US army captain kills four in hurricane rampage

A US army captain gunned down his ex-wife, mother-in-law and two other people in a shooting spree during Hurricane Irene before he turned the gun on himself, a justice official told AFP on Monday.
Captain Leonard Egland, who is understood to have served in Afghanistan and Iraq, started his rampage on Saturday evening right in the middle of the storm and ended it after a shootout with SWAT teams shortly before dawn Sunday.

Buckingham County district attorney David Heckler said it appeared that Egland committed a triple homicide in Virginia before crossing state lines and killing his estranged wife's mother, following a recent child custody row.

The soldier, 37, had been the target of a manhunt after the shooting deaths of his 36-year-old former wife, her boyfriend and her boyfriend's son at a house in Chesterfield, Virginia, as Irene swept up the east coast.

He apparently killed them before driving north into Pennsylvania with his young daughter and gunning down his ex-wife's mother, Heckler said.

Police had been alerted after Egland entered a hospital and left a note asking medics to check on his daughter's health but he pulled out a gun and fled in his car when a member of staff confronted him about the youngster.

"He left a note referring to his mother in law. We believe he shot her in the head," said Heckler, noting that police tracked down the car, leading to a pursuit and shootout with SWAT marksmen.

"He had a semi-automatic rifle and fired around 10 shots at police vehicles," injuring one officer, the district attorney added. Egland was later found dead in nearby woodland.

"From what we have been told there was a legal visitation order involving the child that had allowed Mr Egland take his daughter to California for one week," Heckler said, referring to the soldier's tours of warzones.

"But the ex-wife threatened legal action after the daughter returned from the visit one week late," he added.

A police pursuit eventually saw Egland pinned down near a gas station. "We have every indication that he died from a self-inflicted gun wound. Everything is consistent with that," Heckler said.

The dead soldier's daughter, aged six or seven according to media reports, is in protective custody, authorities said.

Justice officials in Virginia were unavailable for comment on Monday.
Breitbart

Obama Goes All Out For Dirty Banker Deal

A power play is underway in the foreclosure arena, according to the New York Times.

On the one side is Eric Schneiderman, the New York Attorney General, who is conducting his own investigation into the era of securitizations – the practice of chopping up assets like mortgages and converting them into saleable securities – that led up to the financial crisis of 2007-2008.

On the other side is the Obama administration, the banks, and all the other state attorneys general.

This second camp has cooked up a deal that would allow the banks to walk away with just a seriously discounted fine from a generation of fraud that led to millions of people losing their homes.

The idea behind this federally-guided “settlement” is to concentrate and centralize all the legal exposure accrued by this generation of grotesque banker corruption in one place, put one single price tag on it that everyone can live with, and then stuff the details into a titanium canister before shooting it into deep space.

This is all about protecting the banks from future enforcement actions on both the civil and criminal sides. The plan is to provide year-after-year, repeat-offending banks like Bank of America with cost certainty, so that they know exactly how much they’ll have to pay in fines (trust me, it will end up being a tiny fraction of what they made off the fraudulent practices) and will also get to know for sure that there are no more criminal investigations in the pipeline.

This deal will also submarine efforts by both defrauded investors in MBS and unfairly foreclosed-upon homeowners and borrowers to obtain any kind of relief in the civil court system. The AGs initially talked about $20 billion as a settlement number, money that would “toward loan modifications and possibly counseling for homeowners,” as Gretchen Morgenson reported the other day.

The banks, however, apparently “balked” at paying that sum, and no doubt it will end up being a lesser amount when the deal is finally done.

To give you an indication of how absurdly small a number even $20 billion is relative to the sums of money the banks made unloading worthless crap subprime assets on foreigners, pension funds and other unsuspecting suckers around the world, consider this: in 2008 alone, the state pension fund of Florida, all by itself, lost more than three times that amount ($62 billion) thanks in significant part to investments in these deadly MBS.

So this deal being cooked up is the ultimate Papal indulgence. By the time that $20 billion (if it even ends up being that high) gets divvied up between all the major players, the broadest and most destructive fraud scheme in American history, one that makes the S&L crisis look like a cheap liquor store holdup, will be safely reduced to a single painful but eminently survivable one-time line item for all the major perpetrators.

But Schneiderman, who earlier this year launched an investigation into the securitization practices of Goldman, Morgan Stanley, Bank of America and other companies, is screwing up this whole arrangement. Until he lies down, the banks don’t have a deal. They need the certainty of having all 50 states and the federal government on board, or else it’s not worth paying anybody off. To quote the immortal Tony Montana, “How do I know you’re the last cop I’m gonna have to grease?” They need all the dirty cops on board, or else the whole enterprise is FUBAR.

In addition to the global settlement, Schneiderman is also blocking an individual $8.5 billion settlement for Countrywide investors. He has sued to stop that deal, claiming it could “compromise investors’ claims in exchange for a payment representing a fraction of the losses.”

If Schneiderman thinks $8.5 billion is an insufficient, fractional payoff just for defrauded Countrywide investors, then you can imagine how bad a $20 billion settlement for the entire industry would be for the victims.

In that particular Countrywide settlement deal, it looks like Bank of New York Mellon, the New York Fed, Pimco and other players negotiated on behalf of defrauded investors. They told the Times they were happy with the deal, but investors outside the talks told Gretchen they weren’t happy with the settlement.

Schneiderman apparently listened to those voices instead of the Mellon-Fed-BofA crowd, which infuriated the insiders who struck the actual deal. In a remarkable quote given to the Times, Kathryn Wylde, the Fed board member who ostensibly represents the public, said the following about Schneiderman:

It is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street — love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.

This, again, is coming not from a Bank of America attorney, but from the person on the Fed board who is supposedly representing the public!

This quote leads one to wonder just what Wylde would consider “indefensible,” given that stealing is pretty much the worst thing that a bank can do — and these banks just finished the longest and most orgiastic campaign of stealing in the history of money. Is Wylde waiting for Goldman and Citi to blow up a skyscraper? Dump dioxin into an orphanage? It’s really an incredible quote.

The banks are going to claim that all they’re guilty of is bad paperwork. But while the banks are indeed being investigated for "paperwork" offenses like mass tax evasion (by failing to pay fees associated with mortgage registrations and deed transfers) and mass perjury (a la the “robo-signing” practices), their real crime, the one Schneiderman is interested in, is even more serious.

The issue goes beyond fraudulent paperwork to an intentional, far-reaching theft scheme designed to take junk subprime loans and disguise them as AAA-rated investments. The banks lent money to corrupt companies like Countrywide, who made masses of bad loans and immediately sold them back to the banks.

The banks in turn hid the crappiness of these loans via certain poorly-understood nuances in the securitization process – this is almost certainly where Scheniderman’s investigators are doing their digging – before hawking the resultant securities as AAA-rated gold to fools in places like the Florida state pension fund.

They did this for years, systematically, working hand in hand in a wink-nudge arrangement with clearly criminal enterprises like Countrywide and New Century. The victims were millions of investors worldwide (like the pensioners who saw their funds drop in value) and hundreds of thousands of individual homeowners, who were often sold trick loans and hustled into foreclosure when unexpected rate hikes kicked in.

In a larger sense, even the (often irresponsible) people who simply bought more house than they could afford were victims of this scam. That's because in many of these cases, credit simply would not have been available to those people had the banks not first discovered a way to raise vast sums of money dumping crap loans on an unsuspecting market.

In other words: if Bank of America hadn’t found a way to sell worthless subprime loans as AAA paper to the Chinese and the Scandavians in May, you can be sure that it wouldn’t be going back to Countrywide in June to lend out more money for more subprime loans.

And Countrywide, in turn, wouldn’t then have been sending masses of reps out into the ghettoes to offer juicy home loans to undocumented immigrants and refis to confused old ladies on social security.

This is as bad as white-collar crime gets. But to Wylde, it doesn’t rise to the level of being “indefensible.” Until they do something worse than this, we apparently should support the banks, and make sure they don’t have to pay more than a fraction of what they made off of this kind of crime.

What is most amazing about Wylde’s quote is the clear implication that even a law enforcement official like Schneiderman should view it as his job to “do everything we can to support” Wall Street. That would be astonishing interpretation of what a prosecutor's duties are, were it not for the fact that 49 other Attorneys General apparently agree with her.

In Schneiderman we have at least one honest investigator who doesn’t agree, which is to his great credit. But everyone else is on Wylde’s side now. The Times story claims that HUD Secretary Shaun Donovan and various Justice Department officials have been leaning on the New York AG to cave, which tells you that reining in this last rogue cop is now an urgent priority for Barack Obama.

Why? My theory is that the Obama administration is trying to secure its 2012 campaign war chest with this settlement deal. If Barry can make this foreclosure thing go away for the banks, you can bet he’ll win the contributions battle against the Republicans next summer.

Which is good for him, I guess. But it seems to me that it might be time to wonder if is this the most disappointing president we’ve ever had.
RollingStone

The fix is in

Officials: 29 dead in suicide bomb in Iraq mosque

BAGHDAD (AP) - A suicide bomber blew himself up inside Baghdad's largest Sunni mosque Sunday night, killing 29 people during prayers, a shocking strike on a place of worship similar to the one that brought Iraq to the brink of civil war five years ago.

Iraqi security officials said parliament lawmaker Khalid al-Fahdawi, a Sunni, was among the dead in the 9:40 p.m attack.

Maj. Gen. Qassim al-Moussawi, a spokesman for Baghdad's military operations command, confirmed the bombing happened inside the Um al-Qura mosque during prayers in the western Baghdad neighborhood of al-Jamiaah. The blue-domed building is the largest Sunni mosque in Baghdad.

"I heard something like a very severe wind storm, with smoke and darkness, and shots by the guards," said eyewitness Mohammad Mustafa, who hit in the hand by shrapnel. "Is al-Qaida able to carry out their acts against worshippers? How did this breach happen?"

That the bomber detonated his explosives vest inside the mosque is particularly alarming, as it is reminiscent of a 2006 attack on a Shiite shrine in the Sunni city of Samarra that fueled widespread sectarian violence and nearly ignited a nationwide civil war. In that strike, Sunni militants planted bombs around the Samarra shrine, destroying its signature gold dome and badly damaging the rest of the structure.

Under deposed dictator Saddam Hussein, a Sunni, Iraq's Shiite majority was persecuted and repressed. Shiites took power after his ouster, stoking Sunni resentment that bore the insurgency.

No group immediately claimed responsibility for Sunday's bombing, but suicide attacks generally are a hallmark of al-Qaida, which is dominated by Sunnis. Intelligence officials have speculated that al-Qaida will do almost anything to re-ignite sectarian violence, but the group recently had focused on attacking Iraqi security forces and the government to prove how unstable Iraq remains.

Two security officials and medics at two Baghdad hospitals put the casualty toll at 29 dead and 38 wounded. All spoke on condition of anonymity because they were not authorized to release the information.

Al-Moussawi put the death toll at only six and said there was no significant damage to the mosque. Conflicting death tolls are common immediately after attacks in Iraq.

In a statement early Monday, Prime Minister Nouri al-Maliki called on Iraqis to stand strong against terrorists and "pursue them wherever they are."

"Solidarity and unity, and standing as one line behind the army and the police, are the only way to eliminate this danger, which does not differentiate between the Iraqis and targets all of us," al-Maliki said.

The attack hit Sunnis who were praying in a special service during the holy Muslim month of Ramadan, which ends Tuesday. It demonstrates anew that security measures to protect Iraqis as U.S. forces prepare to leave remain riddled with gaps, and shows the extent to which militants want to extend violence even as the eight-year- U.S. presence winds down.

The mosque's security is provided by the government-supported Sunni Endowment, and al-Moussawi raised the possibility that the bomber had inside help.

"For sure there must have been someone inside the mosque who helped the bomber," al-Moussawi said. "It must have been someone who is protecting the mosque."

Sheik Ahmed Abdul Gafur al-Samarraie, the head of Sunni Endowment, agreed that was a possibility and said the group would investigate how the bomber got inside the mosque, where an estimated 200 people were praying. He said this is the first time such a security breach had occurred, and said guards did not suspect the bomber because he had a broken hand that was bandaged.

Al-Samarraie said the bomber exploded just a few feet (meters) from him, and called himself the likely target. He blamed al-Qaida.

"Those people are infidels and unbelievers, and their criminal acts will never deflect us from our unity," al-Samarraie told Iraqi state TV. "We will remain as unified Iraqis."

He described "a deep sorrow for the murder of a child who was praying today. The blast tore his body to pieces: his legs in one place and a hand in another."

Al-Fahdawi, the Sunni lawmaker, was targeted twice by al-Qaida, in 2004 and 2005, when he was the head of Sunni Endowment in Anbar province.

The strike happened hours after the U.N.'s outgoing top diplomat in Iraq said the government in Baghdad must determine whether its security forces are strong enough to thwart violence before requiring U.S. troops to leave at the end of the year.

In his last interview after two years in Baghdad, U.N. envoy Ad Melkert said Iraqi security forces have made "clear improvements" but declined to say if he thinks they are ready to protect the country without help from the American military.

"It's up to the government, really, to assess if it is enough to deal with the risks that are still around," Melkert said in a wide-ranging interview with The Associated Press on the eve of his departure Monday.

"Obviously, security remains a very important issue."

The U.S. and Iraqi governments are negotiating how many American troops might stay, and what role they would play, in a mission that has already lasted more than eight years. A 2008 security agreement between Baghdad and Washington requires all U.S. troops to be out of Iraq by Dec. 31, but the country's shaky security situation and vulnerability to Iranian influence has prompted politicians on both sides to buck widespread public disapproval and reconsider the deadline.

A decision on whether U.S. troops will remain is not expected for several weeks at least, and the American military is already starting to pack up to leave. About 46,000 U.S. troops currently are in Iraq. The White House has offered to keep up to 10,000 there.

Violence has dropped dramatically across Iraq from just a few years ago, but deadly attacks still happen nearly every day.
MyWay

Someone is desperate

What Qaddafi’s Fall Means for His Evil Minions in South America, Asia, and Africa

Judging from the fervor of their celebrations, the Libyan people are acutely aware that they will benefit from the fall of Muammar Qaddafi. But Libya is hardly the only country that has reason to rejoice.

As committed as the dictator was to destroying his own country, he posed an equal—perhaps even greater—danger to developing countries in other parts of the world. From the time he assumed power, Qaddafi leveraged Libya’s oil money, and his own willingness to have his country become a pariah state, to support insurgencies from East Asia, to South America, to southern Africa. With any luck, a number of long-running civil wars will disappear from the world stage together with Qaddafi himself.

Qaddafi always made it clear that he wouldn’t follow the informal rulebook established by other Arab and African leaders, according to which they never meddled in other countries’ affairs: Indeed, his political vision always extended beyond his own borders.

One of his pet projects, in fact, was the World Revolutionary Center, which he established near the city of Benghazi. Stephen Ellis referred to the institution as the “Harvard and Yale of a whole generation of African revolutionaries.” While many of his graduates shared an anti-Western ideology—which appealed to the Libyan dictator’s own self-image as one of the few statesmen willing to stand up to would-be imperialists—sometimes the rebels on his bankroll had no discernable ideology at all. Qaddafi’s ideological inclinations were often outweighed by his appetite for power, his desire to be seen as a dominant powerbroker in Africa, his fantasies of revenge against America, or simply his love of mischief.

Very occasionally, Qaddafi backed insurgents, like the African National Congress during South Africa’s apartheid years, who were fighting for laudable goals. But far more often than not, Qaddafi’s beneficiaries were as antidemocratic and brutal as he was: Among them were future dictators and thugs such as Chad’s Idriss Deby, Sierra Leone’s Foday Sankoh, Burkina Faso’s Blaise Compaore, and Liberia’s Charles Taylor. Taylor, the Liberian warlord now facing charges of war crimes at the International Criminal Court, led one of the grisliest wars in modern history, overseeing the deployment of child soldiers, and the regular use of amputations, rapes, and sexual slavery. Sankoh also played a major role in that war, though he later died in custody. Meanwhile, Compaore, who has ruled with an iron-fist for nearly twenty-five years in Burkina Faso, regularly rigs his elections to maintain power, most recently last year.

Libya thus became the hub of a global network of insurgents and warlords: Qaddafi’s trainees used the ties they established during their time in Libya to further support each other and bolster their staying-power. Compaore, for instance, sent troops to aid the West African insurgents: He also was the one who first introduced Taylor to Qaddafi—love at first sight for the two despots, but a match made in hell for the people of Liberia.

At the height of Qaddafi’s power in the 1970s, 1980s, and 1990s, as civil wars bloomed in the wake of the Cold War and the price of oil kept the Libyan economy flush, Qaddafi’s reach extended far beyond Africa. Qaddafi’s aid—in the form of arms, money, and training—to Muslim separatists in the southern Phillipines long bolstered their bloody insurgency against Catholic-dominated Manila. Despite Qaddafi’s relatively secular leanings, Libya is said to have been channeling funds to the Abu Sayyaf, a terrorist-group-cum-kidnapping-gang in the southern Philippines with ties to Al Qaeda.

And despite his much-hyped rapprochement with the West in the early 2000s, during which he publicly gave up his weapons of mass destruction program and welcoming leading officials like Secretary of State Condoleezza Rice to Tripoli, Qaddafi never entirely stopped supporting insurgencies and dictators. He apparently always continued his backing for the Revolutionary Armed Forces of Colombia (FARC), a drug-running terrorist organization that has helped make parts of Colombia ungovernable.(As longtime Qaddafi-watcher Douglas Farah has noted, one captured FARC hard drive contained a letter from the group requesting $100 million from the Libyan leader.) And his assistance to Robert Mugabe went unabated, even long after the Zimbabwean dictator lost all international credibility by openly stealing national elections.

The constancy of this support has turned out to be mutual. Even as Qaddafi’s rule has crumbled in recent months, exposing his lack of support among average Libyans, the groups he funded abroad have stood by him. Rebels in the southern Philippines have publicly protested the NATO attacks on Qaddafi’s installations. Venezuelan President Hugo Chavez, who has backed the FARC alongside Qaddafi, has denounced the international intervention in Libya, saying that international powers were “kicking, spitting ... on the most basic elements of international law.” Even many African National Congress leaders still have a soft spot for Gadhafi, since he stood by the ANC during the apartheid era—Nelson Mandela and current South African president Jacob Zuma have both called Qaddafi a “brother leader.”

But with Qaddafi gone, the insurgencies he backed will either have to find new patrons, or face the prospect of dying out. Some are already on their last legs. The southern Philippines’ insurgent groups are now engaged in serious peace talks with the government (talks that Qaddafi’s son Saif al-Islam had originally attempted to broker). In Burkina Faso, Compaore’s rule is increasingly threatened by army defections and street protestors attempting to convert the Arab spring into an African fall. Unable to rely upon assistance and rhetorical support from Libya, Compaore seems likely to face the same fate as Qaddafi himself. Robert Mugabe, who seems to be gearing up at nearly 90 years of age for another national election, will also be weakened by not being able to rely upon Qaddafi: African reformers, such as Botswana’s democratic government, will undoubtedly be emboldened in renewing their calls for Mugabe to go.

The rebels who have now taken power in Tripoli would be wise to acknowledge the destabilizing role that Qaddafi had Libya play on the international stage over the past four decades. That is not to say that they are responsible for the mayhem caused by the former regime. But by recognizing their political inheritance, and perhaps setting aside some funds for victims of Qaddafi’s international terror, they will be eschewing Qaddafi’s own attitude of radical fervor. Marking such an end to the country’s era of perpetual revolution would be the most promising development of all for Libya.
TNR

'Million man' anti-Israel rally in Cairo attracts only hundreds

Hundreds of Egyptians gathered Friday outside the Israeli embassy in Cairo in what was supposed to be a "million-man march" calling on the government to expel Israel's ambassador.

Most Egyptian protest groups announced that they would participate in the demonstration to expel the ambassador over the border incident last week in which five Egyptian policemen were killed by the IDF. However, the protesters who actually arrived were far fewer in number.

The police deaths occurred on August 19 during a shootout with militants near the Egyptian border, following attacks on a bus and other vehicles killed eight Israelis.

"The people want the right of our martyrs in Sinai be regained," protesters, holding the Egyptian flags, chanted outside the embassy amid tight security. Others shouted: "The people's first demand is to have the ambassador evicted."

One of the protesters shot in the air and managed to leave the scene before police could arrest him, according to witnesses.

A 23-year-old Egyptian, Ahmed Shahhat, climbed to the roof of the 13-story apartment building housing the embassy early Sunday morning and removed the Israeli flag from the roof, replacing it with an Egyptian flag he had carried with him.

Shahhat, who became an instant folk hero in Egypt, said his action had come in protest against the killing of the three Egyptian soldiers. A resident in the building opened his balcony door for Shahhat, who made the rest of the way down by elevator and was welcomed by thousands of protesters who have been demonstrating outside the building with calls to suspend the Israel-Egypt peace treaty.
Haaretz

Maybe people are starting to see Hisbollah for what it is, a dictator support group more than the Zionist resistance.

Report: 2nd Suspected Syria Nuclear Site Is Found

A second suspected nuclear installation has been identified in Syria, according to commercial satellite photos, the Wall Street Journal reported.

The publishing Wednesday of the photos by Washington's Institute for Science and International Security could increase pressure on the United Nations to demand wide new inspections of suspect Syrian facilities during a March board meeting of the International Atomic Energy Agency.

The newspaper said that “the photos published by the ISIS identifies what it says are one of the three additional sites the IAEA believes could be connected to the Deir al-Zour facility.”

“In a series of photos, ISIS displays what it alleges were apparent Syrian attempts to disguise the activities of site after the Israeli attack (2007),” it added.

Israel attack in 2007 an alleged nuclear site in Syria in which Israeli and American intelligence analysts judged was a partly constructed nuclear reactor, apparently modeled on one North Korea has used to create its stockpile of nuclear weapons fuel, reports say.

The report noted that the “ISIS says the location and contours of the building suggests it housed uranium-conversion equipment that is used to produce nuclear fuel. The facility, in a town called Marj as-Sultan, is on the outskirts of Damascus.”

ISIS said it located the site using commercial satellite images based on information provided by sources at the IAEA as well as by a report in the German newspaper, Sueddeutsche Zeitung.

The Wall Street Journal on Friday cited unnamed officials in the United States and Israel as saying both countries are monitoring Syria's suspected nonconventional arms, fearing that terror groups could take advantage of the unrest to obtain chemical agents and long-range missiles.

The newspaper said U.S. intelligence services believe Syria possesses significant stockpiles of mustard, VX and Sarin gasses and the missile and artillery systems to deliver them.

IAEA inspectors had visited eastern Syria in 2008 and reported that they recovered traces of processed uranium from a site called Deir al-Zour, which the Bush administration alleged housed a nearly operational nuclear reactor. Israeli jets destroyed the facility nearly eight months before the IAEA's visit.

IAEA Director General Yukiya Amano has said in recent months that he'd consider calling for a so-called special inspection of Syrian sites if Damascus continues to deny U.N. staff entry, But Syria could then be referred to the Security Council, if it again refused the IAEA's request.

Diplomats at the IAEA told the newspaper that Amano is also considering releasing a report at the March meeting that would detail what the agency says is evidence that Syria was secretly developing a nuclear reactor.

Syrian President Bashar Assad's government has rebuffed repeated IAEA requests to conduct additional inspections of the site as well as three other facilities the U.N. agency believes could be related to a covert Syrian nuclear program.

Syria is one of six nations that isn't a signatory to the Chemical Weapons Convention, which bans the production and stockpiling of chemical weapons.

Naharnet

Al Qaeda number two killed in Pakistan: U.S. official

WASHINGTON (Reuters) - The number two leader of al Qaeda, Atiyah abd al-Rahman, was killed on August 22 in Pakistan, a senior U.S. official told Reuters on Saturday.
Yahoo

Iraq: How not to overthrow a dictator

BAGHDAD (AP) - Iraqis who lived through the U.S.-led invasion that toppled Saddam Hussein see eerie similarities in the scenes of Libyans parading through Tripoli ripping up posters of Moammar Gadhafi. But Iraqis also saw looting, bloodshed and bombings in the days and years since.

"A lot of people think that freedom means doing whatever you want to do," said Saad Abbas, who witnessed the jubilant cheering when a statue of Saddam Hussein was torn down by American troops steps from Baghdad's Palestine Hotel.

Libyans "are going to have revenge, stealing from the shops. A lot of problems will happen," Abbas said in an interview at the hotel, which he manages.

Skirmishing, some intense, continues in Tripoli. But Gadhafi's regime seems all but finished, with his leading opponents who had established their interim administration, the National Transitional Council, in eastern Libya earlier now moving into Tripoli.

The Iraq conflict provides a sober lesson: Winning the peace is often harder than winning the war.

Libya's rebel military chief Abdel-Hakim Belhaj seems aware of the challenge, telling Al-Jazeera television Tuesday: "We ask God to bless our country with stability."

Belhaj also called on Libyans to act responsibly.

"We need security for our people, justice and prosperity," he said.

There are of course key differences between Iraq eight years ago and Libya today. Although Libyan rebels have had NATO support, the battle to overthrow Gadhafi was an internal uprising galvanized by domestic dissent and propelled by Libyan ground forces. The presence of U.S. troops on Iraqi soil almost immediately became a rallying cry for both Sunni resistance groups and later Shiite militant groups, said Jabir Habib, professor of political science at Baghdad University.

The lessons of Iraq, as well as Afghanistan, were on the minds of many in the West who feared another drawn-out conflict should the U.S. or NATO send troops into Libya.

Libya's neighborhood also differs from Iraq's. Tunisia and Egypt, on Libya's borders, are themselves going through democratic transitions that can serve as a model for Libya.

Iraq, nestled between Sunni powerhouse Saudi Arabia and Shiite dominated Iran, essentially became a battleground for the two meddling neighbors, said Michael Hanna of The Century Foundation .

Libya does not have the stark sectarian and religious differences that drove violence to such horrific levels in Iraq. But Libya does have tribal divisions that could prove deadly if those with ties to Gadhafi feel excluded.

In Libya now, the short-term challenge is securing the capital. The undermanned American forces, with little plan for securing the country, never did that in Iraq, where the National Museum was among the sites looted.

Paul Bremer, the head of the American-backed Coalition Provisional Authority who essentially ruled Iraq during the first year of Saddam's ouster, disbanded the Iraqi Army, leading to tens of thousands of angry Iraqis on the streets and fueling the insurgency.

Hanna of The Century Foundation said the rebels' governmental body, the National Transitional Council, has been eager to show that it is securing Tripoli.

"The security vacuum that opened up right after the fall of Baghdad and the looting, that was seared into people's minds," he said.

The long-term challenges may be tougher. The building blocks of democracy and freedom - parliaments, parties and credible elections - won't just fall into place.

Habib said Libya should move faster than Iraq on important issues. Iraq's first elections weren't held until January 2005, nearly two years after the invasion, and the constitution wasn't approved by voters until October 2005 when Iraq was almost into full-scale civil war.

Iraq also set an early policy of revenge and not reconciliation. Under a process called de-Baathification started by the Coalition Provisional Authority, Iraqis with ties to Saddam's ruling Baath Party lost their jobs.

"Many of the qualified or good people, some of them were the wealth of Iraq, were excluded from their positions," said Iraqi human rights activist Hana Adwar. "If Libyans do this, I fear that will be chaos for the state."

Mahmoud Jibril, the head of Libya's opposition government, told reporters in Paris on Wednesday that his plan for the transition to democracy started with the formation of a national congress to which all Libyan cities would send delegates, and which would select a committee to write a constitution. He said parliamentary elections would follow the constitution within four months, and the parliament speaker will be the interim president. Next will be presidential elections.

Already in Libya, former Gadhafi loyalists have taken key roles in the opposition. Jibril promised "no more alienation."

What may be the most lasting lesson of the Iraq conflict is how difficult it is to maintain unity once the celebrations over a dictator's ouster are gone. Right now, Libyan rebels are united in their desire to oust Gadhafi and his regime. But so were Iraqi leaders and now the government is beset by infighting.

"They were together because their enemy was one: Saddam and the Baathists," said Abbas. "Over there in Libya, they have one enemy: Gadhafi and his family, his tribe. When they leave, the differences between them will appear."
MyWay

Second-quarter growth slows

WASHINGTON (Reuters) - The struggling U.S. economy expanded even more slowly than previously thought in the second quarter of 2011, but a breakdown of the growth suggested a new recession could be avoided.

Gross domestic product rose at an annual rate of 1 percent, the Commerce Department said on Friday, as restocking by businesses and growth in exports proved less strong than initially estimated.

"While confidence indicators have plummeted of late, the most timely hard numbers certainly do not suggest that the economy has fallen back into a recession," said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.

"Instead, we still continue to expect that growth in the second half of the year will accelerate to about 2 percent."

The rate of growth between April and June was cut from the government's first reading of 1.3 percent and followed a lethargic 0.4 percent pace in the first three months of 2011.

This means the economy grew only 0.7 percent in the first half of the year. Nonetheless, and despite a sharp fall in consumer confidence this month, economists do not believe the economy will fall back into recession.

The Thomson Reuters/University of Michigan consumer sentiment index fell to 55.7 this month from 63.7 in July. It was slightly better than August's preliminary reading of 54.9, which had been the lowest level since May 1980.

The weak growth pace has been blamed on high gasoline prices, bad weather and supply-chain disruptions from the March earthquake in Japan, all of which are considered to be temporary drags on the economy.

Federal Reserve Chairman Ben Bernanke told a gathering of central bankers from around the globe in the Rocky Mountains of Wyoming that the economy's recovery from the worst downturn since the 1930s "has been much less robust than we had hoped."

He stopped short of detailing further monetary policy action to bolster the ailing economy, but said the U.S. central bank would consider what more it could do to fight high unemployment.

U.S. stocks rose and Wall Street recorded its first weekly gain in more than a month. Prices of U.S. government debt rose, while the dollar fell against a basket of currencies.

Details of the GDP report were generally encouraging, with consumer spending slightly firmer and businesses accumulating fewer goods than previously thought. Business spending was also more robust than initially believed.

This should improve the economy's prospects for the third quarter, although a strong pick-up in growth remains remote.

STIMULUS NEEDED

Economists said the economy was in desperate need of both fiscal and monetary stimulus, but none expected much help on either front.

The Fed has injected about $2.3 trillion into the economy through purchases of government and agency debt since late 2008 and has slashed interest rates to near zero, leaving it with limited ammunition to bolster the economy.

At the same time, there is no appetite in Washington to increase government spending because of a huge budget deficit.

"The economy is on its own," said Christopher Probyn, chief economist at State Street Global Advisors in Boston. "We are not going to get a marked acceleration in growth."

Business inventories increased $40.6 billion instead of $49.6 billion, cutting 0.23 percentage point from GDP growth during the quarter. The slower restocking was largely blamed on the disruptions to motor vehicle production because of a shortage of parts from Japan.

Motor vehicle production rebounded strongly in July. The slow build-up of inventories also means goods are not piling up on shelves, which should support growth in the third quarter. Excluding inventories, the economy grew at a 1.2 percent rate.

Trade barely contributed to output in the second quarter despite a weak dollar.

The drag from business inventories was offset by growth in consumer spending, which was revised up to a 0.4 percent rate from 0.1 percent.

While sentiment has deteriorated sharply, it remains unclear whether this will translate to consumers and businesses hunkering down, given that data such as industrial production, retail sales and employment remain relatively firm.

"What consumers say and how they behave do not always align. Consumer sentiment will likely be supported as gasoline prices continue to decline," said Troy Davig, an economist at Barclays Capital in New York.

Business spending in the second quarter was stronger than previously estimated -- revised upward to a 9.9 percent rate of increase from 6.3 percent. After-tax corporate profits increased 4.1 percent in the second quarter after edging up just 0.1 percent in the first three months of the year.
Yahoo

Evidence of 'mass execution' in Tripoli

Al Jazeera has found evidence of a possible mass execution of political activists in Libya.

Visiting a hospital in Tripoli on Thursday, Al Jazeera's James Bays said he saw the bodies of 15 men suspected to have been killed a few days earlier as the rebels closed in on the Libyan capital.

"The smell here is overpowering," Bays said from the hospital where a number of bodies lay.

"I have counted the bodies of 15 men, we were told there were 17 here. Two bodies were taken away by relatives for burial."

"We are told these men were political activists who have been arrested over the last few days and weeks and being held near the Gaddafi compound. When the opposition fighters started to enter the compound we are told they were killed.

"Everyone I have spoken to who has looked at these injuries, all the medical staff, they say they believe that the injuries they see on the bodies of these men have the hallmark of a mass execution."

Bays said there were no forensic scientists at the hospital. Doctors there had taken photos of the exit and entry wounds on the bodies, with the intention of showing it to an expert at a later stage.

Fierce fighting

The grisly discovery came as fierce fighting continued across the capital on Thursday, Al Jazeera's Zeina Khodr reported.

Fighting was concentrated along the perimeters of Bab al-Aziziya, in Ghagour, and in the neighbourhoods of the Abu Salim district, where Gaddafi reportedly released, armed and paid former prisoners to fight for his regime.

Rebels stormed into the Abu Salim district, which is one of the main holdouts of forces loyal to Gaddafi.

"Rebels have managed to enter the Abu Salim neighbourhood; clashes are taking place and rebels are pushing very hard," Khodr said.

Rebel reinforcements also streamed into Tripoli from other cities to join in the fight against remnants of Gaddafi's forces.

A rebel spokesman told Al Jazeera that "Libyan territory is 90 to 95 per cent under the control of the rebellion".

The rebels are determined to eliminate the last pockets of resistance and to find Gaddafi; they have offered amnesty and a reward to anyone who kills or captures the 69-year-old Libyan leader.

In Benghazi, the National Transitional Council (NTC) told a news conference on Wednesday that Libyan business people had contributed $1.7m for the cash reward.

"The NTC supports the initiative of businessmen who are offering two million dinars for the capture of Muammar Gaddafi, dead or alive," Mustafa Abdel Jalil, the NTC chief, said.

Audio message

Meanwhile, in an audio message broadcast on loyalist TV channels on Thursday, Gaddafi again called on his supporters to march on Tripoli and "purify" the capital of rebels, who he denounced as "rats, crusaders and unbelievers."

"Libya is for the Libyan people and not for the agents, not for imperialism, not for France, not for Sarkozy, not for Italy," he said. "Tripoli is for you, not for those who rely on NATO".

In an earlier audio address broadcast on Wednesday by the al-Rai television channel, he said Tripoli residents should repel the rebels' advance.

Al Jazeera's Turton reported on Thursday that locals were very worried about attacks by pro-Gaddafi supporters across the city.

"There are check points popping up all over the city. Locals are managing to get hold of weapons to police their streets," she said.

"There is a lot of nervousness … people are very worried that Gaddafi loyalists are coming through these streets

"We've been told about clashes as rebels try to regain control of Abu Salim, the pro-Gaddafi neighbourhood that took a lot of casualties yesterday when rebels took on Gaddafi loyalists there."

The fight for Sirte

Elsewhere in the country, rebel commanders said they are readying fresh attempts to advance against Gaddafi's forces in his hometown Sirte, 360km east of the capital and to break a siege of Zuwarah, a town to the west.

Jacky Rowland, Al Jazeera's correspondent in Ras Lanuf, 200km from Sirte, said rebels there were assembling heavy weaponry in anticipation of an assault on the Gaddafi stronghold of Sirte.

However, Scott Heidler, Al Jazeera's correspondent in the eastern city of Benghazi, said there had already been a stop to rebel advancement towards the Gaddafi stronghold.

"So we are facing a battle in the coming hours," he said.

Rebels advancing towards Sirte were also blocked on Wednesday in the town of Bin Jawad as loyalists kept up stiff resistance.
Al Jazeera

Rebels, looters target Gadhafi family homes

TRIPOLI, Libya — Moammar Gadhafi's son al-Saadi liked fast cars, yachts and soccer, and his beachfront villa was stocked with his expensive toys. His sister Aisha lived in a two-story mansion with an indoor pool and sauna.

As rebels took control of the Libyan capital over the weekend, the luxurious homes — symbols of the Gadhafi family's excesses — were among their first targets. After driving out the guards, rebels trashed and looted the villas and neighbors wandered through the wreckage Wednesday expressing their anger at the Gadhafi family's wealth and ostentatious tastes.

"I can't even believe what I am seeing," said Muftah Shubri, a resident of Tripoli's western Nofleen neighborhood, as he walked across Aisha's lawn to the large covered pool where a ball and a small rubber boat still floated in the water.

Gadhafi's 42-year rule over Libya had increasingly become a family business, with the dictator divvying up key spheres of interest, from oil to security, among his six sons.

In recent years, the Gadhafi offspring had been involved in a series of scandals: Hannibal got arrested in 2008 in Switzerland for mistreating his servants in a Geneva luxury hotel and Muatassim reportedly paid $1 million for a private New Year's concert by Beyonce.

Al-Saadi, a 38-year-old soccer aficionado, was described in a 2009 WikiLeaks cable from the U.S. Embassy in Tripoli as having a troubled past, including run-ins with police in Europe, drug and alcohol abuse and excessive partying.

On Monday, a day after thousands of rebels rode into Tripoli, about 200 people stormed al-Saadi's home on the Mediterranean, said Seifallah Gneidi, a 23-year-old Tripoli rebel who participated in the looting.

Gneidi said he took a large bottle of gin, a toothbrush with a gilded handle and a pair of Diesel jeans. "We wanted to have the stuff that he had," Gneidi said, a Kalashnikov slung over his shoulder. He said rebels are not condoning looting of private property, and only allow the wrecking of symbols of the Gadhafi family's abuse of power.

Gneidi said al-Saadi had four cars — a BMW, an Audi, a white Lamborghini and a Toyota — that were all driven off during the ransacking. His claim about the fate of the cars could not be verified. A large painting of a yellow Lamborghini decorated the back wall of his covered parking area.

In an office area in the villa, reporters saw large piles of catalogues for yachts and cars. A catalog by the firm Benetti had a yellow handwritten post-it note attached listing the price for a 30-meter-long yacht as 7 million euros. A DVD with gay porn entitled "Boyz Tracks" slipped out of the stack of documents.

Business cards were scattered on the floor for a firm called "Natural Selection" that listed al-Saadi as partner and executive producer with an address on Sunset Boulevard in Los Angeles. The looters left behind a black cloth, apparently the back of a "director's chair," that read, in green: "Executive Producer al-Saadi Gadhafi."

Al-Saadi must have been concerned about his safety. A long underground passage with thick concrete walls led from a second villa he was building to the street.

The complex also had a grass soccer pitch. Al-Saadi, who was seen as a poor soccer player was involved in one of Libya's soccer teams, Al-Ahly. Al-Saadi also headed Libya's Football Federation.

Next to the field stood a barbecue pit and two tents, including one that housed guards and was filled with ammunition, said Gneidi. Al-Saadi also kept dogs and had his own kennel with four cages, one decorated with pictures of Dobermans.

If al-Saadi had the reputation of a reckless troublemaker, the 35-year-old Aisha cultivated the image of caring about ordinary Libyans.

However, her neighbors said that several years ago, a small neighborhood clinic was razed to make room for her home.

"You feel that this is not supposed to happen," Sharif Ben Suleiman, a 56-year-old university professor, said as he and other local leaders inspected the house. "It's a place that is serving the community and then it is serving no one."

The presence of small children was felt everywhere in the house. A large play room was strewn with toys, party hats and streamers were in a pile in an entrance hall, and her library contained a number of children's books.

Among Aisha's DVDs were action and mystery films, but also one on getting back in shape after childbirth.

Like others in the Gadhafi family, she had expensive tastes — Bohemian crystal glasses and a brown Dolce & Gabana leather jacket for one of her children were among the items not carted off by the looters.

Asked how the community felt about the presence of the Gadhafi daughter, Ben Suleiman, the neighbor, said it's enough to look out the second-floor window. Beyond the walls of Aisha's spacious compound, houses — some of them barely shacks — were pressed tightly against one another.
Yahoo

A New Generation of Throwbots is Ready to Be Flung Into Battle

One time we dropped it out of a helicopter from more than 100 feet,” one of the designers tells me. “The worst that happened was that one wheel was slightly damaged so it wanted to drive a little wobbly. But it still rolled.”
I’m at AUVSI’s (that’s the Association for Unmanned Vehicle Systems International) Unmanned Systems North America convention at the Recon Robotics booth, checking out the company’s Scout reconnaissance robot, a tiny two-wheeled system weighing just more than a pound. It’s a diminutive machine, about the size of a tallboy beer can. And I’ve just been invited to chuck it over an eight-foot wall.

At an exhibition boasting some seriously mean-looking machines (QinetiQ’s MAARS robot sports a 7.62-millimeter machine gun and four 40-millimeter grenade launcher tubes) these little throwbots (that's a throwable robot, and also a brand name of one of Recon's variants) aren’t exactly an intimidating sight. But their portability and durability serve a mission profile that is becoming increasingly attractive to troops serving in theater, and at AUVSI’s robot roundup last week it showed. It seems like every company with a stake in the ground-based robotic recon game is bringing out a robot that you can literally hurl into action.

Tactical robots have gained a ton of traction within the military over the past decade for several reasons, not least of which is the fact that any time you send a robot to execute a dangerous task, you’re not sending a human. But robots are generally complicated, fickle machines packing a lot of moving parts (and a lot of extra weight). They often require soldiers to undergo special training just to learn how to use them.


What soldiers in, say, Afghanistan really need is a robot intuitive enough that any soldier can pick up the controls, and something highly portable and easily deployable on a moment’s notice so it can quickly begin feeding real-time intelligence to mission commanders when threats emerge on short notice.

In short, they need a small, simple robot they can throw or launch over walls or into second-story windows, something that soldiers can control with handheld Xbox-like controls that come naturally to young men and women of a certain generation, something that can beam them back video and/or other information from a safe distance (and as stealthily as possible). And at AUVSI that need was being met with a smattering of little robots that company reps couldn’t wait to let us abuse.

In a demo at AUVSI’s makeshift proving ground, I watched QinetiQ’s Dragon Runner series ‘bots roll up and over obstacles and dig in the sand for the lead wires of mock IEDs. The newest addition to the QinetiQ family, the Dragon Runner 10, is an 11-pound variant of its larger brother, the 20-pound Dragon Runner 20 which has been on the market for some time now.

Both are man-portable, but the biggest difference between Dragon Runner 10 and Dragon Runner 20 (besides the obvious weight/portability difference): Dragon Runner 10 is being billed as throwable at ranges up to 12 feet. That’s no 100-plus-foot plunge from a helicopter, but it’s enough to make it over a high wall when Marines want to see what’s waiting on the other side--in IR-enhanced low-light vision if necessary.

And Dragon Runner 10 has some other serious merits. Though heavy at more than 10 pounds, it has a 5-pound payload capacity that can accommodate extras like a robotic arm (which is how it was able to dig in the aforementioned sand for IEDs). It’s a throwable ‘bot that does more than just reconnaissance--at the cost of a little added weight.

Roll out with iRobot’s FirstLook and you can cut that poundage by more than half. FirstLook is purely a recon ‘bot--no manipulator robot arm here--but at just 5 pounds it offers the same IR capability and has front, rear, and side-facing cameras. It’s a two-tracked robot resembling a seriously pared down version of iRobot’s renowned PackBot. And the wrist-mounted touchscreen display lends that air of warfighter-of-the-future we’ve come to expect from iRobot.

Throwability is pretty good too, as iRobot claims FirstLook can manage drops onto concrete from 15 feet. If the company’s representatives have any misgivings about this claim, it doesn’t show. They were happy to toss FirstLook carelessly up and down the aisles at AUVSI purely for my--and their--amusement. And the robots never missed a step, save the few seconds it took for them to right themselves when they landed upside-down.

But for pure throwability, there’s still nothing like Recon Robotics’ Scout. The whole system is practically featherlight at 1.3-pounds (plus a couple more for the control unit, for a total of 3.2 pounds). Both robot and control unit can charge from the battery systems troops already carry with them into the field--no added weight in power supplies--and its titanium shell and cast urethane wheels ensure a listed drop shock resistance of 30 feet--twice that of any other we saw at AUVSI.

Its throw shock resistance is listed at four times that distance (that’s a 120-foot radius from the operator where this Throwbot can be deployed via hail mary or a launcher device Recon has in the works). It’s capable of the same IR night vision as Dragon Runner and iRobot, but is hands-down the smallest, most discreet of the three.

Needless to say, I didn’t have the space (or, likely, the arm) to test the limits of the Scout’s range at AUVSI. But I did get to throw it onto the roof of a faux building the company had constructed and then, with it out of view, drive the thing around via the tiny video screen embedded in the single-joystick controller that’s so intuitive and easy to use that I felt like a pro after ten seconds at the stick.

Hurling a robot overhand and then driving it around remotely is just as much fun as it sounds, but it also makes it demonstrably clear just how easy and effective these kinds of robots could be if, say, you're about to commit several breathing humans to breaching a walled compound.

And I'm not the only one who thinks so. Dragon Runner and FirstLook are brand new, but Recon's first variants of the current line of Throwbots have been available for a few years. To date, they have put 2,000 of them into service. Virtually every agency with reason to worry about what's around the corner has deployed them: the U.S. military, various police and firefighting departments, the FBI, DEA, U.S. Marshals, the State Department (for embassy security), the Border Patrol, and more than 200 SWAT teams. Just today, U.S. Special Operations Command announced that it is buying nearly 400 more.

QinetiQ's and iRobot's models will likely find similar traction alongside other small, throwable 'bots that are likely incubating in labs elsewhere, because they meet a critical need for fast, actionable situational awareness on the battlefield. It's been said that knowing is half the battle. It looks as if throwing could become an integral part of it as well.
PopSci

Vid's at the link

International Space Station-Bound Supply Ship Explodes, Crashes in Siberia

MOSCOW – An unmanned Russian supply ship bound for the International Space Station failed to reach its planned orbit Wednesday, and pieces of it fell in Siberia amid a thunderous explosion, officials said.

A brief statement from Roscosmos, Russia's space agency, did not specify whether the Progress supply ship that was launched from the Baikonur cosmodrome in Kazakhstan had been lost. But the state news agency RIA Novosti quoted Alexander Borisov, head of a the Choisky region in Russia's Altai province, as saying pieces of the craft fell in his area some 1,500 kilometers (900 miles) northeast of the launch site.

"The explosion was so strong that for 100 kilometers (60 miles) glass almost flew out of the windows," he was quoted as saying. Borisov said there were no immediate reports of casualties.

The ITAR-Tass news agency quoted Choisky's Interior Ministry as saying the space ship crashed in a vast Siberian forest that contains small villages. Yuri Shmyrin, the chief of Karakoksha, one of those villages, told Interfax news agency that the search operation for the wreckage is not likely to start until Thursday morning.

The Russian Emergencies Ministry could not be reached for comment. A Roscosmos media officer who refused to be identified said the agency had no immediate comment.

Roscosmos said the third stage of the rocket firing the ship into space failed a few minutes into the launch. The ship was carrying more than 2.5 tons of supplies, including oxygen, food and fuel. Since the ending of the U.S. space shuttle program this summer, Russian spaceships are a main supply link to the space station. It was the 44th Progress to launch to the International Space Station.

Roscosmos said the accident "would have no negative influence" on the International Space Station crew because its existing supplies of food, water and oxygen are sufficient.

Interfax cited a Russian space analyst, Sergei Puzanov, as saying those supplies could last two to three months and that "the situation with the loss of the Progress cannot be called critical."

In the United States, NASA said the rocket appeared to function flawlessly at liftoff, which occurred right on time, but there was a loss of contact with the vehicle just over five minutes into the flight.

On NASA TV, Russian officials said the upper stage did not separate from the supply ship and that on two subsequent orbits controllers tried to contact the supply ship -- in vain. Two hours after the mishap, Russian Mission Control told the space station crew: "We'll try to figure it out."

NASA is counting on Russia as well as Japan and Europe to keep the orbiting outpost stocked, now that the space shuttles are no longer flying. The shuttle program ended in July with the Atlantis mission; a year's worth of food and other provisions were delivered.

Late this year, a commercial company in California plans to launch its own rocket and supply ship to the space station. NASA is encouraging private enterprise to make station deliveries.

There are six astronauts aboard the International Space Station, which orbits 350 kilometers (220 miles) above the Earth. They are Russians Andrei Borisenko, Alexander Samokuyayev and Sergei Volkov, Americans Michael Fossum and Ronald Garan and Satoshi Furukawa of Japan.

"The supplies aboard the space station are actually pretty fat" after the resupply mission by space shuttle Atlantis in July, NASA spokesman Kelly Humphries said from Houston. "So we don't anticipate any immediate impact to the crew."

Humphries stressed that NASA was waiting to get more details from Russian space officials on what actually happened.

In July of 2010, a Progress supply ship failed in its first automatic docking attempt due to equipment malfunction, but was connected with the orbiting laboratory two days later.
Foxnews

Jobless total exceeds population of all but four states

America's jobless crisis has been going on so long that the raw numbers have lost much of their power to convey the severity of the problem. The Wall Street Journal's David Wessel has found a clever new way to get at the issue.


Wessel notes that there are more officially unemployed people in the United States (13.9 million, though if you count those who have given up looking it's nearly twice that) than the total individual populations of 46 out of 50 U.S. states.

Or, if you prefer: There are more offically unemployed Americans than the combined population of Wyoming, Vermont, North Dakota, Alaska, South Dakota, Delaware, Montana, Rhode Island, Hawaii, Maine, New Hampshire, Idaho and the District of Columbia.

Or finally: There are more unemployed Americans than the total population of Greece or Portugal, both of which have 10.8 million people. And more than twice as many as the total population of Norway, which has 4.7 million people.
Yahoo

Syrians taunt Assad, saying regime next to unravel

BEIRUT (AP) - Taking inspiration from the rapid unraveling of the regime in Libya, thousands of Syrians poured into the streets Monday and taunted President Bashar Assad with shouts that his family's 40-year dynasty will be the next dictatorship to crumble.

Assad, who has tried in vain to crush the 5-month-old revolt, appears increasingly out of touch as he refuses to acknowledge the hundreds of thousands of people demanding his ouster, analysts say. Instead, he blames the unrest on Islamic extremists and thugs.

But many observers say Assad should heed the lessons of Libya.

"Gadhafi is gone; now it's your turn, Bashar!" protesters shouted in several cities across the country hours after Assad dismissed calls to step down during an interview on state TV. Security forces opened fire in the central city of Homs, killing at least one person.

"Leaders should know that they will be able to remain in power as long as they remain sensitive to the demands of the people," Turkish Foreign Minister Ahmet Davutoglu said in Addis Ababa, Ethiopia, according to Turkey's Anatolia news agency.

Turkey, a former close ally of Syria and an important trade partner, has grown increasingly frustrated with Damascus over its deadly crackdown. The violence has left Syria facing the most serious international isolation in decades, with widespread calls for Assad to step down.

Human rights groups say more than 2,000 people - most of them unarmed protesters - have been killed in the government's crackdown on the uprising.

Britain's Defense Secretary Liam Fox told BBC radio that Assad would "be thinking again in light of what has happened in Tripoli overnight."

"There is an unavoidable change in the area - and I think the message to those in that region is that if you do not allow change to be a process it can become an event," he said.

Syria presented a different case than other Arab nations swept by unrest this year.

A military intervention has been all but ruled out, given the quagmire in Libya and the lack of any strong opposition leader in Syria to rally behind. The U.S. and other nations have little leverage to threaten further isolation or economic punishment of Assad's pro-Iranian regime.

U.S. State Department spokeswoman Victoria Nuland dismissed the idea of arming the Syrian rebels. "I don't think anybody thinks that more guns into Syria is going to be the right answer right now," she said. :The Syrians themselves don't want that. So that's why our focus has been on political and economic pressure."

With neither side in the conflict showing any signs of backing down, many fear a drawn-out and bloody stalemate.

"What is so shocking is that the Syrian people have been really resilient, determined to continue to fight the regime for almost half a year and this is something, I believe, (Assad) did not count on," said Labib Kamhawi, a political analyst in Jordan.

Assad has had four public appearances since the uprising began in March, the latest one on Sunday night. His remarks have stayed remarkably similar even as the uprising gained momentum, with the president trying to convey a sense of confidence while insisting his security forces were fighting a foreign conspiracy to stir up sectarian strife.

He has also pledged reforms, but the opposition says the promises are empty.

Assad told state-run TV Sunday that he was not worried about security in his country and warned against any Libya-style foreign military intervention.

On Monday, the state news agency said Assad formed a committee to pave the way for the formation of political groups other than his Baath party, which has held a monopoly in Syria for decades. The opposition rejected Assad's remarks, saying they have lost confidence in his promises of reform while his forces open fire on peaceful protesters.

Also Monday, a witness said several thousand people converged on the main square in Homs known as Clock Square after they heard that a U.N. humanitarian team was to visit the city. He said security forces opened fire on the protesters, killing one and wounding several others.

"Simply, without any introductions, they started shooting at them," he said, asking that his name not be used for fear of government reprisals.

U.N. Secretary-General Ban Ki-moon criticized Assad for breaking his pledge last week to halt the violence. "It is troubling that he has not kept his word," Ban said.

Syria granted a U.N. team permission to visit some of the centers of the protests and crackdown to assess humanitarian needs, but activists and a Western diplomat have accused the regime of trying to scrub away signs of the crackdown.

In Hama, another central city that has been a hotbed of dissent, pro-regime gunmen fired their guns in celebration after Assad's appearance, killing two people overnight.

The London-based Syrian Observatory for Human Rights and another activist group called the Local Coordination Committees confirmed the deaths. Both groups cited witness accounts.

In the southern village of Hirak, four people were wounded when security forces opened fire on protesters, according to the observatory.

Also Monday, a U.N. human rights expert says Arab nations agreed to demand that Syria allow an international probe within its borders to see whether crimes against humanity have been committed.

Jean Ziegler, a member of the U.N. Human Rights Council's advisory committee, told The Associated Press that Kuwait will make the demand on behalf of Arab nations.
MyWay

Iran cuts Hamas funding for failing to show support for Assad

Iran has reduced or possibly halted its funding of Hamas after the Islamist movement, which rules the Gaza Strip, failed to show public support for Syrian President Bashar Assad, diplomats said on Sunday.

Hamas has denied that it is in financial crisis but says it faces liquidity problems stemming from inconsistent revenues from tax collection in the Gaza Strip and foreign aid.

The West refuses to have diplomatic relations with the group because it refuses to recognize Israel and renounce violence. It receives undisclosed sums of cash from Iran, which has acknowledged providing financial and political support to Hamas.

One diplomat, who asked not to be identified, said intelligence reports showed that Iran had reduced funding for Hamas.

Other diplomatic sources, also relying on intelligence assessments, said the payments had stopped over the past two months.

The diplomats cited Iran's displeasure over Hamas' refusal to hold rallies in support of Tehran's ally, Assad, in Palestinian refugee camps in Syria after an uprising against his rule. Hamas' leadership outside the Gaza Strip is headquartered in Damascus.

Hamas is also widely believed to receive money from the Muslim Brotherhood, Egypt's most popular and organized Islamist political force. Diplomats said those payments also may have been reduced because the Brotherhood has diverted funds to support the so-called Arab Spring revolts.

In a sign of a cash crunch, the Hamas government in Gaza has failed to pay the July salaries of its 40,000 employees in the civil service and security forces. Hamas leaders promised full payments in August, but not all employees received their wages as scheduled on Sunday.

In 2010, Hamas put its Gaza budget at 540-million dollars, with local revenues from taxes on merchants and on goods brought in from Israel and through smuggling tunnels under the Egyptian border accounting for only 55-million dollars.

Since seizing the Gaza Strip in 2007 from forces loyal to Palestinian President Mahmoud Abbas' Fatah movement, Hamas has run several investment projects in former Israeli settlements in the enclave.

They include farms, greenhouses, entertainment facilities and restaurants in areas Israel withdrew from in 2005.
Haaretz

7 reported killed in Turkish air raids

ANKARA, Turkey (AP) - Turkish airstrikes on suspected rebel targets in northern Iraq killed seven civilians Sunday, Iraqi officials said.

The mayor of the town of Qalat Diza, Hassan Abdullah, and Capt. Ali Mohammed of the Iraqi army's border guards, said seven Iraqi civilians died in an attack on Kortak mountain, located on Mount Qandil, near the Iraqi-Iranian border. The two officials said the bodies were charred and dismembered.

Firat, a news agency close to the Kurdish rebels, also said seven people - including five children and a woman - were killed inside a car while trying to flee raids on the village of Golle, on Qandil. Earlier, the agency had reported that six people died in the raid, but later raised the number to seven.

Turkish warplanes have been striking at suspected rebel positions across the border in Iraq since Wednesday. The military has confirmed three days of strikes so far, but Kurdish groups also reported bombings by Turkish jets on Saturday and Sunday.

Turkey's latest offensive follows stepped-up attacks by the rebels of the Kurdistan Workers' Party, or PKK, that have killed some 40 soldiers since July.

Turkey's military has said the jets are targeting PKK sites only - including shelters, anti-aircraft gun positions and ammunition depots - showing "the necessary" care not to harm civilians.

The PKK has denied that claim saying this week's strikes on Qandil and mountainous areas along the Iraqi-Turkish border, have aimed at abandoned rebel bases and have caused damage to civilian-owned homes and land.

The group, considered a terrorist organization by the United States and the European Union, is fighting for autonomy in southeastern Turkey. Tens of thousands of people have been killed in the conflict since 1984.

The rebels have long used northern Iraq as a springboard for hit-and-run attacks on Turkish targets. The latest offensive from Turkey began hours after eight soldiers and a government-paid village guard were killed in a PKK ambush near the border with Iraq.

Turkey has carried out a number of cross-border air raids and ground incursions over the years but has failed to stop rebel infiltration through the mountainous border.

The previous offensive was last summer, when warplanes launched a series of raids on suspected PKK positions and ground troops took part in a daylong incursion.

In Turkey on Sunday, police used tear gas and pepper spray to disperse Kurdish protesters who tried to march to a main square in Istanbul to denounce the Turkish raids. In the capital, Ankara, demonstrators marched to protest the PKK.
MyWay

Air Force recovers stolen materials from Friday's raid

Las Vegas, NV (KTNV)- We're learning more on why the U.S. Air Force raided a local gun store Friday. They say it wasn't guns they were looking for.

An official from the Air Force is speaking to Action News about that raid. New information clarifies that this may have been an inside job, and the penalties could turn out to be very severe.

It was an afternoon that rocked businesses near Dean Martin and Flamingo. Local and federal law enforcement agencies swarmed in and served search warrants on Citadel Gun and Safe.

New information gives us an insight on the massive raid that up until now, authorities were tight lipped about. Turns out it was the Air Force Office of Special Investigations that led the raid.

"They went in there and did in fact find stolen air force military property that was stolen from Nellis Air Force Base," says Linda Card with the Air Force OSI.

Metro lent a hand as well as the FBI, ATF, and ICE. The recovered material though would not have posed a danger to regular people, says the Air Force.

"It did not include weapons, guns, explosives of any kind, bombs, nothing like that. It was basic stolen military property," says Card.

It's unclear what "basic military property" really is. We went to the Citadel Gun and Safe store Saturday it was open for business, but they promptly told us, not open for comment. After questioning the store owner and raiding his home, authorites have turned their investigation to Nellis Air Force Base.

"But if someone is in fact guilty at Nellis and they did steal military equipment and they tried to sell it outside, yes they will be charged for whatever it is that they did," says Card.

At this point no one has been charged, but as the questioning continues, formal charges could come as early as next week. We're told the gun store's owner did cooperate with authorities, and the investigation is still open.
KTNV

Wall Street Aristocracy Got $1.2T in Loans

Citigroup Inc. (C) and Bank of America Corp. (BAC) were the reigning champions of finance in 2006 as home prices peaked, leading the 10 biggest U.S. banks and brokerage firms to their best year ever with $104 billion of profits.

By 2008, the housing market’s collapse forced those companies to take more than six times as much, $669 billion, in emergency loans from the U.S. Federal Reserve. The loans dwarfed the $160 billion in public bailouts the top 10 got from the U.S. Treasury, yet until now the full amounts have remained secret.

Fed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages. The largest borrower, Morgan Stanley (MS), got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion, according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress.

“These are all whopping numbers,” said Robert Litan, a former Justice Department official who in the 1990s served on a commission probing the causes of the savings and loan crisis. “You’re talking about the aristocracy of American finance going down the tubes without the federal money.”

Foreign Borrowers
It wasn’t just American finance. Almost half of the Fed’s top 30 borrowers, measured by peak balances, were European firms. They included Edinburgh-based Royal Bank of Scotland Plc, which took $84.5 billion, the most of any non-U.S. lender, and Zurich-based UBS AG (UBSN), which got $77.2 billion. Germany’s Hypo Real Estate Holding AG borrowed $28.7 billion, an average of $21 million for each of its 1,366 employees.

The largest borrowers also included Dexia SA (DEXB), Belgium’s biggest bank by assets, and Societe Generale SA, based in Paris, whose bond-insurance prices have surged in the past month as investors speculated that the spreading sovereign debt crisis in Europe might increase their chances of default.

The $1.2 trillion peak on Dec. 5, 2008 -- the combined outstanding balance under the seven programs tallied by Bloomberg -- was almost three times the size of the U.S. federal budget deficit that year and more than the total earnings of all federally insured banks in the U.S. for the decade through 2010, according to data compiled by Bloomberg.

Peak Balance
The balance was more than 25 times the Fed’s pre-crisis lending peak of $46 billion on Sept. 12, 2001, the day after terrorists attacked the World Trade Center in New York and the Pentagon. Denominated in $1 bills, the $1.2 trillion would fill 539 Olympic-size swimming pools.

The Fed has said it had “no credit losses” on any of the emergency programs, and a report by Federal Reserve Bank of New York staffers in February said the central bank netted $13 billion in interest and fee income from the programs from August 2007 through December 2009.

“We designed our broad-based emergency programs to both effectively stem the crisis and minimize the financial risks to the U.S. taxpayer,” said James Clouse, deputy director of the Fed’s division of monetary affairs in Washington. “Nearly all of our emergency-lending programs have been closed. We have incurred no losses and expect no losses.”

While the 18-month U.S. recession that ended in June 2009 after a 5.1 percent contraction in gross domestic product was nowhere near the four-year, 27 percent decline between August 1929 and March 1933, banks and the economy remain stressed.

Odds of Recession
The odds of another recession have climbed during the past six months, according to five of nine economists on the Business Cycle Dating Committee of the National Bureau of Economic Research, an academic panel that dates recessions.

Bank of America’s bond-insurance prices last week surged to a rate of $342,040 a year for coverage on $10 million of debt, above where Lehman Brothers Holdings Inc. (LEHMQ)’s bond insurance was priced at the start of the week before the firm collapsed. Citigroup’s shares are trading below the split-adjusted price of $28 that they hit on the day the bank’s Fed loans peaked in January 2009. The U.S. unemployment rate was at 9.1 percent in July, compared with 4.7 percent in November 2007, before the recession began.

Homeowners are more than 30 days past due on their mortgage payments on 4.38 million properties in the U.S., and 2.16 million more properties are in foreclosure, representing a combined $1.27 trillion of unpaid principal, estimates Jacksonville, Florida-based Lender Processing Services Inc.

Liquidity Requirements
“Why in hell does the Federal Reserve seem to be able to find the way to help these entities that are gigantic?” U.S. Representative Walter B. Jones, a Republican from North Carolina, said at a June 1 congressional hearing in Washington on Fed lending disclosure. “They get help when the average businessperson down in eastern North Carolina, and probably across America, they can’t even go to a bank they’ve been banking with for 15 or 20 years and get a loan.”

The sheer size of the Fed loans bolsters the case for minimum liquidity requirements that global regulators last year agreed to impose on banks for the first time, said Litan, now a vice president at the Kansas City, Missouri-based Kauffman Foundation, which supports entrepreneurship research. Liquidity refers to the daily funds a bank needs to operate, including cash to cover depositor withdrawals.

The rules, which mandate that banks keep enough cash and easily liquidated assets on hand to survive a 30-day crisis, don’t take effect until 2015. Another proposed requirement for lenders to keep “stable funding” for a one-year horizon was postponed until at least 2018 after banks showed they’d have to raise as much as $6 trillion in new long-term debt to comply.

‘Stark Illustration’
Regulators are “not going to go far enough to prevent this from happening again,” said Kenneth Rogoff, a former chief economist at the International Monetary Fund and now an economics professor at Harvard University.

Reforms undertaken since the crisis might not insulate U.S. markets and financial institutions from the sovereign budget and debt crises facing Greece, Ireland and Portugal, according to the U.S. Financial Stability Oversight Council, a 10-member body created by the Dodd-Frank Act and led by Treasury Secretary Timothy Geithner.

“The recent financial crisis provides a stark illustration of how quickly confidence can erode and financial contagion can spread,” the council said in its July 26 report.

Any new rescues by the U.S. central bank would be governed by transparency laws adopted in 2010 that require the Fed to disclose borrowers after two years.

21,000 Transactions
Fed officials argued for more than two years that releasing the identities of borrowers and the terms of their loans would stigmatize banks, damaging stock prices or leading to depositor runs. A group of the biggest commercial banks last year asked the U.S. Supreme Court to keep at least some Fed borrowings secret. In March, the high court declined to hear that appeal, and the central bank made an unprecedented release of records.

Data gleaned from 29,346 pages of documents obtained under the Freedom of Information Act and from other Fed databases of more than 21,000 transactions make clear for the first time how deeply the world’s largest banks depended on the U.S. central bank to stave off cash shortfalls. Even as the firms asserted in news releases or earnings calls that they had ample cash, they drew Fed funding in secret, avoiding the stigma of weakness.

Morgan Stanley Borrowing
Two weeks after Lehman’s bankruptcy in September 2008, Morgan Stanley countered concerns that it might be next to go by announcing it had “strong capital and liquidity positions.” The statement, in a Sept. 29, 2008, press release about a $9 billion investment from Tokyo-based Mitsubishi UFJ Financial Group Inc., said nothing about Morgan Stanley’s Fed loans.

That was the same day as the firm’s $107.3 billion peak in borrowing from the central bank, which was the source of almost all of Morgan Stanley’s available cash, according to the lending data and documents released more than two years later by the Financial Crisis Inquiry Commission. The amount was almost three times the company’s total profits over the past decade, data compiled by Bloomberg show.

Mark Lake, a spokesman for New York-based Morgan Stanley, said the crisis caused the industry to “fundamentally re- evaluate” the way it manages its cash.

“We have taken the lessons we learned from that period and applied them to our liquidity-management program to protect both our franchise and our clients going forward,” Lake said. He declined to say what changes the bank had made.

Acceptable Collateral
In most cases, the Fed demanded collateral for its loans -- Treasuries or corporate bonds and mortgage bonds that could be seized and sold if the money wasn’t repaid. That meant the central bank’s main risk was that collateral pledged by banks that collapsed would be worth less than the amount borrowed.

As the crisis deepened, the Fed relaxed its standards for acceptable collateral. Typically, the central bank accepts only bonds with the highest credit grades, such as U.S. Treasuries. By late 2008, it was accepting “junk” bonds, those rated below investment grade. It even took stocks, which are first to get wiped out in a liquidation.

Morgan Stanley borrowed $61.3 billion from one Fed program in September 2008, pledging a total of $66.5 billion of collateral, according to Fed documents. Securities pledged included $21.5 billion of stocks, $6.68 billion of bonds with a junk credit rating and $19.5 billion of assets with an “unknown rating,” according to the documents. About 25 percent of the collateral was foreign-denominated.

‘Willingness to Lend’
“What you’re looking at is a willingness to lend against just about anything,” said Robert Eisenbeis, a former research director at the Federal Reserve Bank of Atlanta and now chief monetary economist in Atlanta for Sarasota, Florida-based Cumberland Advisors Inc.

The lack of private-market alternatives for lending shows how skeptical trading partners and depositors were about the value of the banks’ capital and collateral, Eisenbeis said.

“The markets were just plain shut,” said Tanya Azarchs, former head of bank research at Standard & Poor’s and now an independent consultant in Briarcliff Manor, New York. “If you needed liquidity, there was only one place to go.”

Even banks that survived the crisis without government capital injections tapped the Fed through programs that promised confidentiality. London-based Barclays Plc (BARC) borrowed $64.9 billion and Frankfurt-based Deutsche Bank AG (DBK) got $66 billion. Sarah MacDonald, a spokeswoman for Barclays, and John Gallagher, a spokesman for Deutsche Bank, declined to comment.

Below-Market Rates
While the Fed’s last-resort lending programs generally charge above-market interest rates to deter routine borrowing, that practice sometimes flipped during the crisis. On Oct. 20, 2008, for example, the central bank agreed to make $113.3 billion of 28-day loans through its Term Auction Facility at a rate of 1.1 percent, according to a press release at the time.

The rate was less than a third of the 3.8 percent that banks were charging each other to make one-month loans on that day. Bank of America and Wachovia Corp. each got $15 billion of the 1.1 percent TAF loans, followed by Royal Bank of Scotland’s RBS Citizens NA unit with $10 billion, Fed data show.

JPMorgan Chase & Co. (JPM), the New York-based lender that touted its “fortress balance sheet” at least 16 times in press releases and conference calls from October 2007 through February 2010, took as much as $48 billion in February 2009 from TAF. The facility, set up in December 2007, was a temporary alternative to the discount window, the central bank’s 97-year-old primary lending program to help banks in a cash squeeze.

‘Larger Than TARP’
Goldman Sachs Group Inc. (GS), which in 2007 was the most profitable securities firm in Wall Street history, borrowed $69 billion from the Fed on Dec. 31, 2008. Among the programs New York-based Goldman Sachs tapped after the Lehman bankruptcy was the Primary Dealer Credit Facility, or PDCF, designed to lend money to brokerage firms ineligible for the Fed’s bank-lending programs.

Michael Duvally, a spokesman for Goldman Sachs, declined to comment.

The Fed’s liquidity lifelines may increase the chances that banks engage in excessive risk-taking with borrowed money, Rogoff said. Such a phenomenon, known as moral hazard, occurs if banks assume the Fed will be there when they need it, he said. The size of bank borrowings “certainly shows the Fed bailout was in many ways much larger than TARP,” Rogoff said.

TARP is the Treasury Department’s Troubled Asset Relief Program, a $700 billion bank-bailout fund that provided capital injections of $45 billion each to Citigroup and Bank of America, and $10 billion to Morgan Stanley. Because most of the Treasury’s investments were made in the form of preferred stock, they were considered riskier than the Fed’s loans, a type of senior debt.

Dodd-Frank Requirement
In December, in response to the Dodd-Frank Act, the Fed released 18 databases detailing its temporary emergency-lending programs.

Congress required the disclosure after the Fed rejected requests in 2008 from the late Bloomberg News reporter Mark Pittman and other media companies that sought details of its loans under the Freedom of Information Act. After fighting to keep the data secret, the central bank released unprecedented information about its discount window and other programs under court order in March 2011.

Bloomberg News combined Fed databases made available in December and July with the discount-window records released in March to produce daily totals for banks across all the programs, including the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, Commercial Paper Funding Facility, discount window, PDCF, TAF, Term Securities Lending Facility and single-tranche open market operations. The programs supplied loans from August 2007 through April 2010.

Rolling Crisis
The result is a timeline illustrating how the credit crisis rolled from one bank to another as financial contagion spread.

Fed borrowings by Societe Generale (GLE), France’s second-biggest bank, peaked at $17.4 billion in May 2008, four months after the Paris-based lender announced a record 4.9 billion-euro ($7.2 billion) loss on unauthorized stock-index futures bets by former trader Jerome Kerviel.

Morgan Stanley’s top borrowing came four months later, after Lehman’s bankruptcy. Citigroup crested in January 2009, as did 43 other banks, the largest number of peak borrowings for any month during the crisis. Bank of America’s heaviest borrowings came two months after that.

Sixteen banks, including Plano, Texas-based Beal Financial Corp. and Jacksonville, Florida-based EverBank Financial Corp., didn’t hit their peaks until February or March 2010.

“At no point was there a material risk to the Fed or the taxpayer, as the loan required collateralization,” said Reshma Fernandes, a spokeswoman for EverBank, which borrowed as much as $250 million.

Using Subsidiaries
Banks maximized their borrowings by using subsidiaries to tap Fed programs at the same time. In March 2009, Charlotte, North Carolina-based Bank of America drew $78 billion from one facility through two banking units and $11.8 billion more from two other programs through its broker-dealer, Bank of America Securities LLC.

Banks also shifted balances among Fed programs. Many preferred the TAF because it carried less of the stigma associated with the discount window, often seen as the last resort for lenders in distress, according to a January 2011 paper by researchers at the New York Fed.

After the Lehman bankruptcy, hedge funds began pulling their cash out of Morgan Stanley, fearing it might be the next to collapse, the Financial Crisis Inquiry Commission said in a January report, citing interviews with former Chief Executive Officer John Mack and then-Treasurer David Wong.

Borrowings Surge
Morgan Stanley’s borrowings from the PDCF surged to $61.3 billion on Sept. 29 from zero on Sept. 14. At the same time, its loans from the Term Securities Lending Facility, or TSLF, rose to $36 billion from $3.5 billion. Morgan Stanley treasury reports released by the FCIC show the firm had $99.8 billion of liquidity on Sept. 29, a figure that included Fed borrowings.

“The cash flow was all drying up,” said Roger Lister, a former Fed economist who’s now head of financial-institutions coverage at credit-rating firm DBRS Inc. in New York. “Did they have enough resources to cope with it? The answer would be yes, but they needed the Fed.”

While Morgan Stanley’s Fed demands were the most acute, Citigroup was the most chronic borrower among the largest U.S. banks. The New York-based company borrowed $10 million from the TAF on the program’s first day in December 2007 and had more than $25 billion outstanding under all programs by May 2008, according to Bloomberg data. By Nov. 21, when Citigroup began talks with the government to get a $20 billion capital injection on top of the $25 billion received a month earlier, its Fed borrowings had doubled to about $50 billion.

Tapping Six Programs
Over the next two months the amount almost doubled again. On Jan. 20, as the stock sank below $3 for the first time in 16 years amid investor concerns that the lender’s capital cushion might be inadequate, Citigroup was tapping six Fed programs at once. Its total borrowings amounted to more than twice the federal Department of Education’s 2011 budget.

Citigroup was in debt to the Fed on seven out of every 10 days from August 2007 through April 2010, the most frequent U.S. borrower among the 100 biggest publicly traded firms by pre- crisis market valuation. On average, the bank had a daily balance at the Fed of almost $20 billion.

“Citibank basically was sustained by the Fed for a very long time,” said Richard Herring, a finance professor at the University of Pennsylvania in Philadelphia who has studied financial crises.

Jon Diat, a Citigroup spokesman, said the bank made use of programs that “achieved the goal of instilling confidence in the markets.”

‘Help Motivate Others’
JPMorgan CEO Jamie Dimon said in a letter to shareholders last year that his bank avoided many government programs. It did use TAF, Dimon said in the letter, “but this was done at the request of the Federal Reserve to help motivate others to use the system.”

The bank, the second-largest in the U.S. by assets, first tapped the TAF in May 2008, six months after the program debuted, and then zeroed out its borrowings in September 2008. The next month, it started using TAF again.

On Feb. 26, 2009, more than a year after TAF’s creation, JPMorgan’s borrowings under the program climbed to $48 billion. On that day, the overall TAF balance for all banks hit its peak, $493.2 billion. Two weeks later, the figure began declining.

“Our prior comment is accurate,” said Howard Opinsky, a spokesman for JPMorgan.

‘The Cheapest Source’
Herring, the University of Pennsylvania professor, said some banks may have used the program to maximize profits by borrowing “from the cheapest source, because this was supposed to be secret and never revealed.”

Whether banks needed the Fed’s money for survival or used it because it offered advantageous rates, the central bank’s lender-of-last-resort role amounts to a free insurance policy for banks guaranteeing the arrival of funds in a disaster, Herring said.

An IMF report last October said regulators should consider charging banks for the right to access central bank funds.

“The extent of official intervention is clear evidence that systemic liquidity risks were under-recognized and mispriced by both the private and public sectors,” the IMF said in a separate report in April.

Access to Fed backup support “leads you to subject yourself to greater risks,” Herring said. “If it’s not there, you’re not going to take the risks that would put you in trouble and require you to have access to that kind of funding.”
Bloomberg