Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Tues 08.26.20
Merrill, Wachovia Hit With Record Refinancing Bill Merrill Lynch & Co., Wachovia Corp., Lehman Brothers Holdings Inc. and the rest of the U.S. finance industry are about to find out how expensive credit has become. Banks, securities firms and lenders have a record $871 billion of bonds maturing through 2009, according to JPMorgan Chase & Co., just as yields are at their most punitive compared with Treasuries. The increase in yields may cost them as much as $23 billion more in annual interest versus a year ago based on Merrill Lynch index data. Higher refinancing expenses will restrict the ability of banks to borrow in the capital markets and lend, further cutting off credit to consumers and businesses and curbing what is already the slowest growing economy since 2001. Standard & Poor's said last week that it had a "negative'' outlook on almost half of the 50 highest-rated financial institutions in the U.S. as of June 30, the highest proportion in 15 years. After Merrill's Sale of Bad Debt, Few Have Followed Despite Interest in Unloading Subprime Assets, Firms Are Reluctant to Take Large Losses Merrill Lynch sent an important message last month to its Wall Street brethren when it sold off a massive portfolio of securities badly damaged by the subprime mortgage meltdown: Someone was still willing to buy them. Shareholders and regulators who had been urging banks and investment firms to rid themselves of problem assets welcomed the development. But a mass exorcism of the securities -- which remain a burden for Wall Street as it tries to scrape its way out of the credit crisis -- never materialized. That's because by agreeing to sell at 22 cents on the dollar, Merrill sent another powerful message: Purging the mortgage-related securities would require pricing them at a fraction of their face value. The sale left Merrill's peers wondering whether they should take a similar loss on the securities or hold on to them and risk an even further drop in value. The dilemma is one of several that Wall Street firms face as they try to unfreeze markets and repair balance sheets devastated by the credit crisis. Treasury Secretary Henry M. Paulson Jr., eager to restore investor confidence in the system, has been urging Wall Street executives to clean up the mess quickly and raise more money. U.S. Mint resumes gold coin orders on limited basis The U.S. Mint said it must allocate the American Eagle bullion coins among dealers to cope with overwhelming demand as it resumed taking orders for the popular coins on Monday. "The unprecedented demand for American Eagle gold one-ounce bullion coins necessitates our allocating these coins among the authorized purchasers on a weekly basis until we are able to meet demand," the U.S. Mint told its authorized American Eagle dealers in a memo dated August 22. Last week, soaring demand forced the U.S. Mint to suspend temporarily sales of the American Eagles, creating a shortage in the one-ounce version of the coins, which are also available in other weights and denominations.
THE GOLD PRICE-FIXING CONSPIRACY For many years now, a number of people in the financial arena have been alleging that there is an active conspiracy to suppress the price of gold. Some see it as a sinister backroom affair. Others claim that it’s just the way the world works, and that it happens right out in the open, if only you know where to look. Among the latter is the Gold Anti-Trust Action Committee (GATA), the source of much of the material that has been written on the subject in recent years. In order to get their take, we sent our own Doug Hornig to interview Chris Powell, co-founder and secretary/treasurer of GATA.
2nd-Quarter U.S. Home-Price Index Fell 0.5% Home prices in the U.S. fell at a slower pace in the second quarter, signaling the worst housing slump in more than 25 years may be starting to stabilize, a private survey showed today. Home values declined 0.5 percent in the three months through June from the previous three months, compared with a 0.9 percent drop in the first quarter. Compared with a year earlier, values dropped 15.4 percent, the most since record keeping started 20 years ago. The housing slump, currently in its third year, is declining at a slower pace as the drop in property values has made homes more affordable. Even so, prices probably will continue to fall for the rest of the year as sellers try to unload properties that have sat on the market for a record number of months.
The Freddie-Fannie Deathwatch "We need housing to stop hurting us," Jim Cramer told viewers of his "Mad Money" TV show Monday. He said that until the crisis that has enveloped Freddie Mac and Fannie Mae is finally resolved, the markets will continue to decline. Cramer said that sometimes the market just lies as it did today when Freddie and Fannie shares were up while the rest of the financial service stocks fell. While it's wrong to take all stocks lower because of problems of a select few, that's exactly what will continue to happen until the U.S. Treasury steps in and takes action. He called Fannie and Freddie the root of all market evil. In order for the market to finally bottom, said Cramer, housing has to stabilize. That requires lower interests rates, lower home inventory and higher home sales, things that cannot happen with speculation still swirling on the fate of Fannie and Freddie.
Fannie and Freddie woes spread The problems plaguing mortgage finance giants Fannie Mae and Freddie Mac could cause another big financial drain on banks. Shares of Fannie and Freddie have plunged in recent weeks due to fears that the two companies may need to turn to the Treasury Department to raise more capital. Some even speculate that Fannie and Freddie may wind up being nationalized, which would cause the stocks to lose most, if not all, of their value.
U.S. view of economy is getting worse Americans' opinions on the health of the economy have worsened significantly over the last year, according to the results of a CNN poll released Monday. Seventy-five percent of participants in a national CNN/Opinion Research Corp. poll believe the U.S. economy is in bad shape, compared to just 43% of respondents who shared that view a year ago. In a poll conducted Aug. 23-24, 43% of those surveyed rated the current economic conditions as "very poor," while 32% rated it as "somewhat poor." Only 21% rated the economy as "somewhat good" and a mere 4% said it was "very good." The findings are based on 497 interviews and have a margin of error of plus or minus 4.5 percentage points.
LIBOR Indicates Credit Crisis Deepening as 2008 Draws to a Close The rate at which banks lend to each other hit its highest level in two months last week, and may soon approach record levels established last year – an indication that the credit crisis is far from over. The three-month dollar London interbank offered rate (LIBOR) last week reached 2.81% — a level not seen since June. The LIBOR is fixed on a daily basis by the British Bankers’ Association, which averages the daily borrowing rates of 16 different banks. At 2.81% Libor was 81 basis points higher than the benchmark Federal Funds rate. The spread between the two key rates was just 24 basis points in January, but could be as high as 85 basis points by December, according to futures trading. The average spread between the two rates was just 12 basis points before the onset of the credit squeeze last year.
Regulators Step Up Bank Actions $$ 'Memorandums of Understanding' Surge As U.S. Races to Head Off More Failures Federal regulators have increased the number of struggling banks they have effectively put on probation, forcing them to fix their problems and try to avoid potentially costly failures. The Federal Reserve and the Office of the Comptroller of the Currency, two of the nation's primary bank regulators, have issued more of these so-called memorandums of understanding so far this year than they did for all of 2007, according to data obtained from regulatory agencies under Freedom of Information Act requests. These secret agreements can force banks to take steps including raising capital, cutting back on risky loans and suspending dividend payments.
Failed Bank List (bookmark this site) The FDIC is often appointed as receiver for failed banks. This page contains useful information for the customers and vendors of these banks. This includes information on the acquiring bank (if applicable), how your accounts and loans are affected, and how vendors can file claims against the receivership. This list includes banks which have failed since October 1, 2000.
Bankers Face a Grim Fall $$ Worsening Outlook Suggests It's Time For Consolidation Labor Day typically marks the end of a late-summer lull on Wall Street. This year, investment bankers are beginning to worry that they will return from the Hamptons to find they have even more time to spend with their families. Senior bankers warn that after a tough first half, the outlook has deteriorated further. Does the grim forecast mean that the long-rumored consolidation in investment banking will finally occur? It should. The damage caused by mortgage-backed securities remains the focus for investors. The investment banks might have taken most of the balance-sheet hits from their subprime problems, but other areas, in particular commercial real estate and higher-grade residential mortgages, have begun to show cracks. Continued credit-market weakness is likely to force further write-downs in the third quarter.
Existing-homes sales rise, inventory swells Sales of previously owned U.S. homes ticked higher in July thanks to lower prices, but record inventory suggested the battered housing market is unlikely to recover soon, a trade group report showed on Monday. Home resales rose 3.1 percent to a 5 million-unit annual rate, according to the National Association of Realtors. While that topped analysts' expectations of a pace of 4.90 million, the overall picture was mixed. The median national home price declined 7.1 percent from a year ago to $212,400 and the inventory of homes for sale rose to 4.67 million which would take 11.2 months to clear at the current sales pace. That matched a record set in April. The data points to a generally weak but stable market since the volume of sales has hovered around 5 million for 10 months despite gyrations in price and inventory, said Michael Englund, chief economist with Action Economics in Boulder, Colorado.
Fannie-Freddie crisis spreads The crisis gripping Fannie Mae and Freddie Mac spread across the financial system on Monday as JPMorgan Chase warned of a possible $600m (£323m) loss from its holdings of preferred shares in the two mortgage financing groups. JPMorgan said it would write down the value of its $1.2bn of preferred shares in Fannie and Freddie by half.
Wall St. Rattled by Bank News; Stocks Sell Off Shares that went up on Friday plummeted on Monday. The markets dropped after a flurry of disappointing news about several major financial institutions. The Dow Jones industrial average closed down 241.81 points, or 2.08 percent, to 11,386.25, and the broader Standard & Poor’s 500-stock index declined 25.36 points, or 1.96 percent, to 1,266.84. The Nasdaq was down 2.03 percent, or 49.12 points, to 2,365.59. Monday’s sharp decline followed a jump of 197.85 points for the Dow on Friday. Concerns about major banks and insurance companies again weighed on the markets. The American International Group, the world’s biggest insurance company, fell 5 percent to a 13-year low after the Credit Suisse Group predicted that the insurer would face major losses this quarter because of mortgage-related write-downs.
Lehman Loses Confidence Lehman Brothers entered the weekend with a note of optimism, only to come out of it down all over again. A key South Korean official threw a very wet blanket over the prospect of Korea Development Bank picking up the beleaguered brokerage house. And, for good measure, CEO Richard Fuld may be out by the end of the year. Shares of Lehman Brothers deflated Monday after a top South Korean regulator, Jun Kwang Woo, expressed concern about state-run Korea Development Bank's interest in buying the global bank, going so far as to call such an acquisition "improper." His opinion matters, too: As the chairman of the government's Financial Services Commission, Kwang Woo is in charge of monitoring all the financial institutions in Korea--both state- and privately-owned.
JPMorgan takes $600 million hit on Fannie, Freddie PMorgan Chase & Co said the market value of its investments in Fannie Mae and Freddie Mac preferred stock has dropped by half to $600 million this quarter. In a filing with regulators on Monday, the bank said the decline could affect its earnings. The precise amount of losses for the third quarter is difficult to determine, given the oscillations in the preferred shares' values, it said. Fannie Mae and Freddie Mac have seen their share values plummet amid the credit market crisis, which has triggered questions about whether they have enough capital.
FOMC Minutes Could Reveal Debate Within Fed Economists say Tuesday's release of the FOMC minutes for the Aug. 5 meeting will be largely muted following the more recent commentary by Fed Chairman Ben Bernanke at Jackson Hole, Wyoming, over the weekend. However, the report could highlight the range of opinions within the Fed. David Sloan, senior economist at 4cast, said the minutes should offer a fairly up-to-date guide as to how the Fed is thinking, given that not a lot has happened in terms of economic data since the meeting. Expecting the minutes to reveal that the Fed will remain "reasonably dovish" for the time being, he said markets should be encouraged by the report. Communities Become Home Buyers to Fight Decay As a wave of home foreclosures courses through the United States, some of the nation’s hardest hit cities think they have found a way to ease the blight left on their communities by the crisis. Using taxpayer and private money, Boston, Minneapolis, San Diego and a handful of other places are buying foreclosed properties to refurbish and resell them to developers and homeowners in an effort to prevent troubled neighborhoods from sliding into urban decay. The efforts so far have been taken on a small scale. But local officials say they can become an important pillar of any housing recovery with the help of $4 billion in federal grants that were part of a housing bill Congress approved in July.
Freddie debt sale eases concerns of nationalization Ailing mortgage finance company Freddie Mac easily sold $2 billion of short-term debt on Monday, reassuring investors that it and rival Fannie Mae can fund operations without a government takeover. Fannie Mae shares rose 9 percent, and Freddie Mac stock gained more than 22 percent in early afternoon trading in New York. Broader markets tumbled. An analyst said the government-sponsored enterprises (GSEs), which own or guarantee nearly half of the mortgages in the United States, were unlikely to be nationalized, which also soothed market jitters. Investors have been dumping their stock and have pushed the shares down more than 90 percent since March on fears the housing slump will leave the two insolvent without emergency support from the government. Freddie Mac on Monday sold $1 billion each in three- and six-month bills, with a measure of bids stronger than its sale earlier this month. Freddie Mac and Fannie Mae must routinely issue debt to refinance maturing issues that fund their combined $1.5 trillion in mortgage investments.
U.S. Existing Home Sales Don't Signal Market Normalization Economists say the larger-than-expected rise in July U.S. existing home sales doesn't necessarily point towards stabilization, since more than a third of the sales are related to foreclosures. They also note that a record high inventory level will put downward pressure on prices going forward. The annualized pace of sales in the National Association of Realtors index rose 3.1% to 5.00 million units in July, following June's revised sales pace of 4.85 million. Since July 2007, existing home sales have declined by 13.2%. Ian Shepherdson, chief U.S. economist at HFE, said it's "hard to avoid the conclusion that sales have bottomed out," but he said it's likely that sales have increased from homes in foreclosure rather than a pickup in the regular sales market. "Any real improvement is still a long way off," he added.
U.S. Auto Sales to Decline in August U.S. auto makers are expected to report big declines in August domestic sales despite stepped-up incentives, the Wall Street Journal said citing a report by J.D. Power & Associates. Industry-wide sales, however, will improve slightly from July, it said. The research firm expects sales in the closing days of the month to improve, helped by General Motors Corp's 100th anniversary sales event, which offers "employee pricing" on most vehicles and cash rebates on selected light trucks.
Automakers Seek $25B in Fed Loans to Ride Downturn The Big 3 Detroit-based automakers are seeking about $25 billion in federal loans as they struggle to ride out a steep downturn in U.S. auto sales, The Wall Street Journal reported on Friday. Lobbyists for the U.S. automakers — General Motors Corp, Ford Motor Co, and Chrysler LLC — briefed White House officials, as well as U.S. Rep. John Dingell and other Michigan Democrats, on a possible bailout and plan to unveil the proposal after Labor Day, according to the report. The plan is for the government to lend some $25 billion to the automakers in the first year at an interest rate of 4.5 percent, or about one-third what the companies are currently paying to borrow, the report said. Under the proposal, the government would have the option of deferring any payment at all for up to five years, the article said.
GM receives Gulf Arab interest in Hummer buy General Motors Corp has received interest from two separate investors from the Gulf Arab region to buy its Hummer brand, the company's Middle East chief told Reuters on Tuesday. "For sure, there has been interest from various parties within the Gulf ... there is a precedent in the cases of Aston Martin, Ferrari or Daimler and those kinds of solutions could be very realistic solutions," General Motors Middle East Managing Director Terry Johnson said in an interview. General Motors is readying sales documents for its Hummer brand and has initial expressions of interest from potential buyers that it hopes to develop into formal sale talks, the automaker's chief executive said on Aug 21.
Rio Tinto posts record first-half profit Rio Tinto, the global mining company, posted record first-half profit Tuesday, lifted by booming Asian demand for iron ore and the acquisition last year of Alcan. The company, which is fighting a $150 billion hostile takeover bid by BHP Billiton, said net income had more than doubled in the January-June period to $6.9 billion, from $3.3 billion a year earlier, as revenue rose to $27.2 billion from $12.1 billion. It also raised its interim dividend by 31 percent to 68 cents, and said it was committed to increase its total 2008 and 2009 dividends by at least 20 percent in each year
Will economy's path be shaped like a U, V, W or L? Wall Street, meet Sesame Street. Bulls, bears and Nobel laureates are talking a lot about letters as they try to predict the shape of the charts that will describe the economy's downturn and recovery. Will this roller coaster follow the path of a "U" - a stretched-out slump with a sharp upturn? Or will it be shaped like a "V," with a vertiginous descent followed by a quick recovery? Will we wrestle with a "W"-shaped double dip, or labor through an "L" of long-term languishing? Global Insight Inc.'s May presentation "U.S. Recession and Recovery: U-, V-, or W-shaped?" answered with a "W," saying a second dip would come as spending from stimulus checks dries up. "There's been debate about whether it's V-shaped or U-shaped," Nobel-winning economist Joseph Stiglitz said recently on CNBC. "I think there's growing consensus it's an L-shape." By focusing on letters, Wall Street is "trying to make a desperate situation look sort of technical - 'It's not that much of a fuss, the big boys can take care of it, don't you worry,'" said Wall Street historian Charles Geisst. "Except the big boys here, their trousers are getting a little short, I'm afraid." So far, the downward ride has included record bank writedowns and home foreclosures, the wipeout of $1.9 trillion in shareholder wealth and a spike in unemployment.
Tough economic times hurt post office The U.S. Postal Service could lose about $2 billion this year due to tough economic times, and it needs to change to meet the demands of the public, Postmaster General John Potter said Monday. Potter told the National Association of Postmasters of the United States at their convention in St. Louis that the postal service is grappling with issues that many businesses are facing - like how to handle high fuel prices. "We simply cannot control it," he said. But, he pointed to the postal service's large fleet of alternative-fuel vehicles as a positive step. Potter praised postmasters and postal workers for their commitment to service and reliability, but said more needs to be done to reduce bureaucracy, cut costs and embrace technology. "We're probably going to lose somewhere in the neighborhood of $2 billion this year," he said. "If we don't act, we'll lose $2 billion or more the following year."
Something Rotten In Denmark The ancient Viking city of Roskilde is renowned for its picturesque views, music festivals and a cathedral where a handful of Danish kings and queens are buried. But now there's a small footnote to add to the tourist books: it is the site of Denmark's second bank failure. The Danish central bank and several private lenders announced Monday that they were taking over Roskilde Bank and effectively nationalizing it. Now some 33,000 individual investors in Denmark have lost their money. (The bank's institutional investors already bailed a long time ago.) The Danish central bank governor said overnight that shareholders had lost 1.0 billion kroner ($198.2 million), and hybrid loan holders had lost 2.5 billion kroner ($495.9 million).
Iran says it has started building submarines Iranian state TV said the country had begun production of a domestically built submarine capable of firing missiles and torpedoes. The defense minister, General Mostafa Mohammad Najjar inaugurated a production line Monday for the mid-sized submarine, named Ghaem. The television station quoted him as saying that Iran had made huge investments to become self-sufficient and equip its armed forces with modern weapons.
Gulf Countries Remain Tied to the Dollar RIYADH, Saudi Arabia — As oil prices soared and the dollar’s value plunged, a chorus of academics and policy experts took up the cry that Saudi Arabia and neighboring Persian Gulf countries should abandon their currency pegs to a depreciating dollar to help combat the social ravages of inflation that were spreading across the region. The brief, put forth by the likes of Alan Greenspan, the former Federal Reserve chairman, and the Harvard economist Martin Feldstein, made impeccable theoretical sense: with gulf economies riding an oil boom, higher interest rates and stronger currencies were needed, not the reverse. Currency traders took heed. But that argument made only limited headway in Saudi Arabia. And now, with the dollar’s modest comeback and oil’s retreat, policy makers in the region have been bolstered in their resolve to keep the pegs in place and accept the consequences of higher inflation if need be.
France calls summit on EU-Russia relations The French EU presidency has called an emergency summit on EU-Russia relations for 1 September, as Russian troops continue to occupy parts of Georgia despite EU pressure. The Brussels summit will take place "following the demands of many member states" and will be devoted to EU "aid to Georgia and the future of its relations with Russia," a French communique said on Sunday. The move follows a telephone call between French president Nicolas Sarkozy and Russian president Dmitry Medvedev on Saturday, in which Mr Sarkozy fruitlessly urged Russia to withdraw from the Georgian towns of Poti and Senaki. On Sunday, German chancellor Angela Merkel said on national TV that "Russia has not yet fulfilled its commitment to the six-point peace plan [on withdrawal to pre-conflict positions]," adding "Russia's credibility is at stake." The Russian army began to pull back from Georgia on Friday at a "snail's pace" in the words of one US general, with armed Russian checkpoints still controlling access to key parts of western and northern Georgia on Sunday evening.
West awaits Medvedev word on recognizing rebel areas TBILISI (Reuters) - Georgia and its Western allies waited on Tuesday to hear if Russian President Dmitry Medvedev would recognize Georgia's separatist regions as independent, a move Washington has warned would be unacceptable. In a sign of the fragility of the ceasefire declared after Russian troops marched into the pro-Western state, Georgian and separatist forces were in a tense standoff over a disputed village on the fringes of breakaway South Ossetia. The two houses of Russia's parliament adopted non-binding resolutions on Monday urging Medvedev to recognize the independence of South Ossetia and the second Georgian separatist region of Abkhazia. But the Kremlin leader issued no response to the unanimous votes in parliament. U.S. President George W. Bush said he was deeply concerned by the parliamentary votes. He urged Russia's leaders not to recognize the regions, which broke with Tbilisi after the collapse of the Soviet Union, as independent. Senior officials of the world's leading industrial nations, the Group of Seven, also expressed alarm at the move.
Russia Recognizes Independence of Georgian Regions Russia recognized the independence of Georgia's breakaway regions, South Ossetia and Abkhazia, risking a deepening rift with the West and striking a blow against NATO's expansion toward its border. "I signed decrees on the recognition by the Russian Federation of the independence of South Ossetia and Abkhazia,'' President Dmitry Medvedev said on television from Sochi today. ``Russia calls on other states to follow its example." European governments condemned the move. The U.K. Foreign Office "categorically" rejected it, while Italy and France expressed regret. Russia's unilateral recognition of the two regions stems from its military rout of Georgia, which came this month in response to a Georgian operation to retake South Ossetia. It echoes the West's establishment of ties to Kosovo in February, a step Russia bitterly opposed after the enclave broke away from Serbia, a Russian ally. U.S. President George W. Bush has opposed any move to divide Georgia.
Putin casts doubt on Russia's WTO accession Prime Minister Vladimir Putin said Monday that Russia should abandon some of the commitments it made during World Trade Organization accession talks. Putin's statement is another sign that a war of words between Russia and the West is likely to go beyond empty threats. Also Monday, President Dmitry Medvedev warned that Russia might cut its ties with NATO. Putin said at a regular meeting of his Presidium that it was "sensible" to abandon some of the commitments Russia made during the WTO accession talks. "We don't see or feel advantages from the membership, if they exist at all, but we are carrying the burden," he said in comments posted on the government Web site. "Basic fairness should prevail."
No More NATO Members Ron Paul -- Before the US House of Representatives, statement on H Res 997, expressing the strong support of the House of Representatives for the North Atlantic Treaty Organization to enter into a Membership Action Plan with Georgia and Ukraine, April 1, 2008 Mr. Speaker, I rise in opposition to this resolution calling for the further expansion of NATO to the borders of Russia. NATO is an organization whose purpose ended with the end of its Warsaw Pact adversary. When NATO struggled to define its future after the Cold War, it settled on attacking a sovereign state, Yugoslavia, which had neither invaded nor threatened any NATO member state. This current round of NATO expansion is a political reward to governments in Georgia and Ukraine that came to power as a result of US-supported revolutions, the so-called Orange Revolution and Rose Revolution. The governments that arose from these street protests were eager to please their US sponsor and the US, in turn, turned a blind eye to the numerous political and human rights abuses that took place under the new regimes. Thus the US policy of “exporting democracy” has only succeeding in exporting more misery to the countries it has targeted.
Ron Paul Big Announcement If they expected us to retire quietly from the scene, the political elite are in for a surprise. Today I am making some very big announcements. First, from August 31 to September 2 in Minneapolis, we will host a handful of events that will shake the political establishment. Everything will culminate on Tuesday with the official launch of the Campaign for Liberty at the Rally for the Republic. The Campaign for Liberty will be the largest organization for peace, freedom, the Constitution, and sound money in American history. It will launch in grand fashion with lots of special guests and - if the early television and print inquiries we've received are any indication - plenty of media attention. I would like to personally invite you and your family to join me and thousands of others in Minneapolis for these events and send a message to the Republican Party.
North Korea to Consider Restoring Nuclear Reactor $$ North Korea is shaking up the latest denuclearization agreement it made with the U.S. and four other countries, in a move designed to pressure the Bush administration in its final months to give it a better deal. The country's foreign ministry said Tuesday it may reverse the promising steps it took two months ago to end its pursuit of nuclear weapons, which included disabling its sole nuclear plant. The reason: It is angry the U.S. hasn't removed it from a terrorism blacklist. Getting off the U.S. list of state sponsors of terror has long been a goal of North Korea's authoritarian regime. The U.S. promised to start the process in June, when Pyongyang provided a declaration of the scope of its nuclear-weapons efforts.
N. Korea Makes Plutonium Threat North Korea said on Tuesday that it had stopped disabling its main nuclear complex, and threatened to restore facilities there that the North has used to produce plutonium for nuclear weapons. For months, U.S. experts and North Korean engineers have been disabling key facilities at Yongbyon, north of Pyongyang, in a move that temporarily shut down the North’s only known source of plutonium. If the North rebuilds the facilities, it would nullify a major foreign policy achievement of President Bush. North Korea often issues strident warnings as a negotiating tactic. Nonetheless, the latest declaration dimmed Mr. Bush’s hopes of achieving a breakthrough in the North’s nuclear disarmament before he leaves office in January.
Governing Coalition Collapses in Pakistan Pakistan's ruling coalition broke apart Monday amid a political battle over the presidency, paralyzing the U.S.-backed government at a time when Taliban insurgents here and in neighboring Afghanistan appear to be gaining ground. Former prime minister Nawaz Sharif said he would oppose the candidacy of his onetime political partner Asif Ali Zardari, leader of the Pakistan People's Party and widower of former prime minister Benazir Bhutto. President Pervez Musharraf, a longtime U.S. ally, resigned under threat of impeachment a week ago, and Parliament is set to elect his successor on Sept. 6. Sharif, leader of the Pakistan Muslim League-N party, said he decided to leave the coalition government after Zardari announced plans Saturday to run for president and reneged on a promise to reinstate dozens of judges deposed under Musharraf's rule. Pakistan's judges and lawyers led the struggle against Musharraf and have demanded more power for the judiciary and stronger checks on the executive.
Kennedy, Michelle Obama Tell Convention Nominee Offers New Path Democratic presidential candidate Barack Obama's nominating convention finished its first night with rousing tributes from his wife, Michelle, and the party's unofficial patriarch, Senator Edward Kennedy of Massachusetts. During speeches last night, both promised that Obama would forge a new political path, fight for all Americans and ensure universal health care. Obama said voting for her husband would mean listening "to our hopes instead of our fears." Kennedy ended his speech with an echo of his closing line in 1980, when he dropped his own bid for the presidency in favor of Jimmy Carter. Back then, he said, "for all those whose cares have been our concern, the work goes on, the cause endures, the hope still lives and the dream shall never die."
Clinton tells her supporters to back Obama In a ballroom overflowing with many of her most diehard supporters, Senator Hillary Rodham Clinton on Monday implored New York Democrats to work as hard to elect Senator Barack Obama as they worked for her. Clinton, while acknowledging that true party unity may take time, repeatedly told them it would be disastrous for the country to endure four more years of a Republican in the White House. Despite news reports of lingering tensions between her campaign and Obama's, Clinton sought to dispel those notions in her remarks.
Clinton tells her supporters to back Obama In a ballroom overflowing with many of her most diehard supporters, Senator Hillary Rodham Clinton on Monday implored New York Democrats to work as hard to elect Senator Barack Obama as they worked for her. Clinton, while acknowledging that true party unity may take time, repeatedly told them it would be disastrous for the country to endure four more years of a Republican in the White House. Despite news reports of lingering tensions between her campaign and Obama's, Clinton sought to dispel those notions in her remarks.
Biden Prepares 50,000-Word Acceptance Speech Senator to Address Convention on Wednesday, Thursday Minutes after he was chosen as Barack Obama's vice-presidential pick, Sen. Joseph Biden (D-Del) revealed that he has begun writing a 50,000-word acceptance speech, aides to the senator confirmed today. The address, which Mr. Biden has been working on around the clock, is an abridged version of a 200,000-word acceptance speech that Mr. Biden wrote when he ran for President in 1988. According to those familiar with the speech, the Delaware senator will begin delivering the speech on Wednesday night of the Democratic convention and conclude it on Thursday night.
Obama May Have Been Assassination Target Two men were arrested today in Colorado in connection with a possible plot to kill Democratic presidential candidate Barack Obama, the Denver Post reported. One of the men, identified as Tharin Gartrell, was arrested on charges of weapons possession, the newspaper said. He was found with two rifles, a high-powered telescope, two other weapons and methamphetamine when arrested for a traffic violation, the report said. Denver's CBS affiliate reported that one of the suspects said he had come to Denver to kill Obama. The Illinois senator is scheduled to accept the Democratic Party's presidential nomination on Aug. 28.
Black Americans debate the risks in Obama's rise On the night that Senator Barack Obama accepts the Democratic nomination for president, Roderick Harrison plans to pop open a bottle of Champagne and sit glued to the television with his wife and 12-year-old son. Harrison, a black demographer, says he expects to feel chills when Obama becomes the first black presidential candidate to lead a major party ticket. But as the Democratic convention gets under way, Harrison's anticipation is tempered by uneasiness as he ponders a question: Will Obama's success further the notion that the long struggle for racial equality has finally been won? Obama has received overwhelming support from black voters, many of whom say he will help bridge the racial divide in the United States. But even as they cheer him on, some black academics, bloggers and others who follow the race closely worry that Obama's historic achievements may make it harder to rally support for policies designed to combat racial discrimination, racial inequities and urban poverty.
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