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HP's Whitman calls webOS all-hands meeting, has she decided its fate? | The Verge

2011-12-08T23:48:00.000-08:00

HP's Whitman calls webOS all-hands meeting, has she decided its fate? | The Verge:

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2011-12-05T23:04:00.000-08:00

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WSJ: Verizon Galaxy Nexus to sell for $299.99 on two-year contract -- Engadget

2011-12-05T14:23:00.000-08:00

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Steven Paul Jobs, 1955-2011

2011-10-05T20:43:00.000-07:00

TECHNOLOGYOCTOBER 6, 2011
Steven Paul Jobs, 1955-2011
Apple Co-Founder Transformed Technology, Media, Retailing And Built One of the World's Most Valuable Companies
By YUKARI IWATANI KANE And GEOFFREY A. FOWLER

+ Mr. Jobs delivered the keynote address at the 2011 Apple World Wide Developers Conferen…
+ Mr. Jobs co-founded Apple in 1976. Shown, Mr. Jobs and CEO John Sculley in 1984.
+ Mr. Jobs spoke at his company NeXt, Inc. in Redwood City, Calif., in 1993.
+ Mr. Jobs unveiled a new titanium G4 Powerbook at the MacWorld Expo in San Francisco in…
+ Mr. Jobs stood in the Soho Apple store in 2002.
+ Mr. Jobs held the new iPhone 4 at the 2010 in San Francisco on June 7, 2010.
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Steven P. Jobs, the Apple Inc. chairman and co-founder who pioneered the personal-computer industry and changed the way people think about technology, died Wednesday at the age of 56.

His family, in a statement released by Apple, said Mr. Jobs "died peacefully today surrounded by his family."

The company didn't specify the cause of death. Mr. Jobs had battled pancreatic cancer and several years ago received a liver transplant. In August, Mr. Jobs stepped down as chief executive, handing the reins to longtime deputy Tim Cook.

"Apple has lost a visionary and creative genius, and the world has lost an amazing human being," Mr. Cook said in a letter to employees. "We will honor his memory by dedicating ourselves to continuing the work he loved so much."

Apple CEO and co-founder Steve Jobs died on Wednesday at the age of 56. A look back at the life of an American business icon. (Photo: Getty Images)

During his more than three-decade career, Mr. Jobs transformed Silicon Valley as he helped turn the once-sleepy expanse of fruit orchards into the technology industry's innovation center. In addition to laying the groundwork for the industry alongside others like Microsoft Corp. co-founder Bill Gates, Mr. Jobs proved the appeal of well-designed products over the power of technology itself and transformed the way people interact with technology.

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From the Archives

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"The world rarely sees someone who has had the profound impact Steve has had, the effects of which will be felt for many generations to come," Mr. Gates said in a statement Wednesday.

The most productive chapter in Mr. Jobs's career occurred near the end of his life, when a nearly unbroken string of successful products like the iPod, iPhone and iPad changed the PC, electronics and digital-media industries. The way he marketed and sold those products through savvy advertising campaigns and Apple's retail stores helped turn the company into a pop-culture phenomenon.

At the beginning of that phase, Mr. Jobs described his philosophy as trying to make products that were at "the intersection of art and technology." In doing so, he turned Apple into the world's most valuable company with a market value of $350 billion.

After losing considerable weight in mid-2008, Mr. Jobs took a nearly six-month medical leave of absence in 2009, during which he received a liver transplant. He took another medical leave of absence in mid-January, without explanation, before stepping down as CEO.

Mr. Jobs is survived by his wife, Laurene, and four children.

Among Steve Jobs's legacy was a gift for presentation and speech-making that changed the way tech companies unveiled new products, Lauren Goode reports on a special edition of the News Hub. Photo: Getty Images.

Mr. Jobs turned Apple into the largest retailer of music and helped popularize computer-animated films as the financier and CEO of Pixar Animation Studios, which he later sold to Walt Disney Co. He was a key figure in changing the way people used the Internet and how they listened to music, watched TV shows and movies, and read books, disrupting industries in the process.

"Despite all he accomplished, it feels like he was just getting started," Disney CEO Robert Iger said in a statement Wednesday.

Mr. Jobs pulled off a remarkable business comeback, returning to Apple after an 11-year absence during which he was largely written off as a has-been. He went on to revive the struggling company by introducing products such as the iMac all-in-one computer, iPod music player and iTunes digital-music store.

Beyond PCs
Apple now produces $65.2 billion a year in revenue compared with $7.1 billion in its business year ended September 1997. Apple dropped the "computer" in its name in January 2007 to underscore its expansion beyond PCs.

Steve Jobs: Personal Media Pioneer

Photos: Steve Jobs Through the Years

Justin Sullivan/Getty Images
Timeline: Steve Jobs and Apple

The Apple Evolution

Associated Press
More photos and interactive graphics
Although Mr. Jobs officially handed over the reins of the company to Mr. Cook, his death nevertheless raises a question for Apple of how it will sustain its success without his vision and guidance. Other companies, including Walt Disney, Wal-Mart Stores Inc. and International Business Machines Corp., experienced some transitional woes before eventually managing to thrive after their charismatic founders passed on.

But few companies of that stature have shown such an acute dependence on their founder, or have lost the founder at the peak of his career. Several years after Mr. Jobs was fired from Apple in 1985, the company began a steady decline that saw it drift to the margins of the computer industry. That slide was reversed only after Mr. Jobs returned in 1997.

Mr. Jobs also leaves behind many tales about his mercurial management style, such as his habit of calling employees or their ideas "dumb" when he didn't like something. He was even more combative against foes like Microsoft, Google Inc., and Amazon.com Inc. When Adobe Systems Inc. waged a campaign against Apple for not supporting Adobe's Flash video format on its iPhones and iPads in April 2010, Mr. Jobs wrote a 1,600-word essay about why the software was outdated and inadequate for mobile devices.

He maintained uncompromising standards for the company's hardware and software, demanding "insanely great" aesthetics and ease of use from the moment a shopper walked into one of Apple's stores. His attention to detail shaped some of the distinctive features of Apple's products.

Mr. Jobs enforced strict secrecy among employees, a strategy that he believed heightened anticipation for new products. News of his death came a day after Apple unveiled its newest device, the iPhone 4S, without him on stage.

Mr. Jobs, the adopted son of a family in California, was born on Feb. 24, 1955. A college dropout, he established his reputation early on as a tech innovator when, at 21 years old, he and friend Steve Wozniak founded Apple Computer Inc. in the Jobs family garage in 1976. Mr. Jobs chose the name, in part, because he was a Beatles fan and admired the group's Apple records label, according to the book "Apple: The Inside Story of Intrigue, Egomania, and Business Blunders" by Wall Street Journal reporter Jim Carlton.

The pair came out with the Apple II in 1977, a computer that was relatively affordable and designed for the mass market rather than for hobbyists. It went on to become one of the first commercially successful PCs, making the company $117 million in annual sales by the time of Apple's initial public offering in 1980. The IPO instantly made Mr. Jobs a multimillionaire.

Not all of Mr. Jobs's early ideas paid off. The Apple III and Lisa computers that debuted in 1980 and 1983 were flops. But the distinctive all-in-one Macintosh—foreshadowed in a TV ad inspired by George Orwell's novel "1984" that famously only aired once—would set the standard for the design of modern computer operating systems.

Even then, Mr. Jobs was a stickler for design details. Bruce Tognazzini, a former user-interface expert at Apple who joined the company in 1978, once said that Mr. Jobs was adamant than the keyboard not include "up," "down," "right," and "left" keys that allow users to move the cursor around their computer screens.

Cultivated Image
Mr. Jobs's pursuit of aesthetics sometimes bordered on the extreme. George Crow, an Apple engineer in the 1980s and again from 1998 to 2005, recalls how Mr. Jobs wanted to make even the inside of computers attractive. On the original Macintosh PC, Mr. Crow says Mr. Jobs wanted the internal wiring to be in the colors of Apple's early rainbow logo. Mr. Crow says he persuaded Mr. Jobs it was an unnecessary expense.

Even in his appearance, Mr. Jobs seemed to cultivate an image more like that of an artist than a corporate executive. In public, he rarely deviated from an outfit consisting of Levi's jeans, a black mock turtleneck and New Balance running shoes.

As Apple expanded, Mr. Jobs decided to bring in a more experienced manager to lead the company. He recruited John Sculley from PepsiCo Inc. to be Apple CEO in 1983, overcoming Mr. Sculley's initial reluctance by asking the executive if he just wanted to sell "sugar water to kids" or help change the world.

After Apple fell into a subsequent slump, a leadership struggle led to a board decision to back Mr. Sculley and fire Mr. Jobs two years later at the age of 30. "What can I say—I hired the wrong guy," Mr. Jobs brooded in a PBS documentary. "He destroyed everything I had spent 10 years working for."

Getty Images
Steve Jobs is shown above at an Apple conference in June, one of his final public appearances as CEO.

Mr. Jobs then created NeXT Inc., a start-up that in 1988 introduced a black desktop computer with advanced software. The machine suffered from a high price and some key design decisions. But its operating system would eventually become a foundation for OS X, the software backbone of today's Macs, after Apple purchased NeXT for $400 million in December 1996.

In 1986, using part of his fortune from Apple, Mr. Jobs paid filmmaker George Lucas $10 million to acquire the computer-graphics division of Lucasfilm Ltd. The company Mr. Jobs formed from that purchase, Pixar Animation Studios, went on to create a string of computer-animated film hits, such as "Toy Story." Mr. Jobs sold Pixar to Disney in 2006 in a $7.4 billion deal.

In Mr. Jobs's absence, Apple began foundering, and computers using Intel chips and Microsoft software became increasingly dominant. By 1997, Apple had racked up nearly $2 billion in losses in two years, its shares were at record lows and it was on its third CEO—Gil Amelio—in four years.

Eight months after the deal to buy NeXT in December 1996, Mr. Amelio was ousted and Mr. Jobs appointed interim CEO, a title that became permanent in January 2000. One former Apple employee recalls Mr. Jobs joking soon after he returned that "the lunatics have taken over the asylum and we can do anything we want."

Series of Stumbles

Mr. Jobs, who was given a salary of $1 a year along with options to Apple stock, made a series of changes. He killed the struggling Newton handheld computer and trimmed a confusing array of Mac models to a handful of systems focused on the consumer market.

In May 1998, he introduced the iMac, an unusual one-piece computer that sported a colorful translucent case. Apple launched an ad campaign featuring the phrase "Think Different," featuring photographs of creative individuals including Albert Einstein and Muppets creator Jim Henson.

While shareholders cheered the changes, Mr. Jobs flexed his power on Apple's Cupertino, Calif., campus. Within months of taking over, he replaced four of the five top executives with former NeXT underlings. He issued emails forbidding employees to bring pets to the office or to smoke, even in parking lots. He threatened to fire anyone caught leaking company documents.

Apple had stumbles during Mr. Jobs's second stint, including a cube-shaped Macintosh that failed to catch on and was scrapped in 2001. The failure was one reason Apple posted a quarterly loss and warned it would miss estimates several times in 2000 and 2001.

But big hits followed. In 2001, Apple introduced the iPod, which transformed digital music players. Apple has more than 70% market share in the market.

A key advantage was the iTunes Music Store, opened in 2003. Mr. Jobs helped persuade major record labels to sell recordings for 99 cents each. The store, which has sold more than 16 billion songs, became an incentive for people to buy iPods because, for much of its history, songs from the iTunes store could be downloaded only to Apple's music player.

Bench of Executives
At the same time, Mr. Jobs was building his bench of executives. He recruited Mr. Cook, a former Compaq Computer Corp. executive, in the late 1990s to straighten Apple's operations and promoted him over time to chief operating officer.

In 2004, Mr. Jobs had to lean on this bench when he disclosed that he had had surgery to remove a cancerous tumor from his pancreas. Apple revealed the procedure in early August 2004, but a person familiar with the situation said Mr. Jobs first learned of the tumor during a routine abdominal scan nine months earlier. The board and Mr. Jobs said nothing to Apple shareholders as the Apple executive, during that time, dealt with the tumor through changes to his diet, the person said.

In June 2007, Mr. Jobs made another splash when Apple introduced the iPhone. Mr. Jobs was typically hands-on in the creation of the iPhone. People familiar with the matter say the former CEO was the one who made a decision to change the screen of the iPhone from plastic to glass after he unveiled the product at the Macworld trade show in 2007. The iPhone team scrambled to procure glass that would meet his standards, so the devices could be manufactured in time for the launch.

Despite skepticism about Apple's ability to enter an already competitive market dominated by the likes of Research in Motion Ltd.'s BlackBerry devices, Apple became a force in the mobile phone market, selling 92 million iPhones as of December 2010.

Last year, Mr. Jobs also unveiled the iPad tablet computer to great fanfare. Apple has sold more than 29 million iPads as buyers snapped them up. People who work closely with Mr. Jobs said the project was so important to him that he was deeply involved in its planning even while recovering from his 2009 liver transplant.

Those who knew Mr. Jobs say one reason why he was able to keep innovating was because he didn't dwell on past accomplishments and demanded that employees do the same. Hitoshi Hokamura, a former Apple employee, recalls how an old Apple I that was displayed by the company cafeteria quietly disappeared after Mr. Jobs returned in the late 1990s.

"Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose," Mr. Jobs said in a commencement speech at Stanford University in June 2005, almost a year after he was diagnosed with cancer.

—Pui-Wing Tam, Don Clark and Jim Carlton contributed to this article.
Write to Yukari Iwatani Kane at yukari.iwatani@wsj.com and Geoffrey A. Fowler at geoffrey.fowler@wsj.com

Read more: http://online.wsj.com/article/SB10001424052702304447804576410753210811910.html#ixzz1ZyBh27iG

HP's strategic shift away from TouchPad; PCs, too?

2011-08-18T23:46:00.001-07:00

If there's a notch on the technology timeline demarcating the PC and post-PC eras, we might have just crossed it.

Hewlett-Packard on Thursday effectively announced it was done with the personal computer, extending a crazy week in tech news that saw Google double down on mobile devices with its enormous bid for a Motorola division.

HP, a storied brand that was instrumental in expanding the PC industry, announced that its board had authorized exploring "strategic alternatives" for its computer division. That's corporate speak for a sale or spin-off.

The Palo Alto tech giant and the industry as a whole have seen a drop-off in laptop and desktop sales and margins, as consumers shift to tablets and smart phones.

And yet ... HP also announced plans to discontinue the phones and tablets based on the operating system it acquired through its now clearly ill-fated $1.2 billion purchase of Palm last year. That means it's pulling the plug on its highly promoted TouchPad tablet, less than two months after it hit the market.

The news underscores two critical points about the state of the technology industry:

First, we're rapidly moving into a world where consumer demand for mobile devices is outstripping that for PCs, dampening business prospects for the sector.

Think about it this way: HP, the largest PC manufacturer, a company whose Silicon Valley history predates the personal computer itself, is effectively saying there isn't enough upside to bother staying in the game.

"The increasing momentum of the media tablet market, led by the iPad, is creating a difficult environment for the PC industry," said Matthew Wilkins, principal analyst at research firm IHS iSuppli, in a recent report.

Second, even companies trying to embrace the post-PC world are struggling to get their arms around it as Apple crowds them out. A year and a half after the Cupertino company introduced its breakthrough iPad, not a single serious rival has emerged. The industry blog All Things D reported this week that Best Buy has sold only 25,000 HP TouchPads, less than 10 percent of the supply sitting in warehouses. That compares with more than 9 million iPads sold in the last quarter.

It seems even heavyweight contenders like HP can drop big dollars without making so much as a dent.

Consumer impact

For consumers, these trends are a mixed bag. They'll likely see falling prices for PCs, but it means yet another business has failed to gain strength in mobile computing. Less competition invariably means fewer options in the market and more pricing power for leaders like Apple.

On a conference call Thursday, HP Chief Financial Officer Cathie Lesjack said the company decided to exit the tablet business due to weak sales and suggested it had no plans to try again.

"With such a young ecosystem and poorly received hardware, we were unable to achieve our target," she said.

It's hard to see HP's retreat as anything less than a validation of the post-PC vision articulated by Apple CEO Steve Jobs.

"A lot of folks in this tablet market are rushing in and they're looking at this as the next PC," Jobs was quoted as saying at the unveiling of the iPad 2 in March. "The hardware and the software are done by different companies. And they're talking about speeds and feeds just like they did with PCs.

"And our experience and every bone in our body says that that is not the right approach to this. That these are post-PC devices that need to be even easier to use than a PC. That need to be even more intuitive than a PC. And where the software and the hardware and the applications need to intertwine in an even more seamless way than they do on a PC."

Jobs' words ring even more true in light of Google's announcement on Monday that it plans to buy Motorola Mobility for $12.5 billion in what would be by far its largest acquisition.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/08/18/MN5H1KP2PP.DTL#ixzz1VSGOKn2n

H-P Reports, Plans to Sell PC Biz

2011-08-18T23:44:00.000-07:00

Mark Vickery, On Thursday August 18, 2011, 4:47 pm EDT
A funny thing happened on the way to tech giant Hewlett-Packard's (NYSE: HPQ - News) fiscal 3rd quarter 2011 earnings report, which was supposed to have come out after the closing bell Thursday. When reports leaked that H-P was planning to spin-off its PC business and was seeking to purchase British-based software firm Autonomy for $10 billion, this forced the company to report earlier than expected.

Confirmed by Hewlett-Packard was that it is indeed spinning off its entire PC business -- on both the Consumer and Enterprise sides. This marks a ground-shifting reversal for the company, which in 2002 became the biggest player in the PC market with its purchase of Compaq. H-P also said it will be doing away with its webOS business.

Oh, and by the way, H-P posted adjusted earnings of $1.10 per share on revenues of $31.2 billion in the quarter, beating the Zacks Consensus Estimates of $1.09 and $31.1 billion, respectively. H-P also lowered its full-year revenue guidance from $129-130 billion down to $127.2-127.6 billion.

In another bloody day of regular trading, HPQ shares tumbles roughly 6%. After hours, the sell-off continues -- the shares are down another 2.4% as of the writing of this article.

CEO Leo Apotheker appears to be focused on increasing profit margins by both selling off the company's PC unit and its pursuit of Autonomy, which specializes in Enterprise-side information management software. While profit margins in the PC business remain in the mid-single digits, H-P's Enterprise business sees 15% profit margins. The company expects the spin-off will take place within the next 12-18 months.

Very few analyst estimate revisions had been taking place during the course of the quarter, but with the company lowering guidance for fiscal year 2011, we expect analysts covering H-P will be much busier over the next few days. Among their concerns will be how shedding the PC business -- which accounts for roughly one-third of H-P's business overall -- will affect the company's numbers in the near term.

HEWLETT PACKARD CO (HPQ): Read the Full Research Report

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Palm largely dead as HP shuts phone, tablet unit

2011-08-18T23:43:00.000-07:00

Rachel Metz, AP Technology Writer, On Friday August 19, 2011, 12:13 am EDT
SAN FRANCISCO (AP) -- When Hewlett-Packard Co. snapped up Palm Inc. last year for $1.8 billion, it looked like the smartphone pioneer's last chance.

Palm was a year into a major turnaround effort but gaining little traction despite a hip, new CEO known for making the iPod a household name. It had high hopes for its latest handset, the Pre, which ran on the company's new, intuitive operating software, known as webOS. It needed a savior, and HP, which itself needed a boost in the mobile technology market, seemed like its best bet for survival.

It didn't work. With fierce competition from Apple Inc.'s iPhone and smartphones running Google Inc.'s Android software, HP's handsets running the webOS software developed by Palm have been just a blip on most consumers' radar screens. A tablet called the TouchPad, released in July and also running webOS, has also sold poorly.

The market seemed too tough for HP to forge ahead: The technology conglomerate said Thursday that it is shuttering its mobile device business, which includes the webOS-running smartphones and TouchPad.

The announcement came as HP said it also plans to sell or spin off its PC division. Together, the moves would take HP out of the consumer market, though it will continue to sell servers and other equipment to business customers.

Technology developed by Palm (a brand name HP has phased out) may still exist in some form. In an interview, HP CEO Leo Apotheker said the company was disappointed more with the hardware sales than the performance of the webOS software, which it will try to keep alive in some way. HP is studying its options, which could include licensing the software to handset makers or allowing them to use it for free as open-source software, as Google does with Android.

Still, for Palm, the decision sounds largely like a death knell that comes after nearly 20 years of mobile technology innovation, ownership changes and failed efforts to become a leader in the handheld market.

Palm, founded by Donna Dubinsky and Jeff Hawkins in 1992, helped create the handheld computing market with its Palm Pilot "personal digital assistants" in the 1990s. But after Palm reshuffled itself repeatedly -- it was bought by U.S. Robotics, a modem maker that itself was bought by 3Com Corp. in 1997, and then spun off again as its own company in 2000 -- other companies took control of the market. In 2003, Palm acquired Handspring -- a rival startup Dubinsky and Hawkins created-- and spun off PalmSource, which made the PalmOS handheld computing software, as an independently traded company. Japan's Access Co. bought PalmSource in 2005.

Speaking to The Associated Press several months before HP announced it was buying Palm, Dubinsky said all the shuffling took "critical resources and attention from product development." And even though it happened years ago, she called the decision to spin off PalmOS a "huge strategic error."

"As RIM, Apple and Palm all have demonstrated, these devices need to be highly integrated hardware and software developments in order to optimize the user experience," Dubinsky wrote in an e-mail to the AP. "When Palm no longer could advance the OS, and had to create a new one, it lost several years."

By early 2009, Palm readied itself for a big comeback. At the International Consumer Electronics Show in Las Vegas, the company unveiled the stylish touch-screen Pre and webOS software, which at the time could do something the iPhone couldn't: run multiple applications simultaneously.

One more ingredient it hoped would revitalize the company was the addition of a leader who helped make Apple what it is today.

Just before the Pre's launch, Palm replaced then-CEO Ed Colligan with Jon Rubinstein, who spent a decade at Apple during that company's comeback run. Rubinstein, who started at Apple in 1997, was a pivotal figure behind the brightly colored iMacs and the iPod.

He came to Palm in 2007 as executive chairman under a deal in which Palm sold nearly a third of the company to private equity firm Elevation Partners (when HP acquired Palm, it bought out Elevation's stake).

But Palm's efforts turned out to be too little, too late. While many analysts and critics felt webOS and the Pre were good, consumers weren't biting. Subsequent smartphones released under Palm and, more recently, through HP, have also failed to impress shoppers.

Speaking at a tech conference late last year, Rubinstein said competitors simply innovated too fast for Palm to catch up.

"The world moved faster than we expected and we ran out of runway," he said.

Indeed, since Palm's comeback attempt, the popularity of the iPhone has only grown while phones running Android, which first hit the market in 2008, abound. According to research firm IDC, Apple took the top spot in the second quarter, while Samsung Electronics Co. -- a big maker of Android phones-- took second place in unit sales. Nokia Corp. came in third, while BlackBerry maker Research In Motion Ltd. took fourth.

Rubinstein, currently a senior vice president of HP's personal systems group, said Palm studied a number of alternatives to being bought by HP. He said HP was a good choice because, as the largest computer company in the world by revenue, it could help Palm bring its products to more people.

As it turns out, the mobile pioneer will largely cease to exist.

AP Technology Writer Jordan Robertson contributed to this report.

AP survey: Recovery to remain sluggish into 2011

2010-04-12T22:13:00.001-07:00

By JEANNINE AVERSA, AP Economics Writer
Mon Apr 12, 11:14 am ET

WASHINGTON – The pillars of Americans' financial security — jobs and home values — will stay shaky well into 2011, according to an Associated Press survey of leading economists.
The findings of the new AP Economy Survey, released Monday, point to an economic recovery that will move slowly and fitfully this year and next. As a result, the Federal Reserve will be forced to keep interest rates near zero until at least the final quarter of this year, three-fourths of the economists said.
The new AP survey, which will be conducted quarterly, compiles forecasts of leading private, corporate and academic economists on a range of indicators, including employment, home prices and inflation. Among the first survey's key findings:
• The unemployment rate will stay stubbornly high the next two years. It will inch down to 9.3 percent by the end of this year and to 8.4 percent by the end of 2011. The rate has been 9.7 percent since January. When the recession started in December 2007, unemployment was 5 percent.
• Home prices will remain almost flat for the next two years, even after plunging an average 30 percent nationally since their peak in 2006. The economists forecast no rise this year and a 2.3 percent gain next year.
• The economy will grow 3 percent this year, which is less than usual during the early phase of a recovery and the reason unemployment will stay high. It takes growth of 5 percent for a year to lower the jobless rate by 1 percentage point, economists say.
The economy began growing again last summer, 18 months after the recession started. To keep the recovery on track, the soonest the Federal Reserve will begin raising short-term interest rates is the fourth quarter, 34 of the 44 economists surveyed told the AP.
Those continued low rates will help stimulate home sales.
Economists think sales of previously occupied homes, the biggest chunk of the market, will tick up to 5.4 million this year and to 5.9 million in 2011. That would mark continued improvement from the low of 4.9 million in 2008 and be in line with sales in a healthy economy.
But there's a catch. Sales are forecast to rise in part because of another anticipated wave of foreclosures. That will keep prices from rising — and consumers from spending freely. Surging home equity spurred spending during the housing boom of the last decade.
"Our houses are no longer cash machines," says Allen Sinai, chief economist at Decision Economics, who took part in the AP survey.
By keeping interest rates at record lows, the Fed intends to encourage people and companies to spend more and invigorate the recovery. But anxiety over unemployment, and a reluctance or inability to borrow, will also restrain consumer spending, economists say.
"We're not going to see any irrational exuberance from consumers this year," says Joel Naroff, president of Naroff Economic Advisors, another survey participant.
Like many Americans, Michaela O'Brien of Northampton, Mass., is trying to cope with personal damage from the worst recession since the 1930s. O'Brien's husband, Nathaniel Reade, 51, lost his job two years ago as a magazine editor. Since then, they've seen the value of their home slip. So they're spending less.
Gone are the health club memberships, ski passes and camp for their two children. "We mostly cut back on what people would consider frivolous things," O'Brien says.
She gets around in a 2000 Toyota Corolla, her husband in a 13-year old Subaru.
"We hope we don't have to buy a car anytime soon," says O'Brien, 49, a self-employed publicist. Still, she says they are fortunate because they're able to pay their mortgage.
Economists say it may take until at least the middle of the decade for home values to begin rising normally again. The biggest asset for many Americans, homes have appreciated an average 4 percent a year since World War II, economists say.
National house prices have never remained flat while the economy was growing, says Mark Zandi, chief economist of Moody's Analytics, which reviewed data going back to 1969. Adjusted for inflation, however, home prices were essentially flat throughout the 1980s and the first half of the 1990s, says Zandi, who also took part in the survey.
The recession wiped out 8.2 million jobs. Zandi and other economists had previously forecast that unemployment, which reached 10.1 percent in October, would peak at 11 percent this year. Zandi now expects joblessness to climb again from the current 9.7 percent and reach 10.2 percent by December. That's because many people who have quit looking for work and aren't counted as unemployed will start looking again and because job creation will remain weak.
Employers have begun to add jobs recently, including 162,000 in March. Economists surveyed foresee additional job creation over the next three months, but not enough to reduce the unemployment rate significantly. They predict job gains of roughly 200,000 in April, 250,000 in May and 125,000 in June.
About 125,000 new jobs are needed each month just to keep up with population growth and prevent the unemployment rate from rising. To reduce the jobless rate significantly, employers would need to consistently add 200,000 to 300,000 a month.
"The labor market is the scar left over from the economic trauma that we've been through," says Sean Snaith, economics professor at the University of Central Florida, who took part in the survey. "It will be slow to fade."
Ann DeRoo, 40, of Fairfield, Ohio, began digging into savings to pay home and car loans after her husband was laid off from a trucking job earlier this year. DeRoo, who has three children, has also put off buying new clothes or shoes. Her son, who graduates from college in June, may have to move back home if he can't find a job.
"We just have to really watch what we're doing and worry about getting through today," DeRoo says.
___
AP Business Writer Dan Sewell in Cincinnati contributed to this report.

http://android-developers.blogspot.com/?hl=en

2010-02-26T11:53:00.001-08:00

http://android-developers.blogspot.com/?hl=en

Bernanke says recession 'very likely over'

2009-09-15T09:55:00.000-07:00

By JEANNINE AVERSA, AP Economics Writer Jeannine Aversa, Ap Economics Writer – 1 hr 38 mins ago

WASHINGTON – Federal Reserve Chairman Ben Bernanke said Tuesday that the worst recession since the 1930s is probably over.

Bernanke said the economy likely is growing now, but it won't be sufficient to prevent the unemployment rate, now at a 26-year high of 9.7 percent, from rising.

"The recession is very likely over at this point," Bernanke said in responding to questions at the Brookings Institution.

The Fed boss also said he is confident that Congress will enact a revamp of the nation's financial rule book to prevent a future crisis from happening.

"I feel quite confident that a comprehensive reform will be forthcoming," Bernanke said. It has been "too big a calamity" over the past year, with the near meltdown of the U.S. financial system, for Congress not to take action, he added.

President Barack Obama on Monday urged Congress to enact legislation this year.

Bernanke's speech to at Brookings was identical to the one he delivered last month at a Fed conference in Wyoming. Analysts predict the economy is growing in the current quarter, which ends Sept. 30, at an annual rate of 3 to 4 percent. It contracted at a 1 percent pace in the second quarter.

ap Geithner: Confidence has returned to markets

2009-09-10T15:00:00.000-07:00

Treasury secretary says confidence has replaced last year's panic in financial markets

* By Jim Kuhnhenn, Associated Press Writer
* On Thursday September 10, 2009, 5:52 pm EDT

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WASHINGTON (AP) -- Citing emerging financial sector stability, Treasury Secretary Timothy Geithner said Thursday that a number of government rescue efforts in place since the Wall Street crisis are no longer needed and that banks will repay $50 billion in rescue funds over the next 18 months.

Geithner, testifying before a congressional watchdog panel, said the nation still has a ways to go before "true recovery takes hold." But he said improved conditions in the banking industry have prompted Treasury to begin winding down emergency support programs implemented after the collapse of Lehman Brothers last year.

"The financial system is showing very important signs of repair," Geithner said. He added later: "I would not want anyone to be left with the impression that we're not still facing really substantial enormous challenges throughout the US financial system."

The cautious but upbeat tone reflects a growing push by the administration to present the government financial rescue efforts as a success amid lingering public apprehension about the economy.

Geithner was testifying before the Congressional Oversight Panel that monitors Treasury's $700 billion financial bailout that President George W. Bush and President Barack Obama used to shore up not only banks but the auto industry as well.

Banks have already paid back $70 billion of the $250 billion that the government injected over the past year to boost their liquidity. Geithner noted that only $11 billion of that infusion has occurred since he became Treasury secretary earlier this year. He said dividends on those infusions and the repurchase by banks of warrants held by the government has also generated $12 billion for the government. Overall, he said, the government realized a 17 percent return from 23 banks that have paid back the government in full.

Geithner said a major Treasury program that had been used to guarantee up to $3 trillion in money market mutual fund assets would be closed down on schedule on Sept. 18. The program had no direct cost to taxpayers and actually earned more than $1 billion in fees paid by the mutual fund industry.

That program was established at the height of the financial crisis a year ago after a large money market fund called the Reserve Primary Fund "broke the buck" -- meaning the value of its underlying assets fell below $1 for each investor dollar put in.

Still, unemployment stands at 9.7 percent and administration officials say it could rise to 10 percent in the coming months. Foreclosure rates are surging and the mortgage market remains tight. Geithner acknowledged that the economy would still face "more than the usual ups and downs."

"The classic mistake people make is they declare victory too soon," he said.

Given the still weak economy, Donald Kohn, vice chairman of the Federal Reserve, said it would be a while before the central bank dismantles all of its emergency lending programs.

"That time is not likely to come for an extended period," Kohn said in a speech to the Brookings Institution, a liberal think tank in Washington.

The Fed has been developing "tools" to rein in the money it has pumped into the economy to spur lending and lift the economy out of recession, Kohn said. That's important to avoid a bout of inflation when the economy is on firmer footing.

The government's bailouts have not been popular with the public and Geithner's testimony emphasized the positive returns from the various measures.

Still, one protester sitting behind Geithner held up a pink sign asking: "Where did the $ go?"

Elizabeth Warren, the oversight panel's chairwoman, said: "Taxpayers still want to know how their money has been used and what difference their enormous investment has made."

The panel has been critical of government steps, arguing that in the past it has not received full value for repaid infusions of money into financial institutions. More recently, the panel contended that a significant portion of the government assistance to the auto industry will likely not be repaid.

Geithner pointed out that the number of large financial institutions has grown smaller since the economic crisis. But Warren cautioned that some of the remaining firms were larger than before.

"Are we more at risk on the question of concentration than we were a year ago?" she asked.

"I don't think so," Geithner replied. "But it depends largely on what Congress ultimately decides in terms of financial reforms."

The administration has called for a series of regulatory changes, including requiring large, intertwined institutions to have access to more money to cover their risks.

Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, has pushed back his panel's consideration of the legislation from September until October.

Spokesman Steve Adamske said the committee wanted more time to hold hearings on the issues, as well as draft the bill, which includes more than a dozen major sections.

"The chairman believes the House is still on track to complete our work and get the White House a final product by the end of the year," Adamske said.

Associated Press writers Martin Crutsinger, Jeannine Aversa and Anne Flaherty in Washington contributed to this report.

Stocks jump as Fed raises view of economy

2009-08-12T16:56:00.000-07:00

By TIM PARADIS, AP Business Writer Tim Paradis, Ap Business Writer 1 hr 48 mins ago

NEW YORK – A more upbeat Federal Reserve is reassuring investors that they've been making the right bets.

Stocks bounded higher Wednesday after the central bank ended a two-day meeting by saying the economy appears to be "leveling out" rather than shrinking at a slower rate. The Fed's more positive take on the economy than it had in June wasn't surprising but it still bolstered hopes for a recovery.

Wednesday's advance re-energized the market's summer rally after it had stalled on Monday and Tuesday. Major market indexes jumped more than 1 percent, including the Dow Jones industrial average, which rose 120 points. Long-term Treasurys fell after the Fed said it would slow its purchases of government debt.

Financial and technology shares posted some of the strongest gains after a ratings upgrade and profit reports provided evidence of a rebound. The stock market's advance was itself adding to bank and insurance stock gains — its climb means their investment portfolios are surging in value.

Investors who sent stocks soaring the past four weeks on expectations for a recovery went into Wednesday hoping for a change in the Fed's language. Many investors were anticipating that the central bank's assessment might be moving closer to their own after the Labor Department said Friday that the nation's unemployment rate fell in July for the first time in 15 months.

The Fed's statement was particularly gratifying after traders suffered an attack of nerves Tuesday that slashed 1 percent from the major indexes. Concerns about the health of banks fed that drop, but the Fed's comments soothed those fears. The central bank also left interest rates unchanged, as expected.

"They did really endorse the fact that we're moving into recovery, not searching for the bottom," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.

The Fed also said it would slow the pace of its program to buy $300 billion worth of Treasury securities so that it will close at the end of October, rather than September as planned. The central bank has bought $253 billion of the securities so far. The program is designed to reduce rates on mortgages and other consumer debt.

"The fact that they are going to wind down the Treasury purchases I think leaves the clear impression that they are quite satisfied with the progress we are making in the recovery," McCain said.

But some analysts are skeptical that the market can maintain its climb even with the Fed's more optimistic words. The S&P 500 index is up 14.4 percent in little more than a month and 48.7 percent since it fell to a 12-year low in early March.

"It looks like a pretty sharp rise to me to have a lot of sustainability," said Dan Cook, senior market analyst at IG Markets in Chicago.

The Dow rose 120.16, or 1.3 percent, to 9,361.61. The Standard & Poor's 500 index rose 11.46, or 1.2 percent, to 1,005.81, while the Nasdaq composite index gained 28.99, or 1.5 percent, to 1,998.72.

Rising stocks outpaced those that fell 5-to-2 on the New York Stock Exchange, where consolidated volume fell to 5.5 billion shares from 5.8 billion Tuesday. Light volume can skew price moves but is typical of late summer when many traders take vacations.

Investors found encouragement Wednesday from a range of industries.

Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Ill., said quarterly results from luxury homebuilder Toll Brothers Inc. and retailer Macy's Inc. could be signaling that consumption is increasing. That is key to a recovery because consumer spending accounts for more than two-thirds of U.S. economic activity.

Homebuilders jumped after Toll Brothers said 3 percent more homebuyers signed contracts in its fiscal third quarter, the first annual increase in four years.

The company's statement that many of its markets are improving boosted confidence because analysts point to unemployment and housing as two of the biggest obstacles to a rebound. Toll jumped $2.94, or 14.4 percent, to $23.42.

Macy's reported a better-than-expected second-quarter profit and cited cost-cuts in raising its full-year earnings forecast. The retailer rose 93 cents, or 6 percent, to $16.40.

Insurers led financial stocks higher after S&P raised its credit outlook for Travelers Cos. The commercial and personal property insurer advanced $1.50, or 3.3 percent, to $46.43.

Tech shares rose after Applied Materials Inc.'s fiscal third-quarter results topped analysts' expectations. The maker of equipment for manufacturing semiconductors rose 44 cents, or 3.3 percent, to $13.66.

Meanwhile, bond prices were mixed after an auction of $23 billion in 10-year Treasury notes saw demand in line with recent levels but down from last month. The Treasury Department is issuing a record $75 billion in three auctions this week. The third, for $15 billion in 30-year bonds, is Thursday.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.72 percent from 3.67 percent late Tuesday. The yield on the 30-year bond jumped to 4.54 percent from 4.44 percent as stocks jumped and as investors feared the Fed's withdrawal from the market would hurt demand.

The dollar was mixed against other major currencies, while gold rose.

Benchmark crude rose 71 cents to settle at $70.16 a barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies rose 10.05, or 1.8 percent, to 572.17.

Overseas, Britain's FTSE 100 rose 1 percent, Germany's DAX index added 1.2 percent, and France's CAC-40 jumped 1.5 percent. Japan's Nikkei stock average fell 1.4 percent.

He's the inspiration for a lot of people

2009-07-05T16:29:00.000-07:00

We are the world!

2009-06-25T20:46:00.001-07:00

Financial crisis to last another year

2009-04-29T15:05:00.000-07:00

Financial crisis to last another year
Tue Apr 28, 2009 8:12am BST

By Jonathan Cable

LONDON (Reuters) - The global recession has yet to reach its nadir and stocks narrowly remain in a bear market, a Reuters poll indicated on Monday, predicting the financial crisis will wear on for another year and possibly more.

The survey of analysts across Europe and the U.S. taken April 21-27 found a slim majority saying the bottom had yet to be hit in the worst global recession since the Second World War.

The vast bulk of them said the financial crisis that began in August 2007 and which has been pounding the world economy would last anywhere from six months to another two years -- roughly what they said when polled one year ago.

Those sombre conclusions follow more than a month of building optimism on world equity markets about a recovery later this year from the worst recession and financial crisis since the early 20th century.

Most who said the worst of the global recession had yet to be reached did not see it passed until the second half of the year and remained wary about hopes for a speedy pickup that have been building over recent weeks.

"Financial and macroeconomic stability are still some way off and we don't yet have the foundation for a solid recovery," said Lena Komileva, chief G7 market economist at interdealer broker Tullett Prebon.

Finance chiefs from the Group of Seven richest nations were more optimistic at their meeting in Washington on Friday, saying the global economy may be past the worst phase of a recession although they warned recovery was not yet assured.

Perhaps most striking is how similar the results are to the last financial crisis poll conducted in February, and to views expressed when Reuters first polled on the subject in July 2008, about one year into the crisis.

The proportion of analysts forecasting the crisis to last between one to two years stands at a significant 36 percent. The analysts polled come from a mix of dealers, buyside firms and research shops.

STILL IN A BEAR MARKET

The broad macroeconomic picture still remains at odds with the latest wave of optimism that has triggered an explosive stock market rally around the world over the past month or so.

In the latest poll, a slim majority of analysts, 32 of 60, said the rally that has taken the S&P 500 .SPX up more than 25 percent represented an upturn in a prolonged bear market.

"Earnings pressure remains intense and bank credit conditions continue to deteriorate," said Scott Anderson at Wells Fargo. "We are not yet at a turning point."

Yet 21 analysts, or about a third, said the bear market had ended and seven went even further, declaring a new bull market had already begun.

Much will depend on how much the banking sector has healed and how much toxic debt remains on the books. A pending "stress test" report on U.S. banks due during the week of May 4 and early leaks of that information has investors on tenterhooks.

MORE STIMULUS NEEDED

The poll found that even with trillions of dollars worth of planned fiscal stimulus and outright central bank purchases of assets to increase the money supply, economists said more spending will probably be required to escape the crisis.

"Balance sheet cleanup and recapitalization needs are still substantial," noted Richard Berner, co-head of global economics at Morgan Stanley in New York.

Forty of 63 analysts in the poll said governments and central banks will need to provide more stimulus packages for any economic recovery to take hold.

The European Central Bank and the Bank of Canada are considering implementing outright asset purchase programmes of the kind already being used by the U.S. Federal Reserve, the Bank of Japan and the Bank of England.

The International Monetary Fund slashed its growth forecasts for every major country on Wednesday and urged governments to take forceful action to ensure the world's recovery.

But on the fiscal side, many governments, including the United States and Britain, have effectively run out of leeway for more spending both practically -- given the size of budget deficits -- and politically.

"In the U.S. it will be extremely difficult to pass more stimulus toward the end of the year if needed because of the stigma attached to government borrowing and its abuses," noted Bank of Tokyo-Mitsubishi economist Ellen Zentner in New York.

"The largest risk in the U.S. is that we will not have entered a period of sustainable recovery when government stimulus disappears and will be thrown back into recession."

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Fed to buy up to $300B long-term Treasury bonds

2009-03-18T13:14:00.001-07:00

By JEANNINE AVERSA, AP Economics Writer Jeannine Aversa, Ap Economics Writer 19 mins ago

WASHINGTON – The Federal Reserve announced Wednesday it will spend up to $300 billion over the next six months to buy long-term government bonds, a new step aimed at lifting the country out of recession by lowering rates on mortgages and other consumer debt.

At the same time, the Fed left a key short-term bank lending rate at a record low of between zero and 0.25 percent. Economists predict the Fed will hold the rate in that zone for the rest of this year and for most — if not all — of next year.

Fed purchases should boost Treasury prices and drive down their rates. That would ripple through and lower rates on other kinds of debt. The last time the Fed set out to influence long-term interest rates was during the 1960s.

The Fed also said it will buy more mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac to help that battered market. The central bank will buy an additional $750 billion, bringing its total purchases of these securities to $1.25 trillion. It also will boost its purchase of Fannie and Freddie debt to $200 billion.

"This is not only going to keep mortgage rates low for a long period of time," said Greg McBride, a senior financial analyst at Bankrate.com. "The mere announcement may produce a honeymoon effect and bring mortgage rates down to even lower levels in the coming days."

In addition, the Fed said a $1 trillion program to jump-start consumer and small business lending could be expanded to include other financial assets.

The program — which is rolling out this week — currently is focused on spurring lending for autos, education, credit cards and loans for business equipment. The government already has announced an expansion to include commercial real-estate assets. Any broadening of the program would be beyond that area.

The Fed's action is keeping Wall Street's big rally alive. After being down earlier in the day, the Dow Jones industrial average added about 30 points in afternoon trading, and broader indicators also rose.

Fed Chairman Ben Bernanke and his colleagues are taking the new steps as the economy sinks deeper into recession.

Since the Fed last met in late January, "the economy continues to contract," the policymakers observed.

"Job losses, declining equity and housing wealth and tight credit conditions have weighed on consumer sentiment and spending," they said.

Businesses, meanwhile, are facing weaker sales prospects and credit troubles have them cutting inventories. Problems overseas have crimped demand for U.S. exports, dealing domestic companies another blow, the Fed said.

Across the Atlantic, the Bank of England last week began buying government bonds from financial institutions as it turned to other ways to help revive Britain's moribund economy. The Bank of England, like the Fed, already had lowered its key interest rate to a record low of 0.5 percent.

Finance leaders from top economies have discussed coordinating actions from their governments and central banks to provide a more potent punch against the global financial crisis.

Still, the Fed hoped its actions, the government's banking rescue effort, and President Barack Obama's $787 billion stimulus of increased government spending and tax cuts eventually will help revive the economy.

"Although the near-term economic outlook is weak, the committee anticipates that policy actions .... will contribute to a gradual resumption of sustainable economic growth," the Fed said.

Obama has urged Americans to be patient, saying it will take time for his revival programs to work.

Bernanke has repeatedly said that stabilizing the nation's financial system is key to turning around the economy. If that can be done, then the recession might end this year, setting the stage for a recovery next year, he said.

But even in this best-case scenario, the nation's unemployment rate — now at quarter-century peak of 8.1 percent — will keep climbing. Some economists think it will hit 10 percent by the end of this year.

The recession that began in December 2007 already has snatched a net total of 4.4 million jobs and has left 12.5 million searching for work.

And the economy is still sinking. It contracted at 6.2 percent in the final three months of 2008, also the worst showing in a quarter-century. Analysts believe the economy in the current January-March quarter is contracting at a pace between 5.5 and 6 percent or more. They expect the economy also will continue to contract in the April-June quarter.

____

AP Real Estate Writer Alan Zibel contributed to this report.

Dow ends up nearly 380 on Citigroup profit news

2009-03-10T13:58:00.000-07:00

By SARA LEPRO and TIM PARADIS, AP Business Writers Sara Lepro And Tim Paradis, Ap Business Writers – 3 mins ago

Play Video Reuters – Wall Street rally on Citigroup

Related Quotes
Symbol	Price	Change
BAC	4.79	+1.04
C	1.45	+0.40
GE	8.87	+1.46

AP – Neil Gallagher of Bear Wagner Specialists works on the floor of the New York Stock Exchange, Tuesday, …

NEW YORK – Wall Street has had its best day of the year, storming higher after some good news from Citigroup. Citigroup Inc. says it operated at a profit during the first two months of the year. That energized financial stocks and in turn, the entire market. Surprised investors drove the major indexes up more than 5.5 percent to their biggest one-day rally of the year. The Dow Jones industrials shot up nearly 380 points.

However, many analysts are still cautious — noting that Wall Street has seen many blips higher since the credit crisis and recession began. Word of Citi's performance broke a months-long torrent of bad news from the banking industry but analysts weren't ready to say the stock market was at a turning point and about to barrel higher after a slide that's lasted more than 16 months.

"To have a sustained rally, we have to have a shift in sentiment," said Kurt Karl, chief U.S. economist at Swiss Re. "One day isn't going to make a trend."

Still, the Citigroup news offered investors some hope that the first quarter will show signs of improvement.

In a letter to employees Monday, Citi Chief Executive Vikram Pandit said the performance this year has been the bank's best since the third quarter of 2007 — the last time it booked a profit for a full quarter. Based on historical revenue and expense rates, Citi's projected earnings before taxes and one-time charges would be about $8.3 billion for the full quarter.

Pandit declined to say how large credit losses and other one-time items have been that would at least partially offset profit.

Citi surged 38 percent while Bank of America Corp. jumped 27.7 percent. The stocks are among the 30 that make up the Dow. All the components of the index climbed Tuesday.

"A little bit of good news went a long way because there was so much pessimism," said Harry Rady, chief executive of Rady Asset Management. "Could there be follow through tomorrow? Maybe. In the next few weeks or months I've got to imagine we'll give this back. The economy is in an absolute free fall," he said. "I'd be very surprised if this was a bottom."

Financial stocks have been at the center of the market collapse that has left the major indexes at their lowest point in more than a decade. Reports of losses on bad loans and write-offs on shrinking assets have pounded banking stocks; Citi fell below $1 a share last week. Analysts have been worrying that hundreds of billions of dollars in government bailouts wouldn't be enough to save the big banks.

Investors welcomed Tuesday's rally as overdue after weeks of selling but analysts were quick to warn that it could be little more than a one-day pop. Ben Halliburton, chief investment officer of Tradition Capital Management in Summit, N.J., dismissed the surge as likely little more than a bear market rally that quickly evaporates.

A bear market is defined as a drop of 20 percent from a market peak — and stocks passed that point last year and continued to plunge, leaving the Dow and Standard & Poor's 500 at less than half the record highs they reached in October 2007. A bear market rally lifts stocks off their lows, but it quickly evaporates.

Wall Street has already seen a few false starts. From late November until the start of this year, the Dow and the S&P 500 jumped about 20 percent before plumbing fresh lows this month. The slide has been punishing but it is still well short of the plunge seen in stocks from 1929-32.

"I would be surprised to see us trade back over 800 in the near term," Halliburton said, referring to the S&P 500. "The news coming out on the economic front will continue to be rather gloomy."

Analysts suggested that the market's gains, especially among financial stocks, could be attributed in part to short covering, an investment strategy that tends to drive rallies in volatile markets. Short-sellers are traders who sell borrowed stock and then buy it back later on the hopes that the price will have fallen. If they believe a stock will be going up, they have to "cover" their positions, or buy shares to repay the loan and limit their losses.

Stocks added to their gains Tuesday as word emerged that federal regulators are considering reinstating a rule that supporters say helps protect companies from excessive shorting. The Securities and Exchange Commission eliminated the Depression-era rule in 2007. The agency said it is considering holding a public hearing on the matter as soon as next month.

According to preliminary calculations, the Dow jumped 379.44, or 5.8 percent, to 6,926.49. It was the Dow's biggest point and percentage gain since late November.

The S&P 500 index rose 43.07, or 6.4 percent, to 719.60, while the Nasdaq composite rose 89.64, or 7.1 percent, to 1,358.28.

The Dow Jones Wilshire 5000 index, which reflects nearly all stocks traded in America, jumped 6.8 percent. That gave stocks a gain on paper of $500 billion.

The Russell 2000 index of smaller companies rose 24.49, or 7.1 percent, to 367.75.

About 13 stocks rose for every one that fell on the New York Stock Exchange, where volume came to a heavy 2.19 billion shares. Heavy volume is a good sign for bullish investors who are looking for conviction behind the market's moves.

The day's rally illustrates how concerns about banks have weighed on the overall market, analysts said.

Jon Merriman, chief executive of brokerage Merriman Curhan Ford in San Francisco, said the comments from Citi's Pandit are an indication that the bank is lending.

"Maybe Citibank is not going to zero, that means it's going to lend again and then the economy will turn," he said. "People today in the stock market are connecting those dots. And the market is up broadly, it's not just the banks."

Investors were further encouraged by Federal Reserve Chairman Ben Bernanke who called for a revamp of the country's financial regulatory system. Speaking before the Council of Foreign Relations, Bernanke said "too big to fail" companies must be subject to more rigorous supervision to prevent them from taking on excessive risk. Bernanke's remarks come as the Obama administration and Congress begin to devise their overhaul strategies.

Citigroup's announcement proved to be the dose of good news Wall Street had been waiting for to spark a rally, but there was still plenty of pessimism.

"There's nothing that anybody can do to turn the market around," said Rady. "This is just a little bear-market blip."

Halliburton was hesitant to put much stock in Citigroup's announcement for fear of rising loan losses that could eat away at the operating profit. As long as housing prices are declining and loan defaults are increasing, "they are going to have to take asset write-downs," he said. "I don't think this is a game-changer."

Citi surged 40 cents, or 38.1 percent, to $1.45, while Bank of America jumped $1.04, or 27.7 percent, to $4.79. JPMorgan Chase & Co. rose $3.60, or 22.6 percent, to $19.50.

General Electric Co. rose $1.46, or 19.7 percent, to $8.87. The company has a big financial services division, so it tends to move with banking stocks.

Big gainers included tech and industrial stocks. Caterpillar Inc. rose $2.59, or 10.8 percent, to $26.51. Among tech stocks, Intel Corp. rose $1.37, or 10.9 percent, to $13.92. Cisco Systems Inc. rose $1.02, or 7.5 percent, to $14.64.

Bond prices fell as stocks rallied. The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 3 percent from 2.88 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.24 percent from 0.23 percent Monday.

The dollar was mixed against other major currencies, while gold prices sank.

Light, sweet crude for April delivery fell $1.36 to settle at $45.71 a barrel on the New York Mercantile Exchange.

Overseas, Britain's FTSE 100 rose 4.9 percent, Germany's DAX index jumped 5.3 percent, and France's CAC-40 gained 5.7 percent. Earlier, Hong Kong's Hang Seng index jumped 3.1 percent, while Japan's Nikkei stock average slipped 0.4 percent.

Phoenix Mars Lander Found Liquid Water, Some Scientists Think

2009-03-10T13:57:00.000-07:00

Andrea Thompson
Senior Writer
SPACE.com andrea Thompson
senior Writer
space.com – Tue Mar 10, 12:00 pm ET

During its more than five-month stint on Mars last year, NASA's Phoenix Mars Lander found evidence that liquid water existed at the spacecraft's landing site, some Phoenix team members say.

Water is key to all forms of life as we know it and the discovery of liquid water would suggest a greater opportunity for biology on the red planet.

The new but controversial conclusion comes from observations of a set of "little globules" attached to struts on the lander's legs that were photographed by Phoenix's robotic arm camera over the course of the mission, as first reported at Spaceflight Now.

These globs were seen to apparently move and grow between snapshots, and 22 members of the Phoenix team, including principal investigator Peter Smith of the University of Arizona in Tucson, think that this behavior combined with other Phoenix findings indicates that these blobs might have been liquid water that was splashed up onto the spacecraft as it landed.

The paper making the case for liquid water will be presented on March 23 at the Lunar and Planetary Science Conference in Houston. But not all of Phoenix's team members agree with the paper's interpretation of the globs.

"It's a bit controversial," Smith told SPACE.com. But "obviously they came from somewhere — they weren't there when we launched," he added.

Phoenix touched down at its landing site in the Martian arctic on May 25, 2008. The stationary lander's mission was to search for signs of potential habitability on the red planet, namely, signs that water ice just below the surface was once liquid.

On July 31, 2008, Phoenix confirmed that the hard material it encountered underneath the clumpy surface dirt was indeed water ice. Analyses of dirt done in the lander's onboard instruments also indicated that this ice was likely once liquid and had interacted with the Martian regolith, or dirt, at a period of time in Mars' history when its climate was warmer.

But finding liquid water on the present surface of Mars, which sees temperatures between -20 and -80 degrees Celsius (-4 and -112 degrees Fahrenheight) even in the summer, is a whole different ball game. It was expected that any water ice exposed to the atmosphere would immediately sublimate, or turn to vapor. The Phoenix team saw signs of this when they exposed underground ice in the trenches dug by the spacecraft.

The new report's main author, Phoenix team member Nilton Renno, proposes that perchlorate salts, discovered in the Martian dirt by Phoenix's wet chemistry lab, were concentrated enough in a patch at the spacecraft's landing site that they could lower the freezing point of the water ice, causing it to melt into a salty brine (this is the same phenomenon that causes sidewalk salt to melt down snow and ice in the winter). Nilton and his co-authors think the brine could have been splashed up onto the lander leg when Phoenix touched down.

Of course, Phoenix didn't get any samples of this material and any investigation of the blobs relies on the images taken by Phoenix and knowledge of how perchlorate behaves.

"There's a matter of belief at some level," Smith said.

Smith cautions that the case isn't solved for sure. As Phoenix descended to the surface, its thrusters created a high-pressure, high-temperature environment and blasted ammonia which could have affected the surface below it. There could also be other constituents in the dirt that could affect its chemistry, he said.

But the case for liquid water is compelling, Smith said. Though he added, "I can't say I agree with every statement in the paper."

Michael Hecht, the lead scientist for the instrument that discovered perchlorate, thinks that while the idea of this splash of liquid brine isn't physically impossible, it is "far less likely than simpler explanations," he told SPACE.com.

The imaging of the globules is low resolution, which Smith also pointed out, and some of the apparent changes seen in them could be attributed to changing shadows, Hecht said.

And while perchlorate is an excellent sponge, sucking up water if the surrounding air is warm and dry enough, the temperatures required of the lander mentioned in the paper are too warm and "you would not get liquid droplets of perchlorate brine," Hecht explained.

A more likely explanation, Hecht contends, is that water vapor released by the ground ice stuck to the legs.

The legs would likely be relatively cold compared to the ground during the day, Hecht explained. When sunlight fell on the patches of ice exposed at the landing site, some of that water would sublimate. As that water vapor traveled up through the air, it might encounter cold patches of dirt stuck on the lander legs from the landing and stick.

And "once there's ice there, [other water vapor molecules will] go to the places where there's ice," eventually forming the blobs seen in the photos, Hecht said.

There are circumstances where perchlorate could create liquid brine on Mars though, Hecht said. During periods when Mars might have just a few degrees warmer, perhclorate rinds could melt water ice. Another paper being presented at the Lunar and Planetary Science Conference posits that perchlorates could seep down beneath Mars' polar ice caps, forming a lubricating sludge that lets the ice caps flow.

But these situations are different than the briny blobs described by Renno.

Hecht acknowledges that he could be wrong and the globs on Phoenix could be liquid brine, but "I just don't think it's the likely explanation," he said. "It's just plain old frost, nothing more."

Hecht thinks that the true nature of these blobs will be hashed out over time by the Phoenix team and by reviewers of Renno's paper. (Hecht and Renno, as well as other Phoenix team members, have corresponded at great length over the topic.)

"It hasn't been in front of the jury yet," Hecht said.

Editor's Note: The image showing the globules was added at 11:30 a.m. E.T.

Original Story: Phoenix Mars Lander Found Liquid Water, Some Scientists Think

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Wall Street tumbles anew as financials slide

2009-03-02T11:07:00.000-08:00

NEW YORK (AP) -- The Dow Jones industrial average plunged below 7,000 Monday for the first time in more than 11 years as investors grow even more pessimistic about the health of banks, and in turn the economy.

Symbol	Price	Change
AIG	0.45	+0.03

BAC	3.42	-0.53

FITB	1.78	-0.32

JPM	21.53	-1.32

WFC	10.83	-1.27

A staggering $61.7 billion in quarterly losses at insurer American International Group Inc. touched off fresh fears about the health of the nation's financial system.

The worries pushed the blue chips below 7,000 for the first time since Oct. 28, 1997 and then below 6,900 for the first time since May 1, 1997. The credit crisis and recession have now slashed half the average's value since it hit a record high over 14,000 in October 2007.

Investors are fleeing financials after the government said it would give AIG another $30 billion in loans, besides the $150 billion it has already injected into the company. Investors are worried about European financial companies, too. HSBC PLC, Europe's largest bank by market value, reported a 70 percent drop in 2008 earnings and said it needs to raise $17.7 billion and cut 6,100 jobs.

"As bad as things are, they can still get worse, and get a lot worse," said Bill Strazzullo, chief market strategist for Bell Curve Trading. Strazzullo said he believes there's a significant chance the S&P 500 and the Dow will fall back to their 1995 levels of 500 and 5,000, respectively.

The "game-changer," he said, will be the housing market and whether it can stabilize.

In early afternoon trading, the Dow fell 249.14, or 3.5 percent, to 6,813.79. The Dow last closed below the 7,000 level on May 1, 1997.

Broader stock indicators also slid. The Standard & Poor's 500 index fell 29.93, or 4.1 percent, to 705.16, and the Nasdaq composite index fell 48.45, or 3.5 percent, to 1,329.39.

The Russell 2000 index of smaller companies fell 17.32, or 4.5 percent, to 371.70.

Nearly 10 stocks fell for every one that rose on the New York Stock Exchange, where volume came to 960.5 million shares.

Bond prices jumped as stocks fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, tumbled to 2.88 percent from 3.02 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, slipped to 0.24 percent from 0.25 percent Friday.

The dollar rose against most other major currencies, while gold prices fell.

Light, sweet crude fell $4.57 to $40.19 a barrel on the New York Mercantile Exchange.

Mixed economic readings on Monday weren't enough to prop up stocks.

Personal spending rose 0.6 percent in January and incomes rose 0.4 percent, while construction spending fell 3.3 percent, more than twice as much as economists expected. Manufacturing contracted in February for the 13th straight month, but at a slower pace than expected.

"The economy definitely has deteriorated since November," said Sean Simko, head of fixed income management at SEI Investments in Philadelphia, referring to the Nov. 20-21 lows in stocks that many traders had hoped would mark the market's low since October 2007.

The move below those levels last week and the deterioration Monday comes as investors worry the slide isn't slowing.

"It's just the fact that we haven't seen signs of improving or stabilizing, per se, which is adding to the morass of the market."

Meanwhile, billionaire investor Warren Buffett wrote in his annual letter to investors Saturday he is sure "the economy will be in shambles throughout 2009 -- and, for that matter, probably well beyond -- but that conclusion does not tell us whether the stock market will rise or fall."

AIG rose 4 cents, or 8.8 percent, to 46 cents a share after the government pledged the latest round of money.

HSBC Holdings fell $6.69, or 19.2 percent, to $28.11.

Other financials also fell sharply. Bank of America Corp. fell 58 cents, or 14.7 percent, to $3.37. Regional banks lost ground as well. Fifth Third Bancorp fell 34 cents, or 16.1 percent, to $1.77, while Huntington Bancshares Inc. fell 15 cents, or 10.3 percent, to $1.31.

Even banks that investors consider to be in better shape took hits. JPMorgan Chase & Co. slid $1.44, or 6.3 percent, to $21.41. Wells Fargo & Co. fell $1.39, or 11.5 percent, to $10.71.

In afternoon trading, Britain's FTSE 100 tumbled 5.3 percent, Germany's DAX index fell 3.5 percent, and France's CAC-40 fell 4.5 percent. Earlier, Japan's Nikkei stock average dropped 3.8 percent and Hong Kong's Hang Seng index fell 3.9 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

Silicon Valley jobs dip, green tech grows

2009-02-17T15:32:00.000-08:00

by Dawn Kawamoto

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Green-tech jobs are providing a bloom to Silicon Valley's otherwise barren employment outlook, according to a recently released economic report.

In the high-tech mecca, Silicon Valley jobs dipped 1.3 percent year over year in December. Per capita income fell 0.8 percent last year over the previous period--the first time it had fallen since 2003, according to a report by the Silicon Valley Community Foundation and Joint Venture: Silicon Valley Network. The two organizations will jointly host the State of the Valley Conference on Friday in San Jose, Calif.

Such results in the San Jose-Sunnyvale-Santa Clara metropolitan statistical area come at a time when jobs contracted 1.7 percent statewide and 2 percent nationwide during the same period, according to the report.

(Credit: Joint Venture Silicon Valley Network and Silicon Valley Community Foundation)

According to the report:

Until the last quarter of 2008, Silicon Valley seemed to be weathering the global financial crisis and economic recession better than the nation. This is no longer the case. Since November, we have witnessed a spike in job losses and a significant drop in the commercial property markets.

But green-tech jobs have grown 23 percent from 2005 to 2007, according to the report, as venture capital investments in the sector have soared since 2005. Last year alone, venture capital investments in Valley clean-tech companies soared 94 percent over the previous year, the report noted.

(Credit: Joint Venture Silicon Valley Network and Silicon Valley Community Foundation)

And within green tech, jobs involving energy generation, which primarily entails solar system installation, accounted for the largest slice. But in the two-year period spanning 2005 and 2007, jobs involving green buildings climbed 424 percent, transportation rose 140 percent, and advanced materials 54 percent, according to the report.

(Credit: Joint Venture Silicon Valley Network and Silicon Valley Community Foundation)

The report further notes that growth in green-tech jobs may eventually pull the region out of the economic malaise, which has taken out a wide swath of jobs both within Silicon Valley and across the nation:

Today we're racked by the collapse of our nation's financial institutions, a meltdown in the housing markets and a global climate crisis, and yet here too we may already be seeing the seeds of a Valley comeback. It is being driven by our newly emerging "green" economy.

The report further calls on a retraining of the region's workforce to take advantage of this shift and others within the region's high-tech industries.

Over the past decade, for example, Silicon Valley has seen a change in its industry mix from predominately hardware companies to software companies, the report notes.

Dawn Kawamoto covers enterprise security and financial news relating to technology for CNET News. E-mail Dawn.

Congress looks to keep stimulus cash from zoos, golf courses

2009-01-27T17:26:00.001-08:00

By Abbie Boudreau and Scott Zamost
CNN Special Investigations Unit
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(CNN) -- Congress has moved to prevent money from the proposed $825 billion stimulus package from being used for zoos, aquariums, golf courses, swimming pools and casinos, an effort to ensure the bill funds only what it calls the "highest quality" infrastructure projects.
Restrictions added to the stimulus proposal would keep the money from zoo projects, among other things.

Restrictions added to the stimulus proposal would keep the money from zoo projects, among other things.

"The purpose of this bill is to direct funding at projects that are primarily and clearly aimed at benefiting the economic conditions of communities and the public at large," the bill states. "The federal government and all other levels of government are directed to look with a skeptical eye at projects that don't meet that test."

CNN revealed last month that a list of "ready to go" stimulus projects endorsed by the U.S. Conference of Mayors included museum and zoo renovations, aquatic centers, skateboard parks and bike and horse paths. One of the zoo projects in the report is a $4.8 million polar bear exhibit at the Providence, Rhode Island, zoo.

The House Appropriations Committee added those restrictions last week after criticism from watchdog groups like the National Taxpayers Union, which monitors government spending.

"To the people supporting them, these proposals aren't a joke," said Pete Sepp, the group's vice president. "But to the taxpayers funding them, yes this will be a joke for them, only they won't be laughing."

The restrictions in the bill appear meant to address reports about some of the projects endorsed by the U.S. mayors, Sepp said.

The stimulus bill, known as the American Recovery and Reinvestment Act, has been placed on the congressional fast-track. It could come to a vote in the full House of Representatives as soon as Wednesday, and Democratic leaders have said they aim to get the package to President Obama's desk for enactment by Presidents Day. Video Watch Obama say he's optimistic after discussing the bill with GOP leaders »
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"A historical level of transparency, oversight and accountability will help guarantee taxpayer dollars are spent wisely and Americans can see results for their investment," Rep. Dave Obey, the Wisconsin Democrat who leads the Appropriations Committee, said in a statement.

The committee also added language that would prevent any money given to the state of Illinois from being handled by the state's impeached governor, Rod Blagojevich.

Blagojevich faces federal charges accusing him of attempting to trade or sell the U.S. Senate seat vacated by Obama after his November election, and the state Senate began his trial Monday. The governor denies any wrongdoing and has skipped his impeachment trial to proclaim his innocence on the talk-show circuit.

The measure sets up project monitoring, including a government-wide recovery program Web site, where all announcements for grant competitions, formula grant allocations and competitive grant awards must be listed. In addition, government agencies must publish on the site, "a description of all infrastructure projects, and the total cost and the justification for using stimulus money."
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The strict rules require that the notification include "the name of a person to contact at the entity if there are concerns with the investment and an e-mail address for the federal official in each agency whom the public can contact," the bill states. "Also included within the notification must be a certification from the mayor or governor or other chief executive, as appropriate, that the investment has received the full review and vetting required by law and that they accept responsibility that this investment is an appropriate use of taxpayer dollars."

A Recovery Act Accountability and Transparency Board will be created "to review management of recovery dollars and provide early earning of problems," according to a summary of the bill provided by the appropriations committee. The board will include inspectors general and deputy cabinet secretaries.
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All About Barack Obama • U.S. House of Representatives • U.S. House Committee on Appropriations

Happy Lunar New Year 2009

2009-01-27T14:19:00.000-08:00

1. CHÚC MỪNG NĂM MỚI. 12 tháng phú quý, 365 ngày phát tài, 8760 giờ sung túc, 525600 phút thành công 31536000 giây VẠN SỰ NHƯ Ý. Wishing you 1 year of happiness, 12 months of fun, 52 weeks of gladness, 365 days of success, 8760 hours of good health and 525600 minutes of good luck !

2. Ngàn lần như ý, Vạn lần như mơ, Triệu sự bất ngờ, Tỷ lần hạnh phúc.

3. Tống cựu nghênh tân – Vạn sự cát tường – Toàn gia an phúc

4. Năm hết tết đến. Rước hên vào nhà. Quà cáp bao la, một nhà no đủ. Vàng bạc đầy tủ. Gia chủ phát tài. Già trẻ gái trai, sum vầy hạnh phúc. Cầu tài chúc phúc. An lành thịnh vượng.

5. Tết tới tấn tài – Xuân sang đắc lộc, Gia đình hạnh phúc - Vạn sự cát tường

6. Đong cho đầy Hạnh phúc. Gói cho tròn Lộc tài. Giữ cho mãi An Khang. Thắt cho chặt Phú quý. Cùng chúc nhau Như ý, Hứng cho tròn An Khang, Chúc năm mới Bình An. Cả nhà đều Sung túc.

7. Sang năm mới chúc mọi người có một bầu trời sức khoẻ, một biển cả tình thương, một đại dương tình cảm, một điệp khúc tình yêu, một người yêu chung thủy, một tình bạn mênh mông, một gia đình thịnh vượng. Chúc các bà, các ông, các cô, các chú, các chị, các anh sang năm mới vạn sự như ý, tỷ sự như mơ, làm việc như thơ, đời vui như nhạc, coi tiền như rác, coi bạc như rơm, chung thủy với cơm và sắc son với phở. Chúc vui vẻ

8. Cung Chúc Tân Xuân Phước Vĩnh Cửu
Chúc Trong Gia Quyến Được An Khương
Tân Niên Lai Đáo Đa Phú Quí
Xuân Đến An Khương Vạn Thọ Tường
9. CUNG kính mời nhau chén rượu nồng
CHÚC mừng năm đến, tiễn năm xong
TÂN niên phúc lộc khơi vừa dạ
XUÂN mới tài danh khởi thỏa lòng
VẠN chuyện lo toan thay đổi hết
SỰ gì bế tắc thảy hanh thông
NHƯ anh, như chị, bằng bè bạn
Ý nguyện, duyên lành, đẹp ước mong __._,_.___

President Barack Obama 2009 Inauguration and Address

2009-01-24T23:52:00.001-08:00

Another Vietnamese version of Obama's address

2009-01-20T16:26:00.001-08:00

Những người đồng bào của tôi,

Tôi đứng đây ngày hôm nay, nhỏ bé trước trọng trách phía trước chúng ta, biết ơn vì sự tín nhiệm các bạn đã trao tặng, lưu tâm tới những hy sinh của ông cha chúng ta. Tôi đã cảm ơn Tổng thống Bush vì sự cống hiến của ông cho đất nước của chúng ta cũng như sự hào phóng và hợp tác mà ông đã thể hiện trong suốt quá trình chuyển giao (quyền lực) này.

Tính tới thời điểm hiện tại, 44 người Mỹ đã đọc lời tuyên thệ nhậm chức. Các lời lẽ đã được xướng lên trong những đợt thủy triều dâng trào của sự thịnh vượng và mặt nước tĩnh lặng của hoà bình. Tuy nhiên, thường thì lời tuyên thệ nhậm chức được thực hiện trong lúc những đám mây quần tụ và các cơn bão điên cuồng. Vào những giây phút này, nước Mỹ đang tiến bước không chỉ bởi vì kĩ năng và tầm nhìn của những người cầm quyền cao nhất mà vì chúng ta, người dân, vẫn trung thành với các tư tưởng của các bậc tiền bối và tôn trọng các văn bản đã ban hành của chúng ta.

Mọi việc đã diễn ra như vậy. Và chúng sẽ phải như vậy trong thế hệ này của người dân Mỹ.

Hiện ai cũng hiểu rõ việc chúng ta đang ở giữa khủng hoảng. Đất nước chúng ta đang trong cuộc chiến chống một mạng lưới bạo lực và sự hận thù rộng lớn. Nền kinh tế của chúng ta đặc biệt bị suy yếu, một hậu quả của sự tham lam và vô trách nhiệm của một số đối tượng, nhưng cũng là thất bại của toàn thể chúng ta trong việc đưa ra những quyết định khó khăn và chuẩn bị cho đất nước bước vào một thời kỳ mới. Rất nhiều gia đình mất nhà ở; việc làm bị cắt giảm; các doanh nghiệp tạm ngừng hoạt động. Chăm sóc y tế của chúng ta quá đắt đỏ; các trường học của chúng ta không đáp ứng được mong đợi của nhiều người và mỗi ngày lại xuất hiện thêm những bằng chứng cho thấy các cách thức sử dụng năng lượng của chúng ta đang tăng cường sức mạnh cho các kẻ thù của chúng ta và đe doạ hành tinh này.

Đây là những biểu hiện của khủng hoảng, theo các dữ liệu và con số tính toán. Thiếu tính toán nhưng không thiếu đào sâu suy nghĩ là sự đào bới niềm tin khắp mảnh đất của chúng ta - một nỗi sợ hãi dai dẳng rằng sự suy sụp của nước Mỹ là không thể tránh khỏi và rằng thế hệ tiếp theo sẽ phải hạ thấp các tầm ngắm của họ.

Hôm nay, tôi nói với các bạn rằng những thách thức mà chúng ta đang đối mặt là có thực. Chúng rất nghiêm trọng và rất nhiều. Chúng sẽ không dễ gì được giải quyết hoặc kéo dài trong một thời gian ngắn. Tuy nhiên, nước Mỹ nên biết điều này - các thách thức đó sẽ được giải quyết.

Ngày hôm nay, chúng ta có mặt ở đây vì chúng ta đã chọn hy vọng thay vì sợ hãi, thống nhất các mục đích thay vì xung đột và bất hoà.

Ngày hôm nay, chúng ta tới đây để tuyên bố chấm dứt những lời than phiền vụn vặt và những lời cam kết giả dối, các lời buộc tội lẫn nhau và niềm tin rạn nứt và chấm dứt việc đời sống chính trị của chúng ta đã bị bóp nghẹt quá lâu rồi.

Chúng ta vẫn là một đất nước non trẻ, nhưng theo Kinh thánh, thời gian đã tới để loại bỏ những thứ ngây ngô. Thời gian đã tới để tái xác nhận một lần nữa tinh thần nhẫn nại của chúng ta; để lựa chọn cho chúng ta lịch sử tốt đẹp hơn; chuyển giao món quà quý giá đó, ý tưởng đáng khâm phục đó, vốn được truyền lại từ thế hệ này sang thế hệ khác: Lời cam kết của Chúa rằng tất cả đều bình đẳng, tất cả đều tự do và tất cả đều xứng đáng có cơ hội được theo đuổi tiêu chuẩn toàn diện của họ về hạnh phúc.

Trong khi tái khẳng định sự vĩ đại của đất nước chúng ta, chúng ta hiểu được rằng sự vĩ đại không bao giờ là cái có sẵn. Đó là thứ phải giành được. Cuộc hành trình của chúng ta chưa bao giờ là một trong những chuyến đi rút ngắn hay được định đoạt vì cái kém cỏi hơn. Đó không phải là con đường dành cho những người nhút nhát - cho những ai thích sự nhàn rỗi hơn công việc hay chỉ tìm kiếm niềm vui thích của sự giàu có và nổi tiếng. Nói đúng hơn, đó là con đường dành cho những người chấp nhận mạo hiểm, những người thực hiện, sáng tạo ra mọi thứ - một số người nổi danh nhưng đa phần họ là những người phụ nữ, nam giới vô danh trong công việc của mình, những người đã đưa chúng ta tiến bước trên con đường dài, gập ghềnh để tới sự thịnh vượng và tự do.

Đối với chúng ta, họ đã gói ghém những hành trang trải nghiệm ít ỏi của mình và vượt qua các đại dương để tìm kiếm một cuộc sống mới.

Đối với chúng ta, họ đã làm việc cặm cụi trong các công xưởng bóc lột công nhân tàn tệ và định cư ở phương Tây; chịu đựng đòn roi và cày những mảnh đất cằn cỗi.

Đối với chúng ta, họ đã chiến đấu và hy sinh; ở những nơi như Concord và Gettysburg; Normandy...

Thời gian và một lần nữa những người phụ nữ và nam giới này đã đấu tranh, hy sinh và làm việc cho tới khi tay họ chai lại để chúng ta có thể có một cuộc sống tốt đẹp hơn. Họ đã nhận thấy nước Mỹ to lớn hơn một tập hợp của những tham vọng cá nhân của chúng ta; vĩ đại hơn tất cả những khác biệt về dòng dõi hay của cải hoặc bè phái.

Đây là cuộc hành trình mà chúng ta sẽ tiếp tục ngày hôm nay. Chúng ta vẫn là một cường quốc thịnh vượng và hùng mạnh nhất trên trái đất. Các công nhân của chúng ta không kém năng suất hơn khi cuộc khủng hoảng đã bắt đầu. Đầu óc chúng ta không kém sáng tạo hơn. Nhu cầu về hàng hoá và dịch vụ của chúng ta không kém hơn tuần trước, tháng trước hay năm trước. Khả năng của chúng ta vẫn chưa bị suy giảm. Tuy nhiên, thời mà chúng ta vẫn khư khư ý kiến bảo vệ các lợi ích hẹp hòi và trì hoãn các quyết định khó khăn chắc hắn đã qua. Bắt đầu từ hôm nay, chúng ta phải vực dậy bản thân, cải thiện mình và bắt đầu lại công việc tái thiết nước Mỹ.

Ở bất cứ đâu mà chúng ta hướng tới sẽ có việc cần phải hoàn thành. Tình trạng kinh tế đòi hỏi hành động, táo bạo và mau lẹ. Và chúng ta phải hành động - không chỉ tạo ra các việc làm mới mà đề ra một cơ sở mới cho sự tăng trưởng. Chúng ta sẽ xây dựng các con đường, các cây cầu, mạng lưới điện và các tuyến dữ liệu mã hoá giúp ích cho nền thương mại của chúng ta và gắn kết chúng ta với nhau. Chúng ta sẽ khôi phục khoa học về đúng chỗ của nó cũng như tận dụng sự kỳ diệu của công nghệ để cải thiện chất lượng chăm sóc y tế và hạ giá thành dịch vụ này. Chúng ta sẽ khai thác mặt trời, gió và đất đai để tiếp nhiên liệu cho các xe hơi của chúng ta và vận hành các nhà máy. Và chúng ta sẽ cải tổ các trường phổ thông, cao đẳng và đại học của chúng ta nhằm đáp ứng những yêu cầu của một thời kỳ mới. Tất cả những điều này chúng ta có thể làm được. Tất cả những điều này chúng ta sẽ làm.

Hiện tại, có một số người đang hoài nghi về mức độ các tham vọng của chúng ta. Họ đề xuất rằng hệ thống của chúng ta sẽ không thể chống chịu được quá nhiều kế hoạch lớn. Khả năng ghi nhớ của họ thật hạn hẹn vì họ đã quên những gì mà đất nước này đã làm được; những gì mà những người phụ nữ và nam giới tự do có thể giành được khi khả năng sáng tạo được hoà hợp vì mục đích chung; và hoàn cảnh bắt buộc phải có dũng khí.

Điều mà những người hoài nghi không hiểu là đất đã chuyển dời dưới chân họ và rằng những luận điểm chính trị cũ rích từng huỷ hoại chúng ta suốt một thời gian dài không còn hiệu quả nữa. Câu hỏi chúng ta đặt ra ngày hôm nay không phải là liệu chính phủ của chúng ta quá lớn hay quá nhỏ mà là liệu nó có hoạt động hiệu quả , liệu nó có thể giúp đỡ các gia đình tìm được việc với thu nhập hợp lí, sự quan tâm mà họ có thể được hưởng và sự nghỉ ngơi đáng đề cao. Nếu câu trả lời là có, thì chúng ta dự định tiến bước. Nếu câu trả lời là không thì mọi chương trình sẽ chấm dứt. Và những ai trong chúng ta, những người nắm quyền quản lý các đồng đô la của công chúng sẽ phải chịu trách nhiệm - chi tiêu khôn ngoan, thay đổi những thói quen xấu và làm công việc của mình trong sự minh bạch - bởi vì chỉ khi đó chúng ta mới có thể khôi phục được sự tin tưởng thiết yếu giữa người dân và chính phủ của họ.

Câu hỏi phía trước chúng ta hiện nay cũng không phải là: liệu thị trường là một lực lượng vĩnh viễn hay tạm thời. Sức mạnh tạo ra của cải và phát triển sự tự do của nó là không thể sánh kịp nhưng cuộc khủng hoảng đã gợi nhắc chúng ta rằng không có một cái nhìn thận trọng thì thị trường có thể vọt ra ngoài tầm kiểm soát - và rằng một đất nước không thể thịnh vượng dài lâu khi họ chỉ chú trọng đến những thuận lợi. Sự thành công của nền kinh tế chúng ta luôn luôn không những phụ thuộc vào quy mô tổng sản phẩm quốc nội (GDP) mà còn cả phạm vi của sự thịnh vượng; vào khả năng mở rộng cơ hội tới mọi con người quyết tâm - không nằm ngoài lòng nhân hậu mà bởi vì đó là con đường chắc chắn nhất hướng tới sự tốt đẹp chung cho tất cả chúng ta.

Vì lợi ích chung, chúng ta phản đối việc đánh đổi việc giữ gìn sự an toàn với lý tưởng của chúng ta. Ông cha ta đã đối mặt với khó khăn vất vả và hy sinh để thảo nên và giữ gìn những quy định về quyền con người, đã có những chương sử viết bằng máu của biết bao thế hệ. Những lý tưởng đó vẫn soi sáng thế giới hôm nay, và chúng ta không hy sinh chúng. Và xin gửi lời tới nhân dân và chính phủ các nước đang dõi xem buổi lễ hôm nay, từ những thủ đô tráng lệ nhất cho tới những thôn làng nhỏ nhất như nơi cha tôi đã sinh ra, rằng xin hãy biết nước Mỹ là bạn của mỗi quốc gia, mỗi người đàn ông, đàn bà, trẻ thơ đang tìm kiếm hoà bình và danh dự. Và một lần nữa, chúng ta đã sẵn sàng đi đầu trong sự nghiệp chung đó.

Hãy nhớ rằng các thế hệ gần đây đã đối mặt với phát xít...không chỉ bằng tên lửa và xe tăng, mà bằng cả sự đoàn kết keo sơn và bằng những lý lẽ chắc chắn, vững vàng. Những thế hệ tiền bối đó đã hiểu rằng, chúng ta không thể chỉ dùng sức mạnh để bảo vệ mình, hay tự cho phép mình làm như vậy. Thay vào đó, họ đã hiểu rằng sức mạnh của chúng ta phát sinh từ việc sử dụng hợp lý sức mạnh sẵn có một cách phù hợp nhất; an ninh của chúng ta có được từ chính nghĩa, chẳng hạn, từ sự khiêm nhường và kiềm chế thực sự.

Chúng ta là người gìn giữ những huyền thoại đó. Với những nguyên tắc này làm kim chỉ nam, một lần nữa, chúng ta có thể có được sự hợp tác và hiểu biết lẫn nhau tốt hơn từ các quốc gia khác nhau, một khi phải đối mặt với những nguy cơ lớn hơn trong tương lai. Chúng ta sẽ chuyển giao Iraq một cách có trách nhiệm cho nhân dân Iraq, và củng cố nền hoà bình ở Afghanistan.

Xin nói với cả các bạn xưa lẫn những kẻ thù cũ, rằng chúng tôi sẽ phải làm việc không mệt mỏi để có thể giảm thiểu các nguy cơ hạt nhân và đẩy lùi bóng ma của việc ấm lên toàn cầu. Chúng tôi sẽ không xin lỗi về cách sống của mình, cũng như không do dự trong việc bảo vệ cho mình, và với những kẻ muốn thực hiện mưu đồ khủng bổ và giết hại dân thường vô tội, xin cảnh báo rằng tinh thần của chúng tôi giờ thậm chí còn mạnh mẽ hơn và không thể bị phá vỡ, các người sẽ không thể tồn tại lâu và chúng tôi sẽ đánh bại các người.

Và chúng ta hiểu rõ di sản của mình là sức mạnh lớn chứ không phải là điểm yếu. Chúng ta là một đất nước của người Thiên Chúa Giáo cũng như Hồi Giáo, của người Do Thái cũng như người Hindus — và của người không theo đạo. Chúng ta được định hình từ mọi thứ ngôn ngữ và văn hoá, vẽ từ những nét khác nhau từ khắp trái đất này; và vì chúng ta cũng đã nếm trải vị đắng của nội chiến đau thương, và cũng đã nổi lên từ đêm đen đó bằng sức mạnh của tình đoàn kết, chúng ta không thể không tin rằng, những định kiến xưa cũ rồi sẽ biến mất hoàn toàn; những khoảng cách về dòng giống sẽ được giải quyết hoàn toàn; và khi đó thế giới sẽ trở nên gần gũi hơn, nhân quyền của chúng ta sẽ tự sáng lên; và Mỹ phải đóng vai trò thúc đẩy một kỷ nguyên mới của hoà bình.

Và xin gửi lời tới thế giới Hồi Giáo rằng, chúng tôi đang tìm kiếm một hướng đi mới tới phía trước, dựa trên lợi ích chung và sự tôn trọng lẫn nhau. Xin nói với những nhà lãnh đạo trên trái đất đang kiếm cách gây hiềm khích, hoặc đang đổ lỗi những yếu kém của mình là do phương Tây gây ra, xin hãy biết rằng nhân dân của các vị sẽ phán xét các vị dựa trên những gì các vị đang dựng xây chứ không phải đang phá huỷ. Xin nói với những ai đang leo lên quyền lực bằng con đường tham nhũng và trấn áp sự bất đồng chính kiến, rằng các vị đang đi sai con đường lịch sử, song chúng tôi sẽ dang tay nếu các vị tự giải phóng cho mình đầu tiên.

Và xin gửi lời tới nhân dân các nước nghèo, rằng chúng tôi cam kết sẽ đứng cùng các bạn để giúp mùa màng các bạn bội thu, để khơi thông những dòng nước mát lành, để nuôi dưỡng những cơ thể đang héo hon và để bồi đắp tinh thần cho những con người đang khao khát nhận thức. Và xin nói với những quốc gia giống quốc gia chúng tôi, những quốc gia đang được hưởng thụ khá nhiều, rằng đã đến lúc chúng ta không nên để cho những người dân khác phải sống trong chịu đựng dù ở ngoài biên giới chúng ta, và đã đến lúc chúng ta không thể tiêu thụ tài nguyên của thế giới mà không để ý tới những hậu quả của nó với xung quanh. Để có một thế giới đổi thay, chúng ta phải thay đổi cùng nó.

Trong khi chúng ta đang xem xét cho đoạn đường phía trước, hãy dành những tình cảm biết ơn và kính trọng cho những người Mỹ dũng cảm mà vào giờ phút này đây, đang bồng súng đi tuần trên cát nóng sa mạc hay trên những ngọn núi cao ngoài xa. Họ có nhiều điều để nói với chúng ta hôm nay, hay những người đã nằm xuống trong tiếng nguyện cầu ở Arlington nhiều thế hệ nay. Chúng ta tôn vinh họ không chỉ vì họ là những người gác canh cho tự do của chúng ta, mà còn vì họ là biểu trưng cho tinh thần phục vụ nhân dân, cho sự sẵn sàng cống hiến vì một mục tiêu cao cả hơn cả lo cho bản thân mình. Và điều đó, ngay trong lúc này đây - thời khắc quyết định một thế hệ mới – đó chính là tinh thần mà chúng ta thừa hưởng.

Bất cứ những gì chính phủ có thể làm và buộc phải làm, nhất thiết phải trung thành và kiên định với nhân dân, nền tảng của đất nước này. Lòng tốt sẽ được ghi nhận khi cứu giúp người lạ khi có một con đê bị vỡ. Lòng vị tha sẽ được ghi nhận khi những người công nhân thà giảm giờ làm của mình còn hơn nhìn thấy đồng nghiệp phải mất việc trong những thời khắc khó khăn nhất. Lòng dũng cảm sẽ được ghi nhận khi ngwời lính cứu hoả tìm đường leo lên cầu thang dày đặc khói hay thậm chí chỉ là việc bố mẹ nuôi dưỡng con cái mình. Những đức tính đó tạo nên số phận của chúng ta.

Thách thức của chúng ta có thể sẽ phát sinh mới lạ. Công cụ đi kèm với những thách thức đó mà chúng ta phải đối mặt có thể cũng mới lạ. Song với những giá trị đã giúp tạo nên thành công của chúng ta – siêng năng, trung thực, dũng cảm, fair play, khoan dung, quan tâm chia sẻ, trung thành và ái quốc – thì những thách thức mới lạ ấy rồi cũng sẽ trở thành quá khứ. Những thách thức là có thực. Nó âm thầm xuyên suốt lịch sử của chúng ta. Đòi hỏi của quá khứ là phải tìm ra sự thật. Đòi hỏi của chúng ta ngày nay là một kỷ nguyên mới với đầy đủ trách nhiệm - một sự công nhận, đối với mọi người Mỹ, rằng chúng ta phải có trách nhiệm với chính bản thân mình, với đất nước và với thế giới, những trách nhiệm mà chúng ta không thể nhận bừa song lại phải đón lấy nó một cách vui vẻ, với lập trường vững chắc rằng không có gì thoả mãn tinh thần hơn, định nghĩa được tính cách chúng ta hơn là xả thân vì những trọng trách như vậy.

Thách thức đó là cái giá của những cam kết về quyền công dân.

Đó là khởi nguồn của niềm tin của chúng ta - niềm tin tưởng rằng Chúa Trời đã gọi tên chúng ta để kiến tạo nên vận mệnh chưa định sẵn.

Đây là ý nghĩa của tự do và hệ tư tưởng của chúng ta, là lý do mà mỗi người đàn ông, đàn bà, trẻ thơ của mọi sắc tộc có thể cùng tham gia hội họp cùng nhau tại địa điểm tráng lệ này, là lý do mà một người đàn ông mà nếu chưa đầy 60 năm trước không thể phục vụ ở một nhà hàng địa phương thì giờ đây lại có thể đang đứng đây để chuẩn bị tuyên thệ nhậm chức.

Vì vậy hãy cùng nhau ghi nhớ ngày này, để biết chúng ta là ai và chúng ta đã tiến xa tới đâu. Vào cái năm nước Mỹ được sinh ra, trong tháng lạnh giá nhất, một nhóm nhỏ những người yêu nước dồn lại trong tình cảnh lửa đang tắt lịm dần bên một dòng sông đã đóng băng. Thủ đô đã bị phong toả. Quân thù đang tiến tới. Tuyết trắng chan hoà cùng máu đỏ. Vào thời khắc mà cuộc cách mạng đang đứng trước thời khắc thử thách nhất, người cha của đất nước ta đã đọc những lời này với mọi người:

"Hãy để hậu thế nói với thế giới tương lai… rằng giữa sâu thẳm của mùa đông, khi mà không còn tồn tại gì ngoài hy vọng và nhân cách... rằng thành phố và đất nước của ta, đang đối mặt với một nguy hiểm chung, hãy tiến lên đối mặt với nó!"

Nước Mỹ, đang đối mặt với một nguy hiểm chung, vào thời khắc mùa đông khó khăn này, chúng ta hãy cùng nhớ lại những từ bất hủ đó. Với hy vọng và nhân cách, một lần nữa, chúng ta hãy dũng cảm đối mặt với tình thế đóng băng hiện nay, và bền gan cho dẫu bão tố nào có tới đi nữa. Hãy để cháu chắt của chúng ta được nghe chuyện rằng, khi chúng ta bị thử thách, chúng ta đã không bỏ dở hành trình, chúng ta không lui bước hay gục ngã; và với đôi mắt nhìn thẳng về chân trời phía trước cùng Chúa trời phù hộ trên cao, chúng ra tiếp tục dành lấy món quà tuyệt vời của tự do và giao nó cho các thế hệ tương lai.

Obama's address in Vietnamese

2009-01-20T16:22:00.001-08:00

20 Tháng 1 2009 - Cập nhật 19h13 GMT

Diễn văn nhậm chức của ông Obama

Thưa quốc dân,

Tôi đứng đây ngày hôm nay, cảm thấy thật khiêm nhường trước trách nhiệm trước mắt, biết ơn về sự tin cậy của quý vị, và nhớ về những hy sinh của tổ tiên. Tôi xin cảm ơn Tổng Thống Bush về những cống hiến của Ngài cho đất nước, về sự hào phóng và tinh thần cộng tác của Ngài trong quá trình chuyển giao này.

Bốn mươi tư công dân Mỹ đã tuyên thệ nhận chức tổng thống. Những từ ngữ được vang lên trong những thời thịnh vượng và thời bình. Và những lời tuyên thệ cũng thường vang lên trong lúc dông bão. Vào những thời khắc đó, nước Mỹ đã vượt qua, không chỉ đơn giản nhờ vào kỹ năng hay tầm nhìn của những người lãnh đạo, mà bởi Chúng Ta, Nhân Dân Mỹ đã có niềm tin vào lý tưởng của cha ông, theo đúng tinh thần của các văn bản lập quốc của chúng ta.

Niềm tin đó đúng trong quá khứ. Niềm tin đó phải đồng hành với thế hệ người Mỹ hiện nay.

Các thách thức nghiêm trọng

Chúng ta hiện đang trong giữa cuộc khủng hoảng mà ai ai cũng biết. Đất nước chúng ta đang trong thời chiến, chống lại một mạng lưới bạo lực và thù hận rộng khắp, một phần là hậu quả của thái độ tham lam, vô trách nhiệm của một số người, nhưng cũng là hậu quả của việc chúng ta đã thất bại, không có những lựa chọn khó khăn, chuẩn bị sẵn sàng cho đất nước trong kỷ nguyên mới.

Nhà mất, việc không, kinh doanh đình đốn. Chi phí y tế thì quá tốn kém; chất lượng trường học khiến nhiều người thất vọng. Càng ngày càng có thêm bằng chứng cho thấy cách chúng ta sử dụng năng lượng càng khiến kẻ thù của chúng ta mạnh thêm trong lúc trái đất càng bị đe doạ thêm.

Đó là các chỉ dấu về cuộc khủng hoảng, tính theo dữ liệu và số liệu thống kê. Không đo đếm được cụ thể đến vậy, nhưng cũng không kém phần sâu sắc, đó là tâm trạng mất niềm tin trên toàn đất nước - một tâm trạng sợ hãi đeo đẳng rằng sự đi xuống của nước Mỹ là không thể tránh khỏi, và rằng thế hệ kế tiếp sẽ phải hạ bớt tầm nhìn.

Hôm nay, tôi xin nói với quý vị rằng các thách thức mà chúng ta đang đối diện là rất thật. Các thách thức đó rất nghiêm trọng và có nhiều. Các thách thức đó không thể xử lý được một cách dễ dàng hay trong một thời gian ngắn. Nhưng xin quý vị hãy biết rằng chúng sẽ được xử lý.

Ngày hôm nay, chúng ta tụ hội về đây bởi chúng ta đã lựa chọn hy vọng thay vì sợ hãi, cùng hướng tới một mục tiêu chung thay vì có xung đột và bất hòa.

Ngày hôm nay, chúng ta tới để tuyên bố chấm dứt những lời than vãn vụn vặt cùng những lời hứa hẹn dối trá, những lời tố cáo lẫn nhau cùng những lời nói giáo điều nhàm chán, những thứ đã bóp nghẹt nền chính trị của chúng ta quá nhiều.

Quốc gia dám chấp nhận rủi ro

Chúng ta vẫn là một quốc gia non trẻ, nhưng như kinh thánh nói, đã tới lúc bỏ sang một bên những điều nông nổi. Đã đến lúc tái xác nhận tinh thần kiên nhẫn của chúng ta, nhằm chọn lựa một lịch sử tốt đẹp hơn, nhằm hướng tới món quà quý giá, ý tưởng cao đẹp vốn được truyền từ thế hệ này sang thế hệ khác: Chúa trao cho mọi người quyền được bình đẳng, quyền được tự do, mọi người đều có quyền mưu cầu hạnh phúc.

Trong khi tái khẳng định sự vĩ đại của dân tộc chúng ta, chúng ta hiểu rằng sự vĩ đại đó không bao giờ là thứ được cho không. Chúng ta đã phải giành lấy nó. Hành trình của chúng ta đi cho tới nay chưa bao giờ là một trong những con đường đi tắt hoặc một cái gì đó dễ dàng hơn. Đó không phải là con đường cho những người nhút nhát, cho những người hay ưa thích sự nhàn tản hơn là lao động, hay cho những người chỉ tìm kiếm những thú vui của sự giàu sang và nổi tiếng. Thay vào đó, chính những người dám chấp nhận hiểm nguy, những người lao động, những người làm ra các sản vật – mà một vài trong số họ là những người nổi tiếng nhưng thông thường hơn là những người đàn ông và đàn bà vô danh trong những lao động của họ - là những người đã đưa chúng ta vượt qua con đường dài đầy khó khăn gập ghềnh và dẫn chúng ta tới sự thịnh vượng và tự do.

Vì chúng ta, họ đã phải bươn chải khắp các đại dương mà trong tay chỉ có chút ít tư trang, của cải để mưu cầu một cuộc đời mới.

Vì chúng ta, họ đã phải vất vả lao động ở những công xưởng hà khắc và phải cất công định cư ở miền Tây; đã phải chịu đựng những trận đòn roi da và cấy cầy trên nền đất cứng.

Vì chúng ta, họ đã chiến đấu và hy sinh ở những nơi như Concord và Gettysburg, Normandy và Khe Sanh.

Dấu ấn Mỹ

Hết lần này đến lần khác, những người đàn ông và đàn bà này đã tranh đấu, hy sinh và làm việc tới tận khi đôi bàn tay của họ trai sạm để chúng ta có thể có một cuộc sống tốt đẹp hơn, Họ đã nhìn thấy nước Mỹ lớn hơn tất cả những tham vọng cá nhân, lớn hơn tất cả những khác biệt về sự sinh thành, của cải và phe phái của chúng ta gộp lại.

Đây là hành trình chúng ta tiếp tục ngày hôm nay. Chúng ta vẫn là quốc gia thịnh vượng nhất, mạnh nhất trên trái đất. Các công nhân của chúng ta không hề làm việc kém hiệu quả hơn thời điểm cuộc khủng hoảng này bắt đầu. Trí óc của chúng ta không hề kém sáng tạo, hàng hoá và dịch vụ của chúng ta không hề kém cần thiết hơn tuần trước, tháng trước hay năm ngoái. Năng lực của chúng ta vẫn không hề bị sút giảm. Nhưng thời của sự bảo vệ những lợi ích hẹp hòi và lảng tránh những quyết định không mấy thú vị của chúng ta - thời đó chắc chắn đã trôi qua.

Bắt đầu ngày hôm nay, chúng ta phải tự mình đứng dậy, tự phủi bụi và bắt đầu trở lại công việc tái lập nước Mỹ. Bởi vì ở bất cứ nơi đâu chúng ta nhìn vào, chúng ta sẽ thấy có việc phải làm. Tình trạng kinh tế hiện nay đang kêu gọi chúng ta hành động, can đảm và mau lẹ, và chúng ta sẽ hành động – không chỉ để tạo ra những việc làm mới, mà còn để đặt một nền móng mới cho sự tăng trưởng. Chúng ta sẽ xây dựng cầu, đường, các lưới điện và đường dây kỹ thuật số để cung cấp cho thương mại và kết nối chúng ta lại với nhau. Chúng ta sẽ khôi phục khoa học ở vị trí đúng đắn của nó, sẽ sử dụng các điều kỳ diệu của công nghệ để nâng cao chất lượng chăm sóc y tế và hạ giá thành của nó. Chúng ta sẽ khai thác năng lượng từ mặt trời, từ gió và đất để cung cấp nhiên liệu cho xe hơi và vận hành các nhà máy của chúng ta. Và chúng ta sẽ chuyển các trường học, trường học phổ thông và đại học để đáp ứng các nhu cầu của một thời đại mới. Tất cả điều này chúng ta có thể làm. Tất cả những điều này, chúng ta sẽ làm.

Khôi phục niềm tin

Vào lúc này, đang có những người đặt ra các câu hỏi trước các tham vọng của chúng ta - những người này cho rằng hệ thống của chúng ta không thể kham nổi quá nhiều các kế hoạch. Trí nhớ của họ quá ngắn. Bởi vì họ đã quên rằng đất nước này đã làm được điều đó; điều mà những con người tự do, nam cũng như nữ, có thể đạt được khi trí tưởng tượng của mọi người được hòa trong một mục đích chung, điều cần thiết cho sự can đảm.

Điều mà những người hoài nghi không thể hiểu là mặt đất đang chuyển dịch dưới chân họ - là những luận điểm chính trị cũ kỹ vốn làm héo mòn chúng ta lâu nay, không còn có thể áp dụng được nữa. Câu hỏi chúng ta đặt ra hôm nay không phải là liệu chính phủ của chúng ta quá lớn hay quá nhỏ, nhưng mà là liệu nó có vận hành được hay không - liệu nó có thể giúp cho các gia đình tìm kiếm được việc làm với một đồng lương tử tế, một sự chăm sóc y tế mà họ có thể chi trả được hay tìm kiếm được một hưu bổng xứng đáng. Ở đâu mà câu trả lời là được, chúng ta dự kiến sẽ tiến tới. Ở đâu mà câu trả lời là không, các chương trình sẽ dừng lại.

Và ai trong số chúng ta đang quản lý những đồng đô-la công cộng sẽ phải thận trọng tính toán - để chi tiêu một cách khôn ngoan, phải thay đổi những thói quen xấu và phải làm công việc của chúng ta dưới thanh thiên bạch nhật – vì chỉ khi đó chúng ta mới có thể khôi phục được lòng tin hết sức quan trọng giữa người dân và chính phủ của họ.

Cũng không phải đó là câu hỏi đặt ra trước chúng ta rằng liệu thị trường là một lực lượng lành mạnh hay không. Sức mạnh của thị trường nhằm sản xuất ra của cải và mở rộng tự do là không gì sánh nổi, nhưng cuộc khủng hoảng này nhắc nhở chúng ta rằng nếu không có một con mắt thận trọng, thị trường có thể xoay chuyển và đi ra khỏi vòng kiểm soát - một quốc gia không thể thịnh vượng lâu dài khi nó chỉ tạo thuận lợi cho những người giàu có. Thành công của nền kinh tế của chúng ta đã luôn luôn dựa trên không chỉ quy mô của tổng sản phẩm quốc nội của chúng ta, mà còn dựa trên tầm vóc của sự thịnh vượng của chúng ta; dựa trên khả năng mở rộng cơ hội cho tất cả những người thiện ý, sẵn lòng – không nằm ngoài tính từ thiện, mà còn bởi vì đó là con đường chắc chắn nhất đưa tới lợi ích chung của chúng ta.

Sẵn sàng dẫn dắt

Đối với công cuộc quốc phòng, chúng ta bác bỏ sự lựa chọn giữa an toàn và các lý tưởng của chúng ta. Những bậc cha ông khai quốc của chúng ta, vốn đã từng phải đương đầu với những hiểm nguy mà chúng ta hiếm khi có thể hình dung được, đã soạn thảo ra một bản hiến chương đảm bảo pháp trị và các quyền con người, một bản hiến chương đóng góp bằng máu của nhiều thế hệ. Những lý tưởng này vẫn tiếp tục thắp sáng trên thế giới, và chúng ta sẽ không từ bỏ chúng vì những điều không thích hợp.

Và do đó đối với tất cả các dân tộc và chính phủ khác đang theo dõi chúng ta hôm nay, từ các thủ đô lớn nhất tới ngôi làng nhỏ nơi cha tôi ra đời: quý vị biết rằng nước Mỹ là bạn bè với từng quốc gia, từng cá nhân dù là nam hay nữ, từng đứa trẻ, đang tìm kiếm tương lai hoà bình và phẩm giá, và chúng ta sẵn sàng để đi đầu một lần nữa.

Hãy nhớ rằng thế hệ cha anh chúng ta đã hạ gục chủ nghĩa phát xít và chủ nghĩa cộng sản, không chỉ bằng tên lửa và xe tăng mà bằng những liên minh vững chắc và bằng niềm tin bền bỉ. Lớp cha anh hiểu rằng chỉ sức mạnh không thôi sẽ không thể bảo vệ nổi chúng ta, và nó cũng không cho phép chúng ta làm những gì mình muốn. Các thế hệ trước hiểu rằng sức mạnh của chúng ta lớn mạnh dần là nhờ chúng ta đã sử dụng nó một cách cẩn trọng. Nền an ninh của chúng ta được xây dựng từ sự chính danh, từ sự gương mẫu, từ sự khiêm nhường và sự biết kiềm chế của chúng ta.

Chúng ta là những người gìn giữ di sản này. Được dẫn dắt bởi những nguyên tắc cơ bản này, một lần nữa chúng ta sẽ đương đầu được với các đe doạ mới, là các đe doạ cần được đối phó bằng những nỗ lực to lớn hơn - thậm chí là cả sự hợp tác to lớn hơn cùng và sự thông hiểu hơn giữa các quốc gia. Chúng ta sẽ bắt đầu chuyển giao một cách có trách nhiệm đất nước Iraq cho người dân Iraq, và sẽ vượt lên giành giật hòa bình vốn khó giữ tại Afghanistan. Cùng với bạn cũ thù xưa, chúng ta sẽ làm việc không ngừng nhằm giảm bớt đe dọa hạt nhân và đảo ngược tiến trình ấm nóng toàn cầu. Chúng ta sẽ không xin lỗi vì cách sống của chúng ta và không do dự khi bảo vệ lối sống này. Đối với những kẻ muốn đạt mục tiêu bằng cách khủng bố và giết người vô tội, thì các người hãy nghe đây: tinh thần của chúng ta mạnh hơn của các người, các người không thể bẻ gãy ý chí của chúng ta, các người không thể tồn tại lâu chúng ta, và chúng ta sẽ đánh bại các người.

Kỷ nguyên hoà bình

Chúng ta biết rằng di sản của chúng ta là sức mạnh chứ không phải là sự yếu đuối. Chúng ta là một quốc gia của người Thiên Chúa Giáo và người Hồi Giáo, người Do Thái giáo và người Ấn giáo, và của cả những người không tôn giáo. Chúng ta được hình thành bởi các ngôn ngữ và văn hóa hội về từ khắp nơi trên trái đất. Từng đã trải qua vị đắng của nội chiến và tệ phân biệt màu da, từng trỗi dậy từ thời kỳ đen tối đó để trở nên mạnh mẽ hơn, đoàn kết hơn, chúng ta tin rằng rồi sẽ đến ngày nỗi thù nghịch cũng qua đi, làn phân ranh giữa các bộ tộc sẽ không còn; khi thế giới này trở nên nhỏ bé hơn, lòng nhân hậu sẽ ngự trị và Hoa Kỳ sẽ đóng vai trò mở ra một kỷ nguyên mới, hoà bình.

Đối với thế giới Hồi giáo, chúng ta tìm hướng đi tới mới, dựa trên lợi ích chung và sự tôn trọng lẫn nhau. Đối với các nhà lãnh đạo đang muốn gieo rắc xung đột hay đổ lỗi cho phương Tây gây ra những tệ nạn trong xã hội của họ - quý vị hãy hiểu rằng người dân sẽ đánh giá dựa trên những gì quý vị xây chứ không phải những gì quý vị phá. Đối với những người bám lấy quyền lực nhờ tham nhũng, dối trá và bịt miệng tiếng nói đối lập, hãy biết rằng quý vị đang đi ngược lịch sử, nhưng chúng tôi sẽ chìa tay ra nếu quý vị biết từ bỏ nắm đấm.

Đối với các quốc gia nghèo khó, chúng tôi cam kết sẽ sánh vai cùng quý vị để giúp các trang trại xanh tươi, để dòng nước sạch được tuôn trào, để nuôi dưỡng những sinh linh đói khát. Và đối với những quốc gia được hưởng sự đầy đủ như chúng ta, chúng ta nói với họ rằng chúng ta không thể tiếp tục thờ ơ với những nỗi thống khổ phía bên ngoài biên giới, cũng không thể tiếp tục sử dụng tài nguyên thế giới mà không quan tâm gì tới những ảnh hưởng kéo theo. Thế giới đã thay đổi và chúng ta phải thay đổi theo.

Obama

2009-01-20T10:19:00.001-08:00

The invocation: Rick Warren

2009-01-20T10:18:00.001-08:00

Much ado about nothing? After Rev. Rick Warren delivered the invocation this morning, the reaction to his prayer has been muted, if not silent.

No fireworks, no controversial statements:

Warren's prayer invoked the memory of Martin Luther King, Jr. and asked that Americans remember they are united by a commitment to freedom and justice for all.

Obama sparked a firestorm when he tapped the evangelical pastor. The Saddleback Church founder supported Proposition 8, which banned same-sex marriage in California, and has made controversial statements about gay relationships.

Obama defended his choice of Warren to the AP:

"During the course of the entire inaugural festivities, there are going to be a wide range of viewpoints that are presented. And that's how it should be, because that's what America's about. That's part of the magic of this country ... we are diverse and noisy and opinionated."

Rep. Barney Frank, the longest-serving openly gay member of Congress made his displeasure clear with Obama's pick:

"If he was inviting the Rev. Warren to participate in a forum and to make a speech, that would be a good thing," Frank said. "But being singled out to give the prayer at the inauguration is a high honor. It has traditionally given as a mark of great respect. And, yes, I think it was wrong to single him out for this mark of respect."

It's not just gay-rights activists who are incensed with Warren. For years, fellow evangelicals have criticized him for not being conservative enough. AP explains why he has come under attack from his own flock:

He has spoken out against the use of torture to combat terrorism. He has joined the fight against global warming and, encouraged by his wife, has put his prestige and money behind helping people with AIDS. The Warrens have done so at a time when a notable number of conservative Christians still consider the virus a punishment from God.

On Monday, Warren gave the keynote address at the Ebenezer Baptist Church in Atlanta, on what would have been Martin Luther King Jr.'s 80th birthday:

"Martin Luther King was a mighty tool in the hand of God. But God isn't through. Justice is a journey and we're getting further and further along."

- Lili Ladaga

Barrack Obama's address

2009-01-20T10:14:00.000-08:00

Text of President Barack Obama's inaugural address

2009-01-20T10:13:00.000-08:00

OBAMA: My fellow citizens:

I stand here today humbled by the task before us, grateful for the trust you have bestowed, mindful of the sacrifices borne by our ancestors. I thank President Bush for his service to our nation, as well as the generosity and cooperation he has shown throughout this transition.

Forty-four Americans have now taken the presidential oath. The words have been spoken during rising tides of prosperity and the still waters of peace. Yet, every so often the oath is taken amidst gathering clouds and raging storms. At these moments, America has carried on not simply because of the skill or vision of those in high office, but because we the people have remained faithful to the ideals of our forebears, and true to our founding documents.

So it has been. So it must be with this generation of Americans.

That we are in the midst of crisis is now well understood. Our nation is at war, against a far-reaching network of violence and hatred. Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age. Homes have been lost; jobs shed; businesses shuttered. Our health care is too costly; our schools fail too many; and each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet.

These are the indicators of crisis, subject to data and statistics. Less measurable but no less profound is a sapping of confidence across our land — a nagging fear that America's decline is inevitable, and that the next generation must lower its sights.

Today I say to you that the challenges we face are real. They are serious and they are many. They will not be met easily or in a short span of time. But know this, America — they will be met.

On this day, we gather because we have chosen hope over fear, unity of purpose over conflict and discord.

On this day, we come to proclaim an end to the petty grievances and false promises, the recriminations and worn out dogmas, that for far too long have strangled our politics.

We remain a young nation, but in the words of scripture, the time has come to set aside childish things. The time has come to reaffirm our enduring spirit; to choose our better history; to carry forward that precious gift, that noble idea, passed on from generation to generation: the God-given promise that all are equal, all are free and all deserve a chance to pursue their full measure of happiness.

In reaffirming the greatness of our nation, we understand that greatness is never a given. It must be earned. Our journey has never been one of shortcuts or settling for less. It has not been the path for the faint-hearted — for those who prefer leisure over work, or seek only the pleasures of riches and fame. Rather, it has been the risk-takers, the doers, the makers of things — some celebrated but more often men and women obscure in their labor, who have carried us up the long, rugged path towards prosperity and freedom.

For us, they packed up their few worldly possessions and traveled across oceans in search of a new life.

For us, they toiled in sweatshops and settled the West; endured the lash of the whip and plowed the hard earth.

For us, they fought and died, in places like Concord and Gettysburg; Normandy and Khe Sahn.

Time and again these men and women struggled and sacrificed and worked till their hands were raw so that we might live a better life. They saw America as bigger than the sum of our individual ambitions; greater than all the differences of birth or wealth or faction.

This is the journey we continue today. We remain the most prosperous, powerful nation on Earth. Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished. But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions — that time has surely passed. Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America.

For everywhere we look, there is work to be done. The state of the economy calls for action, bold and swift, and we will act — not only to create new jobs, but to lay a new foundation for growth. We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together. We will restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost. We will harness the sun and the winds and the soil to fuel our cars and run our factories. And we will transform our schools and colleges and universities to meet the demands of a new age. All this we can do. And all this we will do.

Now, there are some who question the scale of our ambitions — who suggest that our system cannot tolerate too many big plans. Their memories are short. For they have forgotten what this country has already done; what free men and women can achieve when imagination is joined to common purpose, and necessity to courage.

What the cynics fail to understand is that the ground has shifted beneath them — that the stale political arguments that have consumed us for so long no longer apply. The question we ask today is not whether our government is too big or too small, but whether it works — whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified. Where the answer is yes, we intend to move forward. Where the answer is no, programs will end. And those of us who manage the public's dollars will be held to account — to spend wisely, reform bad habits, and do our business in the light of day — because only then can we restore the vital trust between a people and their government.

Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched, but this crisis has reminded us that without a watchful eye, the market can spin out of control — and that a nation cannot prosper long when it favors only the prosperous. The success of our economy has always depended not just on the size of our gross domestic product, but on the reach of our prosperity; on our ability to extend opportunity to every willing heart — not out of charity, but because it is the surest route to our common good.

As for our common defense, we reject as false the choice between our safety and our ideals. Our founding fathers, faced with perils we can scarcely imagine, drafted a charter to assure the rule of law and the rights of man, a charter expanded by the blood of generations. Those ideals still light the world, and we will not give them up for expedience's sake. And so to all other peoples and governments who are watching today, from the grandest capitals to the small village where my father was born: know that America is a friend of each nation and every man, woman, and child who seeks a future of peace and dignity, and that we are ready to lead once more.

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.

We are the keepers of this legacy. Guided by these principles once more, we can meet those new threats that demand even greater effort — even greater cooperation and understanding between nations. We will begin to responsibly leave Iraq to its people, and forge a hard-earned peace in Afghanistan. With old friends and former foes, we will work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet. We will not apologize for our way of life, nor will we waver in its defense, and for those who seek to advance their aims by inducing terror and slaughtering innocents, we say to you now that our spirit is stronger and cannot be broken; you cannot outlast us, and we will defeat you.

For we know that our patchwork heritage is a strength, not a weakness. We are a nation of Christians and Muslims, Jews and Hindus — and non-believers. We are shaped by every language and culture, drawn from every end of this Earth; and because we have tasted the bitter swill of civil war and segregation, and emerged from that dark chapter stronger and more united, we cannot help but believe that the old hatreds shall someday pass; that the lines of tribe shall soon dissolve; that as the world grows smaller, our common humanity shall reveal itself; and that America must play its role in ushering in a new era of peace.

To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West — know that your people will judge you on what you can build, not what you destroy. To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history; but that we will extend a hand if you are willing to unclench your fist.

To the people of poor nations, we pledge to work alongside you to make your farms flourish and let clean waters flow; to nourish starved bodies and feed hungry minds. And to those nations like ours that enjoy relative plenty, we say we can no longer afford indifference to suffering outside our borders; nor can we consume the world's resources without regard to effect. For the world has changed, and we must change with it.

As we consider the road that unfolds before us, we remember with humble gratitude those brave Americans who, at this very hour, patrol far-off deserts and distant mountains. They have something to tell us today, just as the fallen heroes who lie in Arlington whisper through the ages. We honor them not only because they are guardians of our liberty, but because they embody the spirit of service; a willingness to find meaning in something greater than themselves. And yet, at this moment — a moment that will define a generation — it is precisely this spirit that must inhabit us all.

For as much as government can do and must do, it is ultimately the faith and determination of the American people upon which this nation relies. It is the kindness to take in a stranger when the levees break, the selflessness of workers who would rather cut their hours than see a friend lose their job which sees us through our darkest hours. It is the firefighter's courage to storm a stairway filled with smoke, but also a parent's willingness to nurture a child, that finally decides our fate.

Our challenges may be new. The instruments with which we meet them may be new. But those values upon which our success depends — hard work and honesty, courage and fair play, tolerance and curiosity, loyalty and patriotism — these things are old. These things are true. They have been the quiet force of progress throughout our history. What is demanded then is a return to these truths. What is required of us now is a new era of responsibility — a recognition, on the part of every American, that we have duties to ourselves, our nation, and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character, than giving our all to a difficult task.

This is the price and the promise of citizenship.

This is the source of our confidence — the knowledge that God calls on us to shape an uncertain destiny.

This is the meaning of our liberty and our creed — why men and women and children of every race and every faith can join in celebration across this magnificent mall, and why a man whose father less than sixty years ago might not have been served at a local restaurant can now stand before you to take a most sacred oath.

So let us mark this day with remembrance, of who we are and how far we have traveled. In the year of America's birth, in the coldest of months, a small band of patriots huddled by dying campfires on the shores of an icy river. The capital was abandoned. The enemy was advancing. The snow was stained with blood. At a moment when the outcome of our revolution was most in doubt, the father of our nation ordered these words be read to the people:

"Let it be told to the future world ... that in the depth of winter, when nothing but hope and virtue could survive...that the city and the country, alarmed at one common danger, came forth to meet (it)."

America, in the face of our common dangers, in this winter of our hardship, let us remember these timeless words. With hope and virtue, let us brave once more the icy currents, and endure what storms may come. Let it be said by our children's children that when we were tested we refused to let this journey end, that we did not turn back nor did we falter; and with eyes fixed on the horizon and God's grace upon us, we carried forth that great gift of freedom and delivered it safely to future generations.

Obama takes office, saying choose 'hope over fear'

2009-01-20T10:12:00.000-08:00

WASHINGTON – Stepping into history, Barack Hussein Obama grasped the reins of power as America's first black president on Tuesday, saying the nation must choose "hope over fear, unity of purpose over conflict and discord" to overcome the worst economic crisis since the Great Depression.

In frigid temperatures, an exuberant crowd of more than a million packed the National Mall and parade route to celebrate Obama's inauguration in a high-noon ceremony. They filled the National Mall, stretching from the inaugural platform at the U.S. Capitol to the Lincoln Memorial in the distance.

With 11 million Americans out of work and trillions of dollars lost in the stock market's tumble, Obama emphasized that his biggest challenge is to repair the tattered economy left behind by outgoing President George W. Bush.

"Our time of standing pat, of protecting narrow interests and putting off unpleasant decisions — that time has surely passed," Obama said in an undisguised shot at Bush administration policies. "Starting today, we must pick ourselves up, dust ourselves off and begin the work of remaking America."

The dawn of the new Democratic era — with Obama allies in charge of both houses of Congress — ends eight years of Republican control of the White House by Bush, who leaves Washington as one of the nation's most unpopular and divisive presidents, the architect of two unfinished wars and the man in charge at a time of economic calamity that swept away many Americans' jobs, savings and homes.

Obama's election was cheered around the world as a sign that America will be more embracing, more open to change. "To the Muslim world," Obama said, "we seek a new way forward, based on mutual interest and mutual respect."

Still, he bluntly warned, "To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West — know that your people will judge you on what you can build, not what you destroy."

"To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history, but that we will extend a hand if you are willing to unclench your fist."

Two years after beginning his improbable quest as a little-known, first-term Illinois senator with a foreign-sounding name, Obama moved into the Oval Office as the nation's fourth youngest president, at 47, and the first African-American, a barrier-breaking achievement believed impossible by generations of minorities.

He said it was a moment to recall "that all are equal, all are free and all deserve a chance to pursue their full measure of happiness."

Obama called for a political truce in Washington to end "the petty grievances and false promises, the recriminations and worn-out dogmas, that for far too long have strangled our politics."

He said that all Americans have roles in rebuilding the nation by renewing the traditions of hard work, honesty and fair play, tolerance, loyalty and patriotism.

"What is required of us now is a new era of responsibility, a recognition, on the part of every American, that we have duties to ourselves, our nation and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character, than giving our all to a difficult task."

With the economy in a long and deepening recession, Obama said it was time for swift and bold action to create new jobs and lay a foundation for growth. Congressional Democrats have readied an $825 billion stimulus plan of tax cuts and spending for roads, bridges, schools, electric grids and other projects.

"The question we ask today is not whether our government is too big or too small, but whether it works," the new president said.

A mighty chorus of cheers erupted as Obama stepped to the inaugural platform, a midday sun warming the crowd that had waited for hours in the cold. There were some boos when Bush and Vice President Dick Cheney came onto the platform.

In his remarks, Obama took stock of the nation's sobering problems.

"That we are in the midst of crisis is now well understood," he said.

"Our nation is at war, against a far-reaching network of violence and hatred. Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age," Obama said. "Homes have been lost, jobs shed, businesses shuttered. Our health care is too costly, our schools fail too many, and each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet."

It was the first change of administrations since the terror attacks of Sept. 11, 2001. Crowds filled the Mall for a distant glimpse of the proceedings or just, in the words of many, simply "to be here." Washington's subway system was jammed and two downtown stations were closed when a woman was struck by a subway train.

Bush — following tradition — left a note for Obama in the top drawer of his desk in the Oval Office.

White House press secretary Dana Perino said the theme of the message — which Bush wrote on Monday — was similar to what he has said since election night: that Obama is about to begin a "fabulous new chapter" in the United States, and that he wishes him well.

The unfinished business of the Bush administration thrusts an enormous burden onto the new administration, though polls show Americans are confident Obama is on track to succeed. He has cautioned that improvements will take time and that things will get worse before they get better.

Culminating four days of celebration, the nation's 56th inauguration day began for Obama and Vice President-elect Joe Biden with a traditional morning worship service at St. John's Episcopal Church, across Lafayette Park from the White House. Bells pealed from the historic church's tower as Obama and his wife, Michelle, arrived five minutes behind schedule.

The festivities won't end until well after midnight, with dancing and partying at 10 inaugural balls.

By custom, Obama and his wife, and Biden and his wife, Jill, went directly from church to the White House for coffee with Bush and his wife, Laura. Michelle Obama brought a gift for the outgoing first lady in a white box decorated with a red ribbon.

Shortly before 11 a.m., Obama and Bush climbed into a heavily armored Cadillac limousine to share a ride to the Capitol for the transfer of power, an event flashed around the world in television and radio broadcasts, podcasts and Internet streaming. On Monday, Vice President Dick Cheney pulled a muscle in his back, leaving him in a wheelchair for the inauguration.

Just after noon, Obama stepped forward on the West Front of the Capitol to lay his left hand on the same Bible that President Abraham Lincoln used at his first inauguration in 1861. The 35-word oath of office, administered by Chief Justice John Roberts, has been uttered by every president since George Washington. Obama was one of 22 Democratic senators to vote against Roberts' confirmation to the Supreme Court in 2005.

The son of a white, Kansas-born mother and a black, Kenya-born father, Obama decided to use his full name in the swearing-in ceremony.

To the dismay of liberals, Obama invited conservative evangelical pastor Rick Warren — an opponent of gay rights — to give the inaugural invocation.

About a dozen members of Obama's Cabinet and top appointees were ready for Senate confirmation Tuesday, provided no objections were raised. But Republican Sen. John Cornyn of Texas indicated he would block a move to immediately confirm Secretary of State-designate Hillary Rodham Clinton. Still, she is expected to be approved in a roll call vote Wednesday.

More than 10,000 people from all 50 states — including bands and military units — were assembled to follow Obama and Biden from the Capitol on the 1.5-mile inaugural parade route on Pennsylvania Avenue, concluding at a bulletproof reviewing stand in front of the White House. Security was unprecedented. Most bridges into Washington and about 3.5 square miles of downtown were closed.

Among the VIPs at the Capitol was pilot Chesley "Sully" Sullenberger, the hero of last week's US Airways crash into the Hudson River.

Obama's inauguration represents a time of renewal and optimism for a nation gripped by fear and anxiety. Stark numbers tell the story of an economic debacle unrivaled since the 1930s:

_Eleven million people have lost their jobs, pushing the unemployment rate to 7.2 percent, a 16-year high.

_One in 10 U.S. homeowners is delinquent on mortgage payments or in arrears.

_The Dow Jones industrial average fell by 33.8 percent in 2008, the worst decline since 1931, and stocks lost $10 trillion in value between October 2007 and November 2008.

Obama and congressional Democrats are working on an $825 billion economic recovery bill that would provide an enormous infusion of public spending and tax cuts. Obama also will have at his disposal the remaining $350 billion in the federal financial bailout fund. His goal is to save or create 3 million jobs and put banks back in the job of lending to customers.

In an appeal for bipartisanship, Obama honored defeated Republican presidential rival John McCain at a dinner Monday night. "There are few Americans who understand this need for common purpose and common effort better than John McCain," Obama said.

Young and untested, Obama is a man of enormous confidence and electrifying oratorical skills. Hopes for Obama are extremely high, suggesting that Americans are willing to give him a long honeymoon to strengthen the economy and lift the financial gloom.

On Wednesday, his first working day in office, Obama is expected to redeem his campaign promise to begin the withdrawal of U.S. forces from Iraq under a 16-month timetable. Aides said he would summon the Joint Chiefs of Staff to the Oval Office and order that the pullout commence.

___

Associated Press Writers Alan Fram, Donna Cassata, Gillian Gaynair, Ricardo Alonso-Zaldivar, Kevin Freking, Ed Tobias, Ben Evans, Seth Borenstein and H. Josef Hebert contributed to this report.

On the eve of Obama's inauguration day

2009-01-19T21:52:00.000-08:00

Cheney pulls back muscle, in wheelchair for inauguration

WASHINGTON (AFP) – US Vice President Dick Cheney pulled a muscle in his back while moving boxes and will be in a wheelchair for Tuesday's historic inauguration of incoming president Barack Obama, the White House said.

"Vice President Cheney pulled a muscle in his back today while moving boxes into his new house," White House spokeswoman Dana Perino said.

"Under his physician's recommendation, the vice president will be in a wheelchair for the next couple of days, including for tomorrow's inauguration."

She said that despite the setback, the 67-year-old Cheney "is looking forward to being there for tomorrow's historic inaugural activities" on the steps of the US Capitol, where Obama and his vice president, Joseph Biden, will be sworn in.

For Cheney, one of the most powerful and controversial vice presidents in US history, the muscle pull is the latest in a series of health problems over his eight years as vice president.

He underwent an angioplasty weeks after taking the oath of office in January 2001 and had a pacemaker implanted that same year.

In September 2005 Cheney had an operation for blood clots behind each of his knees, and in January 2006 he was hospitalized for shortness of breath.

In November 2007, he underwent treatment for the same irregular heartbeat, which required an electrical impulse to restore the upper chambers of the heart to normal rhythm.

The vice president went on a course of blood thinners after doctors discovered a blood clot behind his left knee following a nine-day trip to Asia in March 2007.

And last October he underwent successful treatment for an irregular heartbeat that led him to cancel appearances at the White House.

After the September 11, 2001 attacks on the United States, Cheney became one of the administration insiders leading the charge for the US-led war in Iraq, and was an advocate for some of Bush's most controversial policies including the use of "waterboarding," or simulated drowning, to extract information from terror suspects.

Human rights groups, and the man nominated to be the next attorney general, say waterboarding is torture.

Cheney has said he expects to retire completely from public life after January 20 and return with his wife Lynne to Wyoming following nearly 40 years serving four presidents in Washington, although he said he would maintain a residence in the capital region.

"I've got a lot of rivers to fish," he told CBS Radio last week. "So I don't think anybody will feel sorry for me. They shouldn't."

Illinois House Impeaches Blagojevich

2009-01-09T11:17:00.001-08:00

By DOUGLAS BELKIN

The Illinois House of Representatives voted overwhelmingly to impeach Gov. Rod Blagojevich, one month after he was arrested and charged with corruption.

Impeachment required just 60 votes. The final result was 114-1. A Senate trial will follow in coming days or weeks.

"You ought to be angry, you ought to be disgusted, you ought to be mad as hell," said Rep. Tom Cross, before urging his colleagues to join him in voting to impeach.
More

* Complete Coverage: Rod Blagojevich

Member after member called the day sad, grave and difficult. None spoke in defense of Mr. Blagojevich.

"He has violated the constitution, he has violated the laws of this state," said Rep Barbara Flynn Currie, who chaired a 21-member committee that unanimously recommended impeachment on Thursday. "The totality of the evidence shows he has forfeited the right to hold office."

Mr. Blagojevich was arrested Dec. 9 on a federal criminal complaint alleging corruption, including an attempt to gain from the sale of President-elect Barack Obama's Senate seat.

In a statement Thursday night, Mr. Blagojevich said he expected to be impeached by the House, saying the body's proceedings were flawed and biased and did not follow the rules of law."

But he promised to put up a fight in his Senate trial where "an actual judge will preside over the hearings." There, the statement said, "the governor believes the outcome will be much different."

On Friday morning, however, Rep. Jim Durkin said the impeachment process had been both thorough and fair. "I think we have to act now," he said. "If we did not act we would be derelict in our duties."

Write to Douglas Belkin at doug.belkin@wsj.com

Jobless Rate Surges to 7.2%; Nonfarm Payrolls Drop 524,000

2009-01-09T11:14:00.000-08:00

By BRIAN BLACKSTONE

WASHINGTON -- The final employment report for 2008 closed the books on a miserable year for U.S. workers with payrolls plunging last month by more than half a million, pushing the unemployment rate to a 16-year high.

The economy lost 2.6 million jobs in 2008, government figures showed, the most since World War II ended in 1945. Nearly two million of those losses were in the last four months alone, a sign that the recession accelerated as the financial crisis intensified, and should drag on well into the new year.

The figures will likely put pressure on Federal Reserve officials to expand their already aggressive quantitative easing steps in which cash is essentially created and pumped into the economy, and gives backing to those calling for large-scale fiscal stimulus.

The dramatic loss of jobs in December is a "stark reminder" of the need for an aggressive economic stimulus package, President-elect Barack Obama said Friday. "This is the moment to act and to act without delay," Mr. Obama told reporters at a press conference.

Nonfarm payrolls, which are calculated by a survey of establishments, tumbled 524,000 in December, the U.S. Labor Department said Friday, the 12th-straight decline and in line with the 525,000 drop Wall Street economists in a Dow Jones Newswires survey expected. November was revised to show an even steeper decline of 584,000, the most since 1974.
video
Unemployment Report Making a Case for Stimulus
3:05

The unemployment rate surges to 7.2%, the worst since 1945. WSJ economics reporter Kelly Evans says the U.S. is only a year into the downtown, but is already seeing the results. She tells colleague Phil Izzo how the report is making a case for a massive economic-stimulus package.
More

* Economists React: 'Scary' Employment Report
* Job Creation Chart: Bush vs. Reagan, Clinton
* Real Time Economics: Looking Bad, Getting Worse
* Real Time Economics: Worst Since 1945; More Pain to Come
* Laid Off: After Eight Months, Landing a Job
* Discuss: When will the job market rebound?
* Text of the December employment situation report

The pullback was broad-based among manufacturing, construction and most service industries. Companies across a variety of sectors including AT&T Inc., DuPont Co. and Bank of America Corp. all announced job cuts last month. That trend continued into this year with Alcoa Inc., EMC Corp., Walgreen Co. and others already announcing cuts this month.

Meanwhile the unemployment rate, which is calculated using a separate survey of households, jumped 0.4 percentage point to 7.2%, the highest since January 1993. Economists think the jobless rate, which was just 5% as recently as April, will hit 8% or higher in coming months.

"At this pace, the unemployment rate could well test double digits later this year, and certainly looks well on course to do so during 2010 at the latest," said ING Bank economist Rob Carnell, in a research note.

Indeed, according to the minutes of the Fed's December meeting released Tuesday, its staff economists expect the unemployment rate to rise "significantly" into 2010.

By some broader measures, labor-market conditions are even worse than the main numbers suggest. When marginally attached and involuntary part-time workers are included, the rate of unemployed or underemployed workers reached 13.5% last month, up almost six percentage points from a year earlier.
Job Hunt

* How To Find a Job in a Bad Economy
* Dealing With an Unexpected Job Loss
* How to Refresh a Stale Network
* Layoff Signs: Boss's Cold Shoulder
* Should You Take an Hourly Job or Stay Unemployed?

With the Fed having already lowered official interest rates to near zero last month, officials will have to rely on quantitative easing through the Fed's balance sheet to pump money into the financial system, and officials will likely face more pressure to widen their efforts.

Average hourly earnings increased $0.05, or 0.3%, to $18.36. That was up just 3.7% from a year earlier, suggesting the recession is limiting the ability of workers to command higher wages.

Friday's numbers, along with weak automobile and retailer sales reports for December, suggest that after contracting just 0.5% at an annual rate in the third quarter, gross domestic product probably plunged 5% or more in the fourth quarter, which would be the steepest decline since the early 1980s.

Many economists expect U.S. gross domestic product to contract again this quarter, albeit at a softer pace, and stall or contract next quarter as well. Against that backdrop, expect another 1.5 million job losses at least by the middle of the year, said Harm Bandholz, economist at UniCredit Markets and Investment Banking.
Employment Breakdown

According to Friday's report, hiring last month in goods-producing industries plunged by just over one-quarter million. Within this group, manufacturing firms cut 149,000 jobs, with motor vehicles and auto parts makers accounting for 21,000 job losses.

Construction employment was down by 101,000 last month and has fallen almost 900,000 since peaking in September 2006.

Service-sector employment tumbled 273,000. Labor-intensive services make up the vast majority of employment and usually cushion downturns. Yet business and professional services companies shed 113,000 jobs, the second-straight six-figure loss, and financial-sector payrolls were down 14,000.

Retail trade cut over 66,000 jobs, reflecting the bleak holiday shopping season. Leisure and hospitality businesses, meanwhile, shed 22,000 jobs as households rein in spending.

Temporary employment, which economists consider a leading indicator of future job prospects, fell by more than 80,000.

Among the sole bright spots were health care and education, which tend to be more labor intensive and less productive than manufacturing and other services. Employment in those sectors together rose 45,000.

The government added 7,000 jobs.

The average workweek fell 0.2 hour to 33.3 hours. A separate index of aggregate weekly hours fell 1.2 points to 103.5.
Wholesale Inventories Drop

U.S. wholesale inventories tumbled again during November, sent lower by companies adjusting to plummeting demand and by oil prices sinking along with the economy.

Wholesale inventories decreased by 0.6% compared to the prior month, dropping to a seasonally adjusted $435.01 billion, the Commerce Department said Friday.

Inventories fell a revised 1.2% in October; originally, supplies were seen sliding 1.1%.

The 0.6% decrease in November inventories of wholesalers came short of Wall Street analyst expectations for a 0.8% drop.

Sales of U.S. wholesalers plunged by 7.1% in November to a seasonally adjusted $349.25 billion. October sales fell a revised 4.5%; originally, sales for the month were estimated plummeting 4.1%.

Consumers and businesses slashed spending as the recession deepened in the second half of 2008. Companies adjusted supplies in sync with the downturn.

Another factor lowering inventories was falling oil prices. Decreasing prices lower values of the petroleum that is counted in the tally of overall inventories. Petroleum inventories fell 6.1% in November and 18.2% in October, the data Friday showed. Petroleum sales fell 25.1% in November.

The amount of goods on hand relative to sales rose in November. The inventory-to-sales ratio measures how many months it would take for a firm to deplete its current inventory. The ratio climbed to 1.25 from 1.16 in October.

On a year-over-year basis, sales were 7.6% lower, while inventories rose 6.3%.

November wholesalers' inventories of durable goods -- meant to last three or more years -- dipped 0.1%, after falling 0.3% in October. Automotive stocks increased 1.2% as sales fell 10.6%; the numbers indicated dealers were stuck with unwanted cars. People afraid for their jobs aren't making big purchases; instead, they're saving money, to pay off debt and protect themselves from possible layoffs, pay cuts, or wage freezes.

Durable goods sales fell 6.1%, after going down 4.4% in October.

Non-durable goods inventories decreased 1.5% in November. November non-durable goods sales decreased by 7.9%.
—Jeff Bater contributed to this article.

Write to Brian Blackstone at brian.blackstone@dowjones.com

Fed Selects Four Firms to Manage MBS Purchase Plan

2008-12-31T10:44:00.001-08:00

By Craig Torres and Jody Shenn

Dec. 30 (Bloomberg) -- The Federal Reserve chose BlackRock Inc., Goldman Sachs Asset Management, Pacific Investment Management Co. and Wellington Management Co. to manage a $500 billion purchase of mortgage-backed securities it plans to complete by June.

“They picked the crème de la creme of the money managers,” said Art Frank, head of mortgage-bond research at Deutsche Bank AG in New York. “By doing $500 billion by June, no question they’re doing their best to try to hold down mortgage rates.”

The collapse of U.S. mortgage finance last year led to the worst credit crisis in seven decades and triggered write downs and losses at financial institutions exceeding $1 trillion. The central bank has expanded credit by $1.3 trillion over the past year through programs extending liquidity to banks, bond dealers and other financial institutions. The Fed plans to create money to purchase the bonds, boosting bank reserves.

Only fixed-rate agency mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae will be eligible for purchase, the central bank said in a statement released in Washington today. The purchases, to start early in January, will include securities with maturities of 30, 20, and 15 years, and will exclude riskier securities such as interest- only bonds, the Fed said.

The Fed’s program is intended to lower rates by reducing the supply of outstanding agency mortgage bonds, boosting their prices and thus lowering their yields. Lower yields in turn reduce the interest rates banks need to charge on new mortgages to ensure profitable sales of the securities.

‘Very Quickly’

“It looks like they’re really going to ramp this up and it’s going to be done very quickly,” said Credit Suisse analyst Mahesh Swaminathan. Thirty-year mortgage rates could fall to an average 4.75 percent, he said, and “this is going to take it down sooner rather than later.”

The average rate on a typical U.S. fixed-rate mortgage fell to 5.22 percent early yesterday, the lowest since 2005, from as high as 6.46 percent in October, according to Bankrate.com data. The Treasury also bought $49.7 billion of the companies’ home- loan securities from September through last month.

“The investment managers will be required to purchase securities frequently and to disclose the Federal Reserve as principal,” the central bank said. “Each investment manager will be required to implement ethical walls that appropriately segregate the investment management team” that implements the Fed’s purchases from advisory and proprietary trading teams, the Fed said.

‘Minimal’ Risk

The central bank said risk on the securities would be “minimal” and “mitigated by the conservative, buy-and-hold investment strategy” of the program.

Fed officials announced the program Nov. 25 and said the action was taken to “reduce the cost and increase the availability of credit for the purchase of houses.”

The government hasn’t stemmed the decline in housing even after channeling $172 billion in new capital to banks. The Fed has provided $535 billion in loans to banks as of Dec. 24. Slumping sales and tight credit helped push home prices in 20 major U.S. cities a record 18 percent lower in the 12 months to October, according to the S&P/Case-Shiller index released today.

To contact the reporter on this story: Craig Torres in Washington at ctorres3@bloomberg.net; Jody Shenn in New York at jshenn@bloomberg.net

Last Updated: December 30, 2008 18:52 EST

Dow falls for 5th straight session on grim data

2008-12-23T16:16:00.000-08:00

By MADLEN READ, AP Business Writer Madlen Read, Ap Business Writer 1 hr 35 mins ago

NEW YORK – Wall Street pulled back again Tuesday in muted trading ahead of the holiday, as another round of reports showed further deterioration in the housing market and broader economy.

The Dow Jones industrial average finished lower for the fifth straight day, falling 100 points.

Tuesday's gloomy data was hardly surprising to jaded investors. And trading volume has been light this week, which tends to skew the market's movements; many traders are on vacation for Christmas, and the market will close early, at 1 p.m. EST, on Wednesday.

"It is a very quiet news week, and much of it has already been priced into the market," said Ryan Larson, head of equity trading at Voyageur Asset Management.

The reports offered Wall Street no reason to be upbeat, however, and the concern remains that the economy will keep weakening well into the new year. That anxiety is sapping the hope for a year-end rally in the Dow, which is has fallen 36.5 percent since 2008 began.

The Commerce Department reiterated Tuesday that third-quarter gross domestic product, a measure of the economy that tallies the value of goods and services, fell at an annual rate of 0.5 percent.

The government also said sales of new homes fell in November to the slowest pace in nearly 18 years, while prices of new homes dropped by the biggest amount in eight months.

Sales of existing homes keep dropping as well. The National Association of Realtors said existing home sales fell 8.6 percent to an annual rate of 4.49 million in November from a downwardly revised pace of 4.91 million in October. That was more than analysts expected.

The Dow Jones industrial average shed 100.28, or 1.18 percent, to 8,419.49. The Dow is well off the multiyear lows it tumbled to in mid-November, but it is still down more than 400 points, or 4.6 percent, so far for the month of December. Typically, December is the one of the best months for the stock market.

Broader indexes also declined on Tuesday. The Standard & Poor's 500 index fell 8.47, or 0.97 percent, to 863.16. The Nasdaq composite index fell 10.81, or 0.71 percent, to 1,521.54. The Russell 2000 index of smaller companies fell 6.43, or 1.35 percent, to 468.64.

Declining issues led advancers by 3 to 2 on the New York Stock Exchange, where consolidated volume came to 3.63 billion shares, down from 4.31 billion shares on Monday.

Government bond prices were narrowly mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was flat at 2.18 percent. The yield on the three-month T-bill, considered one of the safest investments, was unchanged at 0.02 percent from late Monday.

News from corporate America on Tuesday brought little cheer.

Greeting-card company American Greetings Corp. said it swung to a third-quarter loss, hurt by hefty charges and a decline in sales. Shares fell $3.42, or 35 percent, to $6.40.

And the shape of the financial industry continued to shift, as two more companies got government funding.

Credit card lender American Express Co. and commercial financial firm CIT Group Inc. said Tuesday they each received preliminary approval to obtain billions in funding from the government's $700 billion bank investment program.

American Express fell 46 cents, or 2.5 percent, to $17.96, and CIT Group rose 8 cents to $4.26.

Shareholders approved two acquisitions that were forced by banks' massive credit losses.

PNC Financial Services Group Inc. and National City Corp. shareholders approved PNC's acquisition of the Cleveland-based bank, and Wells Fargo & Co. and Wachovia Corp. shareholders approved Wells Fargo's $11.8 billion purchase of the Charlotte, N.C.-based bank.

Shares of Pittsburgh-based PNC rose 33 cents to $43.01, and National City shares edged up 4 cents, or 2.5 percent, to $1.65 on its last day of trading.

Shares of San Francisco-based Wells Fargo fell 43 cents to $26.99, and Wachovia shares fell 15 cents to $5.30.

The dollar was mixed against other major currencies, while gold prices fell.

Oil prices fell on concerns that energy demand is evaporating in the face of a severe global economic slowdown. Light, sweet crude fell 93 cents to settle at $38.98 a barrel on the New York Mercantile Exchange, after dipping below $38 earlier in the day.

The plunge in energy prices has brought little comfort to stock investors. The downturn should give consumers a break when they heat their homes and fill their cars' tanks, but it is a glaring sign of the grim economic outlook and the shattered financial industry.

In overseas markets, Japan's Nikkei stock average rose 1.57 percent, and Hong Kong's Hang Seng index fell 2.75 percent. Britain's FTSE 100 rose 0.16 percent, Germany's DAX index fell 0.21 percent, and France's CAC-40 fell 0.73 percent.

___

On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

NYPD: Madoff investor commits suicide in office

2008-12-23T16:13:00.001-08:00

By ADAM GOLDMAN and TOM HAYS, Associated Press Writers Adam Goldman And Tom Hays, Associated Press Writers 28 mins ago

NEW YORK – The founder of an investment fund that lost $1.4 billion with Bernard Madoff was discovered dead Tuesday after committing suicide at his Manhattan office, marking a grim turn in a scandal that has left investors around the world in financial ruin.

Rene-Thierry Magon de la Villehuchet, 65, was found sitting at his desk at about 8 a.m. with both wrists slashed, NYPD spokesman Paul Browne said. A box cutter was found on the floor along with a bottle of sleeping pills on his desk. No suicide note was found.

De la Villehuchet was one of several fund managers to be hit hard in Madoff's alleged $50 billion Ponzi scheme. Investment funds that lost big to Madoff are also facing backlash and investor lawsuits for not protecting their clients from the alleged fraud.

It is not immediately known what kind of scrutiny de la Villehuchet was facing over his Madoff losses through his Access International Advisors, located on Madison Avenue a couple blocks from Rockefeller Center.

But on Monday night, he told cleaning crews in his building that he wanted them out of his office by 7 p.m. because he was going to be working late.

Workers returned Tuesday morning and found the door locked. He was later discovered dead at his desk, with a garbage can placed near his body to apparently catch the blood, Browne said.

De la Villehuchet (pronounced veel-ou-SHAY) was a prominent investor who came from a long line of aristocratic Frenchmen, with the Magon part of his name referring to one of France's most powerful families.

The Magon name is even listed on the Arc de Triomphe in Paris, a world-famous monument that was commissioned by Napoleon in 1806.

His fund enlisted intermediaries with links to the cream of Europe's high society to garner clients. Among them was Philippe Junot, a French businessman and friend who is the former husband of Princess Caroline of Monaco, and Prince Michel of Yugoslavia.

De la Villehuchet, the former chairman and CEO of Credit Lyonnais Securities USA, was also known as a keen sailor who regularly participated in regattas and was a member of the New York Yacht Club.

He lived in an affluent suburb in Westchester County with his wife, Claudine. They have no children. There was no answer Tuesday at the family's two-story house.

"He's irreproachable," said Bill Rapavy, who was Access International's chief operating officer before founding his own firm in 2007.

De la Villehuchet's death came as swindled investors began looking for ways to possibly recoup their losses. A handful of lawsuits have already been filed, all claiming that the hedge funds failed to properly vet Madoff and overlooked some red flags that could have steered them away.

Guy Gurney, a British photographer living in Connecticut, was friends with de la Villehuchet. The two often sailed together and competed in a regatta in France in November.

"He was a very honorable man," Gurney said. "He was extraordinarily generous. He was an aristocrat but not a snob. He was a real person. When he was sailing, he was one of the boys."

The two were supposed to have dinner last Friday but Gurney called the day before to cancel because of the weather. But during the call, de la Villehuchet revealed he had been ensnared in Madoff scandal. "He sounded very subdued," Gurney said.

___

Associated Press Writers Rachel Beck and Joe Bel Bruno and the AP News Research Center in New York; Jim Fitzgerald in New Rochelle, N.Y.; and Joelle Diderich in Paris contributed to this report.

2008-12-21T17:02:00.000-08:00

Real Estate Cycles
Peaks in Land Value	Interval (Years)	Peaks in Construction	Interval (Years)	Depressions	Interval (Years)
1818	—	—	—	1819	—
1836	18	1836	—	1837	18
1854	18	1856	20	1857	20
1872	18	1871	15	1873	16
1890	18	1892	21	1893	20
1907	17	1909	17	1918	25
1925	18	1925	16	1929	11
1973	48	1972	47	1973	44
1979	6	1978	6	1980	7
1989	10	1986	8	1990	10
2006	17	2006	20	2008	18
* Note: Table Summary by Fred Foldvary, Economist, Santa Clara University

Real Estate Triggered Recession

2008-12-21T17:01:00.003-08:00

Real estate crashes have led to recessions in the U.S. economy the majority of times major recessions or economic depressions have developed since the early 1800's.

In California, Santa Clara University economist Fred Foldvary may have been the first to predict a recession for 2008 back in 1997. "Macroeconomists are not always familiar with the real estate literature," Foldvary said, "and I wanted to use it to come up with a better explanation for the causes of business downturns."

Not all recessions are real estate related, but the majority of real estate busts start most recessions. There have been six economic depressions in the U.S. since 1837.

Foldvary made the prediction in a paper called "The Real Estate Cycle and the Depression of 2008," published in the journal GroundSwell. He researched the studies of real estate economist Homer Hoyt, who identified an 18-year cycle of real estate in Chicago, and other historical trends to come up with his forecast.

Real estate values peak a year or two before a recession. A real estate boom and a growing overall economic boom proceed the recession. Real Estate depressions can be tracked every 16 to 20 years roughly since 1818, which indicates real estate slowdowns are a harbinger of things to come for the overall economy.
Real Estate Cycles
Peaks in
Land Value

Interval (Years)

Peaks in Construction

Interval (Years)

Depressions

Interval (Years)
1818

—

—

—

1819

—
1836

18

1836

—

1837

18
1854

18

1856

20

1857

20
1872

18

1871

15

1873

16
1890

18

1892

21

1893

20
1907

17

1909

17

1918

25
1925

18

1925

16

1929

11
1973

48

1972

47

1973

44
1979

6

1978

6

1980

7
1989

10

1986

8

1990

10
2006

17

2006

20

2008

18
* Note: Table Summary by Fred Foldvary, Economist, Santa Clara University

It is Foldvary's belief that it is land inflation not other real estate appreciation, and the primary belief in society that inflation or price increases will continue that causes a land grab sort of mania to develop.

Isaac Newton, who may be the greatest genius in history, invested in the real estate bubble of the early 1700s, selling at a large profit. But when prices continued to rise he bought back in and suffered a large loss when the bubble turned to panic. Disgusted with himself as a result, Newton wrote, "I can calculate the motions of the heavenly bodies, but not the madness of people."

"Mortgages are paid from wages and profits, so eventually real estate prices stop rising," wrote Foldvary. "When that happens sales volume drops. New construction is dampened. The demand for furniture, appliances and office equipment goes down and unemployment and interest rates rise, and a recession is around the corner."

Foldvary expects this recession or economic depression, if it in fact turns into one to be particularly hard hitting because the growth of the secondary loan market, fraud and Wall Street manipulations made this boom bigger.
Published October 31, 2008

Top Markets with Best Chance to Robust Return

2008-12-21T17:01:00.001-08:00

There's nothing wrong with having a little luck on your side when it comes to a bad economy. So with that made clear we list the Top markets with the Best Chance to a Robust Return in real estate.

Chief among all of the candidates to return from the housing bust sooner is Austin, Texas, which hasn't really had it all that bad in comparison to other places during the housing bust. A high-tech corridor should keep this mostly youthful town out of the real bust this time around. You might want to put your money on Austin.

The real estate market started diving more than three years ago in Jacksonville, Florida, where growth is still believe it or not still occurring even at a snails pace as the state's now largest metropolitan area to make the list.

Durham is part of the famous Research Triangle, along with Raleigh and the home of North Carolina State University and Chapel Hill, where the University of North Carolina is located. This area encompasses one of the strongest college areas in the nation and as a result of plenty of college students to rent residences has a strong chance of returning to be one of the country's stronger real estate markets sooner than most of the country.
# Raleigh-Durham, NC

# Austin, TX

# Seattle, WA

# Jacksonville, FL

# San Francisco, CA

The City by The Bay as San Francisco is known has one of the most diverse economies in the country. The 1.8 million residents in San Francisco, Marin and San Mateo counties will see their market's continuing to decline in home prices, but should whether the housing bust much better than the majority, making San Francisco a prime candidate to return from the bust sooner than the rest.

The Port of San Francisco should also help the greater Bay Area during the economic downturn as Americans purchase cheaper consumer goods from over seas.

The collapse of the housing market is having major impacts on the Seattle economy. Washington Mutual and Starbucks have jettisoned tens of thousands of employees. But Seattle still has big time Boeing and Microsoft among a throng of supporting smaller companies to boost the local economy, triggering an economy that will dip but not fallout all together to place Seattle on the list.
Published November 4, 2008

Obama ups jobs goal to 3 million

2008-12-21T16:59:00.000-08:00

With a grimmer forecast on the horizon, the president-elect has raised his outlook for increasing employment.
By Ed Henry, CNN senior White House correspondent
December 20, 2008: 9:49 PM ET

WASHINGTON (CNN) -- President-elect Barack Obama has decided to increase his goal for creating new jobs after receiving economic forecasts that suggest the economy is in worse shape than had been predicted, two Democratic officials told CNN.

The officials said Obama is increasing his goal from 2.5 million to 3 million jobs over the next two years after receiving projections early this week that suggest the recession will be deeper than expected.

One of the officials said Obama "challenged the team to think bolder" as some economists warn there is danger in the government doing too little to curb the recession.

They said the stimulus plan in the works in the Obama camp would have "oversight and transparency measures" to ensure spending on the plan would be focused on stimulating the economy and not devolve into just handing out congressional pork projects.

They said it also would include measures that will "lay a foundation for a stronger economy in the future" - such as health care, education and energy spending.

On Friday, Obama had repeated his original goal while announcing appointments to his cabinet and economic team.

"Together with the appointees that I have announced, these leaders will help craft a 21st century economic plan with the goal of creating 2.5 million jobs and strengthening our economy," Obama said.

The Obama team isn't putting a price tag on its economic stimulus plan, which Democratic leaders want to have ready for the president-elect to sign either on or very soon after Inauguration Day. Currently, the initial package is expected to cost somewhere between $500 billion and $700 billion over two years. To top of page

Wall Street extends big rally to 2nd session

2008-12-08T17:20:00.001-08:00

By JOE BEL BRUNO and TIM PARADIS, AP Business Writer Joe Bel Bruno And Tim Paradis, Ap Business Writer 1 hr 7 mins ago

NEW YORK – The stock market showed renewed confidence Monday, extending its rally and lifting the Dow Jones industrials to their highest level in a month following President-elect Barack Obama's promise to increase infrastructure spending to lift the economy.

The Dow advanced nearly 300 points, gaining 560 points in the last two sessions to extend a period of relative tranquility on Wall Street. The Dow and the Standard & Poor's 500 have risen in nine out of 11 sessions with investors absorbing bad economic news without signs of the panic that rocked the market for much of the fall.

The Dow rose 298.76, or 3.46 percent, to 8,934.18, its highest close since it finished at 8,943.81 on Nov. 7. The blue-chip index, which added 259 points on Friday, is now up for December.

Broader indexes also rose. The Standard & Poor's 500 index advanced 33.63, or 3.84 percent, to 909.70; and the Nasdaq composite index jumped 62.43, or 4.14 percent, to 1,571.74.

The Russell 2000 index of smaller stocks rose 20.29, or 4.40 percent, to 481.38.

Obama's plan calls for the largest U.S. public works program since the creation of the interstate highway system a half-century ago. That could bolster the economy by putting thousands of people to work building schools and other construction projects.

His weekend announcement lifted a range of companies, from machinery makers to materials producers. Alcoa Inc., the world's third-largest aluminum producer, surged 18 percent on the news; while heavy-equipment maker Caterpillar Inc. jumped 11 percent.

Investors also grew more confident as the government neared a deal to dole out billions to America's three biggest automakers. The White House said Monday that it was "very likely" to strike an agreement with Congress on funneling money to General Motors Corp., Chrysler LLC and Ford Motor Co. The package is expected to total about $15 billion.

The stock market has surged despite a host of bad economic news, including Friday's Labor Department report that showed the nation lost more than a half million jobs last month. The report raised hopes that the government would take more steps to stimulate the economy.

"I think people recognize that the government is going to throw everything that they can at this market, everything they can at the economy to make it work," said James Cox, managing partner at Harris Financial Group. "We had bad jobs numbers on Friday. To be able to overcome those type of job losses and have that kind of rally, that is technically significant. If that doesn't make you bullish, I don't know what does."

Still, many analysts, cognizant of the fact that recoveries from bear markets tend to be tumultuous, were still cautious despite the market's recent string of gains.

"My gut feeling is investors aren't going to quite believe this rally and there is probably going to be some profit taking," said Tobias Levkovich, chief U.S. equity strategist at Citigroup Inc. "There are a lot of different balls bouncing in the air right now. You still have a pretty jittery investor base out there."

While big moves in stocks have continued in recent weeks the trading has much of the time been more orderly. There have been some gyrations, like a 680-point drop in the Dow on Dec. 1, but some market observers contend that the market is slowly forming a bottom. Stocks are up sharply from Nov. 20, when the benchmark S&P 500 finished at its worst level since April 1997. Since then, the S&P 500 is up 20.9 percent, the Dow is up 18.3 percent and the Nasdaq is up 19.4 percent.

Bond prices fell as investors put money back into stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.74 percent from 2.70 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, was unchanged at 0.01 percent, still indicating a high degree of investor uneasiness.

The dollar was mixed against other major currencies, while gold prices rose.

David Kelly, chief market strategist at JPMorgan Funds, said professional investors are being drawn to the market by cheap stock prices and a sense that while the economy is weak now it will eventually begin to regain its strength.

"The reality in the economy is it's getting worse but eventually the economy will turn around," he said. "Even if the economy is lousy in 2009 stocks are a long-term investment and are cheap."

But Scott Fullman, director of derivative investment strategies with WJB Capital, warned that the move higher for U.S. markets should be treated cautiously. He said credit still remains tight around the world, and that there are still a number of other worries hanging over the market.

"I'd be very cautious about jumping in with both feet and expecting what could be a Santa Claus rally going into the New Year," he said. "The fact is, we're not seeing the credit markets opening up, we're not seeing buying of the distressed debt, and that leads to additional worries for stocks."

With little in the way of economic data to trade on, investors closely monitored corporate news for direction.

Among the automakers, GM rose 85 cents, or 21 percent, to $4.93, while Ford rose 66 cents, or 24.2 percent, to $3.38. Chrysler isn't publicly traded.

Consumers hungry for a deal boosted worldwide sales at McDonald's Corp.'s established locations by 7.7 percent in November. The company said that U.S. same-store sales — or sales at locations open at least a year — rose 4.5 percent. Shares of the company fell $1.80, or 2.9 percent, to $60.92.

Tribune Co. filed for bankruptcy Monday, as expected. The privately held owner of the Los Angeles Times and Chicago Tribune, other newspapers and the Chicago Cubs and Wrigley Field, is struggling with $13 billion in debt. A steep slump in advertising revenue has hurt the company. Most of its debt stems from a complex transaction in which the company was taken private by real estate mogul Sam Zell last year.

Oil prices bounced off four-year lows after OPEC's president suggested the group could surprise investors with a large production cut later this month. Light, sweet crude rose $2.90 to settle at $43.71 a barrel on the New York Mercantile Exchange.

The move higher follows a global rally as investors took heart from signs the world's largest economies are redoubling efforts to revive growth. In China, government officials this week are meeting to discuss possible new steps to expand the $586 billion stimulus that is already in place.

Stocks that rose outpaced those that fell by about 4 to 1 on the New York Stock Exchange, where consolidated volume came to 6.42 billion shares compared with 6.03 billion shares traded Friday.

Hong Kong's Hang Seng index vaulted 8.7 percent to its highest close in seven weeks, while Japan's Nikkei 225 average rose 5.2 percent. Major European bourses also showed big gains. Britain's FTSE-100 climbed 6.2 percent, Germany's DAX jumped 7.6 percent, and France's CAC-40 surged 8.7 percent.

___

On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

Dow plunges nearly 430 to fall below 8,000 mark

2008-11-19T14:23:00.000-08:00

By JOE BEL BRUNO and SARA LEPRO, AP Business Writers Joe Bel Bruno And Sara Lepro, Ap Business Writers 35 mins ago

NEW YORK – Wall Street hit levels not seen since 2003 on Wednesday, with the Dow Jones industrial average plunging below the 8,000 mark as the fate of Detroit's Big Three automakers amid a slumping economy disheartened investors.

A cascade of selling occurred in the final minutes of the session as investors yanked money out of the market. For many, the real fear is that the recession might be even more protracted if Capitol Hill is unable to bail out the troubled auto industry.

Investors also scoured economic data that included minutes from the last meeting of the Federal Reserve in which policymakers lowered projections for economic activity this year and next. Economic worries caused across-the-board selling, with financial stocks particularly hard hit.

The S&P 500, widely considered the broadest snapshot of corporate America, slipped 6.12 percent to 806.58; and the Dow gave up 5.07 percent to 7,997.28. Both closed at their lowest levels since March 2003.

The financial crisis has already wiped out $6.69 trillion of value from the S&P 500 since its October 2007 high, and many fear more is to come. Stocks have traded with high volatility in the past few months, with the major indexes soaring only to plunge an hour later as the market looks for a bottom.

"I don't know what the catalyst is going to be where we turn the corner and people start buying stocks wholeheartedly again," said Jon Biele, head of capital markets at Cowen & Co. "People got out of the way. The financial situation hasn't changed."

The selling on the New York Stock Exchange was staggering — only 158 companies that trade there finished the day positive while 2,943 declined. Volume again was light, a symptom of the market's recent volatility, with 1.63 million shares exchanging hands by the close.

Smaller stocks also got clobbered. The Russell 2000 index gave up 35.13, or 7.85 percent, to 412.38.

more bad news

2008-11-19T12:32:00.000-08:00

Fed Sharply Lowers Forecasts, Signals Another Rate Cut Coming- AP

The Federal Reserve on Wednesday sharply lowered its projections for economic activity this year and next, and signaled that additional interest rate reductions may be needed to help combat the worst financial crisis to jolt the country in more than a half-century.

* Stocks sink as fate of automakers hangs in balance- AP
* Democrats seek to lower expectations for bailout- AP
* No auto bailout? Investors may just say 'no problem'- CNBC
* Ballmer dismisses Yahoo buyout but open on search- AP
* Oil prices fall below $54 a barrel, down 60% in 4 months- AP
* US home construction sinks to new record low- AP
* Consumer prices drop record 1 percent in October- AP
* e-Commerce Growth Screeches to a Halt- Tech Ticker
* Automaker Bailout Hits Major Pothole- Tech Ticker

SiPort struggling to recover from killing of executives

2008-11-18T12:02:00.001-08:00

Executives at 4-year-old start-up SiPort struggled Monday to get the promising maker of mobile chips running again after the murder of three colleagues last week in their Santa Clara office.

They hope to reopen in a day or two, but it's clear the killings devastated the close-knit engineering staff.

On Friday, hours after police say former SiPort employee Jing Hua Wu gunned down three top officials, the company's six-member board appointed co-founder and vice president of engineering Aiman Kabakibo as chief executive.

The recently fired Wu is expected to face charges in Santa Clara County Superior Court on Wednesday in connection with the murders of SiPort CEO Sid Agrawal and executives Marilyn Lewis and Brian Pugh. Police say Wu shot them after requesting a meeting.

"Our first and foremost priority is for the families of Sid, Marilyn and Brian,'' said Sunder Velamuri, SiPort's vice president of marketing. "We want to make sure they are doing well.''

Like any Silicon Valley startup, SiPort's diverse 38-member staff shares long hours together working to build a successful company. SiPort recently shipped its first product, a computer chip manufactured by a Taiwan company and used in high-definition radio, which enhances the quality of traditional FM radio.

"There are many, many able people there,'' said Vish Mishra, venture director at Clearstone Venture Partners, which once looked at SiPort as a potential investment.
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"(Agrawal) really had a good team. They have a product. It's a good product.''

On Monday, a guard was posted in front of the startup. Shades were drawn and a sign made from computer paper read "Do Not Enter."

Employees agreed that the best course of action was to get back to work as soon as possible, Velamuri said.

"We got together as a team and talked,'' said Velamuri, who has been in "round-the-clock" meetings since Friday. "We all agreed that the best thing to do for us, and for those people taken away from us, was to move forward.''

That is sure to be difficult, though.

"They've been traumatized" said a Morgenthaler Ventures executive who sits on SiPort's board but who did not want his name revealed. "Some of them have witnessed this."

Velamuri said 47-year-old Wu, who was fired "for performance reasons,'' never gave any hint of threatening violence.

"I knew him. I saw him. I talked with him,'' he recalled. "I met his wife and kids. He has 6-year-old twins and a 2-year-old boy. He was a normal employee, like anybody else."

It is unclear if the company will eventually move to another office.

"That's a good question," Velamuri said. "There are the practical realities — but, yes, we are looking at that."

At times, the executive, who has worked at SiPort for 21/2 years, was overcome with emotion.

"It's not an easy thing," he said. "It's a very difficult. My emotions run the gamut every day."

The company is comforted by support from the valley community. Not just friends, but also corporations, partners and customers, have offered everything from thoughtful words to grief counseling for employees.

"The outpouring has been tremendous,'' Velamuri said.

Velamuri, who had just returned from a work trip to Japan, was not at the office at the time of the killings Friday afternoon. Yet he shared his co-workers stunned disbelief.

"Last week, I would have said this only happens in movies, on TV shows," he said. "This is not reality. It does not happen here. And then when it happens, you don't know how to react."

As Congress takes a look at whether to help the struggling U.S. automakers, here is what you need to know about what's at stake for the Big Three.

2008-11-18T11:57:00.000-08:00

Detroit bailout: 7 key questions

NEW YORK (CNNMoney.com) -- Congress is set to begin a heated debate on whether Detroit's Big Three automakers -- General Motors, Ford Motor and Chrysler LLC -- will be next in line for a federal bailout.

Democratic leaders in Congress are in favor of some kind of help, as is President-elect Obama. But the Bush administration has balked on proposals to let the automakers tap the $700 billion Wall Street bailout approved in October.

Many leading Congressional Republicans have suggested that a better option is bankruptcy, enabling the Big Three to restructure and ultimately emerge as leaner and viable businesses.

How this debate plays out could determine whether this important industry survives -- and in what form. Here are some quick answers to seven key questions about the crisis.

What do the automakers want?

The automakers are asking for about $25 billion in loans to help them survive until 2010. Advocates for a bailout argue that if the Big Three can hang on until then, they'll be in position to be competitive long-term.

That's because billions of dollars in annual savings won in the 2007 labor agreement with the United Auto Workers union kick in that year, including shifting the responsibility for retirees' health care costs to union-controlled trust funds.

What's more, it's likely that car sales will pick up again by 2010 and that plant closings between now and then will bring the Big Three's capacity in line with this demand.

How many jobs are at stake?

GM (GM, Fortune 500) has about 120,000 U.S. employees. Ford (F, Fortune 500) has about 80,000 and closely-held Chrysler LLC has about 66,000.

In addition, the three automakers have about 14,000 U.S. dealerships that between them employ another 740,000 workers.

The suppliers used by the Big Three also employ an estimated 610,000 people.

Add that up and you have more than 1.6 million jobs tied to the auto industry.

What happens if there's no bailout?

GM risks running out of money later this year or early in 2009 without a bailout.

GM burned through $6.9 billion during the third quarter, leaving it with only $16 billion on hand as of Sept. 30. But it needs $11 billion to $14 billion to continue normal operations.

Ford and Chrysler have more cash relative to their needs, mostly from money they borrowed prior to the current credit crunch.

But each of those automakers could also run out of cash during 2009 without federal assistance.

What happens if an automaker goes bankrupt?

There are two types of corporate bankruptcy under U.S. law.

Chapter 11 allows a company to continue to operate as it sheds debts and contracts it can not afford.

In Chapter 7 bankruptcy, the company goes out of business fairly rapidly as its assets are sold off to try to satisfy its creditors.

What are advantages of an automaker going into bankruptcy?

Some argue that bankruptcy judges will be able to force the automakers to shed brands and dealerships as well as get the Big Three out of labor contracts they can not afford.

Other U.S. industries, such as steel companies and airlines, have used bankruptcy in the past to return to profitability without putting federal dollars at risk.

What are the arguments against a Chapter 11 bankruptcy?

Given the current credit crunch, many experts question whether automakers would be able to get necessary financing from lenders to help them during the reorganization process.

There are also doubts whether consumers would buy new vehicles from a bankrupt automaker due to concerns over their resale value and warranty. In effect, an automaker that files for Chapter 11 could eventually wind up going out of business anyway.

What are some of the other broader economic impacts if an automaker goes out of business?

Nearly 2 million Americans get their health insurance directly from one of the Big Three automakers. Most of them would lose that coverage if their company goes out of business. A failure of one of the Big Three could also cause a string of bankruptcies among suppliers.

And beyond the job losses at the automakers, dealerships and suppliers, media companies that generate a lot of revenue from auto advertising as well as retailers in towns where plants are located could also have to cut many jobs. The Center for Automotive Research, a Michigan think tank that supports the bailout, estimates that between 1.4 million and 1.7 million jobs indirectly tied to the Big Three would be lost in the first year following widespread auto failures

Foreclosure on 83-year-old

2008-11-18T11:55:00.000-08:00

Lehman Brothers: The Rise and Fall of Lehman Brothers. A History that Goes Beyond the Great Depression.

2008-11-14T15:49:00.000-08:00

Lehman Brothers, an investment bank that dates back to 1850, prior to the Civil War has now filed for bankruptcy. A storied institutions that has survived two World Wars, the Great Depression, and practically every other calamity in its 158-year history is no longer solvent. As of 1am on September 15, 2008 the investment bank announced that it would file for Chapter 11 bankruptcy protection.

This astonishing news comes during a weekend when most of the market on Friday was expecting that someone would surely come to the table to help the firm. Whether it was a private purchase or a government sponsored bailout like what occurred with Bear Stearns and JP Morgan, bankruptcy was not expected by many. Early talks indicated that Bank of American and Barclays were in close talks to take over the troubled investment bank. The Federal Reserve which aided in helping the Bear Stearns deal and the U.S. Treasury which just last weekend entered into the biggest bailout known to humankind by aiding Fannie Mae and Freddie Mac both seemed unwilling to come to the aid of Lehman Brothers. I am sure as time goes on more and more details will emerge as to why this occurred.

Bank of America in an unprecedented move went ahead and managed to get their hands on Merrill Lynch for a stunning $29 a share deal. It is stunning enough that Bank of America went after Merrill Lynch especially given that the Friday close per share value was $17. This is the same Bank of America who recently completed its take over of troubled mortgage lender Countrywide Financial. If you recall the deal, BofA offered a higher share price than the current market price for Countrywide but only months later, implied that they would not be back stopping all the debt of Countrywide. The Federal Home Loan Bank had extended a stunning amount of loans to Countrywide so it is yet to be seen how things playout with the Merrill Lynch purchase since the fate of Merrill was very likely going to precede that of Lehman Brothers.

It is unprecedented that in only six months, 3 of the top 5 investment houses on Wall Street are no longer in their previous form. I can imagine that at this point all eyes must be on Goldman Sachs and Morgan Stanley.
The story of Lehman Brothers takes us back to 1844 when a 23 year old Henry Lehman emigrated to the United States from Bavaria. He decided to settle in all places Montgomery Alabama where he decided to open a dry-goods store. In 1847 another brother arrived and in 1850 yet another. The firm changed its name in 1850 to the current Lehman Brothers name.

Cotton had a high market value and seeing a market for this, the 3 brothers started to accept payment in cotton for goods and also created a secondary market for trading in cotton. It makes you wonder how many tranches can be spun from a shipment of cotton? Seeing the need to be closer to the liquid market of cotton in New York the firm relocated to New York in 1858. It later joined the Coffee Exchange and also the New York Stock Exchange. It was sometime before the initial founding of the firm that Lehman Brothers actually underwrote its first public offering. In 1899 it underwrote a public offering for the International Steam Pump Company. It wasn’t until 1906 that the firm started underwriting some bigger public offerings. The names of Sears Roebuck and Company, Woolworth, Macy & Company, and B.F. Goodrich where all part of their earlier team deals with Goldman Sachs. It was making a big name for itself on Wall Street.

During the Great Depression, much of the focus of Lehman went toward venture capital as the equity markets were being hammered. In the 1930s Lehman Brothers underwrote the IPO for DuMont and also helped to provide capital to get RCA going. It also had its hand in financing Halliburton. Like I said, Lehman Brothers has a storied past.

In 1975 the firm merged with Kuhn, Loeb and Company to form at the time the 4th largest investment bank. The merger didn’t go quite as planned and strife arose in the firm. The firm was sold to American Express. AMEX started to break away from banking and brokerage operations and sold off operations to Primerica which in 1994 was broken off as an IPO for the current Lehman Brothers ticker. The firm did exceptionally well purchasing fixed income such as Lincoln Capital Management and Neuberger Berman which still are profitable today. Since the IPO in 1994 Lehman had steadily increased revenues and grew in employees from 8,500 to approximately 28,000.

As glorious as this past may seem Lehman could not resist the subprime markets. In August of 2007 Lehman closed its subprime lender BNC Mortgage which left 1,200 positions gone. This clearly was only the beginning for Lehman and their mortgage and credit problems. In 2008 Lehman was posting unprecedented losses. For the most part their problems arose from holding onto lower grade tranches and holding on too long to subprime mortgages. It is up in the air whether they held onto to these assets because of a foolish investment move or whether their simply wasn’t a market for these assets. For the 2nd quarter the frim had $2.8 billion in losses and was forced to liquidate $6 billion in assets. It is simply stunning to see the stock movement for the firm:

Lehman Brothers

It is hard to believe that only one year ago, this once behemoth of Wall Street had a $47 billion market cap and now is filing for bankruptcy. As the troubles mounted in late August rumors started piling on that a bailout from the Korea Development Bank was in the works. This never materialized. On September 10 Lehman announced another stunning loss of $3.9 billion and made it clear that they were also in the works of selling off the prized jewel in Neuberger Berman to raise capital. The rest we already know and weekend talks broke down and Lehman was forced with no other option but to file for bankruptcy.

Now truly these are unparalleled times. The ink is only drying on the Fannie Mae and Freddie Mac deal which puts at risk $200 billion of taxpayers’ money and given the current housing market is very likely to use up every single penny. Even though many pundits are quick to tell us no money is lost most unbiased analyst are quick to point out that some money will come out of the taxpayers’ wallet. This is the first major bankruptcy of a major investment bank and it is yet to be seen how the already weak markets are going to respond. The Federal Reserve also announced that they will be accepting equities which is simply astounding. Clearly this weekend meeting has the smell of panic more than anything else.

It is easy to lose perspective of what really is going on. You need to remember that debt is at the center of all this. Most of the debt is secured by residential housing but also commercial real estate. We can all rest assured that most of the balance sheets of many of these firms have been overly generous in estimating the value of their assets. A forced mark to market in today’s market is not going to go well. It is a game of financial brinkmanship and many are trying to offload as many toxic debt products without being stuck with the debt. The financial musical chairs are quickly running out. We go from Fannie Mae and Freddie Mac to this in one week. Clearly the balance sheets of these companies are weaker than anticipated. And with housing showing no signs of recovery, we can expect more of the same. The next question that comes to mind is what will happen to Goldman Sachs and Morgan Stanley? The mortgage market looks to be dominated by the government for the foreseeable future through Fannie Mae and Freddie Mac so it makes you wonder what role these companies will have in the debt markets.

If anyone had any doubts that too much leverage is a bad thing, we are quickly realizing how a small dry-goods store can turn into a massive investment bank years later that has brought the entire world’s attention onto it. A systemic crisis seems more and more probable as the year progresses.

World Economy. Sep 17. Banks Suffer as Market Plunge

2008-11-14T15:28:00.001-08:00

JPMorgan buys WaMu

2008-11-14T15:25:00.000-08:00

In the biggest bank failure in history, JPMorgan Chase will acquire massive branch network and troubled assets from Washington Mutual for $1.9 billion.

By David Ellis and Jeanne Sahadi, CNNMoney.com staff writers
Last Updated: September 26, 2008: 12:18 PM ET

AMERICA'S MONEY CRISIS

* Fidelity adds 1,700 to job cuts
* Hartford Financial looks for bailout capital
* Mayors seek bailout funding
* Dear Obama: Send loans fast
* Credit freeze: 2 months after Lehman

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Biggest bank failures
WaMu became the biggest failure in U.S. history following its stunning collapse Thursday.
Bank Size (by assets) Date
Washington Mutual $307B Sept. 2008
Continental Illinois $67.7B* May 1984
First RepublicBank Corp. $49.2B* July 1988
American Savings & Loan Assoc. $45.7B* Sept. 1988
Bank of New England Corp. $29.4B* Jan. 1991
Source:Federal Deposit Insurance Corporation *Asset size in 2008 dollars
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NEW YORK (CNNMoney.com) -- JPMorgan Chase acquired the banking assets of Washington Mutual late Thursday after the troubled thrift was seized by federal regulators, marking the biggest bank failure in the nation's history and the latest stunning twist in the ongoing credit crisis.

Under the deal, JPMorgan Chase will acquire all the banking operations of WaMu, including $307 billion in assets and $188 billion in deposits.

To put the size of WaMu in context, its assets are equal to about two-thirds of the combined book value assets of all 747 failed thrifts that were sold off by the Resolution Trust Corp. - the former government body that handled the S&L crisis from 1989 through 1995.

In exchange for scooping up WaMu, JPMorgan Chase (JPM, Fortune 500) will pay approximately $1.9 billion to the Federal Deposit Insurance Corporation.

Separately, JPMorgan announced Thursday that it plans to raise $8 billion in additional capital through the sale of stock as part of the deal. The bank expanded the offering to $10 billion on Friday.

The acquisition is JPMorgan Chase's second major purchase this year following the mid-March acquisition of investment bank Bear Stearns, a deal that was also engineered by the government.

"We think it is a great thing for our company," JPMorgan Chase Chairman and CEO Jamie Dimon said in a conference call with investors late Thursday night.

As a result of the acquisition, the New York City-based JPMorgan Chase will now boast some 5,400 branches in 23 states.

Federal regulators, who helped shepherd the deal, stressed that the transition for WaMu customers would be "seamless."

"There will be no interruption in services and bank customers should expect business as usual come Friday morning," FDIC Chairman Sheila Bair said in a statement.

WaMu is the 13th bank to fail so far this year and earns the title of the nation's biggest bank failure by assets on record, ahead of Continental Illinois, which had about $40 billion in assets ($67.7 billion in 2008 dollars) when it failed in May of 1984.

The FDIC, however, was quick to point out Thursday evening that the WaMu-JPMorgan Chase deal would not have any impact to its insurance fund which covers customer deposits when banks fail.

"WaMu's balance sheet and the payment paid by JPMorgan Chase allowed a transaction in which neither the uninsured depositors nor the insurance fund absorbed any losses," Bair said.

The FDIC insures the assets held by 8,451 banking institutions with a total of $13.4 trillion.
A road to collapse

WaMu had been one of the most hard-hit banks during the financial crisis after it bet big, like many of its competitors, on the strength of the U.S. housing market -- only to see its fortunes sour as housing prices fell.

Following several ratings agency downgrades this week and a freefall in the company's stock, many analysts were speculating that the endgame for the embattled savings and loan was imminent.

WaMu (WM, Fortune 500) shares were close to worthless Friday, falling 90% to just 16 cents a share. JPMorgan Chase shares gained more than 2.5% in midday trading.

In a press conference held late Thursday, Bair said regulators deemed it was necessary to act as the company had come under "severe" liquidity pressure. Regulators said that WaMu was experiencing a "run on the bank", as roughly 10% of WaMu deposits were pulled on Monday.

As a result, regulators saw the need to act this week, even as Congress and the White House continued to hash out a bank bailout plan.

Bair added that the company was on the FDIC's latest so-called "problem bank" list for the third quarter, which has yet to be published.

All told, Bair said four banks made bids for WaMu but JPMorgan Chase ultimately won out when the auction was held Wednesday. Several other large institutions, including Wells Fargo (WFC, Fortune 500), Citigroup (C, Fortune 500) and HSBC (HBC), were poring over the company's books, according to news reports last week.

JPMorgan Chase won because they were "the highest bid and the lowest cost resolution," Bair said.

"It was our cheapest option," she said.

Analysts were largely encouraged by the news even as JPMorgan Chase absorbs WaMu's toxic subprime and option-ARM mortgages as part of the deal.

"My initial impression is that this deal is 'generally OK'," wrote Nancy Bush, managing member at investment advisory firm NAB Research LLC, adding that there would be questions about whether the loan losses that JPMorgan took as part of the deal would be sufficient.

All told, JPMorgan Chase said it would recognize projected losses on the loan portfolio upfront by marking down the value of the loans by a whopping $31 billion.
Questions remain

Quite possibly the biggest losers in Thursday's deal, however, are WaMu's stock and debt holders, who were effectively wiped out.

Among that group was the private equity giant TPG, which was part of a consortium of investors that acquired a stake in WaMu for $7 billion in April.

JPMorgan's Dimon said in a conference call with reporters Friday morning that his firm was in talks to buy WaMu earlier this year but that JPMorgan never made a formal offer.

When pressed about what might be next for JPMorgan following two massive deals this year, Dimon didn't close the door altogether on acquiring another commercial bank.

"This is still a big country and there are a lot of places we are not in," he said.

But he and other executives offered little insight about what would happen to WaMu personnel.

Neither Dimon nor Charlie Scharf, JPMorgan's head of retail financial services, were able to provide any estimate as to how many workers could lose jobs as a result of the deal or whether top execs at WaMu, including recently installed CEO Alan Fishman, would remain with the combined firm.

"It's just too early to know right now," said Scharf.
Tough times for banks

The fall of WaMu is the latest turn in a dizzying two weeks that have seen the bankruptcy of Lehman Brothers, the acquisition of Merrill Lynch by Bank of America (BAC, Fortune 500) and the near collapse of insurance giant AIG (AIG, Fortune 500).

The widening credit crisis has prompted President Bush to seek from Congress extraordinary authority to spend as much a $700 billion to bail out the nation's financial system by purchasing toxic assets from banks.

President Bush, in a televised address Friday morning, said the nation's economy is at risk, adding he believed that Congress will move quickly on a bailout proposal.

"We've got a big problem," he said.

Regulators acknowledged they were encouraged to get a deal done but Dimon stressed to investors that a potential bailout by the government was not a factor. To top of page

GM failure: The shockwave

2008-11-14T13:55:00.000-08:00

If General Motors declares bankruptcy, industry watchers say, the entire domestic auto industry could be badly hurt.
By Peter Valdes-Dapena, CNNMoney.com senior writer
Last Updated: November 14, 2008: 12:36 PM ET

NEW YORK (CNNMoney.com) -- If General Motors really does run out of money by the end of the year, as it predicted was possible, the impact would be felt far and wide - to hundreds of suppliers, rival automakers and ultimately dealers across the nation.

"Once the first domino falls, it rapidly takes out all the other dominoes," said Dennis Virag, president of the Automotive Consulting Group.

Suppliers would be among the first to feel those effects since GM only manufactures the body, the engine and the transmission used in its cars.

In the United States alone, GM spends $31 billion on parts from 2,100 different suppliers. These include the "direct suppliers" involved in producing a vehicle - those that provide everything from steering wheels and seatbelts to brakes and airbags - as well as "indirect suppliers" - those that make things such as gloves, protective eyewear, shop rags and lightbulbs.

Although lawmakers appear to be souring on providing a $25 billion bailout to automakers, the impact of a GM failure on the industry as a whole - and therefore the economy as a whole - is weighing heavily in their decisions.

So far this year, 23 major auto-related companies, most of them parts suppliers, have filed for bankruptcy, according to consulting firm Grant Thornton. They are struggling since car makers have cut back as sales have slowed and raw-material prices have risen.

"I would argue that in today's environment, with the stress that's already on the supply base, they can't take another hit," said Kimberly Rodriguez, a principal at Grant Thornton's automotive practice. "The ripple effect would be huge," she added.
Impact on rival car makers

As supplier companies fail, that would have a direct impact on Ford and Chrysler, since the three domestic auto manufacturers share about 70% of their suppliers, Rodriguez estimated.

One executive who works for a Detroit automaker, and who did not want to be named, said the impact of GM - or any of the three - failing would be dramatic and very challenging.

Not all those affected would suffer equally, but it is hard to predict which companies would be hit hardest, because the relationships among the various suppliers and automakers are complex, he said.
Impact on dealers

A GM failure would also affect about 14,000 dealers in the United States, according to the industry newspaper Automotive News. That is almost half of the nation's 29,000 dealerships that specialize in domestic vehicles.

But even if those 14,000 GM dealers also offer foreign cars, the risk of losing their supply of domestic vehicles could force many of them out of business, said Paul Taylor, an economist with the National Automobile Dealers Association. Already, he noted, the industry is expected to lose about 700 dealers by the end of this year, up to 80% of which will be domestic-brand stores.

Car companies are wary of publicly discussing the possibility of financial disaster because it makes it harder to sell the cars that are on dealer lots today, said consultant Virag. Customers don't want to buy from a company they fear may soon be insolvent.

"It's a difficult situation that the automakers are in," said Virag. "To talk about bankruptcy would only exacerbate the situation, but not talking about it isn't helping."

But whether a bankruptcy would help suppliers and everyone dependent upon GM is still uncertain.

If it is determined that GM could file for bankruptcy under Chapter 11 rules, rather than a Chapter 7 liquidation, the automaker could potentially reorganize. That way the company could seek permission to pay outstanding bills to "critical suppliers" that it absolutely needs, said Robert Sanker, a Cleveland bankruptcy attorney who has represented creditors of bankrupt auto suppliers.

Still, Sanker said, relatively few suppliers would be granted "critical supplier" status in court, leaving many more that would have payments cut off.

And GM is says it is not considering Chapter 11, but rather is continuing to seek government assistance. "Bankruptcy reorganization is not an option for GM because it would create more problems than it would solve," said spokesman Dan Flores. To top of page
First Published: November 14, 2008: 12:25 PM ET

The Rise and Fall of Subprime Mortgages

2008-11-14T12:06:00.001-08:00

http://www.dallasfed.org/research/eclett/2007/el0711.html

The Rise and Fall of Subprime Mortgages

2008-11-14T12:05:00.001-08:00

by Danielle DiMartino and John V. Duca

After booming the first half of this decade, U.S. housing activity has retrenched sharply. Single-family building permits have plunged 52 percent and existing-home sales have declined 30 percent since their September 2005 peaks (Chart 1).

Chart 1: Housing activity drops off

A rise in mortgage interest rates that began in the summer of 2005 contributed to the housing market's initial weakness. By late 2006, though, some signs pointed to renewed stability. They proved short-lived as loan-quality problems sparked a tightening of credit standards on mortgages, particularly for newer and riskier products. As lenders cut back, housing activity began to falter again in spring 2007, accompanied by additional rises in delinquencies and foreclosures. Late-summer financial-market turmoil prompted further toughening of mortgage credit standards.

The recent boom-to-bust housing cycle raises important questions. Why did it occur, and what role did subprime lending play? How is the retrenchment in lending activity affecting housing markets, and will it end soon? Is the housing slowdown spilling over into the broader economy?

Rise of Nontraditional Mortgages
Monitoring housing today entails tracking an array of mortgage products. In the past few years, a fast-growing market seized upon such arrangements as "option ARMs," "no-doc interest-onlys" and "zero-downs with a piggyback." For our purposes, it's sufficient to distinguish among prime, jumbo, subprime and near-prime mortgages.

Prime mortgages are the traditional—and still most prevalent—type of loan. These go to borrowers with good credit, who make traditional down payments and fully document their income. Jumbo loans are generally of prime quality, but they exceed the $417,000 ceiling for mortgages that can be bought and guaranteed by government-sponsored enterprises.

Subprime mortgages are extended to applicants deemed the least creditworthy because of low credit scores or uncertain income prospects, both of which reflect the highest default risk and warrant the highest interest rates. Near-prime mortgages, which are smaller than jumbos, are made to borrowers who qualify for credit a notch above subprime but may not be able to fully document their income or provide traditional down payments. Most mortgages in the near-prime category are securitized in so-called Alternative-A, or Alt-A, pools.

Some 80 percent of outstanding U.S. mortgages are prime, while 14 percent are subprime and 6 percent fall into the near-prime category. These numbers, however, mask the explosive growth of nonprime mortgages. Subprime and near-prime loans shot up from 9 percent of newly originated securitized mortgages in 2001 to 40 percent in 2006.[1]

The nonprime boom introduced practices that made it easier to obtain loans. Some mortgages required little or no proof of income; others needed little or no down payment. Homebuyers could take out a simultaneous second, or piggyback, mortgage at the time of purchase, make interest-only payments for up to 15 years, skip payments by reducing equity or, in some cases, obtain a mortgage that exceeded the home's value.

These new practices opened the housing market to millions of Americans, pushing the homeownership rate from 63.8 percent in 1994 to a record 69.2 percent in 2004. Although low interest rates bolstered homebuying early in the decade, the expansion of nonprime mortgages clearly played a role in the surge of homeownership.

Two crucial developments spurred nonprime mortgages' rapid growth. First, mortgage lenders adopted the credit-scoring techniques first used in making subprime auto loans. With these tools, lenders could better sort applicants by creditworthiness and offer them appropriately risk-based loan rates.

By itself, credit scoring couldn't have fostered the rapid growth of nonprime lending. Banks lack the equity capital needed to hold large volumes of these risky loans in their portfolios. And lenders of all types couldn't originate and then sell these loans to investors in the form of residential mortgage-backed securities, or RMBS—at least not without added protection against defaults.

The spread of new products offering default protection was the second crucial development that fostered subprime lending growth. Traditionally, banks made prime mortgages funded with deposits from savers. By the 1980s and 1990s, the need for deposits had eased as mortgage lenders created a new way for funds to flow from savers and investors to prime borrowers through government-sponsored enterprises (GSEs) (Chart 2, upper panel).

Chart 2: Mortgage financial flows

Fannie Mae and Freddie Mac are the largest GSEs, with Ginnie Mae being smaller. These enterprises guarantee the loans and pool large groups of them into RMBS. They're then sold to investors, who receive a share of the payments on the underlying mortgages. Because the GSEs are federally chartered, investors perceive an implicit government guarantee of them. Fannie Mae and Freddie Mac, however, haven't packaged many nonprime mortgages into RMBS.

Lacking the same perceived status, nonagency RMBS—those not issued by Fannie Mae, Freddie Mac and Ginnie Mae—faced the hurdle of paying investors extremely large premiums to compensate them for high default risk. These high costs would have pushed nonprime interest rates to levels outside the reach of targeted borrowers.

This is where financial innovations came into play. Some—like collateralized debt obligations (CDOs), a common RMBS derivative—were designed to protect investors in nonagency securities against default losses. Such CDOs divide the streams of income that flow from the underlying mortgages into tranches that absorb default losses according to a preset priority.

The lowest-rated tranche absorbs the first defaults on the pool of underlying mortgages, with successively higher ranked and rated tranches absorbing any additional defaults. If defaults turn out to be low, there may be no losses for higher-ranked tranches to absorb. But if defaults are much greater than expected, even higher-rated tranches may face losses.

Having confidence in the ability of quantitative models to accurately measure nonprime default risk, a brisk market emerged for securities backed by nonprime loans. The combination of new credit-scoring techniques and new nonagency RMBS products enabled nonprime-rated applicants to qualify for mortgages, opening a new channel for funds to flow from savers to a new class of borrowers in this decade (Chart 2, lower panel).

Nonprime Boom Unravels
As problems began to emerge in late 2006, investors realized they had purchased nonprime RMBS with overly optimistic expectations of loan quality.[2] Much of their misjudgment plausibly stemmed from the difficulty of forecasting default losses based on the short history of nonprime loans.

Subprime loan problems had surfaced just before and at the start of the 2001 recession but then rapidly retreated from 2002 to 2005 as the economy recovered (Chart 3). This pre-2006 pattern suggested that as long as unemployment remained low, so, too, would default and delinquency rates.

Chart 3: Quality of prime and subprime mortgages deteriorates

This interpretation ignored two other factors that had helped alleviate subprime loan problems earlier in the decade. First, this was a period of rapidly escalating home prices. Subprime borrowers who encountered financial problems could either borrow against their equity to make house payments or sell their homes to settle their debts. Second, interest rates declined significantly in the early 2000s. This helped lower the base rate to which adjustable mortgage rates were indexed, thereby limiting the increase when initial, teaser rates ended.

Favorable home-price and interest rate developments likely led models that were overly focused on unemployment as a driver of problem loans to underestimate the risk of nonprime mortgages. Indeed, swings in home-price appreciation and interest rates may also explain why prime and subprime loan quality have trended together in the 2000s. This can be seen once we account for the fact that past-due rates—the percentage of mortgages delinquent or in some stage of foreclosure—typically run five times higher on subprime loans (Chart 3). When the favorable home-price and interest rate factors reversed, the past-due rate rose markedly, despite continued low unemployment.

Failure to appreciate the risks of nonprime loans prompted lenders to overly ease credit standards.[3] The result was a huge jump in origination shares for subprime and near-prime mortgages.

Compared with conventional prime loans in 2006, average down payments were lower, at 6 percent for subprime mortgages and 12 percent for near-prime loans.[4] The relatively small down payments often entailed borrowers' taking out piggyback loans to pay the portion of their home prices above the 80 percent covered by first-lien mortgages.

Another form of easing facilitated the rapid rise of mortgages that didn't require borrowers to fully document their incomes. In 2006, these low- or no-doc loans comprised 81 percent of near-prime, 55 percent of jumbo, 50 percent of subprime and 36 percent of prime securitized mortgages.

The easier lending standards coincided with a sizeable rise in adjustable-rate mortgages (ARMs). Of the mortgages originated in 2006 that were later securitized, 92 percent of subprime, 68 percent of near-prime, 43 percent of jumbo and 23 percent of prime mortgages had adjustable rates. Now, with rates on one-year adjustable and 30-year fixed mortgages close, ARMs' market share has dwindled to 15 percent, less than half its recent peak of 35 percent in 2004.

In early 2007, investors and lenders began to realize the ramifications of credit-standard easing. Delinquency rates for 6-month-old subprime and near-prime loans underwritten in 2006 were far higher than those of the same age originated in 2004.

Other signs of deterioration also surfaced. The past-due rate for outstanding subprime mortgages rose sharply and neared the peak reached in 2002, with the deterioration much worse for adjustable- than fixed-rate mortgages. In first quarter 2007, the rate at which residential mortgages entered foreclosure rose to its fastest pace since tracking of these data began in 1970.

Lenders reacted to these signs by initially tightening credit standards more on riskier mortgages. In the Federal Reserve's April 2007 survey of senior loan officers, 15 percent of banks indicated they had raised standards for mortgages to prime borrowers in the prior three months, but a much higher 56 percent had done so for subprime mortgages. Responses to the July 2007 survey were similar.

However, in the October 2007 survey the share of banks tightening standards on prime mortgages jumped to 41 percent, while 56 percent did so for subprime loans. Many nonbank lenders have also imposed tougher standards or simply exited the business altogether. This likely reflects lenders' response to the financial disruptions seen since last summer.

The stricter standards meant fewer buyers could bid on homes, affecting prices for prime and subprime borrowers alike. Foreclosures added to downward pressures on home prices by raising the supply of houses on the market. And after peaking in September 2005, single-family home sales fell in September 2007 to their lowest level since January 1998.

The number of unsold homes on the market has risen, sharply pushing up the inventory-to-sales ratio for existing single-family homes from their low in January 2005 to their highest level since the start of this series in 1989 (Chart 4). Condominium supply, which is reflected in the all-home numbers, has experienced an even sharper increase since early 2005.

Chart 4: Existing-home inventories rise from late-2004 lows

These high inventories will likely weigh on construction and home prices for months to come. After peaking in early 2005, the Standard & Poor's/Case-Shiller index of year-over-year home-price appreciation in 10 large U.S. cities was down 5 percent in August—its biggest drop since 1991. While a Freddie Mac gauge of home prices posted a small year-over-year gain in the second quarter, the pace was dramatically off its highest rate, reported in third quarter 2005 (Chart 5).

Chart 5: Home-price appreciation plunges into negative territory

In the absence of home-price appreciation, many households are finding it difficult to refinance their way out of adjustable-rate mortgages obtained at the height of the housing boom. Larger mortgage payments could exacerbate delinquencies and foreclosures, especially with interest rate resets expected to remain high for the next year (Chart 6). This suggests mortgage quality will likely continue to fall off for some time.

Scheduled resets on adjustable-rate mortgages remain high

Financial Turmoil
By August 2007, the housing market's weaknesses were apparent: loan-quality problems, uncertainty about inventories, interest rate resets and spillovers from weaker home prices. These, coupled with ratings agencies' downgrading of many subprime RMBS, led to a dramatic thinning in trading for subprime credit instruments, many of which carried synthetic, rather than market, values based on models because of the instruments' illiquidity.

On Aug. 14, the paralysis in the capital markets led three investment funds to halt redemptions because they couldn't reasonably calculate the prices at which their shares could be valued. This event triggered widespread concern about the pricing of many new instruments, calling into question many financial firms' market values and disrupting the normal workings of the financial markets.

Investors sought liquidity, putting upward pressure on overnight interest rates and sparking a sharp upward repricing of risk premiums on assets, particularly those linked to nonprime mortgages. One outcome was an interest rate spike for both mortgage-backed commercial paper and jumbo mortgages, which heightened financial market uncertainty. In this environment, nonagency RMBS were viewed as posing more liquidity and default risk than those packaged by Fannie Mae and Freddie Mac.

Facing greater perceived default risk, investors began demanding much higher risk premiums on jumbo mortgage securities, pushing up the cost of funding such loans via securitization and encouraging lenders to incur the extra cost of holding more of these loans in their portfolios. This contributed to a 1 percentage point jump in jumbo interest rates between June and late August, an especially important increase given that jumbos accounted for about 12 percent of mortgage originations last year.

Although spreads between jumbo and conforming loan rates have fallen off their late-summer highs, they're still elevated. The higher rates have dampened the demand for more expensive homes, just as tighter credit standards reduced the number of buyers for lower-end homes.

Macroeconomic Effects
A housing slowdown mainly affects gross domestic product by curtailing housing construction and home-related spending. It also reins in spending by consumers who have less housing wealth against which to borrow.[5]

Residential construction likely exerted its largest negative effect in third quarter 2006, when it subtracted 1.3 percentage points from the annual pace of real GDP growth. Last year, many forecasts predicted home construction would stop restraining GDP growth by the end of 2007 and the industry would start recovering in 2008. These predictions were made before the tightening of nonprime credit standards began in late 2006. The change in standards will likely prolong the housing downturn and delay the recovery, although it's hard to tell precisely for how long. Since single-family permits have already fallen 52 percent from their September 2005 peak, however, the worst of the homebuilding drag may be behind us.

The same may not be true for housing's indirect effect on consumption. Since the late 1990s, many homeowners have borrowed against housing wealth, using home equity lines of credit or cash-out refinancing or not fully rolling over capital gains on one house into a down payment or improvements on the next one. These mortgage equity withdrawals gave people access to lower cost, collateralized loans, which bolstered spending on consumer goods. By one measure, these withdrawals were as large as 6 to 7 percent of labor and transfer income in the early to mid-2000s.

The magnitude and timing of these withdrawals may have changed in hard-to-gauge ways. New research suggests housing wealth's impact on consumer spending grew as recent financial innovations expanded the ability to tap housing equity.[6] This is consistent with prior research on housing's connection to U.S. consumer spending.[7] Aside from the interest-rate-related refinancing surge of 2002 and 2003, mortgage equity-withdrawal movements have become increasingly sensitive to swings in home-price appreciation since a 1986 law granted a federal income tax deduction for home equity loans (Chart 7).

Chart 7: Mortgage equity withdrawals increasingly move with housing inflation and mortgage refinancings

Compounding the uncertain outlook for consumption is the likely reversal of the early 2000s' mortgage credit liberalization.[8] This will put further downward pressure on home prices and housing wealth and may curtail home equity loans and cash-out refinancings. Finally, the homebuying enabled by the easing of credit standards in recent years may have been at the expense of later sales, further dampening the market going forward.

The timing of housing wealth's impact on consumption may have also changed. For example, before the advent of equity lines and cash-out refinancings, housing wealth increases may have affected U.S. consumption mainly by reducing homeowners' need to save for retirement. Since then, such financial innovations have enabled households to spend their equity gains before retirement. It's unclear how much this may be reversed by the 2007 retrenchment in mortgage availability.

Looking Ahead
The rise and fall of nonprime mortgages has taken us into largely uncharted territory. Past behavior, however, suggests that housing markets' adjustment to more realistic lending standards is likely to be prolonged. [9]

One manifestation of the slow downward adjustment of home prices and construction activity is the mounting level of unsold homes. The muted outlook for home-price appreciation, coupled with the resetting of many nonprime interest rates, suggests foreclosures will increase for some time.

The sharp reversal of trends in home-price appreciation will also dampen consumer spending growth, an effect that may worsen if the pullback in mortgage availability limits people's ability to borrow against their homes.

Although recent financial market turmoil will likely add to the housing slowdown, there are mitigating factors.

First, the effect of slower home-price gains on consumer spending is likely to be drawn out, giving monetary policy time to adjust if necessary.

Second, the Federal Reserve has been successful in slowing core inflation while maintaining economic growth. This gives policymakers inflation-fighting credibility, which enables them to coax down market interest rates should the economy need stimulus.

Third, even if the tightening of mortgage credit standards undesirably slows aggregate demand, monetary policy could still, if need be, help offset the overall effect by stimulating the economy via lower interest rates. This would bolster net exports and business investment and help cushion the impact of higher risk premiums on the costs of financing for firms and households.[10]

About the Authors

DiMartino is an economics writer and Duca a vice president and senior policy advisor in the Research Department of the Federal Reserve Bank of Dallas.

Notes

The authors thank Jessica Renier for research assistance.

1. See "The Subprime Slump and the Housing Market," by Andrew Tilton, US Economics Analyst, Goldman Sachs, Feb. 23, 2007, pp. 4–6. Securitized mortgages account for roughly 70 to 75 percent of outstanding, first-lien U.S. residential mortgages, according to estimates in "Mortgage Liquidity du Jour: Underestimated No More," Credit Suisse, March 13, 2007, p. 28.
2. See, for example, Federal Reserve Chairman Ben Bernanke's remarks, "Housing, Housing Finance, and Monetary Policy," Off-siteat the Federal Reserve Bank of Kansas City's Economic Symposium, Jackson Hole, Wyo., Aug. 31, 2007.
3. Part of the reason lenders eased credit standards was that they planned to sell, rather than hold, the mortgages. The earlier easing of standards may have partly owed to the potential moral hazard entailed when nonconforming loans are originated with the intent to fully sell them to investors. Bernanke discusses this in his remarks at the 2007 Jackson Hole symposium (note 2).
4. The figures are for securitized mortgages. See "Mortgage Liquidity du Jour" (note 1).
5. "Making Sense of the U.S. Housing Slowdown," by John Duca, Federal Reserve Bank of Dallas Economic Letter, November 2006.
6. See "How Large Is the Housing Wealth Effect? A New Approach," by Christopher D. Carroll, Misuzu Otsuka and Jirka Slacalek, National Bureau of Economic Research Working Paper no. 12746, December 2006; and "Housing, Credit and Consumer Expenditure," by John Muellbauer, paper presented at the Federal Reserve Bank of Kansas City's Economic Symposium, Jackson Hole, Wyo., Aug. 31–Sept. 1, 2007. Also see "Booms and Busts in the UK Housing Market," by John Muellbauer and Anthony Murphy, Economic Journal, vol. 107, November 1997, pp. 1701–27; and "House Prices, Consumption, and Monetary Policy: A Financial Accelerator Approach," by Kosuke Aoki, James Proudman and Gertjan Vlieghe, Journal of Financial Intermediation, vol. 13, October 2004, pp. 414–35.
7. "Estimates of Home Mortgage Originations, Repayments, and Debt on One-to-Four-Family Residences," by Alan Greenspan and James Kennedy, Finance and Economics Discussion Series Working Paper no. 2005-41, Board of Governors of the Federal Reserve System, September 2005; and "Mutual Funds and the Evolving Long-Run Effects of Stock Wealth on U.S. Consumption," by John V. Duca, Journal of Economics and Business, vol. 58, May/June 2006, pp. 202–21.
8. This is a possibility to which Muellbauer (2007, note 6) alludes.
9. See Duca (note 5).
10. For a discussion of the channels of monetary policy, see "Aggregate Disturbances, Monetary Policy, and the Macroeconomy: The FRB/US Perspective," by David Reifschneider, Robert Tetlow and John Williams, Federal Reserve Bulletin, January 1999, pp. 1–19.

Economic Letter is published monthly by the Federal Reserve Bank of Dallas. The views expressed are those of the authors and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System.

Articles may be reprinted on the condition that the source is credited and a copy is provided to the Research Department of the Federal Reserve Bank of Dallas.

Economic Letter is available free of charge by writing the Public Affairs Department, Federal Reserve Bank of Dallas, P.O. Box 655906, Dallas, TX 75265-5906; by fax at 214-922-5268; or by telephone at 214-922-5254. This publication is available on the Dallas Fed web site, www.dallasfed.org.

The Fall of Bear Stearns: A Quickie Guide

2008-11-14T12:02:00.001-08:00

So, the Wall Street Journal today has a big story walking us through the events leading up to the collapse of Bear Stearns this past week. But perhaps you haven't gotten to it yet. It's so large and inky, and you've been busy, going to meetings and calculating your annual income should you become a high-class hooker. Still, you don't want to look like an idiot, should someone, somewhere, bring up What Happened at Bear Stearns. You will want to nod knowledgably and pontificate on how it Might Affect the Economy. Which is why, using handy bullet points, we've summarized how the bank's dalliance with subprime lending, coupled with a dope-smoking CEO, finally caught up with them in a stunning week-or-so period. To keep things in perspective, we started at the beginning. The very beginning.

• 1923: Bear Stearns is founded as an equity trading house by Joseph Bear, Robert Stearns, and Harold Mayer with $500,000 in capital. According to the inflation calculator, that's about $6.1 billion dollars today.
• 1969: At a New York bridge tournament, future Bear Stearns CEO Alan "Ace" Greenberg meets a 35-year-old Jimmy Cayne, then a professional card player. Impressed by Cayne's stage presence, pluck, and no doubt, bridge skills, Greenberg offers him a job as a Bear stockbroker on the spot.
• 1985: The bank becomes a publicly traded company.
• 1998: Bear Stearns, now under the watchful eye of Jimmy Cayne, is the one investment-bank holdout in the Wall Street–led rescue of collapsed hedge fund Long Term Capital Management. This move (along with Cayne's comment that they ought to "let them fail," as recorded in Roger Lowenstein's When Genius Failed) will prove ironic later.
• March 2002: The New York Sun announces that Bear Stearns CEO James Cayne will be writing a bridge column for the paper.
• June 2007: Bear Stearns ponies up $3.2 billion to bail out two hedge funds created to invest in subprime mortgages: the High Grade Structured Credit Strategies Fund and the High Grade Structured Credit Strategies Enhanced Leverage Fund.
• July 2007: Bear Stearns writes to inform clients that the two hedge funds now contain "very little" or "effectively no value" for investors. By August, both funds file for bankruptcy.
• October 2007: Cayne reassures investors: "Most of our businesses are beginning to rebound." Later that month, state-owned Chinese lender Citic pays $1 billion for a 6 percent stake in Bear, giving the firm an approximately $20 billion valuation.
• December 2007: Bear Stearns posts fourth-quarter loss of $854 million on massive mortgage-related write-downs, the first quarterly loss in its 85-year history.
• January 2008: Cayne is more or less forced to resign as CEO in the wake of a Wall Street Journal article detailing his recreational pot use, monthlong vacations to play cards, and other high jinks at 383 Madison Avenue. The board kept Cayne on as chairman, and Alan D. Schwartz takes over as CEO.
• March 10–13, 2008: Amid rumors that Bear is teetering and has liquidity problems — and the small matter of $46 billion in mortgages and other questionable "assets" on its books — new CEO Schwartz goes on the public-relations offensive, appearing on CNBC on Monday (via live feed from the Breakers Resort at Palm Beach). "We don't see any pressure on our liquidity, let alone a liquidity crisis," he says. As if to prove it, ex-CEO Cayne closes on a $28 million pad at the Plaza. But to little avail: The perception of trouble quickly becomes a reality as hedge funds and other financial parties engaged with the firm take their money and get out. Enough people decide, all at the same time, that they don't want to be within 200 feet of Bear, and by the evening of Thursday, March 13, Bear finds itself, unquestionably, in the midst of a liquidity crisis. It was kind of like the "run on the bank" at the Bailey Brothers Savings and Loan in It's a Wonderful Life, only no one was wearing fedoras.
• Friday night, March 13–14, 2008: In a desperate scramble to avoid having no funds to operate its businesses, Bear executives pull an all-nighter trying to figure out how "fix this thing." At 5 a.m., they wake Federal Reserve chairman Ben Bernanke and a bunch of other dudes to discuss the matter, and ultimately decide to secure an emergency agreement with JPMorgan and the Federal Reserve Bank of New York in the largest-ever bailout of a U.S. securities firm. The Fed had to invoke a little-used securities law to lend funds through JPMorgan, in order to avoid having Bear Stearns disintegrate and threaten the (remaining) stability of the U.S. financial system. Bear Stearns shares tumbled 47 percent to close at $30. Jimmy Cayne, showing courage in the face of great difficulty and the potential collapse of the 85-year-old firm, takes part in a bridge tournament in Detroit. Using humor as a coping mechanism, Bear employees joke nervously about not bothering to come in on Monday, since the firm will probably be bought over the weekend. They are a prescient bunch.
• March 16–17, 2008: On late Sunday, after forcing a bunch of bankers to work over the weekend, JPMorgan decides it will buy Bear Stearns so that BSC can avoid bankruptcy, but only with the Fed's backing. The going price? $2 a share, which puts the valuation of the once giant firm at $236 million. Remember that $6 billion estimate at the beginning of this timeline? Ouch. JPMorgan, meanwhile, gets the Federal Reserve's protection for some of Bear's potential (and manifold) liabilities, plus a $1.2 billion building. Morgan also gets the firm's viable businesses, like its prime brokerage, for practically nothing. CEO Jamie Dimon looks like a genius (also he's quite handsome, we'd never noticed!), and the Fed looks like a hero.
• Moving forward: Divisions like Bear's investment bank, etc., are probably on their way out, including the employees manning the desks. Conservative estimates regarding the carnage range from a third to half of all of Bear Stearns's 14,000 employees. Everything that just went down is what's known in the business as "not good" for anyone working for Bear right this second, i.e. the people holding 33 percent of the now-devalued stock. The market is placing odds that Lehman Brothers, also a big mortgage player, is next to be taken out and shot. Like Bear did last week, Lehman puts the word out on Monday that they are awash with liquidity, though it doesn't stop the stock from falling to a six-year low. The Fed, in basically backing JPMorgan's rescue of Bear, is setting a dangerous precedent for itself in saving Wall Street's tuchis. There's also the question of who would be willing to play JPMorgan to Lehman's Bear Stearns, should it come to that. —Bess Levin, editor, DealBreaker.com

The rise and fall of Merrill Lynch CEO Stanley O’Neal

2008-11-14T12:00:00.001-08:00

The ouster of Stanley O’Neal as chairman and CEO of Merrill Lynch & Co., the giant Wall Street investment bank and brokerage house, is one more indication of the deep crisis gripping major US financial institutions. It also provides an insight into the corporate culture and social types that have come to dominate the US financial establishment.--Barry Grey

By Barry Grey
30 October 2007

WSWS: It was widely reported Monday that the Merrill Lynch board of directors had decided over the weekend to demand O’Neal’s retirement and was negotiating the terms of his separation package. Last week, the 93-year-old firm announced it had lost over $2.2 billion in the third quarter and written off $8.4 billion in failed investments, of which $7.9 billion was due to the downward valuation of highly speculative securities linked to subprime mortgage debt.

The massive write-off, equivalent to 13 percent of the value of the firm’s shares on the stock market, exceeded Merrill’s net earnings for all of 2006 and equaled 42 percent of gross revenue in the first nine months of 2007. Financial analysts predict that the company will be forced to write down another $4 billion in the fourth quarter.

This spring, Merrill’s stock was trading at around $95 a share, and O’Neal was being hailed as a financial genius for transforming Merrill Lynch from primarily a retail brokerage business into an aggressive, risk-taking institution. Last week, the stock sank to as low as $59 and the credit service Standard & Poor’s downgraded the firm’s credit.

Of the major Wall Street banks, Merrill Lynch has suffered the highest losses from the collapse of high-yield, high-risk investments linked to speculation in the housing market, especially the market in subprime mortgages to borrowers with marginal credit worthiness. The company, under O’Neal, recorded huge profits from 2002, when he took over as chairman and CEO, until the last quarter as a result of O’Neal’s single-minded focus on underwriting so-called collateralized debt obligations (CDOs)—loans linked to home mortgages and the financing of leveraged buyouts that are bundled and resold to other financial companies and big investors.

According to the New York Times, Merrill’s exposure to the CDO market soared to more than $40 billion from around $1 billion some 18 months ago—that is, precisely during the period when the housing market was collapsing and warnings were being issued about the stability of housing-linked securities.

The meltdown in the housing market and surge in subprime home foreclosures led over the summer to a collapse in the market for CDOS and other forms of debt, exposing the reckless speculation that had fueled the stock market boom of recent years and generated huge profits and paychecks for top Wall Street executives. O’Neal was paid $48 billion in 2006. Of the major Wall Street bank CEOs, only Goldman Sachs head Lloyd Blankfein was paid more.

The housing crisis and credit crunch have hit a wide spectrum of US and international banks and financial institutions. The world’s largest banks and securities firms announced more than $30 billion of third-quarter losses from write-downs on bad debt.

O’Neal is the first Wall Street CEO to be sacked, but a growing list of bank executives have lost their jobs. Swiss-based UBS in July dismissed its CEO and earlier this month announced the departure of two additional top officers. Others who have been ousted or have departed in management shakeups include Bear Stearns’ co-president and Citigroup’s trading head.

Bank of America reported last week that its investment banking profit had dropped 93 percent. It cut 3,000 jobs and removed the heads of its investment banking and structured products divisions.

The future of Citigroup CEO Charles Prince is in doubt following the number one bank’s announcement of billions in mortgage-related losses.

While O’Neal’s position was shaky, Wall Street insiders were nonetheless shocked by the speed with which the board of directors—hand-picked by O’Neal—decided to oust him. According to sources within Merrill cited by press reports, the decision was precipitated by the news, leaked to the New York Times and published Friday, that O’Neal had, without the knowledge or authorization of the board of directors, contacted the head of Wachovia Bank to see whether he was interested in buying Merrill.

One likely reason for the overture was the personal windfall that would accrue to O’Neal if such a takeover were effected.

The New York Times wrote on Monday: “If he leaves, O’Neal could be paid at least $159 million, according to an analysis by James F. Reda & Associates, a compensation consulting firm. Had he succeed in putting together a merger, he might have left with as much as $274 million.”

O’Neal’s career and tenure as Merrill CEO exemplify the combination of recklessness, short-sightedness, ruthlessness and greed that has become the hallmark of those who have risen to the top of the US corporate establishment over the past quarter century—a period that has seen an unprecedented redistribution of wealth from the working population to a financial aristocracy that wallows in previously unheard of personal wealth.

His rise to the summit of Wall Street, to become the first African-American CEO of a major bank, also reflects the social results of the policy of racial preferences and affirmative action pursued by the US political and corporate establishment in the aftermath of the ghetto eruptions of the 1960s. A thin layer of blacks and other minorities have been elevated to lucrative positions in business and government, while the living standards of the mass of minority workers have stagnated or declined.

O’Neal, 56, was born into a poor family in Alabama, and subsequently moved to Atlanta. There he got a job at a General Motors plant and was evidently spotted by GM as a minority worker who could be groomed for a position in corporate management. He graduated from General Motors Institute, now Kettering University, and obtained a scholarship from GM to study at Harvard Business School.

After receiving his MBA, O’Neal was given a position in GM’s treasurer’s office. In 1986, at the age of 35, he joined Merrill’s high-yield, or “junk bond,” department. Within three years he was running the department, competing with Michael Milken’s Drexel Burnham Lambert Inc. When Milken pleaded guilty to securities fraud in 1990, it enabled O’Neal’s unit at Merrill to become the biggest junk bond operator for five consecutive years.

In 1997, O’Neal became co-head of Merrill’s corporate and institutional client group, which includes investment banking and securities trading. A year later, he was promoted to chief financial officer. In 2000, O’Neal was promoted once again to head the brokerage division, Merrill’s more prominent department.

He quickly redirected Merrill’s army of 15,000 brokers to focus on winning more millionaires as clients, and after the 9/11 terrorist attack on the World Trade Center he eliminated more than 20,000 employees and closed 266 offices around the world. This ruthless cost-cutting gave him an inside track to the top position, which he was awarded in 2002.

Soon after becoming chairman and CEO he set the tone for his tenure by purging the firm of dozens of its longtime senior employees and firing those who had been considered his rivals for the CEO post. Later he forced out some of his former allies, including Executive Vice President Thomas Patrick, who had campaigned for his elevation to head the company.

As the Wall Street Journal put it on Monday: “With his restructuring, Mr. O’Neal was seen as rejecting the longtime culture of a company known internally as “Mother Merrill.” For years, the brokerage giant was willing to accept lower profit margins in order to keep longtime loyal employees on the payroll, much like International Business Machines Corp. had a no-layoff policy during its 1980s heyday...

“Merrill’s board gave him leeway because he more than doubled the firm’s profit level to an average topping $5 billion annually from 2003 to 2006. Those at the company said he was proud of cutting through the cozy corporate culture.”

According to various press reports, O’Neal’s management style was little short of despotic. “Merrill Chief Executive Stan O’Neal would grill his executives about why, for instance, Goldman Sachs was showing faster growth in bond-trading profits,” wrote the Journal. “Subordinates would scurry to analyze the Goldman earnings to get answers to Mr. O’Neal. ‘It got to the point where you didn’t want to be in the office’ on Goldman earnings days, one former Merrill executive recalls.”

In July of 2006, O’Neal ousted three senior bond executives. They were, according to the Journal, “summoned upstairs, one after another, for 5- to 15-minute meetings” and told “there was no role for them.”

Winthrop Smith, who left as head of Merrill’s international brokerage after O’Neal became president, told Bloomberg.com, “He got rid of people with hundreds of years of [combined] experience.”

Earlier this month, after the end of the third quarter, O’Neal fired two top bond executives and, the New York Times reports, he was looking to fire his chief financial officer and replace him with a longtime friend.

Little wonder than a large number of former executives have been involved in discussions to launch a proxy fight if O’Neal was not removed.

The O’Neal saga is not primarily a matter of the business methods of a single individual. He is rather a representative of the social types and corporate policies that predominate throughout corporate America and, increasingly, the world.

The short-sighted and reckless striving for immediate profit returns at previously unheard of and unsustainable levels is, in the end, driven by profound and insuperable contradictions of a crisis-ridden capitalist system. Unable to generate sufficient rates of profit from productive investment, the entire system is increasingly based on the creation of wealth from speculative and parasitic forms of financial manipulation.

The immense fortunes of the modern American gilded age, unlike the days of the robber barons, are not bound up with the creation of industrial empires, but rather go hand in hand with the decay of industry and the rotting out of the socio-economic infrastructure. All the more intense and explosive are the social and class contradictions building up beneath the surface of American society.

Nation's foreclosure rate in October increases 25 percent year-over-year, with Nevada on top

2008-11-13T13:05:00.001-08:00

MIAMI (AP) -- The number of homeowners caught in the wave of foreclosures in October grew 25 percent nationally over the same month in 2007, data released Thursday showed.

More than 279,500 U.S. homes received at least one foreclosure-related notice in October, an increase of 5 percent over September, according to RealtyTrac Inc. One in every 452 housing units received a foreclosure filing, such as a default notice, auction sale notice or bank repossession.

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More than 84,000 properties were repossessed in October, RealtyTrac said.

A nasty brew of strict lending standards, falling home values and a tough economy is filtering through the housing market. By the end of the year, the company expects more than a million bank-owned properties to have piled up on the market, representing around a third of all properties for sale in the U.S.

The collateral damage in the financial markets forced the government to pass a $700 billion financial rescue package last month. The plan was initially to buy bad assets from banks, but Treasury Secretary Henry Paulson said Wednesday that the rescue package won't purchase those troubled assets.

That plan would have taken too much time, he said, so instead the Treasury will rely on buying stakes in banks and encouraging them to resume more normal lending.

Also Wednesday, Housing and Urban Development Secretary Steve Preston said the government may let more borrowers qualify for a $300 billion program designed to let troubled homeowners swap risky loans for more affordable ones. The program was launched Oct. 1, but there are concerns that lenders won't participate because they have to voluntarily reduce the value of a loan and take a loss.

In RealtyTrac's report, three states -- Nevada, Arizona, Florida -- had the nation's top foreclosure rates. Nevada posted the nation's highest rate for the 22nd consecutive month in October.

In Nevada, one in every 74 homes received a foreclosure filing last month. Arizona saw one in every 149 housing units receive a foreclosure filing, and in Florida it was one in every 157 homes.

Other states in the top 10 were California, Colorado, Georgia, Michigan, New Jersey, Illinois and Ohio.

However, RealtyTrac noted that, while California had the highest total number of foreclosures in October, the rate in that state was down 18 percent from the previous month.

James J. Saccacio, chief executive officer of RealtyTrac, said new laws requiring delays in the foreclosure process have reduced the volume of foreclosure filings in several states. In California, lenders are now required to contact borrowers at least 30 days before filing a default notice. A similar law in North Carolina gives borrowers an extra 45 days.

"While the intention behind this legislation -- to prevent more foreclosures -- is admirable, without a more integrated approach that includes significant loan modifications, the net effect may be merely delaying inevitable foreclosures," Saccacio said. "And in the meantime, the apparent slowing of foreclosure activity understates the severity of the foreclosure problem in these states."

Among cities, Las Vegas had the highest October foreclosure rate among the 230 metro areas tracked in the report, with one in every 62 housing units receiving a foreclosure filing.

Four Florida metro areas ranked in top 10 -- Cape Coral-Fort Myers was second, Miami third, Fort Lauderdale eighth and Orlando 10th. California also had four metro areas in the top 10: Stockton fourth, Merced fifth, Riverside-San Bernardino seventh and Modesto ninth.

The remaining member of the top 10 was Phoenix, which came in sixth.

Jobless claims surge while trade deficit narrows in reflection of weakening economy

2008-11-13T13:04:00.001-08:00

WASHINGTON (AP) -- Applications for unemployment benefits soared to the highest level since just after the Sept. 11, 2001, terrorist attacks while the trade deficit shrank more than expected as demand for imports plunged, further evidence of the struggling U.S. economy.

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The Labor Department reported Thursday that jobless claims shot up by 32,000 last week to a seasonally adjusted 516,000, the highest total in seven years. The tally was much higher than analysts expected and a further indication of how much the labor market is deteriorating amid the shrinking economy. The government reported last week that the unemployment rate surged to a 14-year high of 6.5 percent in October.

Meanwhile, the Commerce Department said the trade deficit declined by a bigger-than-expected amount in September, falling by 4.4 percent to $56.5 billion as imports experienced a record plunge.

The import decline was led by a huge fall in imported oil as the average price for crude dropped by a record $12.41 per barrel and the volume of shipments fell to the lowest level in five years. But demand for other types of imports also fell, with imported cars and car parts dropping to the lowest level in more than five years, an indication that foreign automakers are feeling the pinch hitting U.S. consumers.

President-elect Barack Obama has said that dealing with the worst financial crisis to hit this country in seven decades will be his No. 1 priority when he takes office.

Treasury Secretary Henry Paulson announced Wednesday that the administration had scrapped the original centerpiece of the rescue program -- a proposal to buy troubled assets to get them off the books of banks as a way of promoting increased lending.

Instead, Paulson said the administration will proceed with an alternative plan to spend $250 billion to buy stock in the banks as a way of bolstering their financial situation and accomplishing the same goal -- getting the institutions to return to more normal lending.

However, critics contend the administration should be imposing more restrictions on the stock purchases as a way of insuring the banks will use the government resources to increase lending rather than just hoarding the cash, or using it to acquire other banks or boost dividends for stockholders.

Sen. Charles Schumer, D-N.Y., said he was still disappointed in the administration's unwillingness to issue strict guidelines to ensure that participating firms use the funds to increase lending.

Another report detailing the difficulties facing the economy is expected later Thursday with the government announcing the budget deficit for October.

The deficit is expected to show a big increase in October, the first month of the new budget year, rising to $101.5 billion, compared to $57 billion in October 2007. The soaring costs of the bank rescue and the weak economy are expected to put the country on track to run up a record deficit for the current budget year of between $700 billion and $1 trillion, a staggering sum for a single year.

Despite its new flexibility, the administration said Wednesday it remains opposed to using the rescue fund to bail out the ailing auto industry or to provide guarantees for home loans, an idea that supporters contend offers the greatest hope for helping legions of Americans who are facing foreclosure.

Congressional Democrats felt otherwise on autos, and strongly. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid were pressing for quick passage of a major package for carmakers during a postelection session that begins Nov. 18, and one key House Democrat was putting together legislation that would send $25 billion in emergency loans to the beleaguered industry in exchange for a government ownership stake in the Big Three car companies.

Paulson told reporters Wednesday that the administration was exploring the possibility of setting up a program in conjunction with the Federal Reserve that would provide support for the $1 trillion market in securities that fund such vital consumer products as credit cards, auto loans and students loans. About 40 percent of consumer credit is supplied through the sale of these securities that are backed by payments consumers make on their credit cards and other loans.

The administration already has spoken for all but $60 billion of the initial $350 billion supplied by Congress, including the $250 billion for direct stock purchases from banks and $40 billion for a new loan supplied on Monday to help stabilize troubled insurance giant American International Group.

Bush: Economic crisis not a failure of free market

2008-11-13T13:02:00.001-08:00

NEW YORK – President George W. Bush asserted Thursday that the global financial crisis is "not a failure of the free market" and urged world leaders to adopt modest financial reforms that stop short of the tighter regulations Europeans favor.

"Our aim should not be more government. It should be smarter government," Bush said during a speech in New York, a day before about two dozen world leaders converge on Washington for a weekend summit he is hosting.

Bush called on the leaders to embrace "reasonable" reforms, saying changes won't work if they shun the free market system or restrict trade.

The president delivered a vigorous defense of free-market capitalism and easier global trade to frame his approach to the high-level gathering. Bush invited representatives of some of the world's biggest industrial democracies, emerging nations and international bodies to Washington to start developing a more coordinated world response to the economic woes that have millions of people struggling to keep their jobs, their homes and their hopes.

With the severe economic downturn threatening to end Bush's tenure on a sour note before President-elect Barack Obama takes over, he will host the leaders at a White House dinner Friday and review causes and solutions for the financial mess Saturday.

It was fitting that Bush's argument against regulatory overreach was delivered not in Washington but from the heart of Wall Street. He spoke at venerable Federal Hall, which was home to the first Congress and is within shouting distance of New York Stock Exchange.

Bush called for reforms to strengthen the global economy long-term and said leaders at this weekend's meeting would "discuss specific actions we can take."

Among the areas for possible agreement, Bush listed:

_bolstering accounting rules for stocks, bonds and other investments so investors have a clearer sense of the true value of what they buy.

_requiring "credit default swaps" — a type of corporate debt insurance — to be processed through a central clearinghouse. That would help provide crucial information on the parties involved in these complex, unregulated products. Prices for this insurance soared in the aftermath of the Lehman Brothers' bankruptcy and imperiled American International Group, a major insurer of this kind of corporate debt.

_taking a fresh look at rules aimed at preventing fraud and manipulation in trading of stocks and other securities.

_better coordinating financial regulations among countries.

_Giving a wider variety of countries voting power at the International Monetary Fund and the World Bank.

Notably absent from his speech was any talk about what the U.S. might do to bail out the troubled auto industry or the debate over a second U.S. stimulus package.

"The crisis was not a failure of the free market system," Bush said. "And the answer is not to try to reinvent that system."

But Bush's argument that "government intervention is not a cure-all" came as some critics think his administration already is overstepping in private markets. The federal dollars being spent or put on the line to rebuild the nation's financial system could easily run into the trillions. Already the Bush administration has enacted a $700 financial rescue package, backed the purchase of investment bank Bear Stearns, bought stock in leading banks, engineered a government takeover of mortgage giants Fannie Mae and Freddie Mac, guaranteed money market fund holdings and funneled billions to stabilize troubled insurance giant American International Group.

"I'm a market-oriented guy, but not when I'm faced with the prospect of a global meltdown," Bush said.

At the same time, the president aggressively defended the U.S. against charges from around the world that insufficient U.S. regulation led to the credit collapse worldwide. This was his way of pushing back against both the criticism and the calls by allies for more intrusive rules. Heading into the meeting, Europeans are seen as looking more urgently for broad changes and tighter universal banking regulations than is the United States.

"Many European countries had much more extensive regulations and still experienced problems almost identical to our own," Bush said.

Some critics have said that lax oversight by U.S. and other regulators failed to detect problems and respond with action that could have prevented the meltdown. The crisis began with the collapse of the U.S. housing market, which froze credit, then shook the broader financial sector and finally rippled overseas.

"History has shown that the greater threat to economic prosperity is not too little government involvement in the market, it is too much government involvement in the market," he said. "It would a terrible mistake to allow a few months of crisis to undermine 60 years of success."

Dan Price, Bush's deputy national security adviser for international economic affairs, rejected suggestions of discord with other nations and said it was "grossly inaccurate" to suggest the U.S. was not taking a firm lead in reform.

"We are no less committed to fixing the problems, and addressing regulatory and other deficiencies, than any other leader," he said.

While in New York, the president addressed a conference at the United Nations on religious tolerance and met privately with King Abdullah of Saudi Arabia.

The summit is just the first in a series intended to deal with the enormity of the economic meltdown, and the next meeting won't be until after Bush leaves office on Jan. 20.

In the United States alone, the nation's jobless ranks zoomed past 10 million last month, the most in a quarter-century, as 240,000 more people lost jobs. In the latest dire sign, American automakers say they are struggling to survive.

Obama is steering clear of the summit but will have a couple representatives available to meet with leaders on his behalf.

Besides the United States, the countries represented will be Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey. Those countries and the European Union make up the so-called G-20.

The Obama Transition: What Will Change Look Like?

2008-11-13T13:01:00.001-08:00

By KAREN TUMULTY Karen Tumulty 16 mins ago

It is one of the ironies of politics and history that when the candidate of change was pondering what he would do if he actually got elected President, he turned to the man who eight years before handed over the White House keys to George W. Bush. Former Clinton White House chief of staff John Podesta had met Barack Obama only a few times before the Democratic nominee summoned him to Chicago in August to ask him to begin planning a transition. Podesta supported Hillary Clinton in the Democratic primaries and had little in common with Obama beyond the fact that they are both skinny guys from Chicago. Yet it is hard to think of a Democrat in Washington who can match Podesta's organizational abilities or his knowledge of the inner workings of government. And Obama was already giving plenty of thought to the crucial 76 days between the election and the Inauguration. "He understood that in order to be successful, he had to be ready," says Podesta, who is now a co-chairman of the transition team. "And he had to be ready fast."

Even in the calmest of times, the transfer of presidential power is a tricky maneuver, especially when it involves one party ceding the office to another. But not since Franklin D. Roosevelt took office in the midst of the Depression has a new President faced a set of challenges quite as formidable as those that await Obama. That's why Obama has been quicker off the blocks in setting up his government than any of his recent predecessors were, particularly Bill Clinton, who did not announce a single major appointment until mid-December. As the President-elect put it in his first radio address, "We don't have a moment to lose." (See pictures of Obama's victory celebration in Chicago.)

Not only did Obama name a White House chief of staff two days after the election, but he also began to fill 120,000 sq. ft. (11,000 sq m) of office space in downtown Washington with a transition operation that is ultimately expected to have a staff of 450 and a budget of $12 million, more than half of which must be raised from private funds. Obama's goal, says his old friend Valerie Jarrett, another co-chair of the transition operation, "is to be able to be organized, efficient, disciplined and transparent to the American people." More disciplined than transparent: Washington's quadrennial parlor game is in full swing, with scores of names being circulated as contenders for top jobs in the Obama Administration. But the number of people who actually know anything is small, and they are not prone to leaking.

The transition provides an early glimpse of how the Obama team will conduct itself in power - and a test of how much change it really will bring to Washington. As the cascade of crises grows - the collapse of General Motors being the latest - the President-elect won't have time to settle in before making big decisions. In a real sense, the moves Obama makes in the next six weeks may help define what kind of President he will be. The appointments he makes, the way he engineers his government, how fast he gets everything in place - each of those things will determine whether he stumbles or bursts out of the starting gate and whether he sets forth a clear or an incoherent agenda for governing.

Planning Ahead
By all indications, this is shaping up to be one of the most amicable transfers of power between the parties in recent years - thanks in no small part to the extraordinary efforts of the current occupant of the Oval Office. Planning for the handoff was under way well before the Obamas paid a visit to the Bushes at the White House on Nov. 10 for a tour of the place that they, their daughters and the new President's mother-in-law will soon be calling home. Since September, Podesta has been quietly working with current White House chief of staff Josh Bolten and Bolten's deputy, Blake Gottesman, to make sure the transition is as smooth as possible. Bolten and Gottesman have been offering advice on which posts need to be filled quickest and making their personnel available to Obama advisers. More than 100 interim security clearances have already been granted to Obama aides. "If a crisis hits on Jan. 21, they're the ones who are going to have to deal with it," Bolten said in an interview with C-SPAN. "We need to make sure that they're as well prepared as possible."

The most labor-intensive phase is about to begin, as teams of Obama aides descend on more than 100 federal departments and agencies to begin poring over their operations. Meanwhile, the new Administration is looking for more than 300 Cabinet secretaries, deputies and assistant secretaries, plus upwards of 2,500 political appointees who do not require Senate confirmation. Not that there will be any lack of candidates: in the first five days after Obama's team set up its Change.gov website, 144,000 applications poured in.

Obama seems determined to avoid the mistakes of Bill Clinton's chaotic transition in 1992, which helped set the stage for what turned out to be a rocky first year in office. Whereas Clinton put most of his early efforts into picking a diverse Cabinet that he said would look like America - and required three attempts to come up with a female Attorney General - Obama will initially focus on building his White House operation, much as Ronald Reagan did in 1980. Cabinet appointments are likely to begin coming by the end of the month, which is still early by recent historical standards. But Podesta says Obama intends to make the White House the locus of policy formulation and decision-making.

The strongest signal of how that White House will operate has been Obama's pick of Illinois Congressman Rahm Emanuel to be its chief of staff. Emanuel is a win-at-any-cost partisan but not an ideologue; in his earlier White House stint as a top aide to Clinton, he was a key figure in shepherding through the North American Free Trade Agreement, a crime bill and welfare reform - none of them popular with the Democratic Party's liberal base. The appointment of someone who has been a savvy operator at both ends of Pennsylvania Avenue also shows that, for all Obama's talk of change, he does not intend to make the mistake of earlier Presidents who ran as outsiders and brought in top advisers who did not understand the folkways of Washington. (See pictures of the world reacting to Obama's win.)

But there are those who worry that Emanuel's hard-edged style - he's famously profane and once sent an enemy a dead fish - will stifle dissent and debate in a White House that, Jarrett says, Obama wants to function using a "team-of-rivals approach, with differences of opinion." Comparing Emanuel with Richard Nixon's ruthless chief of staff, New York University government expert Paul Light predicts, "He's going to make Bob Haldeman look like a cupcake."

The Agenda Dilemma
Beyond personnel, the transition period is likely to yield insights into Obama's executive abilities and his agenda. Obama, following a model set by F.D.R. during his transition, has signaled that he does not intend to get deeply involved in the wrangling between Bush and Congress over an economic-stimulus package. Nor does he intend to return to Washington from Chicago to vote on one if it should come to the Senate chamber, where he technically still serves.

But given the urgency of the challenges - guarding against another terrorist attack and dealing with an economic crisis - Obama knows he doesn't have time on his side. His top priority will be stabilizing the financial system, he said in an interview with CNN shortly before the election, followed by investing in renewable energy, universal health care, middle-class tax cuts and education reform. Then there are the other things he talked about at various points in the campaign: closing GuantÁnamo, withdrawing from Iraq, renegotiating trade deals, reforming immigration. How quickly those now secondary goals will follow is a major question and source of debate among Obama's advisers. Publicly, they insist that he can do it all, and there is plenty of talk about putting these issues on parallel tracks. But it is hard to see how he can afford such expensive undertakings alongside a $700 billion federal bailout of the financial system (which Obama now wants to extend to the collapsing auto industry) and a new economic-stimulus package.

One relatively easy way that he can put early points on the change board once in office is by issuing a series of Executive Orders - for instance, reversing Bush policies on stem-cell research, offshore drilling and the prohibition against using foreign-aid money for abortion counseling. Congress, with its stronger Democratic majorities in both houses, is likely to quickly pass legislation that previously died under a Bush veto, beginning with expanded funding for the children's health-insurance program that is administered by the states. And lawmakers may also begin passing parts of Obama's economic and energy plans piecemeal.

The question is whether that will build Obama's momentum for bigger change or merely squander his honeymoon. Here too, Clinton's history is telling. In his first year, he put so much energy and capital into his deficit-reduction package and NAFTA that, in the view of some who served with him, he had little left for health care in his second.

The greatest challenge of all for President Obama will be the one set for him by candidate Obama. A Diageo/Hotline poll conducted after his election showed that two-thirds of those surveyed are now confident that "real change" is coming to Washington. How long are they willing to wait for it? Hope can fuel a campaign, but Presidents are measured by results.

- With reporting by Jay Newton-Small / Washington

U.S. unveils mortgage plan

2008-11-11T13:46:00.000-08:00

Effort focuses on Fannie, Freddie - sets standards for private sector. No direct financial help from U.S.
By Chris Isidore, CNNMoney.com senior writer
Last Updated: November 11, 2008: 4:40 PM ET

NEW YORK (CNNMoney.com) -- The Bush administration on Tuesday unveiled a new program to modify mortgages and stabilize the battered real estate market, but the plan stops short of providing direct government financial help to at-risk homeowners.

The plan centers on Fannie Mae and Freddie Mac, which between them own or back about 31 million mortgages worth a combined $5 trillion. The federal government took over the firms in September due to mounting losses on their portfolios of mortgages.

Homeowners 90 or more days late in their mortgage payments, owe at least 90% of their home's current value, live in the home on which the mortgage was taken and have not filed for bankruptcy are eligible.

Their mortgage payments would be adjusted through lower interest rates or longer repayment schedules with the goal of bringing payments below 38% of monthly household income.

Officials said the standards for loan modifications should fast-track changes in payments. The standards will be applied to loans owned by Fannie and Freddie, but officials said they hope they will also be adopted industrywide.

"We expect that it could significantly increase the number of modifications completed," said James Lockhart, director of the Federal Housing Finance Agency, the regulator that oversees Fannie and Freddie.

There was no estimate available of how many loans owned by Fannie or Freddie are eligible for help under this program. Fannie reported this week that 1.7% of its mortgages by value are delinquent by 90 or more days. Fannie's filings suggest that it has about 18 million mortgages on its books, which would work out to about 300,000 mortgages that could potentially be eligible.

Freddie has yet to release third-quarter results, but at the end of the second quarter it had 115,000 delinquent loans on its books, or about 1% of its total. That number is likely to be significantly higher when it reports third quarter results later this week.
'An important step forward'

Faith Schwartz, executive director of Hope Now, a coalition of lenders, loan servicers and not-for-profit housing groups, said setting standards for loan modifications is an important advance that she believes other banks and mortgage investors are likely to follow.

"It may not be across the whole industry, but it's an important step forward," she said. "We think over time this is going to affect a couple hundred thousand homeowners."

But even in cases where declining home prices have taken the value of a home to less than is owed on the mortgage, the balance of the loan will not be lowered under this program.

"This is not loan forgiveness; the loans will be paid but at terms affordable for borrowers," said Brian Montgomery, commissioner of the Federal Housing Administration.

The fact that mortgage balances will not be reduced for the so-called underwater mortgages -- those in which a homeowner owes more than the home is worth -- will limit the use and impact of the program, according to some experts.

"When they realize they owe $300,000 on a home worth $200,000, many will decide it's just not worth it," said Dean Baker, co-director of the Center for Economic and Policy Research.

Sen. Charles Schumer, D-N.Y., was quick to criticize the program for not going far enough. He said too many of the loans won't be modified because the investors who own the loan will be able to block a new payment schedule.

"These voluntary plans sound nice, but they don't do the job," Schumer said.

Sen. Christopher Dodd, D-Conn., called the plan "a constructive step forward." But he called on the Bush administration to push ahead with a separate mortgage guarantee program under the $700 billion financial system bailout enacted last month. "We are still awaiting agreement from the Treasury Department to move this program forward," he said.
Private-sector efforts underway

While a number of major banks, including Citigroup (C, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Bank of America (BAC, Fortune 500), have announced loan modifications programs in recent weeks, they hold only a fraction of those owned or guaranteed by Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500).

Most of the mortgage modification programs announced by banks so far cap the payments of homeowners at risk of losing their homes at a level they can afford -- typically about 34% to 40% of their income -- through lower interest rates, longer repayment schedules or reductions in loan balances. But many of those loan modification programs include the option of reducing the balance of the loan, an option not included in this latest program.

Banks and mortgage finance firms have a strong interest in trying to halt foreclosures. The market is already flooded with more homes for sale than there are buyers, and foreclosures will only further drive down home prices and lead to more foreclosures.

Moody's Economy.com forecasts that even with loan modification programs, 1.6 million Americans will lose their homes this year either in a foreclosure or a distressed sale, and another 1.9 million are projected to lose their homes in 2009.

On Monday, Fannie reported a $29 billion loss in the third quarter. The company also reported sharp increases in loan default rates and the amount it is setting aside for future loan losses. To top of page
First Published: November 11, 2008: 11:42 AM ET

McCain's nightmares

2008-11-06T23:22:00.001-08:00

Foreclosures wave

2008-11-06T23:19:00.001-08:00

Obama in Chicago - Nov 4th 2008

2008-11-06T23:15:00.001-08:00

President-Elect Obama

2008-11-04T22:37:00.001-08:00

Obama's Victory Speech Nov 4th 2008

2008-11-04T22:28:00.000-08:00

Hello, Chicago.

If there is anyone out there who still doubts that America is a place where all things are possible, who still wonders if the dream of our founders is alive in our time, who still questions the power of our democracy, tonight is your answer.

It's the answer told by lines that stretched around schools and churches in numbers this nation has never seen, by people who waited three hours and four hours, many for the first time in their lives, because they believed that this time must be different, that their voices could be that difference.

It's the answer spoken by young and old, rich and poor, Democrat and Republican, black, white, Hispanic, Asian, Native American, gay, straight, disabled and not disabled. Americans who sent a message to the world that we have never been just a collection of individuals or a collection of red states and blue states.

We are, and always will be, the United States of America.

It's the answer that led those who've been told for so long by so many to be cynical and fearful and doubtful about what we can achieve to put their hands on the arc of history and bend it once more toward the hope of a better day.

It's been a long time coming, but tonight, because of what we did on this date in this election at this defining moment change has come to America.

A little bit earlier this evening, I received an extraordinarily gracious call from Sen. McCain.
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Sen. McCain fought long and hard in this campaign. And he's fought even longer and harder for the country that he loves. He has endured sacrifices for America that most of us cannot begin to imagine. We are better off for the service rendered by this brave and selfless leader.

I congratulate him; I congratulate Gov. Palin for all that they've achieved. And I look forward to working with them to renew this nation's promise in the months ahead.

I want to thank my partner in this journey, a man who campaigned from his heart, and spoke for the men and women he grew up with on the streets of Scranton and rode with on the train home to Delaware, the vice president-elect of the United States, Joe Biden.

And I would not be standing here tonight without the unyielding support of my best friend for the last 16 years the rock of our family, the love of my life, the nation's next first lady Michelle Obama.

Sasha and Malia I love you both more than you can imagine. And you have earned the new puppy that's coming with us to the new White House.

And while she's no longer with us, I know my grandmother's watching, along with the family that made me who I am. I miss them tonight. I know that my debt to them is beyond measure.

To my sister Maya, my sister Alma, all my other brothers and sisters, thank you so much for all the support that you've given me. I am grateful to them.

And to my campaign manager, David Plouffe, the unsung hero of this campaign, who built the best -- the best political campaign, I think, in the history of the United States of America.

To my chief strategist David Axelrod who's been a partner with me every step of the way.

To the best campaign team ever assembled in the history of politics you made this happen, and I am forever grateful for what you've sacrificed to get it done.

But above all, I will never forget who this victory truly belongs to. It belongs to you. It belongs to you.

I was never the likeliest candidate for this office. We didn't start with much money or many endorsements. Our campaign was not hatched in the halls of Washington. It began in the backyards of Des Moines and the living rooms of Concord and the front porches of Charleston. It was built by working men and women who dug into what little savings they had to give $5 and $10 and $20 to the cause.

It grew strength from the young people who rejected the myth of their generation's apathy who left their homes and their families for jobs that offered little pay and less sleep.

It drew strength from the not-so-young people who braved the bitter cold and scorching heat to knock on doors of perfect strangers, and from the millions of Americans who volunteered and organized and proved that more than two centuries later a government of the people, by the people, and for the people has not perished from the Earth.

This is your victory.

And I know you didn't do this just to win an election. And I know you didn't do it for me.

You did it because you understand the enormity of the task that lies ahead. For even as we celebrate tonight, we know the challenges that tomorrow will bring are the greatest of our lifetime -- two wars, a planet in peril, the worst financial crisis in a century.

Even as we stand here tonight, we know there are brave Americans waking up in the deserts of Iraq and the mountains of Afghanistan to risk their lives for us.

There are mothers and fathers who will lie awake after the children fall asleep and wonder how they'll make the mortgage or pay their doctors' bills or save enough for their child's college education.

There's new energy to harness, new jobs to be created, new schools to build, and threats to meet, alliances to repair.

The road ahead will be long. Our climb will be steep. We may not get there in one year or even in one term. But, America, I have never been more hopeful than I am tonight that we will get there.

I promise you, we as a people will get there.

There will be setbacks and false starts. There are many who won't agree with every decision or policy I make as president. And we know the government can't solve every problem.

But I will always be honest with you about the challenges we face. I will listen to you, especially when we disagree. And, above all, I will ask you to join in the work of remaking this nation, the only way it's been done in America for 221 years -- block by block, brick by brick, calloused hand by calloused hand.

What began 21 months ago in the depths of winter cannot end on this autumn night.

This victory alone is not the change we seek. It is only the chance for us to make that change. And that cannot happen if we go back to the way things were.

It can't happen without you, without a new spirit of service, a new spirit of sacrifice.

So let us summon a new spirit of patriotism, of responsibility, where each of us resolves to pitch in and work harder and look after not only ourselves but each other.

Let us remember that, if this financial crisis taught us anything, it's that we cannot have a thriving Wall Street while Main Street suffers.

In this country, we rise or fall as one nation, as one people. Let's resist the temptation to fall back on the same partisanship and pettiness and immaturity that has poisoned our politics for so long.

Let's remember that it was a man from this state who first carried the banner of the Republican Party to the White House, a party founded on the values of self-reliance and individual liberty and national unity.

Those are values that we all share. And while the Democratic Party has won a great victory tonight, we do so with a measure of humility and determination to heal the divides that have held back our progress.

As Lincoln said to a nation far more divided than ours, we are not enemies but friends. Though passion may have strained, it must not break our bonds of affection.

And to those Americans whose support I have yet to earn, I may not have won your vote tonight, but I hear your voices. I need your help. And I will be your president, too.

And to all those watching tonight from beyond our shores, from parliaments and palaces, to those who are huddled around radios in the forgotten corners of the world, our stories are singular, but our destiny is shared, and a new dawn of American leadership is at hand.

To those -- to those who would tear the world down: We will defeat you. To those who seek peace and security: We support you. And to all those who have wondered if America's beacon still burns as bright: Tonight we proved once more that the true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals: democracy, liberty, opportunity and unyielding hope.

That's the true genius of America: that America can change. Our union can be perfected. What we've already achieved gives us hope for what we can and must achieve tomorrow.

This election had many firsts and many stories that will be told for generations. But one that's on my mind tonight's about a woman who cast her ballot in Atlanta. She's a lot like the millions of others who stood in line to make their voice heard in this election except for one thing: Ann Nixon Cooper is 106 years old.

She was born just a generation past slavery; a time when there were no cars on the road or planes in the sky; when someone like her couldn't vote for two reasons -- because she was a woman and because of the color of her skin.

And tonight, I think about all that she's seen throughout her century in America -- the heartache and the hope; the struggle and the progress; the times we were told that we can't, and the people who pressed on with that American creed: Yes we can.

At a time when women's voices were silenced and their hopes dismissed, she lived to see them stand up and speak out and reach for the ballot. Yes we can.

When there was despair in the dust bowl and depression across the land, she saw a nation conquer fear itself with a New Deal, new jobs, a new sense of common purpose. Yes we can.

When the bombs fell on our harbor and tyranny threatened the world, she was there to witness a generation rise to greatness and a democracy was saved. Yes we can.

She was there for the buses in Montgomery, the hoses in Birmingham, a bridge in Selma, and a preacher from Atlanta who told a people that "We Shall Overcome." Yes we can.

A man touched down on the moon, a wall came down in Berlin, a world was connected by our own science and imagination.

And this year, in this election, she touched her finger to a screen, and cast her vote, because after 106 years in America, through the best of times and the darkest of hours, she knows how America can change.

Yes we can.

America, we have come so far. We have seen so much. But there is so much more to do. So tonight, let us ask ourselves -- if our children should live to see the next century; if my daughters should be so lucky to live as long as Ann Nixon Cooper, what change will they see? What progress will we have made?

This is our chance to answer that call. This is our moment.
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This is our time, to put our people back to work and open doors of opportunity for our kids; to restore prosperity and promote the cause of peace; to reclaim the American dream and reaffirm that fundamental truth, that, out of many, we are one; that while we breathe, we hope. And where we are met with cynicism and doubts and those who tell us that we can't, we will respond with that timeless creed that sums up the spirit of a people: Yes, we can.

Thank you. God bless you. And may God bless the United States of America.
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Obama sweeps to victory as first black president

2008-11-04T22:25:00.000-08:00

WASHINGTON – Barack Obama swept to victory as the nation's first black president Tuesday night in an electoral college landslide that overcame racial barriers as old as America itself. "Change has come," he told a huge throng of jubilant supporters.

The son of a black father from Kenya and a white mother from Kansas, the Democratic senator from Illinois sealed his historic triumph by defeating Republican Sen. John McCain in a string of wins in hard-fought battleground states — Ohio, Florida, Iowa and more. He captured Virginia, too, the first candidate of his party in 40 years to do so.

On a night for Democrats to savor, they not only elected Obama the nation's 44th president but padded their majorities in the House and Senate, and in January will control both the White House and Congress for the first time since 1994.

A survey of voters leaving polling places showed the economy was by far the top Election Day issue. Six in 10 voters said so, and none of the other top issues — energy, Iraq, terrorism and health care — was picked by more than one in 10.

Obama's election capped a meteoric rise — from mere state senator to president-elect in four years.

Spontaneous celebrations erupted from Atlanta to New York and Philadelphia as word of Obama's victory spread. A big crowd filled Pennsylvania Avenue in front of the White House.

In his first speech as victor, to more than 100,000 supporters at Grant Park in his home town of Chicago, Obama catalogued the challenges ahead. "The greatest of a lifetime," he said, "two wars, a planet in peril, the worst financial crisis in a century."

He added, "There are many who won't agree with every decision or policy I make as president, and we know that government can't solve every problem. But I will always be honest with you about the challenges we face."

McCain called his former rival to concede defeat — and the end of his own 10-year quest for the White House. "The American people have spoken, and spoken clearly," McCain told disappointed supporters in Arizona.

President Bush added his congratulations from the White House, where his tenure runs out on Jan. 20. "May God bless whoever wins tonight," he had told dinner guests earlier.

Obama, in his speech, invoked the words of Lincoln and seemed to echo John F. Kennedy.

"So let us summon a new spirit of patriotism, of service and responsibility where each of us resolves to pitch in and work harder," he said.

He and his running mate, Sen. Joseph Biden of Delaware, will take their oaths of office as president and vice president on Jan. 20, 2009. McCain remains in the Senate.

Sarah Palin, McCain's running mate, returns to Alaska as governor after a tumultuous debut on the national stage.

He will move into the Oval Office as leader of a country that is almost certainly in recession, and fighting two long wars, one in Iraq, the other in Afghanistan.

The popular vote was close — 51.3 percent to 47.5 percent with 73 percent of all U.S. precincts tallied — but not the count in the Electoral College, where it mattered most.

There, Obama's audacious decision to contest McCain in states that hadn't gone Democratic in years paid rich dividends.

Shortly after midnight in the East, The Associated Press count showed Obama with 338 electoral votes, well over the 270 needed for victory. McCain had 141 after winning states that comprised the normal Republican base, including Texas and most of the South.

Interviews with voters suggested that almost six in 10 women were backing Obama nationwide, while men leaned his way by a narrow margin. Just over half of whites supported McCain, giving him a slim advantage in a group that Bush carried overwhelmingly in 2004.

The results of the AP survey were based on a preliminary partial sample of nearly 10,000 voters in Election Day polls and in telephone interviews over the past week for early voters. Obama has said his first order of presidential business will be to tackle the economy. He has also pledged to withdraw most U.S. combat troops from Iraq within 16 months.

In Washington, the Democratic leaders of Congress celebrated.

"It is not a mandate for a party or ideology but a mandate for change," said Senate Majority leader Harry Reid of Nevada.

Said Speaker Nancy Pelosi of California: "Tonight the American people have called for a new direction. They have called for change in America."

Democrats also acclaimed Senate successes by former Gov. Mark Warner in Virginia, Rep. Tom Udall in New Mexico and Rep. Mark Udall in Colorado. All won seats left open by Republican retirements.

In New Hampshire, former Gov. Jeanne Shaheen defeated Republican Sen. John Sununu in a rematch of their 2002 race, and Sen. Elizabeth Dole fell to Democrat Kay Hagan in North Carolina.

Biden won a new term in Delaware, a seat he will resign before he is sworn in as vice president.

The Senate's Republican leader, Mitch McConnell, survived a scare in Kentucky, and in Georgia Sen. Saxby Chambliss hoped to avoid a December runoff.

The Democrats piled up gains in the House, as well.

They defeated seven Republican incumbents, including 22-year veteran Chris Shays in Connecticut, and picked up nine more seats where GOP lawmakers had retired.

At least three Democrats lost their seats, including Florida Rep. Tim Mahoney, turned out of office after admitting to two extramarital affairs while serving his first term in Florida. In Louisiana, Democratic Rep. Don Cazayoux lost the seat he had won in a special election six months ago.

The resurgent Democrats also elected a governor in one of the nation's traditional bellwether states when Missouri Attorney General Jay Nixon won his race.

An estimated 187 million voters were registered, and in an indication of interest in the battle for the White House, 40 million or so had already voted as Election Day dawned.

Obama sought election as one of the youngest presidents, and one of the least experienced in national political affairs.

That wasn't what set the Illinois senator apart, though — neither from his rivals nor from the other men who had served as president since the nation's founding more than two centuries ago. A black man, he confronted a previously unbreakable barrier as he campaigned on twin themes of change and hope in uncertain times.

McCain, a prisoner of war during Vietnam, a generation older than his rival at 72, was making his second try for the White House, following his defeat in the battle for the GOP nomination in 2000.

A conservative, he stressed his maverick's streak. And although a Republican, he did what he could to separate himself from an unpopular president.

For the most part, the two presidential candidates and their running mates, Biden and Republican Gov. Sarah Palin of Alaska, spent weeks campaigning in states that went for Bush four years ago.

McCain and Obama each won contested nominations — the Democrat outdistancing former first lady Hillary Rodham Clinton — and promptly set out to claim the mantle of change.

Obama won California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Virginia, Vermont, Washington and Wisconsin.

McCain had Alabama, Arizona, Arkansas, Idaho, Kansas, Kentucky, Louisiana, Mississippi, Nebraska, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia and Wyoming.

He also won at least 3 of Nebraska's five electoral votes, with the other two in doubt.

Obama's Electoral Map

2008-11-04T22:10:00.000-08:00

Obama captures historic White House win

2008-11-04T22:08:00.000-08:00

By John Whitesides, Political Correspondent

WASHINGTON (Reuters) - Democrat Barack Obama captured the White House on Tuesday after an extraordinary two-year campaign, defeating Republican John McCain to make history as the first black U.S. president.

Obama will be sworn in as the 44th U.S. president on January 20, 2009 and will face a crush of immediate challenges, from tackling an economic crisis to ending the war in Iraq and trying to overhaul the U.S. health care system.

McCain saw his hopes for victory evaporate with losses in a string of key battleground states led by the big prizes of Ohio and Florida, the states that sent Democrats to defeat in the last two elections.

The win by Obama, son of a black father from Kenya and white mother from Kansas, marked a milestone in U.S. history. It came 45 years after the height of the civil rights movement led by Martin Luther King.

"It's been a long time coming, but tonight, because of what we did on this day, at this defining moment, change has come to America," Obama, 47, told 125,000 ecstatic supporters gathered in Chicago's Grant Park to celebrate.

"The road ahead will be long. Our climb will be steep. We may not get there in one year or even one term, but America -- I have never been more hopeful than I am tonight that we will get there," he said.

Obama, a first-term Illinois senator, led sweeping Democratic victories that expanded the party's majorities in both chambers of Congress and marked an emphatic rejection of President George W. Bush's eight years of leadership.

McCain, a 72-year-old Arizona senator and former Vietnam War prisoner, called Obama to congratulate him and praised his rival's inspirational and precedent-shattering campaign.

"We have come to the end of a long journey," McCain told supporters. "I urge all Americans who supported me to join me in not just congratulating him but offering our next president our goodwill."

News of Obama's win set off celebrations by supporters around the country, from Times Square in New York to Ebenezer Baptist Church in Atlanta, King's home church.

"This is a great night. This is an unbelievable night," said U.S. Rep. John Lewis of Georgia, who was brutally beaten by police in Selma, Alabama, during a voting rights march in the 1960s.

The Rev. Jesse Jackson, a civil rights leader, joined the celebrations in Chicago, tears streaming down his cheeks.

ECONOMY THE KEY

In a campaign dominated at the end by a flood of bad news on the economy, Obama's judgment on handling the crisis tipped the race in his favor. Exit polls showed six of every 10 voters listed the economy as the top issue.

Obama has promised to restore U.S. leadership in the world by working closely with foreign allies, and has pledged a tax cut for low- and middle-class workers while raising taxes on those making more than $250,000 a year.
McCain would have become the oldest president to begin a first term in the White House and his running mate Sarah Palin would have been the first female U.S. vice president.

The vice-presidency goes to Obama's running mate, Sen. Joe Biden.

In addition to Ohio and Florida, Obama won Virginia, Iowa, New Mexico, Nevada and Colorado -- all states won by Bush in 2004. McCain's loss in Pennsylvania eliminated his best hope of capturing a Democratic-leaning state.

Obama was on the way to winning more than 300 Electoral College votes, far more than the 270 needed. With nearly two-thirds of U.S. precincts reporting, he led McCain by 51 percent to 48 percent in the popular vote.

The vote capped an epic two-year campaign marked by a rapid rise from obscurity for Obama and a bitter Democratic primary battle with New York Sen. Hillary Clinton, as well as McCain's comeback from the political scrap heap to win the Republican nomination.

Obama hammered his favorite theme throughout the campaign, accusing McCain of representing a third term for Bush's policies and being out of touch on the economy.

McCain's campaign attacked Obama as a tax-raising liberal and accused him of being a "pal" with terrorists.

But in a difficult political environment for Republicans, McCain struggled to separate himself from Bush. Exit polls showed three out of every four voters thought the United States was on the wrong track.

In the fight for Congress, Democrats were making big gains as well, but it appeared they would fall short of picking up the nine Senate seats to reach a 60-seat majority that would give them the muscle to defeat Republican procedural hurdles.

Democrats gained at least five Senate seats and knocked off two-high profile Republican incumbents -- North Carolina Sen. Elizabeth Dole, a former presidential candidate and wife of 1996 Republican presidential nominee Bob Dole, and New Hampshire Sen. John Sununu.

Democrats also gained about 25 more House of Representatives seats to give them a commanding majority in that chamber.

My Votes for This Year's Election

2008-11-03T10:51:00.001-08:00

Hi,

I also will vote for Obama and here are some of my reasons:

1- I am not satisfied with the war in Iraq and how much it is costing our tax dollars every month. ($10B to be exact - that's a B - not a M) - Senator John McCain has not indicated to end this war any time sooner - so I expect it will continue to cost US some huge amounts of money before it can be ended. Obama will end this war in a timely and orderly fashion. I also think we need to allow the Iraqis to come here as immigrants and I think Obama is willing to accept that.

2- Senator McCain used to be a very liberal senator in US Senate; but as soon as his nomination was selected, he has become all the way to the left that I fear if he's elected, this country will continue going to wrong direction as G.W. Bush has been taking us to. In fact, only 27% approve the current president and his way of governing this country.

3- Senator McCain's VP pick is a disaster - Gov. Sarah Palin. For me, she's just not ready for national level yet. On many occasions, Gov. Palin has clearly shown us how much out of touch she is in terms of the national issues. It's not that she can't answer the media's questions, it's just that she does not understand the questions and issues. Issues/questiosn are like the foreign policies, the Bush's doctrine, the health cares, and much more... She is just not ready yet. Period.

3- It will be naive to think whatever Obama said will be done. However, Obama has new visions and directions of which America is in need of. Of course, some of his ideas might not work and at least he's shown to us the kind of HOPE that millions of Americans hope everyday. Example: on the Health Care and Energy issues, there is no way he can change the system. But at least, he will try something. That's what we need. We need a change. Remember, the president has power to introduce new laws and the Congress will approve or disapprove it.

4- Obama is an inspiration for millions of people. One of the first millions who was inspired by Obama is the daughter of late JFK, Katherine Kennedy. She said in her supporting speech to Obama that Obama is the kind of leader that is very resembling her father. For me, that's something. I always look for a potential character of a candidate. Obama is the one. Remember when Kennedy was elected, America did not think we could launch a rocket to the space. Guess what? Kennedy helped to introduce the space vision to NASA. And this very idea of competion is indeed a big advantage for America later in the Cold War.

5- I think we all agree that Senator McCain has served this country well. And we as immigrants also agree that we are grateful for his generousity in terms of agreeing with many immigration laws that has carried us to this country. However, as we're trying to integrate to this new country, we must also recognize our common goal as Americans. But remember this! Immigration issue is a very delicate issue and most of the time, the President, Senate and House of Representatives agree with the majority. That's why I do not believe that this issue is a partisan issue.

6- The way McCain and Palin run the campaign really tells me how nasty and furious both of them are. First, they call Obama as inexperienced but as soon as Palin came on board, they quickly switched their theme. Then, they called him a Terrorist. Then they called him 'Socialist' which is very incorrect.

Remember, when Obama said he would 'spread the wealth' , all he is trying to say is that he want to re-enforce the American system. That is, if you make more $, you are obligated to pay an extra tax. This is what former President Clinton did in the 1990s. And it worked.

And Obama's tax plan is very similar to Clinton's plan in the 1990s. And the reason I know this is because of the Clinton's plan, I was able to attend college with financial aids. :-) Well, the fact is that on Obama's website, it also mentioned that his tax plan is similar to Clinton's.

During the past 8 years, students across the nation has cried out loud because of the insufficient financial aid. Why? Because the government is running out of budget and it's trickling down to the State level.

So, calling Obama a socialist is wrong and unfair.

Finally, Obama represents Dr. Martin Lunar King's image. Because of Dr. King, Asians including you and me, colored people, and non-Caucasians can sit on the same seat on the bus, the lightrail and the train today.

And ....

It's important to know that California also has some critical ballots to cast in this election. Here are my votes for the state prepositions.

* Proposition 1A - provides for a bond issue of $9.95 billion to
establish high-speed train service
[My Vote] YES

* Proposition 2 - standards for confining farm animals

[My Vote] YES

* Proposition 3 - authorizes $980 million in general obligation bonds to
fund construction and financing of children\u2019s hospitals

[My Vote] NO

* Proposition 4 - would change the California Constitution to prohibit
abortion for unemancipated minor until 48 hours after physician notifies minor\u2019s parent or legal guardian

[My Vote] YES

* Proposition 5 - would expand treatment programs for persons convicted
of drug and other offenses, and changes sentencing and parole policies

[My Vote] YES

* Proposition 6 - would require minimum annual funding for police and law
enforcement, and amend laws and penalties for certain gang, methamphetamine, and car-theft crimes
[My Vote] YES

* Proposition 7 - requires utilities to generate 20% of their power from
renewable energy by 2010

[My Vote] YES

* Proposition 8 - changes the California Constitution to eliminate the
right of same-sex couples to marry in California

[My Vote] NO

* Proposition 9 - requires notification to victim and opportunity for
input during phases of criminal justice process

[My Vote] YES

* Proposition 10 - provides for $5 billion in general obligation bonds
for the purchase and development of renewable energy resources

[My Vote] NO

* Proposition 11 - changes authority for establishing Assembly, Senate,
and Board of Equalization district boundaries from elected representatives to a 14 member commission

[My Vote] NO

* Proposition 12 - provides for a bond issue of $900 million to provide
loans to California veterans to purchase farms and homes
[My Vote] NO

Police: Child's body found in SUV is Hudson nephew

2008-10-27T20:46:00.000-07:00

Police: Child's body found in SUV is Hudson nephew
By SOPHIA TAREEN, Associated Press Writer Sophia Tareen, Associated Press Writer 2 hrs 25 mins ago

CHICAGO – Oscar winner Jennifer Hudson's 7-year-old nephew was found dead in the back of an SUV on Monday, ending a frantic search that began after the shooting deaths of her mother and brother three days earlier.

The singer and actress was among seven family members and close friends who cried and held hands as they identified Julian King's body from a live image on a television screen at the Cook County Medical Examiner's office Monday afternoon.

Chicago police spokeswoman Monique Bond said the boy, like his grandmother and uncle, had been shot. The medical examiner's office planned a Tuesday autopsy.

Chicago Police Superintendent Jody Weis said a motive remained unclear Monday but added, "It wasn't a case of a stranger-type homicide."

Police have characterized the slayings as "domestic related" and authorities have been questioning Julian's stepfather, who has been estranged from the boy's mother and is being held on a parole violation. No one has been charged in the slayings.

Julian's body was found shortly after 7 a.m. in the rear seat of the SUV, which matched the one mentioned in an Amber Alert for the boy and was parked on the street in a neighborhood of brownstone homes and apartment buildings.

The vehicle was about 10 miles from the house where the other victims were found, which was where Julian lived and where Hudson grew up.

Hudson had offered $100,000 Sunday for information leading to the safe return of her nephew, the son of her sister, Julia Hudson. Hudson's publicist did not immediately return calls and e-mail messages Monday.

"Miss Hudson wanted to request privacy," Cook County spokesman Sean Howard said after the family left the medical examiner's office. "This is a very trying time for her and her family."

Hudson's aunt, Dorothy Hudson, said the Chicago funeral home she owns with her husband will handle arrangements for the family, but details were pending.

"We're just sad. We're going through this stage where we're just sad and in shock," Dorothy Hudson said.

The Amber Alert had listed William Balfour, the estranged husband of Julia Hudson, as a suspect in a "double homicide investigation." He is not the boy's father and has not been charged in the slayings.

Weis said Monday that Balfour "remains a person of interest."

The chief said he was confident that with two crime scenes, investigators would find important clues.

Balfour, 27, was taken into custody for questioning Friday after the bodies of Hudson's 57-year-old mother, Darnell Donerson, and 29-year-old brother, Jason Hudson, were found.

On Sunday, Balfour was transferred to the Illinois Department of Corrections, where a spokeswoman declined Monday to discuss his parole violation.

Corrections records show Balfour spent nearly seven years in prison for attempted murder, vehicular hijacking and possessing a stolen vehicle. He was expected to remain in state custody until the Illinois Prisoner Review Board looked at his case.

Balfour's mother, Michele Balfour, has said Hudson's mother kicked Balfour out of the family home last winter. She denied her son had anything to do with the killings.

It was unclear whether Balfour had an attorney.

Lynette Louden, 47, said she called police about the SUV across the street from her home on Chicago's West Side after her family's Chihuahua started barking at it early Monday. Some neighbors said they hadn't seen the vehicle before Monday, but Louden said it had been there since at least Saturday.

"I only hoped the body wasn't in there," she said. "When they said that it was, I cried."

Weis said police were waiting for the autopsy to determine how long the boy had been dead, but estimated the vehicle was parked on the street "a couple of days."

When asked how officers could have missed the SUV during their massive search, Weis noted that Chicago is a big city and that the vehicle was "several miles away from the first crime scene."

Steve Peterson, head of the department's Bureau of Investigative Services, said the search for the boy had been centered farther east based on information they had about where Balfour's current girlfriend lives.

Hudson, 27, who won an Academy Award for best supporting actress in 2007 for her role in "Dreamgirls," returned to Chicago to be with her family during the weekend. She also had identified the bodies of her mother and brother.

Neighbors and well-wishers brought stuffed animals and other items to a makeshift memorial outside Donerson's two-story white clapboard home as news of Monday's discovery spread.

At a candlelight vigil on Monday night, hundreds of people gathered outside the Englewood home. They sang, held hands and cried in the cold as they contributed to an expanding memorial of stuffed animals, balloons and flowers.

"I wanted to come out and support the community in their endeavor and to let Jennifer Hudson know how much we care and we're praying for her," said Doris Jones, who lives in the neighborhood. "It pains all of us to know three lives are gone and we don't know why."

___

Associated Press writers Caryn Rousseau, Don Babwin, Carla K. Johnson and Michael Tarm contributed to this report.

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