Global Articles on what is going on...posted daily

[sandi66]

MAY 24, 2010, 6:00 A.M. ET

Obama To Send Spending-Reduction Legislation To Congress

WASHINGTON (Dow Jones)--U.S. President Barack Obama will Monday send legislation to Congress that will give the White House broad authority to reduce wasteful federal spending and block earmarks, according to an administration official.

The proposal, called the Reduce Unnecessary Spending Act of 2010, comes amid growing criticism that the federal government's spending is out of control. Such concerns played a hand in a Kentucky primary earlier in the week, where Rand Paul defeated a well-connected Republican state politician by attacking federal spending and deficits.

The legislation allows Obama to propose a series of rescissions to spending packages approved by Congress. Congress would have to vote on whether to approve Obama's rescissions within set timeframes to limit debate and without the ability to make any changes.

The legislation is part of a broader effort underway to reduce federal spending and the fiscal deficit. Obama has already signed into law a pay-as-you-go bill, forcing Congress to make cuts equivalent to any new entitlement increases. Obama has also proposed a three-year freeze on non-security discretionary funding, which could save the government $250 billion over 10 years.

online.wsj.com/article/BT-CO-20100524-703798.html?mod=WSJ_latestheadlines

[sandi66]

Tensions rise in Korea as Obama promises military support
Tensions have escalated sharply on the Korean Peninsular, where the sinking of a South Korean warship has created a "highly precarious" situation, increasing the risk of a flare-up in the 60-year old conflict, Hillary Clinton, the US secretary of state, warned on Monday.

May 24, 2010

Her remarks came hours after South Korea announced it was cutting off all trade with the North in retaliation for the deliberate sinking of the Cheonan in March and vowed "immediate" retaliation if North Korean attempted further provocations.

"We are working hard to avoid an escalation of belligerence and provocation," Mrs Clinton said while on a two-day visit to China. "This is a highly precarious situation that the North Koreans have caused in the region."

In Washington, President Barack Obama threw his full support behind the Seoul's decision and ordered his military commanders to work closely with their South Korean counterparts to "ensure readiness and deter aggression".

In Beijing, Mrs Clinton engaged in "very intensive consultations" with the Chinese government in a bid to win international support for punitive measures against Pyongyang.

As tensions in the region rose, the US was reported to be forward-deploying a unit of its state-of-the-art F-22 Raptor ground-attack aircraft to Japan before the end of the month, which could be over North Korea within minutes in the event of conflict.

It is also understood that Japan was persuaded to change its mind over the closure of a controversial US air base in Okinawa in part because of Washington's arguments that the base was essential for deploying US marines to North Korea's nuclear facilities in the event of the regime's collapse.

Less than a week after an international inquiry found North Korea responsible for torpedoing the ship with loss of 46 lives, South Korea's president Lee Myung-bak, announced a package of reprisals in a sombre televised address from the country's war memorial.

"From now on, (South) Korea will not tolerate any provocative act by the North and will maintain the principle of proactive deterrence," Mr Lee said in a nationally televised speech delivered from the country's war memorial.

"If our territorial waters, airspace or territory are violated, we will immediately exercise our right of self-defence."

Mr Lee, who last week said the sinking was a breach of the 1953 armistice that ended the Korean War, confirmed that Seoul will now refer the matter to the United Nations.

North Korea's near-bankrupt economy is already reeling from the impact of UN sanctions imposed last year after the illegal testing of a ballistic missile and a second nuclear device, with defectors reporting rising food shortages and growing discontent among the population.

Analysts said that Mr Lee's response – which exempted the joint Kaesong industrial complex and aid for North Korean children – appeared to be carefully calibrated, avoiding direct mention of Kim Jong-il himself.

However, Mr Lee said the South was no longer prepared to turn the other cheek in the face of North Korean provocations, as it had in the past after a 1983 bombing in Myanmar aimed at Seoul's then-president and the downing of a South Korean airliner in 1987, which killed 115 people.

"Now things are different. North Korea will pay a price corresponding to its provocative acts," said President Lee. He added: "North Korea's goal is to instigate division and conflict. It is now time for the North Korean regime to change."

The South's capital and stock markets dipped slightly on the news, with the won falling more than two per cent to an eight-month low in early trading, though later recovered a little, as traders appeared to signal that the situation was not yet sufficiently grave to trigger capital flight.

www.telegraph.co.uk/news/worldnews/asia/northkorea/7759124/Tensions-rise-in-Korea-as-Obama-promises-military-support.html

[sandi66]

May 24, 2010, 4:36 PM HKT

Basketball Diplomacy: Geithner Shoots Hoops in Beijing

Amid the big U.S-China issues of the day—rising tensions over North Korea, the Strategic and Economic Dialogue between the two countries this week in Beijing — U.S. Treasury Secretary Timothy Geithner took some time out Sunday for a half-court game of four-on-four with some students from a high school affiliated with Renmin University in the Chinese capital. Clad in rolled-up shirtsleeves, slacks and sneakers, Geithner faced some keen competition on the court, as seen in the five-minute video clip below, via Youku. (The highlight for the Treasury secretary: a loudly cheered three-pointer seen around the halfway mark at 02:35).

Geithner’s game showed qualities that make a good teammate: a willingness to pass and help out on defense. But where was the killer instinct you’d expect from a man who is fifth in line of succession for the U.S. presidency?

The other players on the floor didn’t seem intimidated by Geithner, so it’s unclear if the occasions when he was left open for jumpers were a function of poor defense or simply their assessment that he wasn’t worth defending.

Geithner’s decent-though-inconsistent shooting form got him a few good rolls, but too many times the ball clanged noisily off the front of the rim. More alarmingly, an ill-advised pass through traffic was intercepted and led directly to a three-pointer, suggesting some questionable decision-making: Was the secretary trying to thread the needle in an attempt to impress his hosts? And why in the world didn’t he untuck his shirt?

Geithner, though not among the tallest men on the floor, wouldn’t be the last man picked for a team—he’s fleet of foot for a 48-year-old and, like Chinese league all-star guard Stephon Marbury, the secretary was born in Brooklyn. But his erratic decision-making indicates he may want to spend some time with Craig Robinson, head coach of men’s basketball at nationally ranked Oregon State University—and President Obama’s brother-in-law.

blogs.wsj.com/chinarealtime/2010/05/24/basketball-diplomacy-geithner-shoots-hoops-in-beijing/

[sandi66]

MAY 24, 2010, 7:00 A.M. ET

Euro-Zone Debt Fears Hit Futures

By STEVE GOLDSTEIN

U.S. stocks are expected to open sharply lower Monday amid fears that the euro zone's debt crisis could continue to spread to Spain and Portugal.

More than two hours before the start of trading, Dow Jones Industrial Average futures were 87 points lower at 10073. The S&P 500 futures lost 13.8 points to 1070.8 and Nasdaq 100 futures slumped 18.5 points to 1800.75. Changes in futures do not always accurately predict early market moves after the opening bell.

The expected drop at the open comes after a tumultuous week that saw major U.S. indexes post their biggest one-day losses of the year on Thursday only to rebound and rise sharply to close out the week.

Concerns over peripheral euro-zone countries have been exacerbated by the Spanish central bank's decision to take control of CajaSur, a regional savings bank, over the weekend.

Fears are also weighing on the euro Monday, which has fallen back to last week's lows after a brief respite as Spain's bank bailout refocused attention on the bloc's peripheral nations. "This will drag on until we really know the levels of European debt," said Jones.

However, Ian Harwood, chief economist at U.K. broker Evolution Securities, said traders are too bearish at the moment.

"At present I think they're fretting far too much about what could go wrong, thereby ignoring what could go right," he said in a note to clients. "What we're seeing—and what the markets in their state of funk are currently ignoring—is a corporate-led recovery taking root, which has an excellent chance of successfully driving a multiyear economic recovery."

With Treasury Secretary Timothy Geithner in Beijing, Chinese President Hu Jintao said China would continue to work toward reforming its currency system, though he didn't announce any concrete measures. Mr. Geithner said he "welcomed" the move and he hinted over what was at stake.

"Continued, reliable access to the large and growing United States market is an important underpinning of China's prosperity and growth," Mr. Geithner said.

Most commodities futures improved, however, with gold futures up around $8 an ounce and oil futures above $70 a barrel.

Data on existing home sales for April, due at 10 a.m., are the highlight of an otherwise quiet economics calendar.

Elsewhere, American International Group may be active on reports the U.S. has closed a criminal investigation without filing any charges.

In Asia, the Shanghai Composite rallied 3.4% on hopes China wouldn't tighten monetary policy too quickly, while the Nikkei 225 dipped 0.3% in Tokyo. The Stoxx Europe 600 rose 0.5% in midmorning trade.

—The Associated Press contributed to this article

online.wsj.com/article/SB10001424052748704113504575263993860737532.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsSecond

[sandi66]

May 24, 2010, 6:40 PM HKT

Geithner in Translation: Gao Yiran Or Gai Te Na?

As we have said before on China Real Time Report: The U.S. Treasury secretary, in Beijing for the Strategic and Economic Dialogue, has a history in China.

Geithner studied Mandarin for two summers in the early 1980s at Peking University. Perhaps some of the Beijing officials at the summit will remember his Chinese name from his student days, Gao Yiran, or ¸ßÒÝÈ». Gao sounds similar to the principal syllable in his surname and Yiran means ¡°elegant¡± and ¡°graceful.¡±

Indeed. On a chat show with China¡¯s Phoenix TV that aired Monday, celebrity talk-show host Chen Luyu fawned over how composed and well-dressed she finds Geithner, even calling him Obama¡¯s best-looking administration official.

Chen¡¯s gift to him for appearing on the show? A doll with Geithner¡¯s likeness darned in the cultural costume of the god of wealth.

Maybe after this high-profile visit, he will be given an official name apart from the one state media adopted, based on a phonetic transliteration of his surname: Gai Te Na, or ¸ÇÌØÄÉ. Directly translated from the Chinese, the characters mean, respectively, ¡°lid¡± (such as on a tea-pot), ¡°special¡± and ¡°pay.¡±

Meanwhile, Hillary Clinton¡¯s official Chinese name is based just on her first name: Xi La Li, or Ï£À­Àï, perhaps to avoid confusion with her husband, who¡¯s generally known as Ke Lin Dun (¿ËÁÖ¶Ù).

¨CIan Talley

blogs.wsj.com/chinarealtime/2010/05/24/geithner-in-translation-gao-yiran-or-gai-te-na/

[sandi66]

Chinese yuan revaluation talk shores up markets
By PAN PYLAS (AP) – 2 hours ago

LONDON — World stocks mostly rose Monday after a turbulent few days amid expectations that China will loosen its currency policy, which would improve the outlook for global trade, though the effective nationalization of a regional bank in Spain pressured the euro once again.

In Europe, the FTSE 100 index of leading British was up 9.01 points, or 0.2 percent, at 5,071.94 while France's CAC-40 rose 20.52 points, or 0.6 percent. Germany's DAX was 25.42 points, or 0.4 percent, lower at 5,803.83.

Earlier in Asia, China's Shanghai Composite index jumped 3.5 percent to 2,673.42 as jitters of tighter credit policies eased amid mounting hopes for the yuan to appreciate. Most other stock markets in the region were buoyed by Beijing's apparent willingness to talk about currency reform.

China's president Hu Jintao said at the opening of talks with a U.S. delegation headed by Treasury Secretary Timothy Geithner that the country "will continue to steadily advance reform of the yuan exchange rate."

In response Geithner welcomed the fact that China's leaders have "recognized that reform of the exchange rate is an important part of their broader reform agenda."

Most analysts think it's crucial that the yuan is allowed to rise against the dollar if the world economy is to grow in a more balanced manner in the months and years ahead.

For many years the Chinese authorities have kept their currency artificially low against the dollar, partly as a means of boosting their exports to the United States. As a result, China has built up a massive trade surplus with the U.S.

"Positive signals coming out of Geithner's meeting in Beijing will add to risk appetite as it reduces the risk of a trade war," said Hans Redeker, global head of foreign exchange strategy at BNP Paribas.

Risk appetite has also been buoyed by the refusal by most EU countries to follow Germany's shock decision last week to ban naked short-selling, a type of speculative trade.

Though the ban caused consternation and contributed to heavy losses in stock markets as well as the euro currency, there does not seem to be much of an appetite elsewhere in the world to introduce similar measures.

Nevertheless, Europe's debt crisis, which has already seen Greece bailed out and raised questions about the future of the euro currency, is never too far from investors' minds.

Wall Street, which ended last week strongly, is set to open lower later — Dow futures were down 37 points, or 0.4 percent, at 10,123 while the broader Standard & Poor's futures fell 5.7 points, or 0.5 percent, to 1,078.90.

The euro was undermined by the weekend news that the Bank of Spain was taking over regional bank CajaSur after merger talks with another similar entity broke down.

"If any reminder were needed of the problems facing the eurozone then it was provided by Spain at the weekend when the Bank of Spain stepped into rescue one of its biggest regional banks as a good portion of its property loan book went bad," said Michael Hewson, an analyst at CMC Markets.

By late-morning London time, the euro was down 1.1 percent at $1.2414 — despite the fall, Europe's single currency is still way up from the four-year low of $1.2146 recorded Wednesday in the wake of the German ban of naked short-selling.

Elsewhere in Asia, Australia's S&P/ASX 200 added 2.1 percent to 4,395.40 while Hong Kong's Hang Seng gained 0.6 percent to 19,663.66. Stock markets in South Korea, India, Singapore and Indonesia all gained.

However, Japan's Nikkei 225 stock average dropped 26.14 points, or 0.3 percent, to 9,758.40 while Thailand's benchmark index fell 2.3 percent with investors cautious after the worst political violence in the Thai capital in decades last week.

Oil prices continued to hover around the $70 a barrel mark — benchmark crude for July delivery was up 25 cents to $70.29 a barrel in electronic trading on the New York Mercantile Exchange.

www.google.com/hostednews/ap/article/ALeqM5h3kgMAkbLwyfxBdjzw8Pc4KZ7DhQD9FT5CUO0

[sandi66]

Chinese yuan revaluation talk shores up markets; Spanish bank takeover pressures euro
06:35 PM May 24, 2010LONDON (AP) - Global stock markets have mostly risen following a turbulent few days amid expectations that China will allow its currency to rise in value against the dollar.

The FTSE 100 index of leading British was up 9.01 points, or 0.2 percent, at 5,071.94 while France's CAC-40 rose 20.52 points, or 0.6 percent. Germany's DAX was 25.42 points, or 0.4 percent, lower at 5,803.83.

Earlier in Asia, China's Shanghai Composite index jumped 3.5 percent to 2,673.42 as jitters of tighter credit policies eased.

Elsewhere in Asia, Australia's S&P/ASX 200 added 2.1 percent to 4,395.40 while Hong Kong's Hang Seng gained 0.6 percent to 19,663.66. Stock markets in South Korea, India, Singapore and Indonesia all gained.

Japan's Nikkei 225 stock average dropped 26.14 points, or 0.3 percent, to 9,758.40 while Thailand's benchmark index fell 2.3 percent with investors cautious after the political violence.

- AP

www.todayonline.com/BreakingNews/EDC100524-0000191/Chinese-yuan-revaluation-talk-shores-up-markets-Spanish-bank-takeover-pressures-euro

[sandi66]

NDFs imply more yuan rise as China, US begin talks


Mon, May 24, 2010
Reuters



SHANGHAI - Offshore dollar/yuan forwards fell nearly across the curve on Monday to imply greater future yuan appreciation as investors bet on a possible Chinese currency policy change timed around top-level Sino-U.S. talks in Beijing on Monday and Tuesday.

But the non-deliverable forwards market remained cautious, potentially limiting how far the dollar/yuan NDFs could fall in the near term, after speculators suffered losses on bets on a one-off yuan revaluation against the dollar over the past six weeks, dealers said.

"Neither hedgers nor speculators want to overplay the China-U.S. talks, although there are hopes for an outcome that could lead to a yuan depegging," said a dealer at a major European bank in Shanghai.


Initial signals from the Sino-U.S. Strategic and Economic Dialogue, held to discuss the direction of ties between the two global powers, indicate that China is ready for a policy change.

But China also appears to be waiting for an impetus to kick off the process, likely U.S. economic or political concessions.

news.asiaone.com/News/Latest%2BNews/Business/Story/A1Story20100524-218226.html

[sandi66]

Geithner Says Europeans ‘Acting Forcefully’ to Mend Finances

May 25, 2010, 3:15 AM EDT

May 25 (Bloomberg) -- U.S. Treasury Secretary Timothy F. Geithner said Europe needs to revamp its fiscal policies to avoid crises like the one triggered by Greece’s budget woes.

European leaders face “the difficult challenge of trying to restore sustainability to an unsustainable system,” Geithner told a group of mid-career Chinese government officials in Beijing today. He said the European Union launched its common currency with a budgeting framework that put restraints on borrowing without tools needed to deal with country-specific imbalances.

“Europe’s leaders recognize that and now are acting forcefully to put strong reforms in place,” Geithner told about 30 students at the Central Party School, an advanced training facility in Beijing for government officials from other parts of China.

One of the officials at the school asked Geithner whether the Securities and Exchange Commission’s probe of Goldman Sachs Group Inc. had the potential to hurt market stability. The Treasury chief declined to comment, instead responding with the broad goals of U.S. efforts to overhaul financial regulation to prevent future crises.

Geithner emphasized similarities between U.S. and Chinese policy approaches, such as a tendency to act rather than hold back out of excessive caution. He also affirmed the U.S. pledge to rein in its long-term budget deficits from the $1 trillion- plus annual gaps caused by efforts to fight the global recession and financial-market meltdown.

“We have a huge mutual interest in developing a more balanced global economic system,” he said. “That’s the great challenge of our time.”

Geithner also said matters like interest rates and foreign-exchange policy ought to be influenced by market conditions. He touched on U.S. priorities such as improving intellectual property protections and making sure the Chinese market is open to U.S. companies.

“You want the marketplace to work with you and not against the objective of promoting innovation,” he said.

www.businessweek.com/news/2010-05-25/geithner-says-europeans-acting-forcefully-to-mend-finances.html

[sandi66]

China hints at yuan revaluation

Last Updated: May 24. 2010 11:34PM UAE / May 24. 2010 7:34PM GMT

BEIJING // China yesterday has indicated it was ready to revalue its currency as it began two days of talks with US officials on a series of issues.

Speaking as the annual US-China Strategic and Economic Dialogue got under way, the Chinese president Hu Jintao indicated his country might allow the appreciation of the yuan the US has been calling for over the past few months.



“China will continue to steadily push forward reform of the [yuan] exchange-rate formation mechanism in a self-initiated, controllable and gradual manner,” Mr Hu said.

The issue of the yuan’s value has dogged US-China relations amid concern that China is keeping the currency at an artificially low level to help its exporters, something that US politicians and manufacturers insist has cost thousands of American jobs.



Timothy Geithner, the US Treasury secretary, and Hillary Clinton, the secretary of state, are leading the US delegation, with the Chinese side including the vice premier Wang Qishan.

Mr Geithner welcomed Mr Hu’s comments, saying they indicated China understood the importance of revaluation “as an important part of their broader reform agenda”.

But Chinese officials emphasised that Mr Hu was not indicating a change of policy and said the currency issue was not discussed at the first session of the talks.


Other issues being raised across the table include US concerns over “indigenous innovation” policies that involve a bias in favour of Chinese technology when government contracts are handed out.

In his opening remarks, Mr Geithner called for China to adopt “a level playing field” and to end policies he said disadvantaged American companies.

On the other side, Beijing is keen for the US to lift controls imposed on the export of some high-tech products to China. These rules require that licences are obtained for the export of civilian technology that could have military applications.



The US commerce secretary Gary Locke recently indicated the number of products covered by the regulations would be reduced, although stricter rules would be imposed on those that remained. US officials have argued that only a tiny proportion of American exports to China are affected by the regulations.

Mr Wang, referring to Mr Locke’s comments, yesterday said he was pleased at the proposed changes to the rules.



“We hope to hear from the US side in detail [about] a timetable and road map on gradually removing barriers on high-tech exports to China,” he added.

Chinese officials are also keen for their country to be classed in trade law as a “market economy”, because being a “non-market economy” makes it more vulnerable to trade remedy cases related to issues such as anti-dumping measures.

But Susan Esserman, a former US deputy trade representative, was quoted in the Chinese press this month as saying she thought it was unlikely China would win market economy status before 2016.



Non-economic issues, including the US desire for China to support a fourth round of sanctions against Iran, are also set to be discussed.

Analysts said Mr Hu’s comments on the yuan should not be taken as an indication that China is planning an immediate appreciation.

Ren Xianfang, a China analyst at IHS Global Insight in Beijing, said there was little new in what Mr Hu said and described his remarks as “just the rhetoric of the Chinese government”.



But Ms Ren added the talks and inflationary pressures at home could make it more likely that the currency would be allowed to appreciate, although not straight away.

Other observers have suggested the recent plunges in financial markets in Europe may reduce the likelihood of revaluation.

“I think China would like to follow its own agenda,” Ms Ren said. “It likes to set the pace of revaluation rather than following a schedule set by the US government. That is something it’s resisting.”



Roger Ludwig, a vice president at Bank Link Asia, suggested there could be many reasons why China would be keen not to revaluate.

“You can see the advantage China has in not making this readjustment,” Mr Ludwig said. “This is a brutal trade negotiation. There are a lot of things Beijing is being careful on. [Revaluation] opens up a Pandora’s box.”


www.thenational.ae/apps/pbcs.dll/article?AID=/20100524/BUSINESS/705249902/1005

[sandi66]

China Falls Victim to Greek Deficit Contagion: Michael Pettis

May 24, 2010, 3:22 PM EDT

May 25 (Bloomberg) -- China is under growing pressure from Asia, Europe and the U.S. to revalue its currency. Until recently, it even looked like we were about to embark on a sustained process of yuan revaluation fairly soon.

The Greek crisis may have changed that. The 15 percent slide in the euro’s value against the yuan over the past six months has eroded Chinese competitiveness in the market of its largest trading partner: the European Union. More importantly, many trade-deficit countries in Europe -- such as Greece, Portugal and Spain -- are having difficulty financing themselves. Without net capital inflows, these countries can no longer run current-account shortfalls.

Not surprisingly, concerns in China about euro weakness have fueled calls for caution in any decision to realign the currency. The yuan has already strengthened significantly in trade-weighted terms and the potential contraction in demand from China’s main trading partner could put serious pressure on Chinese exporters even before a yuan revaluation.

One school of thought says to allow more yuan appreciation might create a drag on the economy, just as the Chinese government is trying to wean itself off a massive, and perhaps toxic, dose of investment. China will probably be hurt by the impact of the Greek crisis, and it should try to limit the pain.

The reasoning sounds plausible and even responsible, but it might only exacerbate the problem for China over a longer horizon by increasing trade tensions, which historically have been especially damaging to surplus countries.

Shift Burden

China plays a huge role in the global balance of payments. The Greek crisis and the larger European response will adversely affect existing trade. Limiting the damage for China necessarily means shifting the brunt of the adjustment to other countries.

Something similar happened in 1930 when the U.S., the leading trade-surplus nation at the time, foolishly used the Smoot-Hawley Tariff Act in an attempt to protect itself from the trade consequences of a collapse in the ability of European trade-deficit countries to finance themselves. U.S. protective measures implicitly required other deficit countries to absorb the full brunt of the impact, and this caused them to retaliate with tariffs, currency depreciations and import quotas.

What does all this have to do with Greece? For the foreseeable future, the major trade-deficit countries in Europe are going to find it very difficult to attract net new financing. At best they will be able, with official help, to refinance part of their existing liabilities.

New Capital Inflows

If they can’t attract net new capital inflows, they can’t run current-account deficits. There must be an equal, obverse reaction in the global balance of trade if there is a contraction in these large trade gaps, now equal to two-thirds that of the U.S. Either the trade surpluses of Germany and other European surplus countries must shrink by the same amount, or Europe’s overall surplus must expand by the same amount.

We will probably see a combination of the two, but a weaker euro -- as well as credit contraction, rising unemployment and a German reluctance to reverse policies that constrain domestic consumption -- will push most of the adjustment abroad via an expanding European current-account surplus.

If Europe’s current-account surplus grows, there must be a trade adjustment elsewhere. Either the current-account surplus of countries such as China and Japan must contract by the same amount, or the current-account deficits of countries such as the U.S. must grow (or some combination of both).

Trade Wars

Should China resist a contraction of the current-account surplus by postponing a yuan revaluation, lowering real interest rates (which have already declined this year), slowing credit contraction, and otherwise trying to maintain exports -- let alone grow them -- most of the adjustment will be shifted to countries that don’t intervene in trade directly. The most obvious are current-account-deficit countries.

This would cause a sharp increase in their current-account deficits, but these countries are likely to resist by intervening in trade themselves. Unlike many other countries, the U.S. has limited ability to use interest rates or currency intervention to affect trade, so it must use tariffs. As happened in the 1930s, this would probably set off higher tariffs in other countries that couldn’t regain export competitiveness through currency intervention.

The Greek crisis is forcing a much more rapid adjustment in trade than the world is easily able to absorb. As in the 1930s, each country seems eager to pursue policies to avoid adverse trade effects, but these policies can only work by pushing the burden of adjustment onto other, equally unwilling, entities.

The only way to overcome a beggar-thy-neighbor crisis is if the major trading powers -- the U.S., China, Japan, Germany and the EU -- work out a plan in which the adjustment process is slowed as much as possible and the burden is shared. Is it possible for them to come up with something fair and equitable? Perhaps not, but unless they try, the world will adjust much more painfully.

(Michael Pettis is a finance professor at Peking University and is an associate at the Carnegie Endowment. The opinions expressed are his own.)

www.businessweek.com/news/2010-05-24/china-falls-victim-to-greek-deficit-contagion-michael-pettis.html

[sandi66]

WaMu bank unit bondholders oppose bankruptcy plan

Mon May 24, 2010 7:53pm EDT

(Reuters) - A group of senior bondholders of Washington Mutual Inc's (WAMUQ.PK) banking unit on Monday said they oppose a global settlement reached Friday with the Federal Deposit Insurance Corp over the thrift's September 2008 failure.

Deals

The proposed settlement calls for the return of $7 billion to creditors. It is also designed to resolve claims arising from the FDIC's role as receiver for Washington Mutual, and claims between the bankrupt holding company and JPMorgan Chase & Co (JPM.N), which bought the thrift's banking operations. The settlement requires court approval.

William Isaacson, a partner at the law firm Boies, Schiller & Flexner LLP representing the banking unit's senior bondholders, in a statement called the proposed settlement "an enormous loss" to the bankruptcy estate, creating a "windfall" for the holding company and JPMorgan through the awarding of billions of dollars of tax refunds.

He also said it was unfair that noteholders of the holding company would be paid in full, while senior noteholders at the bank unit level would "not receive anything close" to full payment.

"Our clients do not support this proposed settlement," he said. "They will seek to vindicate their rights and claims, including their claims in the Washington Mutual Inc bankruptcy proceedings, until a decision on the merits is reached."

Washington Mutual is the largest U.S. banking company to fail. Regulators seized it on September 25, 2008 after it suffered a run on deposits, amid tens of billions of dollars of exposure subprime mortgages, adjustable-rate mortgages and home equity loans.

The case is In re: Washington Mutual Inc, U.S. Bankruptcy Court, District of Delaware, No. 08-12229.

www.reuters.com/article/idUSTRE64N5V020100524

[sandi66]

clark posted the following linked article:

Guilty Verdict Handed Down by the Obama Columbia Jury

Posted by Europe on May 20, 2010 | 11 Comments

The past few days have been very intense on all of us that took part in this very interesting event. The jury deliberated for over 3 hours until they came up with the verdict. The defendants were found guilty on all charges and there were so many, but I will basically give you all a quick review.

Mail fraud, wire fraud, Obstruction of Justice and Sedition were the main charges. I would have found Columbia University not guilty of any charges that involved them knowingly undermining the country. I just do not think they knew back in 1981 that they were taking part in a conspiracy to undermine the Government. Their silence about Obama attending Columbia University during his campaign does not meet that level of conspiracy in my opinion. I do not think that was proven, but they can appeal it if they like.

Day 5

Witness Miki Booth

Miki Booth is a Hawaiian born native that is running for congress in Oklahoma, District 2. Booth held up birth certificates that were real long form birth certificates from Hawaii. She then explained the difference between a Certificate of Live Birth anda Certification of Live Birth (what Obama posted on Factcheck.org).

Booth testified that anyone could get a Certification of Live Birth, it does not prove ANYTHING. Then she discussed the birth announcements and she stated that anyone could put that in the paper if they want to notify the town about a new baby in the family.

Wayne Allyn Root

Manning discussed his phone call with Wayne Allyn Root and about the article that Root posted on the Internet many libertarians attacked Root for even considering to testify at this trial. Also, many Columbia University Alumni contacted him as well. What are they afraid of? Root said he never saw or heard of any student named Barack Obama at Columbia University at that time that Obama claims he attended the school. Root had the same major as Barry, but still never heard of him.

Manning submitted the article as evidence.

Next, Manning described a letter that he got from a former KGB agent that was also a double agent with the CIA. The informant Mike, stated that Obama worked with the CIA for 4 years (1981-1985) in Pakistan assisting the Mujahadeen fighters during the Soviet-Afghan war.

Manning then stated that factions of the CIA and the KGB are working together to install a socialist government and that Bill Clinton, Leon Panetta, Rahm Emanuel and Obama are all in on it. This means that there has been a conspiracy for at least the past 20 years to create a super spy agency. This spy agency would blackmail and assassinate the opposition, the Republicans were targets.

This was called “The Professional System”. A KGB like security force that will undermine freedom and elections in the United States, to shove this nation into a socialist state.

This KGB agent claimed that the CIA was more interested in American citizens, rather than foreign enemies. Basically he is saying that they have been compromised by the enemy.

Manning – They put out a hit on me

Pastor Manning then stated that he was informed by a disgruntled CIA agent that a hit was put on his head by the CIA. This was by an anonymous caller and it was just two days after the CIA, Homeland Security and the NYPD visited Manning’s church. Manning claims that the hit was called off when the assassin refused to accept the order to kill Pastor Manning. Pastor Manning is calling for the Justice Department to investigate this alleged conspiracy to assassinate him.

Manning then claimed that the CIA Operative told him to dig into Columbia University rather than the birth certificate issue, because it was clear that Obama never attended Columbia University, because he was working with the CIA in Pakistan at the time that he was allegedly attending the University.

Pastor Manning then stated that “Columbia University did not cover their tracks well”. Then he commented “If John McCain is not qualified, I know for sure that Barack Hussein Obama is not qualified for the office either.”

Obama said that his father was Kenyan in his book and the debate ends right there, he is NOT a natural born citizen.

Manning also stated that Obama traveled to Pakistan with a Kenyan Passport, not a Indonesian passport that has been speculated the past 22 months.

Obama’s records are not sealed by the courts, they are sealed by the CIA.

Manning then shouted, “What are you hiding Mr. Obama? The people need to ask this question. Only criminals hide themselves and Obama is the most notorious criminal that ever walked the earth.”

Then Manning solemnly said, “My life was challenged by MY GOVERNMENT. Obama is a Muslim and the Church failed this nation to allow this to take place.”

Pastor Manning then told the jury “If a guilty verdict is rendered today, it will rock the world. You will save this nation, save my life and the lives of YOUR CHILDREN. Every dollar that Obama has collected was under fraudulent pretenses, because he is not a natural born citizen.

The Verdict

I am sure that Pastor Manning will release an official copy in the near future of all of the charges and the verdict. The church erupted with applause and cheers after the final guilty verdict was announced. Pastor Manning was very excited and he did an excellent job with this entire trial, aided by his assistant Anthony Jones (an attorney).

Manning will most likely submit all of the evidence and the verdict to the US Attorney General and demand that they investigate, validate the decision by the jury and move forward with possible arrests. I do agree that fraud was committed, Manning proved that to the entire audience and the jury.

www.eutimes.net/2010/05/guilty-verdict-handed-down-by-the-obama-columbia-jury-2/

[sandi66]

National Guard troops heading to border, lawmaker says
By Jordan Fabian - 05/25/10 02:35 PM ET

The government has decided to deploy 1,200 National Guard troops to the U.S.-Mexico border to help quell violence there, an Arizona lawmaker said Tuesday.

Rep. Gabrielle Giffords (D-Ariz.), who represents a district in the southern part of the state, said that President Barack Obama will announce the deployment along with $500 million be included in legislation for extra border security and law enforcement.



“The White House is doing the right thing,” Giffords said in a statement. "The fulfillment of my request is a clear sign that this administration is beginning to take border security seriously."


Arizona lawmakers from both parties have long-called on the Obama administration to send National Guard troops to help secure the border after a string of violence and drug cartel activity in the last few months.


One attack left an Arizona rancher dead in March.


In response to the situation, Arizona Gov. Jan Brewer (R) signed a controversial immigration law that allows state law enforcement to ask for identification from individuals they suspect are in the country illegally, if they are stopped for another cause.

Brewer said she authorized the legislation because the federal government has failed to secure the border.


Obama has called the law, which critics say could lead to racial profiling, "misguided" but pledged that the federal government would do more to provide border security.


The 1,200 troops is short of the 3,000 Sen. John McCain (R-Ariz.) has requested.


Officials have debated whether or not to send federal troops to the border, especially after 17,000 National Guard members were sent to areas surrounding the Gulf of Mexico to assist with the recover following the massive oil spill there.

thehill.com/blogs/blog-briefing-room/news/99769-national-guard-troops-heading-to-border-lawmaker-says

[sandi66]

BP internal probe focuses on other companies' work

Last Update: 2:05 pm


COVINGTON, La. (AP) - Oil giant BP said its internal investigation of the unchecked Gulf oil spill is largely focused on work done by other companies as a new government report Tuesday showed workers at the federal agency that oversees offshore drilling accepted sports tickets, lunches and other gifts from oil and gas companies.

BP PLC said in a release that an initial investigation found multiple control mechanisms should have prevented the accident that started with an oil rig explosion April 20 off the coast of Louisiana that killed 11 workers.

BP, the largest oil and gas producer in the Gulf, listed seven areas of focus as it hunts for a cause. Four involve the blowout preventer, a massive piece of machinery that sits atop the wellhead and should have acted as a safety device of last resort but did not. That was manufactured by Cameron International Corp. and owned by Transocean LTD, which also owned the Deepwater Horizon oil rig.

The other three areas of focus for the investigation involve the cementing and casing of the wellhead, which was Halliburton Inc.'s responsibility.

In BP's release, Chief Executive Tony Hayward stopped short of assigning responsibility. President Barack Obama has blasted executives from the companies for blaming each other during Congressional hearings this month.

"A number of companies are involved, including BP, and it is simply too early - and not up to us - to say who is at fault," Hayward said.

Gene Beck, a petroleum engineer at Texas A&M at College Station who worked in the drilling industry for two decades, said the list of problems BP is investigating appears exhaustive. But he said the company also needs to look at decisions made by people on the rig.

"That needs to be investigated: Why did they do what they did?" Beck said. "They need to ask themselves that very, very serious question: 'Why did we make these choices?"'

Guy Cantwell, spokesman for TransOcean, said TransOcean is doing its own investigation and noted the company was having a memorial service Tuesday for the workers killed in the explosion.
"We'll comment at the appropriate time," he said.

Halliburton released a statement saying it stands firm in its belief that services if provided were exactly as requested and directed by the well owner.

"Halliburton provided customized cementing services at the well owner's direction for the Mississippi Canyon 252 well," the statement said. "There are certain aspects of these operations that are the responsibility of the well owner and are not controlled by the cement service company."

Meanwhile, a new Interior Department report released Tuesday found that staffers in the Louisiana office of the Minerals Management Service violated a number of federal regulations and agency ethics rules, including accepting gifts from oil and gas companies and using government computers to view pornography.

The report by the department's acting inspector general follows up on a 2008 report by then-Inspector General Earl Devaney that decried a "culture of ethical failure" and conflicts of interest at the minerals agency.

Interior Secretary Ken Salazar called the latest report "deeply disturbing" but stressed that it only covered a period from 2000 to 2008. He said he wants the investigation expanded to include agency actions since he took office in January 2009.

BP filed its site-specific exploration plan for the Deepwater Horizon in February 2009.

The Obama administration has come under increasing pressure as frustrations build, oil washes up in delicate Louisiana wetlands, and efforts to cap the well prove unsuccessful. Millions of gallons of oil have spilled and are starting to come ashore across a 150-mile swath from Grand Isle, La., to Dauphin Island, Ala., endangering wildlife and livelihoods in commercial fishing and tourism.

After butting heads with the administration, BP is now complying with a request that it spray less of a toxic dispersant it has been using to break up oil in the water, White House energy adviser Carol Browner said.

She also said safer dispersants are not available in the needed quantities, so officials need to study alternatives.

All of BP's attempts to stop the leak have failed, despite the oil giant's use of joystick-operated submarine robots that can operate at depths no human could withstand.

Live underwater video showed the underwater plume getting significantly darker Tuesday, the color changing from medium gray to black. Two scientists noticed the change, which BP downplayed as a natural fluctuation that is not likely permanent.

But engineering professor Bob Bea at the University of California at Berkeley said the color change may indicate the leak has hit a reservoir of more oil and less gas. Gas is less polluting because it evaporates.

BP is pinning its latest hopes of stopping the gusher on a technique never tested 5,000 feet underwater: a "top kill," in which heavy mud and cement would be shot into the well to plug it up.

BP engineers had the equipment in place Tuesday and planned to start 12 hours of tests to prepare for the maneuver, BP senior vice president Kent Wells said.

The top kill has proven successful in aboveground wells in Kuwait and Iraq, but has never before been tried a mile beneath the sea. Company executives peg its chances of success at 60 to 70 percent.

Engineers are working on several other backup plans, including injecting assorted junk into the well to clog it up and lowering a new blowout preventer on top of the one that failed.

The only certain permanent solution is a pair of relief wells crews have already started drilling, but the task could take at least two months.


BP exec acknowledges public frustration over spill
May 24
BARATARIA BAY, La. (AP) - The BP executive in charge of fighting the Gulf of Mexico oil spill said Monday his company knows people are frustrated by its failure to plug the well that has been gushing for more than a month and is now spreading damage through Louisiana's wetlands.

Doug Suttles, chief operating officer at BP PLC, went on all three U.S. network morning talk shows with the same message: "We are doing everything we can, everything I know," he said on NBC's "Today" show.

Millions of gallons of oil have already spewed from the well that blew out after a drilling rig exploded April 20 off the Louisiana coast.

Company spokesman John Curry said it will be at least Wednesday before BP will try using heavy mud and cement to plug the leak, a maneuver called a top kill that represents the best hope of stopping the oil after several failed attempts. BP initially said it would try Tuesday, but Curry said more time is needed to get equipment in place and test it.

"Our goal, of course, is to succeed," Curry said. "We want this as much as anyone and our best chance of success is looking like Wednesday morning."

Several officials from President Barack Obama's administration led a delegation of U.S. senators who surveyed the affected areas from the air Monday, then held a press conference to emphasize that the cleanup is BP's responsibility.

"We are going to stay on this and stay on BP until this gets done and it gets done the right way," said Homeland Security Secretary Janet Napolitano.

BP said Monday its costs for the spill had grown to about $760 million, including containment efforts, drilling a relief well to stop the leak permanently, grants to Gulf states for their response costs, and payment of damage claims. BP said it's too early to calculate other potential costs and liabilities.

At least 6 million gallons of crude have spewed into the Gulf, according to a Coast Guard and BP estimate of how much is coming out, though some scientists say they believe the spill has already surpassed the 11 million-gallon 1989 Exxon Valdez oil spill off Alaska as the worst in U.S. history.

A mile-long tube operating for about a week has siphoned off more than half a million gallons, but it began sucking up oil at a slower rate over the weekend, and even at its best it wasn't capturing all of what is leaking.

The spill's impact on shore now stretches across 150 miles, from Dauphin Island, Ala. to Grand Isle, La.

With oil pushing at least 12 miles into marshes in his state and two major pelican rookeries coated in crude, Louisiana Gov. Bobby Jindal said crews have begun work on a chain of berms made with sandbags, reinforced with containment booms, that would skirt the state's coastline.

"This oil threatens not only our coast and our wetlands, this oil fundamentally threatens our way of life in southeastern Louisiana," he said at Monday's press conference.

On Barataria Bay, some brown pelicans coated in oil could do little more than hobble. Their usually brown and white feathers were jet black, and eggs were glazed with rust-colored gunk.

The birds got spooked when wildlife officials tried to rescue one, and officials were not sure they would try again.

Pelicans are especially vulnerable to oil because they dive into the water to feed. They could eat tainted fish and feed it to their young, or they could die of hypothermia or drown if their feathers become soaked in oil. The birds were removed from the federal endangered species list just six months ago.

Oil has also reached a 1,150-acre oyster ground leased by Belle Chasse, La., fisherman Dave Cvitanovich. He said cleanup crews were stringing lines of absorbent boom along the surrounding marshes, but that still left large clumps of rust-colored oil floating over his oyster beds. Mature oysters might eventually filter out the crude and become fit for sale, but this year's crop of young oysters will perish.

"Those will die in the oil," Cvitanovich said. "It's inevitable."

Officials said last week that 264 birds, sea turtles and dolphins had been found dead or stranded on shore that may have been affected by the spill, though Roger Helm, chief of the U.S. Fish and Wildlife Service's contaminants division, said the death toll is certain to rise as the oil moves deeper into the marshes. In contrast, hundreds of thousands of birds, otters and other animals were killed after the Exxon Valdez spill in 1989.

Helm said the biggest reason for the relatively low death toll from the Gulf spill is that until recently, most of the oil remained far out to sea.

"But if the oil does really start fouling up the marshes, you can expect the numbers of oiled birds to go up significantly," he said.

Drilling official retires in oil spill fallout
May 17
WASHINGTON (AP) - The federal official overseeing offshore drilling announced his departure Monday in a fallout from the Gulf oil spill and criticism that federal regulators have been too cozy with industry.

President Barack Obama, meanwhile, has decided to have a presidential commission investigate the cause of the rig explosion that unleashed millions of gallons of oil into the Gulf of Mexico, where engineers are struggling after three weeks to stop the flow.

The presidential panel will be similar to ones that examined the Challenger space shuttle disaster and Three Mile Island nuclear power plant accident, said a White House official, speaking on condition of anonymity because the decision had not been formally announced. The commission also will examine the safety of offshore oil drilling and the effectiveness of its regulations.

In Congress, more attention was focused on the Gulf spill.

Sen. Barbara Boxer, D-Calif., and seven other senators asked the Justice Department to determine whether BP PLC made false and misleading claims to the government about its ability to prevent a serious oil spill when it applied for permission last year to drill the Deepwater Horizon well that has unleashed environmental havoc along the Gulf coast.

But lawmakers are taking aim not only at BP at hearings this week, but also the Interior Department's regulation of offshore drilling that allowed BP to operate without assurance a massive spill could be prevented.

On Monday, the fallout from the Gulf spill began having its impact on the agency charged with regulating offshore drilling.

Chris Oynes, the associate Minerals Management Service administrator for offshore drilling programs, informed colleagues he will retire at the end of the month, according to an e-mail sent to agency officials and obtained by The Associated Press.

Oynes, who was regional director in charge of Gulf offshore oil programs for 13 years before he was promoted in 2007 to head all offshore drilling programs, has come under criticism for being too close to the industry.

He told colleagues unexpectedly that he will retire on May 31. A person in Oynes' office said he was in meetings and unavailable for comment. Oynes had earlier indicated his plans to retire, but decided to accelerate his departure, said an administration official, who spoke on condition of anonymity because the issue involved a personnel matter. It was unclear what pressure, if any, was made.

The departure was welcomed on Capitol Hill.

Rep. Nick Rahall, D-W.Va., chairman of the House Natural Resources Committee, said he hoped Oynes' retirement signaled an understanding that wholesale changes "will be necessary to fundamentally reform MMS."

"It represents an opportunity to begin anew with a clean slate," said Rahall, whose committee is investigating MMS' regulation of offshore drilling activities.

Rep. Darrell Issa, R-Calif., a longtime MMS critic, said the agency has been corrupt for more than a decade, a period spanning three administrations, and that its shortcomings were not the fault of one person. The agency "is in need of an exhaustive overhaul and comprehensive reform," he said.

At a Senate hearing Monday, Coast Guard Rear Adm. Peter Neffenger says the Gulf oil spill is beyond what anyone anticipated and demonstrates that response plans for future spills will have to be changed. Neffenger, the deputy national incident commander at the Coast Guard, testified before the Committee on Homeland Security and Government Affairs.

Boxer, whose Environment Committee will hold hearings Tuesday, said BP claimed to have the capability to prevent a serious oil spill in case of a well blowout.

"In the wake of the Deepwater Horizon oil spill ... it does not in any way appear there was 'proven equipment and technology' to respond to the spill" as BP claimed, she and the other senators wrote Attorney General Eric Holder. They asked the Justice Department to determine whether any criminal or civil laws may have been violated as to misleading the government.

Anticipating tough questioning on Capitol Hill at hearings this week, Interior Secretary Ken Salazar on Monday announced a tightening of requirements for onshore oil and gas drilling. The new measures would not apply to oil rigs at sea.

"The BP oil spill is a stark reminder of how we must continue to push ahead with the reforms we have been working on and which we know are needed," Salazar said.

---
Associated Press writer Erica Werner contributed to this report.

Worry that Gulf oil spreading into major current
NEW ORLEANS (AP) - BP said Monday it was siphoning more than one-fifth of the oil that has been spewing into the Gulf for almost a month, as worries escalated that the ooze may reach a major ocean current that could carry it through the Florida Keys and up the East Coast.

BP PLC chief operating officer Doug Suttles said Monday on NBC's "Today" that a mile-long tube was funneling a little more than 1,000 barrels - 42,000 gallons - of crude a day from a blown well into a tanker ship. The company and the U.S. Coast Guard have estimated about 5,000 barrels - 210,000 gallons - have been spewing out each day. Engineers finally got the contraption working on Sunday after weeks of failed solutions - however, millions of gallons of oil are already in the Gulf of Mexico.

Crews will slowly ramp up how much oil the tube collects over the next few days. They need to move slowly because they don't want too much frigid seawater entering the pipe, which could combine with gases to form the same ice-like crystals that doomed the previous containment effort.

As engineers worked to get a better handle on the spill, a researcher told The Associated Press that computer models show the oil may have already seeped into a powerful water stream known as the loop current, which could propel it into the Atlantic Ocean. A boat is being sent later this week to collect samples and learn more.

"This can't be passed off as 'it's not going to be a problem,"' said William Hogarth, dean of the University of South Florida's College of Marine Science. "This is a very sensitive area. We are concerned with what happens in the Florida Keys."

BP PLC engineers remotely guiding robot submersibles had worked since Friday to place the tube into a 21-inch pipe nearly a mile below the sea. Crews got it working after several setbacks.

BP failed in several previous attempts to stop the leak, trying in vain to activate emergency valves and lowering a 100-ton container that got clogged with icy crystals. They have used chemicals to disperse the oil. Tar balls have been sporadically washing up on beaches in several states, including Mississippi where at least 60 have been found. But so far, oil has not washed ashore in great quantities.

Hogarth said a computer model shows oil has already entered the loop current, while a second shows the oil is 3 miles from it - still dangerously close. The models are based on weather, ocean current and spill data from the U.S. Navy and the National Oceanic and Atmospheric Administration, among other sources.

Hogarth said it's still too early to know what specific amounts of oil will make it to Florida, or what damage it might do to the sensitive Keys or beaches on Florida's Atlantic coast. He said claims by BP that the oil would be less damaging to the Keys after traveling over hundreds of miles from the spill site were not mollifying.

Damage is already done, with the only remaining question being how much more is to come, said Paul Montagna, from the Harte Research Institute for Gulf of Mexico Studies at Texas A&M University.

"Obviously the quicker they plug this the better, but they are already having a tremendous effect on the environment," he said. "In the end, we have to figure out how much is actually pouring into the Gulf."

BP had previously said the tube, if successful, was expected to collect most of the oil gushing from the well. Officials still hope to collect most of it when the tube is working at full capacity.

Two setbacks over the weekend illustrate how delicate the effort is. Early Sunday, hours before a steady connection was made, engineers were able to suck a small amount of oil to the tanker, but the tube was dislodged. The previous day, equipment used to insert the tube into the gushing pipe at the ocean floor had to be hauled to the surface for readjustment.

The first chance to choke off the flow for good should come in about a week. Engineers plan to shoot heavy mud into the crippled blowout preventer on top of the well, then permanently entomb the leak in concrete. If that doesn't work, crews also can shoot golf balls and knotted rope into the nooks and crannies of the device to plug it, Wells said.

The final choice to end the leak is a relief well, but it is more than two months from completion.

Top officials in President Barack Obama's administration cautioned that the tube "is not a solution."

"We will not rest until BP permanently seals the wellhead, the spill is cleaned up, and the communities and natural resources of the Gulf Coast are restored and made whole," Secretary of Homeland Security Janet Napolitano and Secretary of the Interior Ken Salazar said in a joint statement.

Meanwhile, scientists warned of the effects of the oil that has already leaked into the Gulf. Researchers said miles-long underwater plumes of oil discovered in recent days could poison and suffocate sea life across the food chain, with damage that could endure for a decade or more.

Researchers have found more underwater plumes of oil than they can count from the well, said Samantha Joye, a professor of marine sciences at the University of Georgia.

The hazards of the plume are twofold. Joye said the oil itself can prove toxic to fish, while vast amounts of oxygen are also being sucked from the water by microbes that eat oil. Dispersants used to fight the oil are also food for the microbes, speeding up the oxygen depletion.

"So, first you have oily water that may be toxic to certain organisms and also the oxygen issue, so there are two problems here," said Joye, who's working with the scientists who discovered the plumes in a recent boat expedition. "This can interrupt the food chain at the lowest level, and will trickle up and certainly impact organisms higher. Whales, dolphins and tuna all depend on lower depths to survive."

Oil has been spewing since the rig Deepwater Horizon exploded April 20, killing 11 people and sinking two days later. The government shortly afterward estimated the spill at 210,000 gallons a day, a figure that has since been questioned by some scientists who fear it could be far more. BP executives have stood by the estimate while acknowledging there's no way to know for sure.

Steve Shepard, who chairs the Gulf Coast group of the Sierra Club in Mississippi, said the solution by BP to siphon some of the oil is "hopefully the beginning of the end of this leak."

He, like others, is worried that much more than the estimate is leaking and that the long-term damage is hard to measure.

"We have a lot to be worried about," he said. "We are in uncharted territory."

Oil spill damage takes a new turn
May 16
ROBERT, La. (AP) - The scope of the environmental damage from the oil spill in the Gulf of Mexico is taking on another dimension today.

Tar balls have been sporadically washing up on beaches along the Gulf Coast, but scientists are expressing fresh concerns about the quantity of oil that remains beneath the surface in the Gulf of Mexico.

They've detected three of four plumes, at least one of which measure 10 miles long and a mile wide.

Researchers are also testing the effects of the subsea oil on oxygen levels in the water.

One researcher says levels are down by 30 percent in some areas and it could get worse. That could harm plankton and other tiny creatures that serve as food for a wide variety of sea critters.

Because of the depth of the ruptured well, scientists say there are many unknowns since the situation hasn't been seen before.

BP continues to try things to cut the hundreds of thousands of gallons of oil that have been gushing from a blown-out well daily for more than three weeks. Engineers are still trying to insert a 6-inch tube with a stopper into the larger, ruptured pipe.

www.9wsyr.com/news/local/story/BP-internal-probe-focuses-on-other-companies-work/FW9fSlx58UCj432KqgfFvw.cspx

[sandi66]

Strong Gold Demand Expected for 2010

Wednesday May 26, 2010, 12:59 am EDT
LONDON, May 26, 2010 /PRNewswire/ --

- Economic Uncertainty, Sovereign Risk in Western Markets and Appetite for Gold From Asia to Underpin Market

The World Gold Council ("WGC") expects that demand for gold will be strong during 2010, driven by growing demand for jewellery in China and India as well as an increase in European and US investment in the context of continued economic instability, sovereign risk and the threat of a 'double dip' recession.

According to WGC's Gold Demand Trends report, published today, demand in India and China will continue to grow, driven by jewellery demand, in spite of high local currency gold prices. In Q1 2010, India was the strongest performing market as total consumer demand surged 698% to 193.5 tonnes. In China, demand proved resilient; demand increased 11% in Q1 2010 to 105.2 tonnes.

This strong demand is despite high local gold prices, which on 12 May in India increased to Rs 56,032/oz, the highest level for the year, while at the same time in China prices reached an all-time high of RMB8,480/oz, suggesting that consumers in India and China are becoming accustomed to higher gold prices.

Concerns over Greece's public finances and debt contagion fears in Europe have led to strong buying in particular for gold coins, bars and gold exchange traded funds (ETFs) during May which may show up in the Q2 2010 figures. While momentum in ETF tonnage paused during Q1 2010, gold ETF flows started to rise strongly again in April and May as investors sought less volatile investments in which to protect their funds against economic turmoil. On 20 May, SPDR Gold Shares (GLD) held a record 1,200 tonnes, with a value of US$46.88 billion.

Aram Shishmanian, CEO of the World Gold Council commented:

"Currently, European gold investment demand is exceptionally strong, especially from German and Swiss investors. This is mainly attributable to concern over public debt levels in the Eurozone and the potential inflationary impact of the European Central Bank's (ECB) announcement of the US$1 trillion rescue package to purchase Eurozone government bonds to address the Greek debt crisis."

"With the global economic recovery still burdened by high and rising debt levels in Western economies, as well as the renewed threat of recession driving down the US dollar and equities, the outlook for gold as a liquid, reliable asset class and as a store of wealth remains highly favourable."

According to the WGC, global jewellery demand in non Western countries will continue to recover after reaching 470.7 tonnes in Q1 2010. Economic recovery in Europe and the US will add to this demand, as a potential return to restocking in the jewellery sector is likely, given that existing inventories have been run down since the first half of 2009 to very lean levels. This should provide fundamental support to the gold price.

Aram Shishmanian continued:

"The diversity of demand for gold, both by sector and geography ensures that the outlook for gold remains strong for the remainder of 2010. Despite increasing gold prices, consumers in China and India will continue to drive market growth, particularly in jewellery. In Western markets, the uncertain economic outlook and sovereign risk fears will add further impetus to growth in investment as investors seek to protect wealth. In the instance that we continue to see elevated levels of risk around the world, however, investment demand will remain strong in 2010."

Whilst total investment demand during Q1 2010 fell in comparison with Q1 2009, this decrease was driven by the very strong level of demand in Q1 2009 for investment particularly ETFs. This exceptional activity created a bias for the total demand figures for Q1 2010 when ETF demand paused. However, the strong recovery in jewellery demand which was driven by China and India in Q1 2010, combined with recent high inflows into ETFs, has created a firm basis for an optimistic outlook for the remainder of 2010.


DEMAND STATISTICS FOR Q1 2010 - While the volume of total identifiable gold demand was down 25% on Q1 2009 levels at 760.2 tonnes, in US$ value terms, the decline was a more moderate 9%. - Consumers are more comfortable with a higher local price environment, borne out by demand in non-western markets where jewellery demand increased 43%. - Indian jewellery demand rose 291% to 147.5 tonnes, there was continued strong demand from China and signs of recovery in Turkey and the Middle East. - Net retail investment demand, which covers retail bar and coin demand, was 26% up on the first quarter of 2009 at 182.5 tonnes. - Industrial and dental demand was up 31% at 103.2 tonnes, driven by a solid recovery in the electronics and other industrial sectors owing to the improved economic conditions.
The full 2010 Q1 Gold Demand Trends report, which includes comprehensive data for the first quarter 2010, can be viewed at: www.mediacentre.gold.org


Notes to Editors: World Gold Council World Gold Council's mission is to stimulate and sustain the demand for gold and to create enduring value for its stakeholders. It is funded by the world's leading gold mining companies. For further information visit www.gold.org. ---------------------------------

According to figures compiled independently for WGC by GFMS Limited

finance.yahoo.com/news/Strong-Gold-Demand-Expected-prnews-1403734675.html?x=0&.v=1

[sandi66]

Tougher HK securities regulator risks being defanged

Wed May 26, 2010 4:25am EDT

(Reuters) - Wavering political intent and possible changes at the helm of the securities regulator may dent Hong Kong's recently won reputation as a tough enforcement regime and undermine its place as a prominent financial center.

Once famous for its anything-goes approach to capitalism, Hong Kong's sometimes unruly stock market has turned downright sober in the past two years under a crackdown on insider trading and other market misdeeds.

Any regression could affect the bourse's credibility at a time when it is making a major push to become more global, after recently attracting listings by names such as aluminum giant UC Rusal, L'Occitaine and Prudential.

In just the past few months, the territory's Securities and Futures Commission (SFC) has convicted two warrants traders for market manipulation, frozen a company's IPO proceeds citing filing of misleading information, and sought to ban U.S.-based hedge fund Tiger Asia from operating in Hong Kong.

Those actions follow a string of successful cases last year, including one in which the regulator cited rigged voting allegations to successfully block the privatization of PCCW, Hong Kong's former telephone monopoly controlled by the son of the territory's richest man.

That's a big change for a place where trading on inside information was not even a criminal offence until 2003.

But the moves have triggered a backlash from businesses. Moreover, the government recently watered down a set of reform proposals that would have strengthened the regulator's hand.

And crucially, the two men most responsible for the change -- SFC Chairman Martin Wheatley and head of enforcement Mark Steward -- will see their terms expire in 2011 and 2012, respectively, with extensions far from certain.

"Would the SFC be a strong enforcer without Martin Wheatley and Mark Steward? No," said Jamie Allen, the head of the Asian Corporate Governance Association and a member of the Hong Kong Exchange's listing committee.

TOUGH MINDSET

Wheatley, who joined the SFC in 2005, is a former London Stock Exchange (LSE) executive who helped see that bourse through its "big bang" transformation into a listed company. Steward is a veteran of Australia's securities regulator.

Their mandate for change was part of a broader global push to give more teeth to financial regulators at the height of the global financial crisis, blamed in part on lax regulation.

"During the first three years, the buzzwords in Hong Kong were all about being an international financial center," said Wheatley in an interview. "But since the collapse of Lehman, the mindset is 'Is enforcement tough enough to deal with the fact that you can't rely on the enlightened self interest of bankers to get it right?'"

That tougher mindset has drawn praise from investors and governance experts.

"I'd say the SFC's record is pretty rock solid," said Alan Ewins with law firm Allen & Overy in Hong Kong. "They have sent a good message to the market."

But with the worst of the crisis behind, the regulator may be losing political support for its tough policies, reflecting Hong Kong's long-standing close ties between local business and the political elite.

That dynamic was brought into relief last year when fierce opposition by business leaders led the SFC to abandon an effort to extend a trading "blackout" period for company directors.

Tycoons also lobbied successfully in March to weaken a proposal to add criminal penalties for companies that violate listing rules, analysts said.

"When you see coercion being applied on the SFC, particularly on the blackout issue, your confidence level can't be too high," said C.K. Low, a law professor at the Chinese University of Hong Kong. "But I would definitely give them the benefit of the doubt based on their track record."

DOUBT OVER REAPPOINTMENTS

Wheatley, who left the LSE to become a carpenter and cabinet maker before coming to Hong Kong, pointed out that the SFC's recent successes had come despite the lack of any specific new legislative authority.

"We haven't had any new powers enacted by the legislature," he said. "Instead, we've been using the existing powers (of the SFC) more creatively."

Those include freezing the assets of individuals and companies pending the outcome of a court case. The regulator has also begun avoiding slow-moving tribunals in favor of taking cases directly to higher courts, which have proven willing to impose stiff penalties.

One former SFC official with close ties to the Hong Kong government predicted that neither Wheatley or Steward would be reappointed when their terms expire, citing the government's unease with the newer hardline approach.

"They definitely won't be reappointed," he said. "While the government is happy with some of their successes, the administration needs to balance the interests of different parties."

A spokesman for Hong Kong's Financial Services and Treasury Bureau, which monitors the SFC, declined to comment.

www.reuters.com/article/idUSTRE64P1QM20100526

[sandi66]

AP source: USDA offers discrimination settlement
By BEN EVANS (AP) – 14 hours ago

WASHINGTON — The Obama administration on Tuesday offered $1.3 billion to settle complaints from female and Latino farmers who say they faced discrimination from the Agriculture Department.

The proposal comes as Congress is poised to approve a $1.25 billion settlement with African-American farmers in a similar discrimination case. The agency also is negotiating with Native American farmers over another lawsuit.

Details of the latest offer were provided to The Associated Press by a Justice Department official who spoke on condition of anonymity because the settlement has not been finalized.

The Latino and female farmers, whose lawsuits were filed a decade ago, have sought a larger settlement, and Stephen Hill, an attorney representing Latinos, suggested the cases remain far from being resolved.

Under the proposal, the government would reach out to farming communities to make women and Latinos aware of the settlement. Successful claimants could get a maximum of $50,000, but the awards could be lower depending on how many people win claims.

"It's disappointing that they have not seen fit to offer what we think is a just proposal," Hill said, declining to discuss specifics of the offer. "The administration still has a ways to go in order to treat Hispanic farmers and ranchers fairly, and on par with other victims of discrimination."

Thousands of minorities and women say local USDA offices for years denied them loans and other assistance that routinely went to whites.

Agriculture Secretary Tom Vilsack has emphasized resolving the cases and closing what he calls a "sordid" chapter in the agency's history.

"We have made significant progress on addressing USDA's civil rights record and look forward to providing substantial relief to Hispanic and women farmers in an expedited manner," Vilsack said in a statement.

Along with the black farmers case, Congress currently is considering a $3.4 billion settlement reached by the Obama administration with Native Americans over lands trust funds mismanaged by the Interior Department.

www.google.com/hostednews/ap/article/ALeqM5iv9v_OlUj1DJg6B1PShb97LhFpaQD9FU6D9O0


ty David

[sandi66]

UBS Prosecutor Addresses Global Tax Enforcement at BNA Conference in Hong Kong
PR Newswire

ARLINGTON, Va., May 19

ARLINGTON, Va., May 19 /PRNewswire-USNewswire/ -- At a time when industrialized countries are heightening their scrutiny of offshore financial centers and the use of offshore accounts in an effort to recover tax revenues, BNA's Tax Management Educational Institute will present a live Executive Briefing, Global Tax Enforcement Developments, June 3, 2010, in Hong Kong, PRC, to help financial institutions, financial professionals and their clients understand and navigate this evolving enforcement environment.

(Logo: www.newscom.com/cgi-bin/prnh/20090114/DC59060LOGO-b)

BNA is pleased that a member of the government prosecution team in United States v. UBS AG, will be joined by attorneys from DLA Piper and faculty from the Chinese University of Hong Kong's Faculty of Law in this 5-hour briefing.

Topics to be covered include:

Global Developments: An update on recent exchange of information agreements, G20 actions and developments in the OECD Global Forum on Tax Transparency and Exchange of Information
U.S. Enforcement Developments: IRS and Department of Justice initiatives on global tax evasion
U.S. Legislation to Curb International Tax Evasion: A review of the Foreign Account Tax Compliance Act and how it will affect foreign financial institutions and other foreign entities that have U.S. investments
Hong Kong Developments: An update on actions that Hong Kong has taken to deal with this new exchange of information and enforcement environment
Financial Institution Compliance: Issues for financial institutions to consider in this new regulatory environment


"Tax authorities are increasing collaboration, obtaining information from other countries heretofore unavailable, and aggressively implementing programs to enforce their internal tax laws," says BNA Tax & Accounting Executive Editor George Farrah. "Offshore financial institutions and their clients who ignore this new reality do so at their own peril," Farrah added.

To register for this event being held at the offices of DLA Piper (Hong Kong) go to tinyurl.com/bnahongkong. Pre-registration is required and seating limited.

WHO SHOULD ATTEND: Financial professionals, general counsel, accountants, consultants and other professionals who counsel financial institutions with respect to offshore operations or accounts or counsel individuals with respect to international cross-border investments.

Speakers:

Jeffrey A. Neiman is an Assistant United States Attorney for the Southern District of Florida where he is assigned to the Economic Crimes Section in Fort Lauderdale. Â As an AUSA, Mr. Neiman has prosecuted numerous white collar cases involving securities, mortgage, and healthcare fraud, tax offenses, and other corporate crimes.

Mr. Neiman has experience handling complex, high-profile fraud cases. Most recently, Mr. Neiman helped obtain the deferred prosecution agreement with Switzerland's largest bank, UBS AG, and he is involved with the prosecution of its managers, bankers, and clients. He has also prosecuted executives at large United States corporations, as well as other businessmen. Â He has represented the government in several federal jury trials, has directed numerous grand jury investigations, and has litigated countless evidentiary hearings.

Alan Winston Granwell is an international tax partner resident in DLA Piper's Washington, DC office. Mr. Granwell's practice encompasses representing multinational corporations and high-net worth individuals on cross-border transactions and controversies. He conducts an active administrative practice, regularly representing clients before the Internal Revenue Service and the U.S. Treasury Department (including negotiating advance pricing agreements, conducting competent authority proceedings, advising taxpayers on voluntary disclosures, assisting clients in obtaining regulatory changes and tax rulings and advising clients on tax legislation matters). From 1981 through 1984, Mr. Granwell was the International Tax Counsel and Director, Office of International Tax Affairs at the U.S. Department of the Treasury.

Patrice Marceau is a partner in the Corporate tax group of DLA Piper Hong Kong specializing in Hong Kong, regional and international taxation. Mr. Marceau has extensive experience advising corporations and high net worth individuals on tax planning and litigation matters. He has advised clients in private practice as well as within the Private Bank of a major financial institution. His practice focuses on tax planning for corporations, particularly with respect to inbound and outbound PRC investment structures. He also advises individuals on estate planning, establishing and advising on the use of trusts for tax planning purposes (particularly from a Canadian perspective). Furthermore, Mr. Marceau has extensive experience advising clients involved in disputes with tax authorities.

Ellis Reemer is a Partner with DLA Piper in New York, where he heads the Tax Controversy and Tax Disputes practice and has more than two decades of experience in tax controversy, tax disputes and tax litigation matters. He concentrates on representing clients in complex federal, state, and local tax controversies and tax litigation.

Mr. Reemer has represented both public and privately held corporations, as well as partnerships, estates, trusts and individuals. He regularly represents accounting firms and accountants in matters involving their obligations under federal and state tax laws.

Jefferson VanderWolk is a Professor of Law with the Chinese University of Hong Kong's Faculty of Law and a leading international tax lawyer. During his career he has been based in Hong Kong (15 years), London (5 years), the U.S. (3 years) and Cairo (3 years). He has been a law professor, a partner in a global law firm and in a global accounting firm, a senior executive with a global investment bank, and a U.S. government official. He is qualified to practice law in New York, New Hampshire, and England & Wales.

Peter R. Zeidenberg is a litigation partner in the Washington, DC office of DLA Piper, whose primary focus is defending individuals and businesses in white-collar criminal matters and related issues involving corporate governance and internal fraud investigations.

Prior to joining DLA Piper in 2007, Mr. Zeidenberg spent 17 years as a federal prosecutor, both at the U.S. Department of Justice, where he served in both the Public Integrity Section of the Criminal Division and, before that, at the United States Attorney's Office in the District of Columbia. Mr. Zeidenberg was also a state prosecutor for five years in Middlesex County, Massachusetts.

While at the Department of Justice, Mr. Zeidenberg investigated and prosecuted local, state and federal officials. His trial experience includes some of the highest profile criminal cases handled by the DOJ. Mr. Zeidenberg served as a Deputy Special Counsel in the investigation and prosecution of Lewis "Scooter" Libby. Mr. Zeidenberg gave the government's closing argument and handled direct examination of half of the government witnesses in the Libby case.

About the Tax Management Educational Institute

Tax Management Educational Institute (TMEI) is the education arm of Tax Management Inc., a subsidiary of The Bureau of National Affairs, Inc. TMEI is devoted to the conduct of responsible, professional seminars and conferences of the highest quality dedicated to issues of tax policy and practice, and to the funding of related scholarly endeavors.

www.examiner.com/p-472878~UBS_Prosecutor_Addresses_Global_Tax_Enforcement_at_BNA_Conference_in_Hong_Kong.html

[sandi66]

Geithner in London meeting with new UK finance minister -- Corker slams Obama for using GOP senators as 'props' -- Frank says Lincoln's derivatives provision 'goes too far'
By: BEN WHITE on May 26, 2010 @ 5:46 AM

HECKUVA JOB, TONY – FT’s Ed Crooks reports on pg. 1: “BP’s chairman hit back at critics of the company’s response to the oil spill … insisting that they ought to remember that the group was ‘big and important’ for the US. ... Carl-Henric Svanberg told the [FT] that ‘everything that can be done is being done’ to staunch the spill caused by the April 20 explosion on the Deepwater Horizon rig. In his first newspaper interview since the accident … Mr Svanberg … said the company’s board felt Tony Hayward, the chief executive, was doing a ‘great job’, in spite of widespread criticism in the US. ‘This is a very difficult issue to deal with, a leak in 5,000ft of water,’ Mr Svanberg added.”

BIG AND IMPORTANT – See CNN video of Hayward yelling at a photographer on the Gulf Coast, via HuffPo. Video

BREAKING: CLINTON WARNS NORTH KOREA – AP reports from Seoul: “U.S. Secretary of State Hillary Rodham Clinton said Wednesday the world must respond to sinking of a South Korean warship that has been blamed on North Korea. ‘This was an unacceptable provocation by North Korea and the international community has a responsibility and a duty to respond,’ Clinton told reporters after talks with South Korean leaders. The ship sinking ‘requires a strong but measured response,’ she said, although she did not elaborate.”

FLIPPING THE SCRIPT? – Yesterday, we laid out the argument that financial reform could hit investment banks such as Goldman Sachs and Morgan Stanley harder than more consumer-oriented players such as Bank of America and Citigroup. That could still be true if the derivatives provision winds up anywhere close to the Sen. Blanche Lincoln’s proposal and if the final version of the Volcker rule sets clear and strict limits on proprietary trading. However, several industry sources yesterday pointed to an alternate scenario that could hit the consumer banks harder. And it’s a scenario that became more likely following House Financial Services Committee Chairman Barney Frank’s comments criticizing Lincoln’s proposal. Under this outcome, investment banks could face smaller limits on their lucrative derivatives business and implementation of the Volcker rule would be left up to regulators after a period of study. Meanwhile, Citigroup, Bank of America and the like would face declining revenue based on limits on fees charged to use debit cards, higher costs to comply with a new consumer regulator and 50 state attorneys general with increased ability to police national banks.

Good Wednesday morning. “Sex in the City 2” seems destined to become “Ishtar with Cocktails.” L.A. Times’ Betsy Sharky today slams the sequel: “[T]he satire is sagging, the irony's atrophied and the funny is flabby.”

"TOP KILL" TO BE TELEVISED – BP’s latest attempt to stop oil from gushing into the Gulf, which could begin as soon as today, will be televised after all, despite initial reports that the camera fixed on the leak might be shut down.

SANDBAG BRIGADES – Miami Herald reports on efforts to fortify the Louisiana coastline.

** A message from the Financial Services Forum: Properly regulated, derivatives are an important, risk-reducing aspect of our financial economy, reducing the cost of capital to businesses and saving the average home buyer thousands of dollars on a mortgage. www.financialservicesforum.org. **

www.politico.com/morningmoney/

[sandi66]

Regulators Seek Global Capital Rule
By BINYAMIN APPELBAUM
Published: May 25, 2010

WASHINGTON — Capital is the body fat of banking: too much is debilitating, too little is fatal. During the financial crisis, as large banks burned through their capital reserves, governments were forced to add padding at public expense.

Now one of the most consequential decisions about new restraints on the banking industry — how much more capital banks should hold in their rainy day reserves — is being decided not on Capitol Hill but far from Washington, by a committee based in Basel, Switzerland.

The Obama administration is pursuing an international agreement to make banks hold significantly larger reserves, which it regards as essential to increase the stability of the global financial system. It wants to complete the negotiations, which are being coordinated by the Basel Committee on Banking Supervision, by the end of the year.

The world’s largest banks have responded with consternation, arguing that the proposed standards would tie up too much money that otherwise could be used for lending, a loss that would curtail economic growth.

The debate between regulators and banks is about the proper balance between growth and safety, but the implications are much broader. In fixing reserve requirements, governments are deciding how much horsepower belongs under the hood of the global economy.

“We need them to get the balance right,” said Douglas J. Elliott, a Brookings Institution expert who has studied the Basel proposals. “More safety will make loans more expensive. We don’t want to buy so much safety that the economy suffers.”

There is tremendous political pressure to decide quickly. With the Senate’s passage of financial overhaul legislation, administration officials said that increasing capital and liquidity reserve requirements was the critical remaining piece in their efforts to overhaul financial regulation.

The Group of 20 nations affirmed the year-end deadline at its April meetings in Washington, notwithstanding divisions between the United States and some European nations on a range of banking issues.

“Reform is multifaceted, but at its core must be stronger capital standards,” the group wrote in its communiqué. “We recommitted to developing by end-2010 internationally agreed rules to improve both the quality and quantity of bank capital and to discourage excessive leverage.”

The rules governing capital are dry and technical, a subject that even bankers leave to specialists, but they have become the single most important tool that governments use to restrain and preserve financial institutions.

Banks are required to set aside capital in proportion to loans and investments. The rules shape behavior because banks must hold more capital against assets or loans that regulators consider more likely to lose value.

Capital is so important that the United States has pushed for international agreements on reserve requirements so as not to place American banks at a disadvantage. As a result, the financial bills passed by the House and Senate leave the issue largely untouched.

The first international agreement, known as Basel I, was reached in 1988. Work began almost immediately on a revision, but the standards known as Basel II were not completed until 2004. Now officials are racing to overhaul that framework in little more than a year.

“We’re going to be pushing through this year to make sure that happens. That’s an absolutely critical part of reform,” said Michael S. Barr, assistant Treasury secretary for financial institutions.

The industry mostly is reconciled to an increase — many bankers regard it as necessary — but in comment letters to the Basel committee made public in mid-April, large banks from across the world linked arms to argue that the initial proposals went much too far.

For instance, analysts for JPMorgan Chase estimated that banks would need to raise prices by 33 percent to maintain profits. They also predicted that the Basel proposals would reduce the gross domestic product of the United States by “a multiple” of $30 billion.

Banks also warned that governments were piling on proposals to tax and constrain the beleaguered industry.

“The cumulative financial impact represents a level of conservatism so extreme that it will harm the banking sector, banking customers and national economies,” Wells Fargo’s chief financial officer, Howard I. Atkins, wrote in a letter to the committee.

Most large banks held more capital than regulators required in the fall of 2008. But they did not hold enough to survive the financial crisis. As borrowers defaulted and the value of investments fell sharply, many banks failed or were fortified with public money. The United States distributed more than $165 billion to nine of the largest American banks.

The Basel committee is still discussing how much to increase the minimum capital requirement. The amount will depend in part on the results of a study estimating the impact of the proposals on banks, scheduled for discussion at the next meeting of the G-20 in June.

Already on the table, however, are an overhaul of the risk-weightings, and a tighter definition of capital, closing loopholes that allowed banks to count borrowed money and projected profits as part of their reserves.

Separately, the proposals would create a new reserve requirement, mandating that banks keep enough cash on hand — or assets sold easily for cash — to pay their bills for 30 days. Some banks ran out of cash during the crisis as depositors withdrew, investors fled and the borrowing markets shut down. The new rule, called a liquidity requirement, is intended to ensure that banks can survive such a financing drought.

A central point of international disagreement is whether banks should be allowed to hold smaller reserves because it is understood that central banks will provide loans during times of crisis.

Financial analysts say that some nations, including France, are reluctant to make banks duplicate the safety net that the government provides already.

“Trying to get global buy-in is going to be hard to achieve,” said Frederick Cannon, a banking analyst at Keefe, Bruyette and Woods.

Banks argue more broadly that the initial Basel proposals are based on the extremes of recent experience, and that the cost of preparing for such extremes is too high in terms of lost lending and growth.

The liquidity standard, for example, directs banks to prepare for the loss of 15 percent of deposits. A study of 121 recent bank failures by the American Bankers Association found the average institution lost 2.1 percent of its deposits. Only one bank lost more than 15 percent.


www.nytimes.com/2010/05/26/business/global/26basel.html?dbk

[sandi66]

BP Starts "Top Kill" Operation to Stop Oil Leak
Oil Company Attempts Unprecedented Underwater Plug Operation a Mile Beneath the Sea
CBS NEWS
Created: 05/26/2010 11:56:43 AM PDT


Related
U.S. Gov't: We're In Charge of Spill ResponseBP or U.S.: Who's In Charge Here?Analyst: Gulf Oil Spill Criminal and Civil Damages Could Exceed Exxon Valdez SpillKevin Costner May Play Role in Gulf Oil CleanupTar Balls off Key West Up Oil Spill Spread Fear(CBS) BP says it is trying to seal the blown-out oil well in the Gulf of Mexico by pumping heavy mud into it.

BP said in a news release Wednesday that the "top kill" maneuver has started. The top kill has never before been tried a mile beneath the sea, and company officials say it could be a couple of days before they know whether it is working.

Engineers hope to pump enough mud into the gusher to overcome the flow of the well. Engineers plan to follow up the mud with cement that the company hopes will permanently seal the well.

The Coast Guard said ealrier that it gave the approval for the "top kill" maneuver after consulting with government scientists. The top kill has never before been tried a mile beneath the sea, and company officials say it could be a couple of days before they know whether it is working.

First word that the top kill operation would go forward came at a House hearing when Interior Secretary Ken Salazar cut short his testimony, explaining he had to go monitor the attempt to cap the well, reports CBS Radio News' Bob Fuss.

Facing increased skepticism over the government's handling of the devastating spill, President Obama said his administration won't rest until the well that's leaking millions of gallons of oil is shut and all the damage repaired. But Mr. Obama warned that it could be months before the leak is fully contained, and said there's no guarantee that the top kill procedure being attempted Wednesday to cap the well would work better than previous efforts.

BP Chief Executive Tony Hayward said earlier that crews would try to choke off the massive leak a mile below the sea by force-feeding it heavy drilling mud and cement. The spill started with an April 20 explosion and fire that sank the oil rig Deepwater Horizon and killed 11 workers.

Special Section: Disaster in the Gulf

Testimony ahead of a hearing Tuesday and BP's own internal investigation showed there were warning signs of problems before the blast. One rig worker said managers from rig owner Transocean Ltd. worried that day that BP, which ran the operation, as not taking the right steps to contain the pressure.

Senior Transocean managers complained April 20 that BP was "taking shortcuts" by replacing heavy drilling fluid with seawater in the well, according to sworn testimony by Truitt Crawford, a rig roustabout. BP was leasing the rig and is responsible for stopping the leak and the cleanup.

BP Took "Shortcuts" with Oil Well, Witnesses Say
Argument Aboard Oil Rig, Hours Before Explosion

The seawater was being used in preparation for dropping a final blob of cement into the well as a temporary plug for the pipe. Workers had finished pumping the cement into the exploratory well to bolster and seal it against leaks until a later production phase.

Crawford said seawater would provide less weight to contain surging pressure from the ocean depths. His testimony was expected to be part of a hearing in New Orleans. A BP spokesman declined to comment on what he said.

Dozens of worker statements obtained by The Associated Press describe the hours and minutes before the sudden, violent blowout and many said they were concerned about the pressure coming from below.

And tests within an hour of the blast indicted the pressure was building, according to a congressional memo about new warning signs that a BP investigation indicated. The buildup was an "indicator of a very large abnormality," in the well, BP's investigator indicated.

Still, the rig team was "satisfied" that another test was successful and resumed adding the seawater, said the memo by U.S. Reps. Henry Waxman and Bart Stupak to members of the Committee on Energy and Commerce, which is investigating what went wrong.

There were other warning signs of problems included an unexpected loss of fluid from a pipe known as a riser five hours before the explosion, which could have indicated a leak in the blowout preventer, the memo said. The blowout preventer is designed to shut down the well in case of an emergency. BP has cited its failure as a contributor to the blast.

Plugging the leak was the focus Wednesday 50 miles off the Louisiana coast.

The top kill involves pumping enough mud into the gusher to overcome the flow of the well, which has leaked millions of gallons of oil into the water since an April 20 rig explosion. Engineers then plan to follow it up with cement that the company hopes will permanently seal the well.

Dr. Ed Overton, an environmental scientist at the Louisiana State University, tells "The Early Show" that, in his view, the chances of success are about 50/50 -- perhaps slightly better.

CBS News correspondent Mark Strassmann reports there are concerns that if the pressure of the oil shooting from the well is too great, the top kill attempt could actually force the broken valves open even wider, making the spill worse.

"I'm sure that they looked at the consequences," Dr. Overton told CBS. "When you're in a situation like this, you try to do things that will not make the situation worse."

"I think what BP and everybody's doing is low risk, low gain, and we're hoping that we hit the jackpot and slow it down significantly," added Overton.

The prospects of a successful operation come as public disenchantment with both BP and the government's handling of the crisis has increased. According to a new CBS News poll, 70 percent of Americans disapprove of BP's handling of the disaster, compared with just 18 percent who approve. More people are dissatisfied with the U.S. government's efforts than not, by a mark of 45 percent to 35 percent.

CBS Poll: 70% Say BP Handling Oil Spill Badly

"I have to say that it will be a day or two before we can have certainty that it's worked." Hayward said on NBC. He said pressure tests ahead of the procedure continued through the night and he would review the results before deciding whether to go ahead.

The top kill has been successful in aboveground wells but has never been tried a mile beneath the sea. Hayward earlier pegged its chances of success in this case at 60 percent to 70 percent.

It is the company's latest effort to stem the spill and comes as politicians and Gulf residents are losing patience with the company over several failed attempts to stop the leak.

At least 7 million gallons of crude have spilled into the sea, fouling Louisiana's marshes, coating birds and other wildlife and threatening livelihoods from fishing and tourism.

BP said those who want can watch the procedure online. Live video of the leak has been available for the past few days, and BP said that it will continue throughout the procedure.

Will BP Oil Spill Feed Go Dark During "Top Kill"?

If all goes as planned, engineers will pump fluid twice as dense as water from two barges into two 3-inch-wide lines that will feed it into the blowout preventer. Crews plan to pump it in at a rate of 1,680 to 2,100 gallons per minute in hopes of counteracting the upward pressure of the oil gushing to the surface. They stockpiled some 50,000 barrels of the heavy mud, a manufactured substance that resembles clay.

An illustration of BP's top kill procedure. The company says the primary objective is to put heavy kill mud into the well so that it reduces the pressure and then the flow from the well.

Bob Bea, an engineering professor at the University of California at Berkeley, said the procedure carries a high risk of failure because of the velocity at which the oil may be spewing.

"I certainly pray that it works, because if it doesn't there's this long waiting time" before BP can dig relief wells that would cut off the flow, Bea told the AP.

Wells said it could take anywhere from a few hours to two days to determine whether the top kill is working.

President Barack Obama could get the results in person. He prepared to head to the Gulf on Friday to review efforts to halt the contaminating crude that scientists said seems to be growing significantly darker, from what they can see in the underwater video. It suggests that heavier, more-polluting oil is spewing out.

Ahead of his trip, Mr. Obama planned to address an Interior Department review of offshore drilling that's expected to recommend tougher safety protocols and inspections for the industry, according to an administration official. The official spoke on condition of anonymity ahead of the public release Thursday of the findings of the 30-day review Obama ordered after the spill.

A new report from the Interior Department's acting inspector general alleged that drilling regulators have been so close to oil and gas companies they've been accepting gifts including hunting and fishing trips and even negotiating to go work for them.

BP's "Cozy" Connections

The Interior Department's acting inspector general, Mary Kendall, said her report began as a routine investigation.

"Unfortunately, given the events of April 20 of this year, this report had become anything but routine, and I feel compelled to release it now," she said.

Her biggest concern is the ease with which minerals agency employees move between industry and government, Kendall said. While no specifics were included in the report, "we discovered that the individuals involved in the fraternizing and gift exchange - both government and industry - have often known one another since childhood," Kendall said.


www.ktva.com/ci_15162449?source=pkg

[sandi66]

A Useful Crisis

May 27, 2010
Viewpoint: Christian Science Monitor (excerpted)
(May 27, 2010)
European and U.S. stock markets are shaking and the euro currency keeps falling, largely over debt woes in Europe. Now's the time to remember the words of Rahm Emanuel: "You never want a serious crisis to go to waste."

In today's context, the advice from the White House chief of staff would mean this: It's time for developed nations that are overloaded by deficits and debt to finally clean fiscal house.

No politician likes to do that, because it usually means spending cuts, tax increases or structural changes that the public resists. But this is the perfect excuse. More than an excuse, actually, because if financial markets continue their disapproval of unlimited government borrowing and spending, they will exact a steep price in less capital for economic growth, stability and standards of living.

Governments are beginning to heed the markets' growl. In Britain, the new coalition government announced a series of starter budget cuts, to be followed by an emergency budget next month, and plans to seriously cut Britain's deficit within five years. As Queen Elizabeth said in her opening of the new parliament: "The first priority is to reduce the deficit and restore economic growth."

In the fiscally messy countries that make up the PIIGS (Portugal, Ireland, Italy, Greece and Spain), sacrifice and austerity have crept into government vocabulary. Ireland, which led in adopting an austerity program last year, is being followed by the rest. Greece, Spain, and Portugal are freezing or cutting salaries of public employees. Italy is set to announce the same, as well as more drastic measures.

And in the U.S., it's voters who are scaring politicians into action -- "tea party" followers and others. The White House has proposed a constitutional version of the line-item veto and lawmakers are attacking earmarks -- even as Congress considers a stimulus push.

Some of these efforts can be classified as eyewash, temporary or shallow attempts to cut government spending. But they indicate a momentum toward fiscal responsibility. Some countries are even daring to start in on the hard stuff, or at least, prepare the way for it.

In Europe, that means restructuring unaffordable pension systems for an aging population and freeing up the rigid labour market by making it easier to hire and fire. Several countries are taking steps toward the former. On paper, at least, Greece plans to raise its retirement age, and France is also focusing on raising it. Germany recently did so.

In the U.S., Social Security still needs fixing, but the far bigger debt worry is government health care. America's short-term deficit prospects are actually improving.

"We're now in rescue mode," Carl Bildt, Sweden's foreign minister, told the New York Times. "But we need to transition to the reform mode very soon."

Hmmm, has he been listening to the markets, and perhaps to Emanuel?

www.thespec.com/Opinions/article/776566

[sandi66]

Amnesty: Big Nations Soft On Rights Abuses

10:12am UK, Thursday May 27, 2010

Sarah Gordon, Sky News Online

The world's most powerful countries protect their smaller allies from criticism over human rights abuses, according to a d**ning report by Amnesty International.

The campaigning organisation also says influential nations often only enforce the law when it is politically convenient.

In its annual report on the state of the world's human rights, London-based Amnesty points the finger at nations including the US, Russia, China and Iran.

The report says citizens have been exposed to torture or ill-treatment in at least 111 countries, unfair trials in at least 55, with restrictions on free speech affecting 96 nations and prisoners of conscience imprisoned in at least 48.

Iran was highlighted as a country where repression was on the rise while global superpower China was criticised for increasing pressure on challenges to its authority.

Amnesty also warned that both armed groups and government forces around the world are showing callous disregard for civilians, with women and girls in particular suffering in conflicts.


We're stressing that 'justice gaps' - where people are cut off from accessing justice - need to be closed all around the world, and it's only right that the UK delivers on law and order at home and abroad.

Tim Hancock, UK campaigns director, Amnesty International

In Mexico, Guatemala, El Salvador, Honduras and Jamaica there are increased reports of rape, sexual abuse, murder and mutilation after rape while Europe and Central Asia have seen a sharp rise in xenophobia and intolerance.

In Africa, mass forced evictions of people from their homes in countries such as Angola, Ghana, Kenya and Nigeria are blamed for driving the population deeper into poverty.

The organisation called on G20 states to lead the way by signing up to the International Criminal Court.

Amnesty said it hoped Britain's new political era could be an opportunity to crack down on human rights abuses.

Tim Hancock, the group's UK campaigns director, said: "Both parties in the new government have criticised the previous government on human rights grounds and it's vital that they live up to their fine words now they're in office.

"We're stressing that 'justice gaps' - where people are cut off from accessing justice - need to be closed all around the world, and it's only right that the UK delivers on law and order at home and abroad.

"While dozens of countries in the world have very poor human rights records, the plain truth is that ours has been nothing to write home about either."

news.sky.com/skynews/Home/World-News/Amnesty-International-Accuses-The-US-China-And-Russia-Of-Standing-Above-Human-Rights-Laws/Article/201005415639184?lpos=World_News_First_Home_Article_Teaser_Region_1&lid=ARTICLE_15639184_Amnesty_International_Accuses_The_US%2C_China_And_Russia_Of_Standing_Above_Human_Rights_Laws

[sandi66]

G20 progress on financial regulation

Thu May 27, 2010 5:15am EDT

(Reuters) - Finance ministers from the G20 group of industrial and emerging countries meet in Busan, Korea, on June 4-5 to review pledges made in 2009 to strengthen regulation and learn lessons from the financial crisis.

The focus is on the European Union and United States, where much of the financial crisis has played out.

The United States aims to sign into law in July a sweeping piece of legislation that implements most of the G20 pledges.

The EU is implementing the G20 pledges in a string of individual laws on credit rating agencies, hedge funds, bank capital and supervision.

Following is the state-of-play on the main regulatory pledges, many of which are not due to take effect until the end of 2012.

www.reuters.com/article/idUSTRE64Q1U620100527

[sandi66]

Rising tensions over sinking of South Korean warship put China in an uncomfortable bind

CHRISTOPHER BODEEN, THE ASSOCIATED PRESS
May 26, 2010 4:01 p.m.

BEIJING, China - Rising tensions over North Korea's alleged sinking of a South Korean warship are providing an unwelcome reality check for Pyongyang's chief ally, China.

Only months ago, Beijing was reaping kudos for sponsoring six-nation talks on dismantling North Korea's nuclear programs. These days, it's looking increasingly isolated for failing to back U.S. and South Korean calls to get tough on Pyongyang in the face of what investigators say is overwhelming evidence the ship was struck by a North Korean torpedo.

The ship sinking and rising tensions put Beijing in an uncomfortable position, forcing it to choose between traditional communist ally North Korea and close trading partner South Korea. Beyond that, the situation is squeezing China between playing the responsible power it says it wants to be, and protecting a loyal buffer state reviled by the world.

For Beijing, none of the options look good.

"China won't pressure North Korea. That could lead to a crisis," said Gong Keyu, deputy director of the Asia-Pacific Research Center at Shanghai's Institute for International Studies. "But if China keeps doing nothing, some countries may come to doubt our influence in the region and question whether Beijing is a responsible international player."

Senior U.S. officials speaking after strategic talks this week in Beijing predicted that China will gradually endorse the view that North Korea should be held accountable for the March 26 torpedo attack. They spoke on condition of anonymity because of the sensitive nature of the discussions.

For now, however, Beijing appears to be buying time in hopes of an outcome that won't require it to take a clear-cut stance that could cripple relations with either Korea, with whom Beijing works to maintain a balance in ties.

On Wednesday, a vice foreign minister said the cause of the March 26 sinking in which 46 South Korean sailors died had yet to be determined, and called for dialogue in place of growing confrontation.

Beijing regards the destruction of the corvette Cheonan as "extremely complicated" and is "carefully and prudently studying and examining the information from all sides," Zhang Zhijun told reporters.

Chinese officials have been no more forthcoming in private, telling diplomats that the result of the international investigation blaming North Korea that was announced last week was inconclusive, according to people with knowledge of the discussions. They say Beijing has also faulted Seoul for rejecting North Korea's demand that it be allowed to send its own investigators to the South.

Yet the pressure on Beijing seems likely to only grow. On Friday, Premier Wen Jiaobao travels to South Korea for a three-way summit with his Japanese and South Korean counterparts, and the incident is expected to feature prominently.

Meanwhile, South Korea's plan to bring the issue before the U.N. Security Council would force Beijing into a hard decision on whether to use its veto power to quash the discussion. Doing so might preserve relations with Pyongyang but could be disastrous for Beijing's hopes of being seen as a rising, responsible regional and world power.

"They're in a quandary," said Yoon Deok-min, a professor at South Korea's Institute of Foreign Affairs and National Security.

"Protecting Pyongyang — this is an extremely difficult stance for Beijing to take. Internationally, this will translate into China defending what's been clearly declared as a provocation," Yoon said.

Beijing's apparent tolerance of North Korean provocations is predicated on its overweening aversion to any steps that could seriously destabilize the regime in Pyongyang and bring chaos and refugees to its northeastern border.

Even state-sponsored academics in Beijing say that fear of a North Korean collapse — and the loss of an important buffer between China and U.S. troops based in South Korea — serves as cover for Pyongyang to act out.

"Some say China has almost been hijacked by North Korea," Gong said. "The little brother is always hiding behind China's back and every time he makes trouble, China gets pushed out there to deal with it."

The uniqueness and sensitivity of the Beijing-Pyongyang relationship was displayed during a rare visit to China by the eccentric and reclusive North Korean dictator Kim Jong Il, just weeks after the Cheonan's sinking. Beijing closed highways to cater to his aversion to air travel and played along with increasing farcical attempts to keep his presence in the country a secret.

During the visit, Kim is believed to have secured crucial Chinese investment and economic assistance to prop up his impoverished communist state, already suffering from earlier U.N. sanctions and a cutoff of South Korean aid. That economic lifeline will be all the more vital following South Korea's decision Monday to sever many economic links with the North.

Yet despite its status as chief ally, Chinese officials and academics say Beijing has only limited influence with the hard-line communist regime. Past attempts to sweet talk Kim into reforming his dysfunctional command economy have yielded little, and repeated efforts to persuade him to return to the stalled nuclear talks have won only vague affirmations of the process.

Renewed negotiations look even more unlikely now, with South Korea saying a satisfactory resolution of the Cheonan issue must come first. That deprives Beijing of what had been a signature issue showcasing its avowed role as a responsible regional power able to bring the feuding sides together.

Given the bind it's in, Beijing would ultimately like to see the Cheonan crisis resolved through talks between the two Koreas, leaving China and the United Nations out of it, Gong and other analysts said.

Should the situation on the peninsula deteriorate, however, Chinese inaction could carry a high diplomatic price, said Steven Kim, a Korea expert at the Asia-Pacific Center for Security Studies in Hawaii.

"I think there will be increasing international scrutiny and criticism of China and this will have negative impact on China's reputation as a responsible stakeholder and as a honest broker," Kim said in an email.

www.metronews.ca/halifax/world/article/535435--rising-tensions-over-sinking-of-south-korean-warship-put-china-in-an-uncomfortable-bind--page1

[sandi66]

Hong Kong Stock Exchange New Listing Rules to Benefit Canadian Resources Sector
HONG KONG, May 27 /CNW/ - New Hong Kong Stock Exchange listing rules for mineral and petroleum companies that come into force next week will provide an attractive option for Canadian companies wanting to tap into Asian capital and especially the Chinese unrelenting appetite for minerals.

According to the Hong Kong-based lawyer who advised on the new rules, Minter Ellison's Fred Kinmonth, the HKSE's strategic location at the cross-roads of investors from Mainland China, Europe, the UK and the US has always been a key selling point for listing in Hong Kong. What was missing were rules for listing mineral and petroleum companies that meet international standards.

"From next week, companies will have clear and comprehensive rules to guide their listing process," he said. "Importantly, mineral and petroleum companies, and their advisers in particular, will easily understand the new rules because they have been drafted with the listing rules of resource-rich countries like Canada and Australia in mind.

"And because eligible companies will be able to apply for either a primary or a secondary listing, we are likely to see increased interest from companies who are already listed on home stock exchange like the TMX or VSE but who want the added option of an Asian presence," Mr Kinmonth noted.

The new rules ensure that investors have access to material, relevant and reliable information that meets globally recognised standards - they set out disclosure obligations, standards for reporting resources and reserves and for valuing mineral and petroleum assets, and the qualifications and experience of technical experts.

In recent years, more overseas companies have shown interest in listing on the HKSE, attracted by Hong Kong's deep capital pool, financial expertise, strategic location, English common law regulatory infrastructure, and the HKSE's strong fund raising capability. The HKSE has also expanded its approved list of acceptable jurisdictions for listing applicants, and Canada (British Columbia and Ontario) as well as Australia are now included.

To establish eligibility for initial listing under the new Chapter 18 rules, a company's main activity must be the exploration for and/or extraction of natural resources (including minerals and petroleum) and this must represent 25% or more of the total assets, revenue or operating expenses of the company and its subsidiaries.

The company must also have a portfolio of resources identifiable under the applicable international reporting standard, the JORC Code, NI 43-101 or the SAMREC Code (Minerals) or PRMS (Petroleum). Companies that have only inferred or prospective resources will not qualify.

The HKSE currently ranks 7th in the world in terms of market capitalisation (US$2.3 trillion) - this compares to the LSE at US$2.8 trillion and the ASX at US$1.2 trillion. In 2009, the HKSE led the world in IPO funds raised (US$32 billion) and was ranked 4th in relation to total funds raised (behind NYSE Euronext, LSE and ASX). Its spread of international investors includes 36% US, 23% UK, 16% Asia, and 11% Europe.

"Given the capital intensive nature of mining, Australian mineral and petroleum companies seeking capital to grow are increasingly looking to the HKSE and the HKSE now has a solid set of rules to encourage that interest," Mr Kinmonth said.

An overview of the new rules can be found here: www.minterellison.com/public/connect/Internet/Home/About+Us/NA-Hong+K ong+Stock+Exchange+new+listing+rules


About Minter Ellison


Minter Ellison is a leading international law firm with more than 280 partners and 900 legal personnel in offices in Hong Kong, The People's Republic of China, Indonesia (through an associated firm), Australia, New Zealand and the UK. The firm's specialist resources & energy and corporate lawyers support local and multinational companies clients throughout Asia and have been independently recognized among the region's pre-eminent lawyers.


www.minterellison.com



For further information: Sarah Henwood, Director, Business Development, International Offices, Tel: [phone]; Fred Kinmonth, Chairman, Minter Ellison, Asia, Tel: [phone]

www.newswire.ca/en/releases/archive/May2010/27/c7183.html


ty allrich

[sandi66]

Worker: Transocean, BP argued before blast - Rig's top mechanic corroborates other statement of BP 'taking shortcuts'

updated 7:23 p.m. ET, Wed., May 26, 2010
HOUSTON - Before rig workers aboard the doomed Deepwater Horizion drilling platform performed a procedure that BP says may have been a "fundamental mistake," there was a "skirmish" between BP and Transocean staff about whether to proceed, the rig's chief mechanic told federal investigators on Wednesday.

The testimony corroborated other witness statements obtained by The Associated Press that show Transocean managers complained BP was "taking shortcuts" the day of the explosion by replacing heavy drilling fluid with saltwater in the well that blew out.

The accounts could give Transocean more ammunition in its verbal battle with BP to assign blame for the disaster, which caused what is likely the biggest oil spill in U.S. history.

Speaking to a federal board of investigators in Kenner, Louisiana, mechanic Douglas Brown said that around noon on April 20, the day of the explosion, rig workers met in a room adjacent to the rig's galley and "there was a slight argument that took place and a difference of opinions."

Brown said "a skirmish" took place between "the company man" from BP — whose name he said he did not know — and three Transocean employees.

"The company man was basically saying, 'Well this is how it's going to be,'" and Transocean rig workers "reluctantly agreed," Brown said.

Brown said the top Transocean official on the rig grumbled, "Well, I guess that's what we have those pinchers for" — which he took to be a reference to devices on the blowout preventer, the five-story piece of equipment that can slam a well shut in an emergency.

The argument concerned "displacing the riser," Brown said, a reference to a decision made by rig personnel to remove heavy drilling mud from the drill pipe and replace it with sea water, in an attempt to wrap up drilling operations and plug the well with cement until it was ready for production.

Drilling mud is a mixture of synthetic ingredients that is pumped into the well to exert downward pressure and prevent a column of oil and gas from rushing up the pipe.

The switch presumably would have allowed the company to remove the fluid and use it for another project, but the seawater would have provided less weight to counteract the surging pressure from the ocean depths.

Because water is lighter and less dense than mud, the procedure allowed a flood of flammable methane gas to surge up the drill pipe, which ignited and led to a catastrophic fire, according to documents from the House Energy and Commerce Committee.

Conflicting pressure tests
Congressional investigators say BP and Transocean made a decision late on April 20 to begin removing mud from within the drill pipe despite pressure tests from within the well that a BP official described as "not satisfactory" and "inconclusive."

Earlier in the day, well pressure tests showed an imbalance between the drill pipe choke and kill lines running from the drill deck to the blowout preventer. The pressure in the drill pipe was 1,400 pounds per square inch, while the choke and kill lines read zero PSI, according to BP documents gathered by the House Energy and Commerce Committee.

In BP's internal investigation, made public by the committee, BP said it might have been a "fundamental mistake" to continue with the procedure because there was an "indication of a very large abnormality."

The statements obtained by The Associated Press include those by Truitt Crawford, a Transocean worker who told Coast Guard investigators about similar complaints.

"I overheard upper management talking saying that BP was taking shortcuts by displacing the well with saltwater instead of mud without sealing the well with cement plugs, this is why it blew out," Crawford said in his statement.

BP declined to comment.

The statements also show that workers talked just minutes before the blowout about pressure problems in the well. At first, nobody seemed too worried: The chief mate for Transocean left two crew members to deal with the issue on their own.

What began as a routine pressure problem, however, suddenly turned to panic. The workers called bosses to report a situation, with assistant driller Stephen Curtis telling one senior operator that the well was "coming in." Someone told well site leader Donald Vidrine that they were "getting mud back." The drilling supervisor, Jason Anderson, tried to shut down the well.

It didn't work. Both Curtis and Anderson died in the explosion.

'Complete mayhem, chaos'
Brown said that as methane surged up the drill pipe and enveloped the rig, a loud hiss of gas escaped from the well, which set off a stream of alarms.

"Gas alarms just kept piling up on top of each other more and more and more," Brown said. The rig was hit by a power blackout, and the explosion came soon after, he said.

"The first explosion basically threw me up against the control panel that I was standing in front of," Brown said.

As Brown raced to reach the rig's lifeboats, "it was just complete mayhem, chaos, people were scared, they were crying," Brown said.

The rig worker taking a muster of workers boarding the lifeboat, a man that Brown said he had known for nine years, did not recognize him. "This is a man that has known me for nine years and he cannot even remember my name," Brown said.

"It was just completely chaotic and nobody was really paying attention in my opinion," Brown said. "They were more concerned about just getting off the rig — escaping."

www.msnbc.msn.com/id/37363106/ns/gulf_oil_spill



ty joye

[sandi66]

China prices could follow int'l oil lower Source: Global Times

[07:50 May 28 2010]

By Li Woke

The international price of crude oil slightly rebounded to $71.74 a barrel Wednesday after plunging below $70.40 a barrel this week, which could bring on oil price adjustments in China.

Crude oil jumped 0.32 percent Wednesday and futures fell as much as 1.2 percent in New York. In London, the Brent crude index fell $0.16 to settle at $71.68 on the ICE futures exchange.
The slide resulted from the European debt crisis, high US inventories of crude and concerns over the global economic recovery.

"The US economy is looking good but still we have to watch carefully the situation in Europe," Ken Hasegawa, a sales manager at broker Newedge, was quoted as saying by Bloomberg. "It's possible for crude oil prices to go down again below $70."

Oil prices have dropped about 20 percent since hitting an 18-month high of $87.15 on May 3.

Analysts expect domestic oil prices to decrease soon. "Anything could happen in the short-term," said Liu Gu, an analyst with Guotai Junan Securities.

"If the international crude oil price would stabilize around $70 per barrel, it would be a very good thing for China."

"The aviation and transportation industries would benefit from the possible oil price fall," said petrol analyst Zhong Jian in Shanghai. "Auto sales should be stimulated by the oil price adjustment."

China raised retail gasoline and diesel prices by 4-4.5 percent last month, while the price of retail oil has remained unchanged since November last year.

The country adjusted domestic oil prices eight times last year, including five hikes and three cuts. "A domestic oil price drop could reduce enterprises' costs and ease China's growing inflationary pressures and international calls for revaluation of the renminbi," Liu said.

In April, China's consumer prices rose 2.8 percent from a year earlier, the National Bureau of Statistics (NBS) said. Food prices jumped 5.9 percent, up from March's 5.2 percent growth rate.
Prices of some agricultural products - such as garlic and mung beans - are surging in China, while corn and cotton prices are also growing.

China has maintained the yuan at a rate of about 6.83 per dollar for nearly two years. The US and the European Union are urging revaluation of the yuan.

"China will reform its exchange rate regime, but at its own pace," Chinese President Hu Jintao said Monday at the US-China Strategic and Economic Dialogue.

business.globaltimes.cn/china-economy/2010-05/536187.html

[sandi66]

USDollar will be the next global leaders emerging

Thursday, 27 May 2010

NORTHERN EURO CURRENCY

Word has come to the Jackass desk from the War Room itself, where important decisions were made in a series of meetings inside Germany . The new Northern Euro currency is finally in its formative stage. Contracts have been forged. Relationships with the more independent Central European central banks have been arranged. Market mechanisms with the commodity markets have been delegated to Finland . A role for Russia is being planned, source of many commodities. The timing of the new Northern Euro is planned for June 2011, with perhaps little if any formal news releases. The key element of the new Northern Euro will be its gold component. Permit a Jackass conjecture of a 1% or 2% cover clause, meaning $100 million in Northern Euros could be redeemed for assets that contain $1 or $2 million. The new currency will be born in crisis. It will be begged for. One must wonder if Saudi crude oil will eventually require payment in Northern Euros. Maybe it will contain not only a gold component but a crude oil component.



For over a year, my openly stated belief has been that the first nations to create a monetary and banking system with clear distance set from the USDollar will be the next global leaders emerging. It will be Germany and its cohorts that include the Benelux nations and Austria . In debate is the future role of France , which might be assigned squire duty for the Germans who hold 94% of their sovereign debt. The antics of Sarkozy are as annoying as a mosquito roaming near the face during bedtime hours. By the way, the Northern Euro as planned is a USDollar Killer, since the present day world reserve currency will fall rapidly in valuation, finding its true worthless value, in reflection with its hemorrhage of USGovt deficits and debt ratios that put it in the same PIGS manure pen as the Southern Europe nations heaving in convulsion.

news.goldseek.com/GoldenJackass/1274940780.php



ty nalmann