local bank and apply for a mortgage. During this process they were poked, prodded and maneuvered into giving up every nugget of info about their financial lives. If all was well and they had a modest down payment, the loan would be written. The loan itself came from the savings of the depositors of the bank. In other words, the bank acted in its given role as a financial intermediary between the real lender (the depositors) and the borrower. The bank, while holding the note on its books, was not the real lender. This is an important distinction to make. Banks had to be very careful because if a loan went bad, then the bank had to make its depositors whole again. So banks were very careful to focus on the borrower's ability to pay and exercised proper due diligence. Certainly, there were cases where the bank would get burned and a borrower would default, but the property could often be sold to close the gap and keep losses to a minimum. It worked very well.

Guaranteed Loans guarantee trouble

However, in typical fashion, Big Government decided that everyone had some sort of inborn 'right' to own a home and created GSE's (Government Sponsored Enterprises) to 'guarantee' certain types of loans. This served to shift the risk to the GSE from the originator. So the bank which previously had a very good reason to be diligent now had less of a reason to do so knowing that the loan could be dumped on the GSE's. This was the beginning of the moral hazard in lending. The only saving grace was that the GSE's were throttled by their charters and regulators in terms of the types of loans they could buy, the total amount of their holdings, and similar restrictions.

In recent weeks we have seen a continuation of the entitlement mentality as the Federal Reserve and government have now decided that the people who made these poor decisions need to be absconded of their responsibility at the expense of the rest of us, our kids, and future generations. It would seem that the only group of people who are not entitled to anything are those of us who work, behave and act responsibly. Oh wait I forgot; we're entitled to pay for the profligate ways of others, government included.

Wall Street steps in

Then another layer was added: securitization. Loans were sold by originators and chopped up and packaged into pools of CDO/CMO/CLO's and sold to Wall Street firms who then performed acts of magic that would make David Copperfield blush. Fancy computer models were used to 'distribute' the risk and spread it out (sarcasm mine). At the end of all of this, the aforementioned Wall Street bigshots would run to their rating agency buddies who slapped a higher than deserved credit rating on the pools and the shuck and jive was complete.

It is pretty easy to see what the role of the originator had become. Due to loose monetary policy on the part of the Fed, the markets were sloshing with money and the demand for asset-backed securities was voracious. It became as simple as selling as many loans as possible and do it as quickly as possible. The loans never stayed with the originator for more than a few months so who really cared if the borrower could make the payments? If they didn't, the originator didn't have to make anyone whole again. The moral hazard reached fever pitch. Originators no longer worried about the borrower's ability to pay, instead opting to focus on their own ability to sell the resulting loans.

Where does buck stop?

Since the beginning of the year, cries have come out from consumer advocacy groups, watchdog organizations and political action committees decrying the exploitation of the defenseless victims in the mortgage mess. There has been talk of a bailout of consumers unlucky enough to put their signature on something they never bothered to learn about. Where is our sense of personal responsibility? I am not going to advocate or try to justify the unethical business practices of those involved from the originators to Wall Street and the rating agencies. There need to be indictments; and quickly. Some folks need to go to jail for this. Some of the big boys need to be allowed to fail if that is their destiny.

The Fed facilitated this mess with too much easy money and it is asinine to believe that they'll be able to fix it with more of the same. All that being said, at the end of the day none of this would have happened if there weren't people who for whatever reason were willing to sign on the dotted line. Maybe it was greed. Maybe they assumed that the other counterparties were looking out for them. Maybe it was naivete. Maybe it was a lack of education. Maybe it was our new national attitude: buy now worry later. Well, the buying has been done. Now it's time to worry. We do not live in a vacuum. There are immense resources for anyone inclined to exercise due diligence. I just don't buy the exploitation line. The seeds for this mess may have been sown in Washington and on Wall Street, but the blame ultimately lives on Main Street.

 Andy Sutton holds a MBA with Honors in Economics from Moravian College and is a member of Omicron Delta Epsilon International Honor Society in Economics.

This was Written in August of 2007...over a Year Ago..!   Oh Gee....They Couldn't See this Coming!!!!!

Key finance firms 'probed by FBI'

The FBI has begun an investigation into four major US financial institutions caught up in the current financial crisis, US media say.

The US government has stepped in to rescue some struggling institutions

Investigators are reportedly examining possible fraud by mortgage giants Fannie Mae and Freddie Mac, the failed bank Lehman Brothers and insurer AIG.

Top managers at those firms are also being investigated, the reports say.

In the past year, as the US housing market slumped, the FBI began a broad inquiry across the financial sector.

It was prompted by concerns over the way high-risk, "sub-prime" mortgages were being sold.

The FBI has been looking at lenders who sold home loans to buyers on low or unpredictable incomes and also the investment banks that packaged these loans and sold them on.

To Read Whole Article Go To:

http://news.bbc.co.uk/2/hi/business/7632790.stm

N Korea nuclear seals 'removed'

The UN's atomic watchdog says it has removed seals and surveillance cameras from North Korea's main nuclear complex at Pyongyang's request.

A sticking point in talks has been how to verify North Korea's disarmament

North Korea says the move is part of a plan to reactivate the Yongbyon plant, and that it plans to return nuclear material to the site next week.

The move comes amid a dispute over an international disarmament-for-aid deal.

A similar step in 2002 sparked a crisis which eventually resulted in Pyongyang testing a nuclear weapon in 2006.

The removal of seals and cameras "was completed today", a spokeswoman for the International Atomic Energy Agency (IAEA) said.

To Read the Whole Story Go To:

http://news.bbc.co.uk/2/hi/asia-pacific/7633140.stm

Russian 'arms dealer' trial opens

A hearing has begun in a Bangkok court to determine if alleged Russian arms dealer Viktor Bout should be extradited to the United States.

Russian MPs say the charges Mr Bout faces are politically motivated

Mr Bout was detained in a sting operation in Bangkok on 6 March, in which US agents posed as arms buyers.

He has been indicted on four terrorism charges in the US and has been accused of supplying al-Qaeda.

Dubbed "the Merchant of Death" by the media, Mr Bout denies any illegal activities.

His extradition hearing opened in Bangkok's Criminal Court on Monday after months of delays.

Mr Bout has had trouble retaining a defence team - the first lawyer said he had problems with his heart, the second failed to appear, and a third has now been assigned by the court.

The new defence lawyer Preecha Prasertsak tried to block the extradition hearing by arguing Mr Bout's detention in Thailand was illegal, but the court ruled it would discuss that issue at a later date.

To read the Whole Article Go to:

http://news.bbc.co.uk/2/hi/asia-pacific/7628863.stm

Tuesday, September 23, 2008

 AP

FILE: The Pyotr Velikiy, Peter the Great, a Russian nuclear-powered missile cruiser is seen in the Barents Sea, Russia.

Russia flexed its muscles in America’s backyard Tuesday as it sent one of its largest warships to join military exercises in the Caribbean. The nuclear-powered flagship Peter the Great set off for Venezuela with the submarine destroyer Admiral Chabanenko and two support vessels in the first Russian naval mission in Latin America since the end of the Cold War.

“The St Andrew flag, the flag of the Russian Navy, is confidently returning to the world oceans,” said Igor Dygalo, a spokesman for the Russian Navy. He declined to comment on Russian newspaper reports that nuclear submarines were also part of the expedition.

The voyage to join the Venezuelan Navy for operations came only days after Russian strategic nuclear bombers made their first visit to the country. Hugo Chavez, the President, said then that the arrival of the strike force was a warning to the U.S. The anti-American Venezuelan leader is due to visit Russian President Dmitri Medvedev in Moscow this week as part of a tour that includes visits to Cuba and China.

Peter the Great is armed with 20 nuclear cruise missiles and up to 500 surface-to-air missiles, making it one of the most formidable warships in the world. The Kremlin has courted Venezuela and Cuba as tensions with the West soared over the proposed U.S. missile shield in Eastern Europe and the Russian invasion of Georgia last month.

To Read the Whole Story Go To:

http://www.timesonline.co.uk/tol/news/world/europe/art
icle4804157.ece

CEO Rejects $22M Parachute; Will Others Follow?

Robert Willumstad Opted Out of His AIG Severance Package; Will Other Execs Do the Same or Will the Law Do It for Them?

 By ALICE GOMSTYN
ABC NEWS Business Unit
Sept. 23, 2008

Who in his right mind would walk way from an eight-figure severance package? Try Robert Willumstad.

Former AIG CEO Robert Willumstad, citing shareholder and employees losses that resulted from AIG's... Former AIG CEO Robert Willumstad, citing shareholder and employees losses that resulted from AIG's drop in shares, has declined to accept $22 million in severance from the ailing insurance giant. If proposed federal legislation is passed, other top executives could give up some of their compensation too -- albeit, not voluntarily. (ABC News)

Willumstad, 63, served as the chief executive officer of ailing insurance giant American International Group from June until he was replaced earlier this month. He was eligible for a severance package of $22 million, but in a Sunday e-mail to his successor, Edward Liddy, he said that he would decline the package.

"I prefer not to receive severance payments while shareholders and employees have lost considerable value in their AIG shares," he wrote in an e-mail, according to a person familiar with the situation.

Given this year's turmoil in the stock and credit markets, AIG is far from the only firm to see massive drops in share value. But don't expect executives from other financial firms to follow Willumstad's example, at least not voluntarily, said Robert Reich, the former U.S. labor secretary under President Clinton and a professor of public policy at the University of California at Berkeley.

To read the Whole Story Go To:

http://abcnews.go.com/Business/MarketTalk/story?id=
5861458&page=1

Angst Returns to Wall St.: Stocks Dive, Oil Soars

Angst Returns to Financial Markets as Investors Fret Over Bailout Plan; Stocks Fall, Oil Soars

 By PATRICK RIZZO AP Business Writer
NEW YORK

September 23, 2008 (AP)

The Associated Press

After a brief spell of elation, angst has returned to Wall Street.

Financial markets' initial relief over a $700 billion U.S. government bailout plan has given way to concerns the rescue package may cost too much, drive up inflation, swell the already-bloated deficit and hurt the ailing economy.

On Monday, investors sold off stocks, sent oil prices to their biggest one-day gain and dumped the dollar.

The Dow Jones industrials lost 372 points, wiping out the gains the index made Friday after administration officials and congressional leaders promised swift action to get bad debt off the books of banks and end the financial crisis.

"Investors had a weekend to look at the news that was streaming out, and they are now finding fault in it," said Joseph Battipaglia, market strategist in the private client group at the investment firm Stifel Nicholaus.

To read the Whole Story Go To:

http://abcnews.go.com/Business/wireStory?id=5862800