Fed eyes Nordic-style nationalisation of US banks

The US Federal Reserve is examining the Nordic bank nationalisations of the 1990s as a possible interim solution to the US financial crisis.
The Fed has been criticised for its rescue of Bear Stearns, which critics say has degenerated into a taxpayer gift to rich bankers

The Fed has been criticised for its rescue of Bear Stearns, which critics say has degenerated into a taxpayer gift to rich bankers.

A senior official at one of the Scandinavian central banks told The Daily Telegraph that Fed strategists had stepped up contacts to learn how Norway, Sweden and Finland managed their traumatic crisis from 1991 to 1993, which brought the region's economy to its knees.

It is understood that Fed vice-chairman Don Kohn remains very concerned by the depth of the US crisis and is eyeing the Nordic approach for contingency options.

Scandinavia's bank rescue proved successful and is now a model for central bankers, unlike Japan's drawn-out response, where ailing banks were propped up in a half-public limbo for years.

While the responses varied in each Nordic country, there a was major effort to avoid the sort of "moral hazard" that has bedevilled efforts by the Fed and the Bank of England in trying to stabilise their banking systems.

Norway ensured that shareholders of insolvent lenders received nothing and the senior management was entirely purged. Two of the country's top four banks - Christiania Bank and Fokus - were seized by force majeure.

"We were determined not to get caught in the game we've seen with Bear Stearns where shareholders make money out of the rescue," said one Norwegian adviser.

"The law was amended so that we could take 100pc control of any bank where its equity had fallen below zero. Shareholders were left with nothing. It was very controversial," he said.

Stefan Ingves, governor of Sweden's Riksbank, said his country passed an act so it could seize banks where the capital adequacy ratio had fallen below 2pc. Efforts were also made to protect against "blackmail" by shareholders.

Mr Ingves said there were parallels with the US crisis, citing the use of off-balance sheet vehicles to speculate on property. All the Nordic banks were nursed back to health and refloated or merged.

The tough policies contrast with the Fed's bail-out of Bear Stearns, where shareholders forced JP Morgan to increase its Fed-led rescue offer from $2 to $10 a share. Christopher Wood, chief strategist at brokers CLSA, says the Fed's piecemeal approach has led to "appalling moral hazard".

"Shareholders have been able to lobby for a higher share price only because the Fed took over the credit risk on $30bn of the investment bank's dubious paper. The whole affair also amounts to a colossal subsidy for JP Morgan," he said.

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Companies go 'topless' at meetings

SAN FRANCISCO, March 31 (UPI) -- Distractions from laptops and other devices are causing many San Francisco companies to say they are going "topless" -- no electronic devices at meetings.

Many companies are banning electronics during meetings after getting increasing complaints of sidetracked workers slowing down productivity, the Los Angeles Times reported Monday.

"Laptops, Blackberries, Sidekicks, iPhones and the like keep people from being fully present. Aside from just being rude, partial attention generally leads to partial results," said Todd Wilkens of Adaptive Path, a San Francisco design firm

Wilkens said since his company has banned laptops from meetings they have been "a lot more productive."

Some companies argue that meetings in general are simply unproductive and should be tossed out altogether.

"No laptop meetings make sense. No meetings make even more sense," said Joe Lazarus, former director of marketing for Yahoo.

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In Wal-Mart We Trust

Scott Morgan/Getty ImagesA woman crosses a flooded Bourbon Street in the French Quarter in August, 2005 in New Orleans.

Shortly before Hurricane Katrina made landfall on the U.S. Gulf Coast on the morning of Aug. 29, 2005, the chief executive officer of Wal-Mart, Lee Scott, gathered his subordinates and ordered a memorandum sent to every single regional and store manager in the imperiled area. His words were not especially exalted, but they ought to be mounted and framed on the wall of every chain retailer -- and remembered as American business's answer to the pre-battle oratory of George S. Patton or Henry V.

"A lot of you are going to have to make decisions above your level," was Scott's message to his people. "Make the best decision that you can with the information that's available to you at the time, and above all, do the right thing."

This extraordinary delegation of authority -- essentially promising unlimited support for the decision-making of employees who were earning, in many cases, less than $100,000 a year -- saved countless lives in the ensuing chaos. The results are recounted in a new paper on the disaster written by Steven Horwitz, an Austrian-school economist at St. Lawrence University in New York. While the Federal Emergency Management Agency fumbled about, doing almost as much to prevent essential supplies from reaching Louisiana and Mississippi as it could to facilitate it, Wal-Mart managers performed feats of heroism. In Kenner, La., an employee crashed a forklift through a warehouse door to get water for a nursing home. A Marrero, La., store served as a barracks for cops whose homes had been submerged. In Waveland, Miss., an assistant manager who could not reach her superiors had a bulldozer driven through the store to retrieve disaster necessities for community use, and broke into a locked pharmacy closet to obtain medicine for the local hospital.

Meanwhile, Wal-Mart trucks pre-loaded with emergency supplies at regional depots were among the first on the scene wherever refugees were being gathered by officialdom. Their main challenge, in many cases, was running a gauntlet of FEMA officials who didn't want to let them through. As the president of the brutalized Jefferson Parish put it in a Sept. 4 Meet the Press interview, speaking at the height of nationwide despair over FEMA's confused response: "If [the U.S.] government would have responded like Wal-Mart has responded, we wouldn't be in this crisis."

This benevolent improvisation contradicts everything we have been taught about Wal-Mart by labour unions and the "small-is-beautiful" left. We are told that the company thinks of its store management as a collection of cheap, brainwash-able replacement parts; that its homogenizing culture makes it incapable of serving local communities; that a sparrow cannot fall in Wal-Mart parking lot without orders from Arkansas; that the chain puts profits over people. The actual view of the company, verifiable from its disaster-response procedures, is that you can't make profits without people living in healthy communities. And it's not alone: As Horwitz points out, other big-box companies such as Home Depot and Lowe's set aside the short-term balance sheet when Katrina hit and acted to save homes and lives, handing out millions of dollars' worth of inventory for free.

No one who is familiar with economic thought since the Second World War will be surprised at this. Scholars such as F. A. von Hayek, James Buchanan and Gordon Tullock have taught us that it is really nothing more than a terminological error to label governments "public" and corporations "private" when it is the latter that often have the strongest incentives to respond to social needs. A company that alienates a community will soon be forced to retreat from it, but the government is always there. Companies must, to survive, create economic value one way or another; government employees can increase their budgets and their personal power by destroying or wasting wealth, and most may do little else. Companies have price signals to guide their productive efforts; governments obfuscate those signals.

Aside from the public vs. private issue, Horwitz suggests, decentralized disaster relief is likely to be more timely and appropriate than the centralized kind, which explains why the U.S. Coast Guard performed so much better during the disaster than FEMA. The Coast Guard, like all marine forces, necessarily leaves a great deal of authority in the hands of individual commanders, and like Wal-Mart, it benefited during and after the hurricane from having plenty of personnel who were familiar with the Gulf Coast geography and economy.

There is no substitute for local knowledge -- an ancient lesson of which Katrina merely provided the latest reminder.

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Penny Dreadful

One problem with pennies is that their metal value exceeds their face value.

Several years ago, Walter Luhrman, a metallurgist in southern Ohio, discovered a copper deposit of tantalizing richness. North America’s largest copper mine—a vast open-pit complex in Arizona—usually has to process a ton of ore in order to produce ten pounds of pure copper; Luhrman’s mine, by contrast, yielded the same ten pounds from just thirty or forty pounds of ore. Luhrman operated profitably until mid-December, 2006, when the federal government shut him down.

The copper deposit that Luhrman worked wasn’t in the ground; it was in the storage vaults of Federal Reserve banks, and, indirectly, in the piggy banks, coffee cans, automobile ashtrays, and living-room upholstery of ordinary Americans. A penny minted before 1982 is ninety-five per cent copper—which, at recent prices, is approximately two and a half cents’ worth. Luhrman, who had previously owned a company that refined gold and silver, devised a method of rapidly separating pre-1982 pennies from more recent ones, which are ninety-seven and a half per cent zinc, a less valuable commodity. His new company, Jackson Metals, bought truckloads of pennies from the Federal Reserve, turned the copper ones into ingots, and returned the zinc ones to circulation in cities where pennies were scarce. “Doing that prevented the U.S. Mint from having to make more pennies,” Luhrman told me recently. “Isn’t that neat?” The Mint didn’t think so; it issued a rule prohibiting the melting or exportation of one-cent and five-cent coins. (Nickels, despite their silvery appearance, are seventy-five per cent copper.) Luhrman laid off most of his employees and implemented his corporate Plan B: buying half-dollars from banks and melting the silver ones (denominations greater than five cents aren’t covered by the Mint’s rule); mining Canadian five-cent coins (which were a hundred per cent nickel most years from 1946 to 1981); and lobbying Congress.

Luhrman’s experience highlights a growing conundrum for the Mint and for U.S. taxpayers. Primarily because zinc, too, has soared in value, producing a penny now costs about 1.7 cents. Since the Mint currently manufactures more than seven billion pennies a year and “sells” them to the Federal Reserve at their face value, the Treasury incurs an annual penny deficit of about fifty million dollars—a condition known in the coin world as “negative seigniorage.” The fact that the Mint loses money on penny production annoys some people, because one-cent coins no longer have much economic utility. More than a few people, upon finding pennies in their pockets at the end of the day, simply throw them away, and many don’t bother to pick them up anymore when they see them lying on the ground. (Breaking stride to pick up a penny, if it takes more than 6.15 seconds, pays less than the federal minimum wage.)

Various people have proposed various remedies, one of which is to get rid of pennies altogether. This is a step that many countries have taken with their least valuable coins—among them the United States, which stopped making half-cents in 1857, when a half-cent, by almost any measure, had significantly more purchasing power than a dime does today. There are problems, though. One is that many people are quite attached to one-cent coins. Another is that some people fear that merchants in a penny-free economy, when making change on cash purchases, might be more inclined to round up than to round down, thus penalizing consumers. A third is that eliminating pennies would increase our reliance on nickels, which now cost almost ten cents to manufacture and so generate even more negative seigniorage, per coin, than pennies do. What is to be done?

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America’s assortment of circulating pocket change is anything but immutable. Colonial-era settlers initially had no coins (or bills) of their own. They therefore depended heavily on barter, and conducted cash transactions with British coppers and other foreign coins, especially Spanish reals. (The “dollars” mentioned in Article I of the Constitution were actually eight-real coins, also known as pieces of eight.) British silver coins were scarce in America because Britain, which had little domestic access to precious metals and hoped its colonists would soon get busy shipping treasure in the opposite direction, forbade their export. In 1702, the alchemy-obsessed master of the British Royal Mint, Isaac Newton, melted down and minutely analyzed the coins of a number of countries to determine their exact content. The results of Newton’s assay were used, among other things, to set the bewildering, constantly shifting exchange rates that were a part of daily commercial life in England and America in the early eighteenth century.

Congress created the Mint in 1792, and its original headquarters, in Philadelphia, was the first government building to be erected under the authority of the Constitution. The first U.S. coins, produced that year, were silver “half dismes,” or half-dimes. They were worth a twentieth of a dollar and may have been manufactured, at least in part, from silverware donated by President and Mrs. Washington. The first U.S. coins to circulate widely were probably one-cent pieces struck in 1792 or 1793. They were made of pure copper, and were slightly larger in diameter than a Sacagawea dollar and about half again as heavy. The first Lincoln cent was minted in 1909, on the hundredth anniversary of Lincoln’s birth. It replaced the Indian-head cent, and was the first circulating American coin to be stamped with the likeness of a real, identifiable person. It was made of bronze and weighed about twenty-five per cent more than the cent we use today.

The scarcity of one metal or another has prompted sporadic crises in American coin production. In 1943, the Mint, hoping to preserve copper for military uses, experimented with a number of materials, including Bakelite, before settling on galvanized steel. These coins were prone to rust, especially near the edges, and were so unpopular that in 1944 the Mint went back to using copper, much of it from spent shell casings. Enough steel cents were made, however, that they were still turning up twenty years later, when I made a brief go at coin collecting. (I had all three versions—from the Mints in Denver, Philadelphia, and San Francisco.) In the early seventies, when the value of the copper in a penny had risen to almost a penny, the Mint produced about a million and a half Lincoln cents made of aluminum. Congress rejected that idea, and the Mint destroyed all the aluminum coins, except for a dozen samples that were kept by congressmen and others. Possessing these coins, which are dated 1974, is against the law, since they are considered by the Mint to be purloined government property; one of them—which numismatists refer to, ominously, as the Toven Specimen—is thought to be held by heirs of a Capitol police officer.

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Deal 'close' for Mugabe to leave

President Mugabe has ruled Zimbabwe since independence in 1980

The outline of a deal has almost been reached for Zimbabwe's President Robert Mugabe to step down, opposition sources have told the BBC.

They say representatives of Mr Mugabe, military chiefs and the opposition have held meetings chaired by South Africa since Saturday's elections.

The sources say Mr Mugabe is to give an address to the nation but urge caution until the announcement has been made.

Zimbabwe and South Africa's governments denied any negotiations or a deal.

But the US embassy in the capital Harare said Mr Mugabe was expected to address the people of Zimbabwe shortly.

Claim and counter-claim

Western diplomats had been summoned to a meeting with the government, the embassy told the BBC.

The opposition Movement for Democratic Change says it won Saturday's general elections, but results have been slow to emerge.

Under the proposed deal, MDC leader Morgan Tsvangirai would be declared the winner of the presidential race after Mr Mugabe publicly announced he was stepping down.

President Mugabe, 84, came to power 28 years ago at independence, but the economy has been in freefall in recent years.

The Zimbabwe Electoral Commission has not yet given any results in the presidential race, sparking MDC claims that the outcome was being fixed.

BBC correspondent Ian Pannell has spoken to three MDC sources who have claimed a deal had almost been reached.

Run-off vote?

The sources claim talks brokered by South Africa have been going on in Harare for the last few days, our correspondent says, although Johannesburg denies involvement.

The sources say Mr Tsvangirai's victory was so overwhelming that Mr Mugabe would have no chance of victory, even in a run-off.

But our correspondent cautions it is in the opposition's interests to talk up the possibility of Mr Mugabe's exit and the claims are difficult to verify at the moment.

Bright Matonga, Zanu-PF's Deputy Information Minister, denied any talks were going on with the opposition.

"There are no discussions, no negotiations, and President Mugabe will not be going on state television to announce anything because there's nothing to announce."

Earlier, there had been increasing speculation that a second round vote would be needed, as no candidate had yet passed the 50% threshold required for victory.

The MDC says that Mr Tsvangirai won 60% of the vote, against 30% for Mr Mugabe.

Parliamentary results released so far show that the MDC has 72 seats, including five for a breakaway faction of the party, against 68 for Zanu-PF, with 70 still to come.

As he cast his vote on Saturday, Mr Mugabe said:

"If you lose an election and are rejected by the people, it is time to leave politics."

Neither Mr Mugabe nor Mr Tsvangirai have been seen in public since the election.

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Mile-high tower: Saudi prince promises £5bn desert spire TWICE as tall as nearest rival being built

On a clear day, the view from the top will take in the Middle East, North Africa and the Indian Ocean - providing you've a head for heights.

Plans for a mile-high tower in the Saudi Arabian desert have been unveiled by the billionaire owner of London's Savoy Hotel.

At 5,250ft, the £5billion project, masterminded by two British engineering consultancies, will be twice as high as its nearest rivals, skyscrapers under construction in Dubai and Kuwait, and almost seven times as high as the Canary Wharf tower in London's Docklands.

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Little brother: The Dubai Tower and Prince al-Walid bin Talal, who is behind the scheme

It is being planned for a new city near the Red Sea port of Jeddah. Behind the scheme is 51-year-old Prince al-Walid bin Talal, who bought the Savoy for £1.25billion in 2005.

The plan gives the Middle East a clear lead over Asian countries and the U.S., who have vied in the past to construct the world's tallest buildings.

None of the other skyscrapers under construction, including New York's Freedom Tower on the World Trade Centre site, will exceed 2,296ft.

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The prince's company, Riyadh-based Kingdom Holdings, has set up a joint venture with the London firms Hyder Consulting and Arup.

Experts say the technical challenges are enormous. Much of the lifting will be carried out by helicopters, which will also be used as commuter transport for builders.

The tower will have to be capable of withstanding a wide range of temperatures, with its top baking in the desert sun by day but dropping to well below freezing at night.

To resist the strong winds prevalent in the area and stop it swaying, giving its occupants a form of high-rise seasickness, it will be fitted with a giant computer-operated damper.

Two "mini-towers" - both taller than Canary Wharf - will be built on either side of the main tower.

Linked to it by elevated walkways, they will anchor it and act as stabilisers.

Until recently, the still-under-construction Dubai Tower was expected to be the world's tallest building.

Plans have changed several times to make it higher, but the final version is expected to be 2,300ft with 160 storeys.

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Rapists in the ranks

The stories are shocking in their simplicity and brutality: A female military recruit is pinned down at knifepoint and raped repeatedly in her own barracks. Her attackers hid their faces but she identified them by their uniforms; they were her fellow soldiers. During a routine gynecological exam, a female soldier is attacked and raped by her military physician. Yet another young soldier, still adapting to life in a war zone, is raped by her commanding officer. Afraid for her standing in her unit, she feels she has nowhere to turn.

These are true stories, and, sadly, not isolated incidents. Women serving in the U.S. military are more likely to be raped by a fellow soldier than killed by enemy fire in Iraq.

The scope of the problem was brought into acute focus for me during a visit to the West Los Angeles VA Healthcare Center, where I met with female veterans and their doctors. My jaw dropped when the doctors told me that 41% of female veterans seen at the clinic say they were victims of sexual assault while in the military, and 29% report being raped during their military service. They spoke of their continued terror, feelings of helplessness and the downward spirals many of their lives have since taken.

Numbers reported by the Department of Defense show a sickening pattern. In 2006, 2,947 sexual assaults were reported -- 73% more than in 2004. The DOD's newest report, released this month, indicates that 2,688 reports were made in 2007, but a recent shift from calendar-year reporting to fiscal-year reporting makes comparisons with data from previous years much more difficult.

The Defense Department has made some efforts to manage this epidemic -- most notably in 2005, after the media received anonymous e-mail messages about sexual assaults at the Air Force Academy. The media scrutiny and congressional attention that followed led the DOD to create the Sexual Assault and Response Office. Since its inception, the office has initiated education and training programs, which have improved the reporting of cases of rapes and other sexual assaults. But more must be done to prevent attacks and to increase accountability.

At the heart of this crisis is an apparent inability or unwillingness to prosecute rapists in the ranks. According to DOD statistics, only 181 out of 2,212 subjects investigated for sexual assault in 2007, including 1,259 reports of rape, were referred to courts-martial, the equivalent of a criminal prosecution in the military. Another 218 were handled via nonpunitive administrative action or discharge, and 201 subjects were disciplined through "nonjudicial punishment," which means they may have been confined to quarters, assigned extra duty or received a similar slap on the wrist. In nearly half of the cases investigated, the chain of command took no action; more than a third of the time, that was because of "insufficient evidence."

This is in stark contrast to the civilian trend of prosecuting sexual assault. In California, for example, 44% of reported rapes result in arrests, and 64% of those who are arrested are prosecuted, according to the California Department of Justice.

The DOD must close this gap and remove the obstacles to effective investigation and prosecution. Failure to do so produces two harmful consequences: It deters victims from reporting, and it fails to deter offenders. The absence of rigorous prosecution perpetuates a culture tolerant of sexual assault -- an attitude that says "boys will be boys."

I have raised the issue with Defense Secretary Robert Gates. Although I believe that he is concerned, thus far, the military's response has been underwhelming -- and the apparent lack of urgency is inexcusable.

Congress is not doing much better. Although these sexual assault statistics are readily available, our oversight has failed to come to grips with the magnitude of the crisis. The abhorrent and graphic nature of the reports may make people uncomfortable, but that is no excuse for inaction. Congressional hearings are urgently needed to highlight the failure of existing policies. Most of our servicewomen and men are patriotic, courageous and hardworking people who embody the best of what it means to be an American. The failure to address military sexual assault runs counter to those ideals and shames us all.

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A Prohibitionist having trouble with the truth

So what's new there indeed! Antonio-Maria Costa, the Executive Director of the UN Office on Drugs and Crime is seen here avoiding answering a question about the cannabis policy in Holland. (A youtube video - broadband only)

The question was really quite simple - how does Mr Costa explain the relatively low levels of cannabis use in Holland, given his claims that easy availability would lead to higher levels of use?

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USA 2008: The Great Depression

GETTY

Disadvantaged Americans queue for aid in New York

We knew things were bad on Wall Street, but on Main Street it may be worse. Startling official statistics show that as a new economic recession stalks the United States, a record number of Americans will shortly be depending on food stamps just to feed themselves and their families.

Dismal projections by the Congressional Budget Office in Washington suggest that in the fiscal year starting in October, 28 million people in the US will be using government food stamps to buy essential groceries, the highest level since the food assistance programme was introduced in the 1960s.

The increase – from 26.5 million in 2007 – is due partly to recent efforts to increase public awareness of the programme and also a switch from paper coupons to electronic debit cards. But above all it is the pressures being exerted on ordinary Americans by an economy that is suddenly beset by troubles. Housing foreclosures, accelerating jobs losses and fast-rising prices all add to the squeeze.

Emblematic of the downturn until now has been the parades of houses seized in foreclosure all across the country, and myriad families separated from their homes. But now the crisis is starting to hit the country in its gut. Getting food on the table is a challenge many Americans are finding harder to meet. As a barometer of the country's economic health, food stamp usage may not be perfect, but can certainly tell a story.

Michigan has been in its own mini-recession for years as its collapsing industrial base, particularly in the car industry, has cast more and more out of work. Now, one in eight residents of the state is on food stamps, double the level in 2000. "We have seen a dramatic increase in recent years, but we have also seen it climbing more in recent months," Maureen Sorbet, a spokeswoman for Michigan's programme, said. "It's been increasing steadily. Without the programme, some families and kids would be going without."

But the trend is not restricted to the rust-belt regions. Forty states are reporting increases in applications for the stamps, actually electronic cards that are filled automatically once a month by the government and are swiped by shoppers at the till, in the 12 months from December 2006. At least six states, including Florida, Arizona and Maryland, have had a 10 per cent increase in the past year.

In Rhode Island, the segment of the population on food stamps has risen by 18 per cent in two years. The food programme started 40 years ago when hunger was still a daily fact of life for many Americans. The recent switch from paper coupons to the plastic card system has helped remove some of the stigma associated with the food stamp programme. The card can be swiped as easily as a bank debit card. To qualify for the cards, Americans do not have to be exactly on the breadline. The programme is available to people whose earnings are just above the official poverty line. For Hubert Liepnieks, the card is a lifeline he could never afford to lose. Just out of prison, he sleeps in overnight shelters in Manhattan and uses the card at a Morgan Williams supermarket on East 23rd Street. Yesterday, he and his fiancée, Christine Schultz, who is in a wheelchair, shared one banana and a cup of coffee bought with the 82 cents left on it.

"They should be refilling it in the next three or four days," Liepnieks says. At times, he admits, he and friends bargain with owners of the smaller grocery shops to trade the value of their cards for cash, although it is illegal. "It can be done. I get $7 back on $10."

Richard Enright, the manager at this Morgan Williams, says the numbers of customers on food stamps has been steady but he expects that to rise soon. "In this location, it's still mostly old people and people who have retired from city jobs on stamps," he says. Food stamp money was designed to supplement what people could buy rather than covering all the costs of a family's groceries. But the problem now, Mr Enright says, is that soaring prices are squeezing the value of the benefits.

"Last St Patrick's Day, we were selling Irish soda bread for $1.99. This year it was $2.99. Prices are just spiralling up, because of the cost of gas trucking the food into the city and because of commodity prices. People complain, but I tell them it's not my fault everything is more expensive."

The US Department of Agriculture says the cost of feeding a low-income family of four has risen 6 per cent in 12 months. "The amount of food stamps per household hasn't gone up with the food costs," says Dayna Ballantyne, who runs a food bank in Des Moines, Iowa. "Our clients are finding they aren't able to purchase food like they used to."

And the next monthly job numbers, to be released this Friday, are likely to show 50,000 more jobs were lost nationwide in March, and the unemployment rate is up to perhaps 5 per cent.

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Florida's population slowing to 30-year low, study shows

A new study has reaffirmed a growing demographic trend in Florida: The state is seeing its population growth slow to its lowest level in three decades.

So says a University of Florida professor who reviewed building permits and residential electric customer data to draw projections on the state's population growth.

''The state has not experienced a decline of this magnitude since the mid-1970s, when we were in a national recession,'' said Stan Smith, an economist and director of UF's Bureau of Economic and Business Research.

The Census Bureau has made similar findings in its tracking of population growth in Florida. In a report released earlier this month, Census officials reported a net gain in the state's population of just 35,301 between 2006 and 2007. The figure was much lower than the 170,099 gain tabulated from 2005 to 2006.

The lower rate of growth is caused largely by people leaving South Florida, where the cost of living is driving them away from the region.

In his study, Smith notes that the state's population growth is slowing because more people are leaving than moving into the state. He expected Florida to add an average of only about 209,000 residents a year between 2007 and 2010, compared with annual increases of about 418,000 people during the previous five-year period.

Florida still remains a major destination for retirees, but more and more twenty- and thirty-something year-olds -- the lion's share of the state's movers -- have left, Smith said.

That same segment of the population represented the largest group moving to Florida during the past four or five decades.

Smith attributes the recent departures to Florida's sagging housing market, high cost of living and the overall economic malaise plaguing the nation.

Florida enjoyed a boom in real estate and construction from 2002 to 2006 -- just as it did from 1971 to 1979, Smith notes.

He adds that fewer job opportunities in Florida have curbed the influx of younger people.

''The question is, will Florida rebound as it has in the past?'' Smith said. ``We're guessing it will, but that is certainly not a guarantee.''

Smith projects that Florida's population will return to a ''more normal growth'' level of about 317,000 a year between 2010 and 2020, similar to the 1980s and 1990s.

Even with slow growth in population statewide, there is one county likely to enjoy strong growth: tiny Lafayette County in North Florida. It is predicted to grow the fastest in percentage terms between 2007 and 2010 because of prison construction, Smith said.

During that period, Lafayette County is expected to add 1,000 people, reaching a population of 9,200, he said.

Many of Florida's steadily growing counties -- such as Flagler on the East Coast -- will still lure newcomers.

In terms of absolute numbers, the following counties are expected to make the biggest gains between 2007 and 2010:

• Miami-Dade, from 2,462,292 to 2,512,300, due to foreign migration.

• Orange, from 1,105,603 to 1,154,200

• Hillsborough, from 1,192,861 to 1,234,900.

Broward is not among the biggest-growing counties in actual numbers, according to the latest estimates by the Census Bureau.

In a report released on March 20, Census officials estimated that the number of people in Broward fell by more than 13,000 people -- or about 1 percent -- to 1,759,591 from 2006 to 2007.

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North Korea warn of pre-emptive nuclear strike against neighbour

An escalating war of words across the world’s last Cold War, nuclear-armed border spiraled dramatically yesterday when North Korea threatened to wreak total destruction on its neighbour to the south.

“Our military will not sit idle until warmongers launch a pre-emptive strike,” the official news agency in Pyongyang reported a senior military commander as saing, “everything will be in ashes, not just a sea of fire, if our advanced pre-emptive strike once begins.”

The threat was among the most direct and bellicose statements from Pyongyang since North Korea test-fired an atomic device in late 2006. International efforts since then to persuade the country’s enigmatic dictator, Kim Jong il, to abandon his weapons programme have repeatedly stalled.

The threat also marked a fourth day of rapidly deteriorating relations on the Korean peninsula, which remains technically still at war despite more than 50 years of often uncomfortable armistice.

The two countries – the prosperous, modern South and the unpredictable Stalinist Democratic People’s Republic of Korea (DPRK) – continue to glare at one another across the world’s most heavily armed border.

A note sent by a North Korean military delegation to its South Korean counterpart on Saturday, said that “these outbursts are the gravest challenge ever in the history of the inter-Korean relations and a reckless provocation little short of a war declaration against the DPRK.”

Sunday’s warning followed remarks in Seoul earlier in the weekend in which the head of South Korea’s military vowed to conduct a pre-emptive strike on the suspected North Korean nuclear weapons site if Pyongyang tried to attack with atomic weapons.

The office of the chairman of the South’s joint chiefs of staff later explained that it was a statement of general principles, rather than a hint that the South was planning any unprovoked attack on the North. Pyongyang said that it would suspend all cross-border dialogue unless the remarks were withdrawn and an apology issued.

Although the communist regime of Kim Jong Il has regularly used this form of extreme language in the past, long-term North Korea experts said that its renewed appearance of the past few days should be treated with some caution.

The row, which has already seen 11 South Korean officials expelled from a joint economic “friendship” zone by the North, is thought to be a test by Pyongyang of the mettle of the new president in Seoul.

On Friday the DPRK test-fired a salvo of short-range missiles, reprising an act that has traditionally provoked outrage in Seoul and placed South Korean leaderships under immense domestic strain.

Lee Myung Bak was elected to the South Korean presidency in December last year on promises of a stronger economy. But he made little secret that his view towards North Korea and Kim Jong il would be far less conciliatory than his predecessor’s.

His response to the current escalation of tensions will be closely scrutinised on both sides of the demilitarized zone that splits the peninsula.

In addition to the deeper conflict over Pyongyang’s atomic weapons programme, the most recent row has ignited an argument over a line in the Yellow Sea that has never been recognised by North Korea: officials in Pyongyang said on Friday that “armed conflict may break out at any moment” over the boundary.

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As Jobs Vanish and Prices Rise, Food Stamp Use Nears Record

Driven by a painful mix of layoffs and rising food and fuel prices, the number of Americans receiving food stamps is projected to reach 28 million in the coming year, the highest level since the aid program began in the 1960s.

The number of recipients, who must have near-poverty incomes to qualify for benefits averaging $100 a month per family member, has fluctuated over the years along with economic conditions, eligibility rules, enlistment drives and natural disasters like Hurricane Katrina, which led to a spike in the South.

But recent rises in many states appear to be resulting mainly from the economic slowdown, officials and experts say, as well as inflation in prices of basic goods that leave more families feeling pinched. Citing expected growth in unemployment, the Congressional Budget Office this month projected a continued increase in the monthly number of recipients in the next fiscal year, starting Oct. 1 — to 28 million, up from 27.8 million in 2008, and 26.5 million in 2007.

The percentage of Americans receiving food stamps was higher after a recession in the 1990s, but actual numbers are expected to be higher this year.

Federal benefit costs are projected to rise to $36 billion in the 2009 fiscal year from $34 billion this year.

“People sign up for food stamps when they lose their jobs, or their wages go down because their hours are cut,” said Stacy Dean, director of food stamp policy at the Center on Budget and Policy Priorities in Washington, who noted that 14 states saw their rolls reach record numbers by last December.

One example is Michigan, where one in eight residents now receives food stamps. “Our caseload has more than doubled since 2000, and we’re at an all-time record level,” said Maureen Sorbet, spokeswoman for the Michigan Department of Human Services.

The climb in food stamp recipients there has been relentless, through economic upturns and downturns, reflecting a steady loss of industrial jobs that has pushed recipient levels to new highs in Ohio and Illinois as well.

“We’ve had poverty here for a good while,” Ms. Sorbet said. Contributing to the rise, she added, Michigan, like many other states, has also worked to make more low-end workers aware of their eligibility, and a switch from coupons to electronic debit cards has reduced the stigma.

Some states have experienced more recent surges. From December 2006 to December 2007, more than 40 states saw recipient numbers rise, and in several — Arizona, Florida, Maryland, Nevada, North Dakota and Rhode Island — the one-year growth was 10 percent or more.

In Rhode Island, the number of recipients climbed by 18 percent over the last two years, to more than 84,000 as of February, or about 8.4 percent of the population. This is the highest total in the last dozen years or more, said Bob McDonough, the state’s administrator of family and adult services, and reflects both a strong enlistment effort and an upward creep in unemployment.

In New York, a program to promote enrollment increased food stamp rolls earlier in the decade, but the current climb in applications appears in part to reflect economic hardship, said Michael Hayes, spokesman for the Office of Temporary and Disability Assistance. The additional 67,000 clients added from July 2007 to January of this year brought total recipients to 1.86 million, about one in 10 New Yorkers.

Nutrition and poverty experts praise food stamps as a vital safety net that helped eliminate the severe malnutrition seen in the country as recently as the 1960s. But they also express concern about what they called the gradual erosion of their value.

Food stamps are an entitlement program, with eligibility guidelines set by Congress and the federal government paying for benefits while states pay most administrative costs.

Eligibility is determined by a complex formula, but basically recipients must have few assets and incomes below 130 percent of the poverty line, or less than $27,560 for a family of four.

As a share of the national population, food stamp use was highest in 1994, after several years of poor economic growth, with an average of 27.5 million recipients per month from a lower total of residents. The numbers plummeted in the late 1990s as the economy grew and legal immigrants and certain others were excluded.

But access by legal immigrants has been partly restored and, in the current decade, the federal and state governments have used advertising and other measures to inform people of their eligibility and have often simplified application procedures.

Because they spend a higher share of their incomes on basic needs like food and fuel, low-income Americans have been hit hard by soaring gasoline and heating costs and jumps in the prices of staples like milk, eggs and bread.

At the same time, average family incomes among the bottom fifth of the population have been stagnant or have declined in recent years at levels around $15,500, said Jared Bernstein, an economist at the Economic Policy Institute in Washington.

The benefit levels, which can amount to many hundreds of dollars for families with several children, are adjusted each June according to the price of a bare-bones “thrifty food plan,” as calculated by the Department of Agriculture. Because food prices have risen by about 5 percent this year, benefit levels will rise similarly in June — months after the increase in costs for consumers.

Advocates worry more about the small but steady decline in real benefits since 1996, when the “standard deduction” for living costs, which is subtracted from family income to determine eligibility and benefit levels, was frozen. If that deduction had continued to rise with inflation, the average mother with two children would be receiving an additional $37 a month, according to the private Center on Budget and Policy Priorities.

Both houses of Congress have passed bills that would index the deduction to the cost of living, but the measures are part of broader agriculture bills that appear unlikely to pass this year because of disagreements with the White House over farm policy.

Another important federal nutrition program known as WIC, for women, infants and children, is struggling with rising prices of milk and cheese, and growing enrollment.

The program, for households with incomes no higher than 185 percent of the federal poverty level, provides healthy food and nutrition counseling to 8.5 million pregnant women, and children through the age of 4. WIC is not an entitlement like food stamps, and for the fiscal year starting in October, Congress may have to approve a large increase over its current budget of $6 billion if states are to avoid waiting lists for needy mothers and babies.

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In Iraq, U.S. caught in middle of Shiite rivalry

CEMETERY: Graves are prepared for Mahdi Army fighters near the holy city of Najaf. Responding to the crackdown in Basra, cleric Muqtada Sadr praised armed resistance and urged his followers to reject the Iraqi government’s cash-for-arms offer.

With the Iraq government cracking down on Sadr fighters in Basra, the U.S. military's own gains with the militia are at risk.

By Ned Parker, Los Angeles Times Staff Writer
March 30, 2008

BAGHDAD -- The biggest surprise about the raging battles that erupted last week in southern Iraq was not that the combatants were fellow Shiites, but that it took this long.

Enmity has long festered between the two sides: one a ruling party that has struggled against the widespread perception that it gained power on the back of the U.S. occupation, the other a populist movement that has positioned itself as a critic of the U.S.-backed new order.

As they vie for power before October provincial elections that will determine who controls the oil-rich south, the stakes are high not only for the Supreme Islamic Iraqi Council, the largest Shiite faction in the Iraqi coalition government, and the Mahdi Army, the militia loyal to cleric Muqtada Sadr.

The conflict also poses great difficulties for the Americans, who are widely seen as siding with the Supreme Islamic Iraqi Council and Prime Minister Nouri Maliki's Islamic Dawa Party against Sadr.

The Iraqi government's offensive in Basra has spelled the end to a seven-month cease-fire by Sadr's militia in all but name.

In an ominous sign Saturday, Sadr in a rare TV interview praised armed resistance. Separately, he urged his followers to defy Maliki's ultimatum to surrender their weapons.

Iraqi forces battling the Mahdi Army called in U.S. airstrikes Saturday in Basra, and two American soldiers were killed in a mostly Shiite area of east Baghdad.

Sadr's cease-fire, which he imposed in August after his loyalists clashed with the Supreme Islamic Iraqi Council's militia in the southern city of Karbala, was widely credited with helping calm Baghdad.

The U.S. military now risks forfeiting gains with the Sadr group, arguably the most popular Shiite political movement across Iraq. Already, U.S. officers have reported an increase in the number of attacks against them in Baghdad, where soldiers had benefited from the Mahdi Army's tacit cooperation.

"It would be disastrous if the United States ended up as supporters on a crackdown on the Sadrists for reasons mainly to do with internal Shiite politics," said Reidar Visser, editor of the southern Iraq-related website historiae.org.

"The fight in Basra shows the folly of trying to control all the Shiites of Iraq through a small minority, which appears to be the current U.S. policy."

Many Iraqis have viewed the members of the post-Saddam Hussein administrations as isolated returning exiles, backed by Iran or the U.S. The officials' credibility has been diminished by government failings since the U.S.-led invasion -- notably endemic corruption, the lack of security and abysmal public services.

In contrast, the Sadr movement's foundations are built upon the legacy of Sadr's father, who challenged Hussein's rule in sermons and was killed in 1999. Its voice, fiercely anti-U.S. and staunchly nationalist, has emerged as one of the few alternatives for Iraqis. The movement has even survived a two-year stint in the government and, like other Shiite militias, its involvement in sectarian killings.

Sadr loyalists allege that as the elections approach, their group has been deliberately targeted by the Supreme Islamic Iraqi Council through the army and police's top commanders, where the party wields influence. The Sadr camp mostly boycotted the last local elections in January 2005, and predicts that it will rout its opponents this time.

But a senior Supreme Islamic Iraqi Council leader, Sheik Jalaluddin Saghir, said the Sadr loyalists were trying to cover up their criminal activities with the allegations of politically motivated attacks.

"They have an overt plan to control the provinces; this is what is happening. They want to take over certain provinces. There is no hiding this," he said. "They will deal with the devil, they will deal with criminal elements if it helps them reach their goals."

The dislike runs deep. Sadr loyalists curse members of the rival group's armed wing, the Badr Organization, with a play on words, calling them "Ghadr" -- Arabic for treachery. Mahdi Army fighters accuse the Badr Organization of killing Sunnis in Baghdad and then blaming it on them.

In turn, asked about Sadr, one senior official from the Supreme Islamic Iraqi Council answered coldly: "You know what they say, once a problem, always a problem."

The animosity is also rooted in a historic rivalry between the Sadr family, long seen as a champion of the underclass, and the Supreme Council's senior leader, Sheik Abdelaziz Hakim, son of a conservative grand ayatollah, whose family traditionally enjoyed the support of the country's Shiite merchant class.

Observers warned a year ago that the situation in the Shiite-majority south was deteriorating as anger mounted within the Mahdi Army over delays in holding provincial elections. Then, the senior coalition commander in the southern city of Diwaniya, Polish Maj. Gen. Pawel Lamla, said that an increase in Shiite militia violence could be traced to the power struggle.

"The Badr Organization and the government are a little afraid of the future elections," Lamla said. "Now they have the power, but who knows about the future?"

Many in the Mahdi Army had chafed under the cease-fire, believing that the Americans and Iraqi security officials, backed by the Badr Organization, continued to go after Sadr supporters who weren't involved in violence.

"The law has been taken advantage of by certain actors for political gain," said Liwa Sumaysim, head of Sadr's political bureau. "There is fear and anxiety that this is what is happening in Basra."

Fueling the Sadrists' concerns about Basra is the fact that some of Maliki's trusted security advisors are from the Badr camp. The head of the Basra security command, Gen. Mohan Freiji, is also considered loosely affiliated with the Supreme Islamic Iraqi Council, or SIIC, said a Western advisor at the Defense Ministry.

The offensive in Basra so far has targeted only Sadrist neighborhoods and has avoided going after the Al Fadila al Islamiya party of Basra Gov. Mohammed Waeli or the Badr Organization, both of which have elements that have contributed to the problems in the port city.

"How could the Sadrists interpret U.S. air support of the Basra operation other than as the manifestation of a U.S.- SIIC alliance?" asked Joost Hiltermann, a Middle East expert with the International Crisis Group think tank.

British officers have noted that the Fadila party is suspected of involvement in oil smuggling, one of the major security concerns in Basra. The Badr Organization has also been implicated in racketeering at ports and controlling the city's police intelligence service, according to the International Crisis Group. Without tackling Fadila and Badr's lawless elements, Basra's problems are likely to continue.

The current violence also jeopardizes the Americans' detente with Sadr loyalists around the country. After the cleric's cease-fire in August, U.S. officers in Baghdad cut deals with moderate elements of the Mahdi Army to stabilize the capital's western neighborhoods. Officers were even given lists of Mahdi Army fighters they could not arrest.

Now, the same Shiite militiamen are battling U.S. forces again.

Abu Ali, a member of the Sadr movement in the capital's New Baghdad area, had been helping enforce Sadr's cease-fire, but said his local office had returned to planting homemade bombs in case U.S. soldiers dared to enter their area.

"We have called for jihad," Abu Ali said. "The government came with the occupier and supports the occupiers and they know the Americans will protect them. We are fighting to get our rights."

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