Sunday, April 13, 2008

The Economy of Fear

Why this recession is going to hit particularly hard--and last longer than you think.

An investment banking, securities and investment management firm, which provides a range of services worldwide to a diversified …
Primary executive:
Lloyd C. Blankfein,
Real Estate
The Company provides funds to mortgage lenders through purchases of mortgage assets and issuing & guaranteeing mortgage-related …
Primary executive:
Daniel H. Mudd,
Real Estate
A stockholder-owned corporation chartered by Congress to create a flow of funds to mortgage lenders. Purchases certain residential …
Primary executive:
Richard F. Syron,
Aerospace and Defense
Operates as an aerospace firm in five principal segments: Commercial Airplane, Integrated Defense Systems, Precision Engagement …
Primary executive:
W. James McNerney, Jr.,
The Company and its wholly-owned subsidiaries design, manufacture, and market personal computers, portable digital music …
Primary executive:
Steven P. Jobs,
A global financial services holding company, which provides a range of financial services to consumer and corporate customers.
Primary executive:
Vikram S. Pandit,
The Company provides investment, financing, insurance, and related services to individuals and institutions on a global basis …
Primary executive:
Laurence A. Tosi, COO, Divisional
From Citigroup to Harry Macklowe to the Metropolitan Museum of Art, the list of the credit crunch's victims grows by the day. So how bad will it get? If Federal Reserve chairman Ben Bernanke and former Treasury secretary Lawrence Summers are to be believed, the answer is not too bad. Bernanke recently predicted "a period of sluggish growth followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt." Summers said a recession is likely, but it will be a relatively mild one that lasts a year or less. "Everybody needs to take a deep breath and recognize the resilience, the potential, and the competitiveness of the American economy," he declared.

Whenever Bernanke or Summers talk about economics, my advice is to sit down and listen. Bernanke left his childhood home in South Carolina for M.I.T., Stanford, and Princeton, where he headed the economics department. Summers, if anything, is even more formidable. In the 1980s, when I was visiting Harvard, I attended a series of lectures he gave to first-year Ph.D. students. Whereas other professors turned up with pages of typewritten equations, which they then copied onto a whiteboard, Summers came in with a few notes scribbled on a piece of paper and started talking. He could see the algebra in his head; he didn't need to write it down.

Yet when it comes to this economy, Bernanke and Summers, for all their brilliance, may well be mistaken. The economy is most likely spiraling down, with unemployment rising, the stock market tumbling, and corporate losses mounting. In economics, as in quantum physics, nothing is certain, but falling housing prices and slumping consumer confidence point to a deep recession that could last for two or three years. Psychology is critical in economics, and right now it is battered. Until we get through this period, it might be worth keeping in mind the words of another famous economist, Adam Smith, who said that in every great nation "there is a lot of ruin."

Unlike some past recessions, which were rooted in inflation problems, this one has been triggered by credit and real estate—both of which have a lot to do with how people perceive their financial well-being and, in response, how they adjust their spending. (View a tally of recent recessions and their causes.) For what is probably the first time since the 1930s, home prices are falling sharply. Nationwide, housing prices have slipped about 10 percent in the past year, and the decline is accelerating, according to the S&P Case-Shiller home-price index. As prices drop, more and more homeowners discover that they owe more than their property is worth, at which point they experience the temptation to hand the keys back to the bank or mortgage company. Jan Hatzius, an economist at Goldman Sachs, estimates that by the end of 2009 up to 15 million households could be in a position of negative equity. If Hatzius is right, the glut in houses for sale will only get larger, and prices will fall a lot further. Just how low they could go is anybody's guess, but a reading of data compiled by Yale economist Robert Shiller, which show the evolution of inflation-adjusted home values since 1890, suggests an overall drop of 30 or even 40 percent.

When property prices fall, homeowners feel poorer, which prompts them to spend less and save more. Gross domestic product falls and unemployment increases. A slide of 25 percent in home prices would wipe out about $5 trillion in household wealth. Coincidentally, this is roughly how much was lost when technology stocks collapsed in 2000 and 2001. Given that some predictions have home values falling even more steeply, the pain could be severe.

In addition, homes are more widely owned than stocks, and they have a bigger effect on spending. Simulations carried out by Frederic Mishkin, one of Bernanke's colleagues at the Fed, imply that the typical American family will cut its spending by up to 7 cents for every dollar in housing wealth it loses. Given a 20 percent fall in prices, this adds up to a nationwide reduction in consumer spending of about $350 billion a year, or 2.5 percent of the U.S.'s gross domestic product. That's a big number—more than big enough to tip the economy into recession.

Just as consumers are hitting the panic button, companies also are being squeezed, with many of them unable to access money precisely at a time when they need it. It has been nine months since the subprime crisis began, and it is now affecting virtually all credit products, including two of the safest of all: municipal bonds and corporate bonds issued by blue-chip companies. Now that the credit bubble has burst, even some perfectly reputable and solvent businesses are struggling for access to funds. Unless something happens to reverse these trends, a big drop in G.D.P. is inevitable.

Bernanke and Summers know this, of course. They are relying on the stimulus package signed by President Bush in February and lower interest rates to boost demand. From September through January, the Fed cut the federal funds rate from 5.25 percent to 3 percent. Cheaper borrowing costs make it attractive for families to refinance their mortgages and take out home-equity loans. In the boom years of 2004 to 2006, refis and home-equity cash-outs boosted consumer spending; the Fed is hoping to restart this game. Lower interest rates also bring down the value of the dollar, making American goods such as Boeing airplanes and Apple computers more competitive in world markets. In recent months, the one economic bright spot in the U.S. has been a surge in exports.

I doubt whether these policy changes will be enough to offset the slumping housing market and its psychic multiplier. But a bigger weakness in the optimistic view is its failure to fully address the crisis in the financial system. In the mild recessions of 1990-91 and 2001, we didn't see anything like the dislocation we are now witnessing. In some ways, the current situation more closely resembles the ruinous credit busts of the late 1800s, which shepherded in lengthy periods of economic contraction in that century's last three decades. According to the National Bureau of Economic Research, the U.S. was in recession from October 1873 to March 1879, March 1882 to May 1885, and January 1893 to June 1897 (with a brief respite from June 1894 to December 1895). The slump of the 1870s, which was precipitated by a collapse in the value of railway bonds—the era's subprime securities—and the ruin of banker Jay Cooke, lasted even longer than the Great Depression.

For those who prefer more-recent analogies, the relevant episode is the Nordic banking crisis of the late 1980s and early 1990s, which afflicted Norway, Sweden, and Finland, three highly developed countries that hitherto were considered exemplars of financial stability. In each of these cases, a lending boom that revealed poor risk management, ill-advised deregulation, and irresponsible macroeconomic policies preceded the financial blowup, and a severe recession followed. In Sweden, for example, banks were left with bad loans that came to more than 10 percent of G.D.P., and the economy went into a slump that lasted three years.

In all three countries, the initial reaction to the banking crisis was to try and drum up private-sector solutions for stricken institutions, such as new injections of capital or takeovers. But as panic spread, consumer psychology worsened, and G.D.P. growth turned negative, the authorities had little choice but to step in. The Norwegian government took over the three largest banks in the country, wiping out their shareholders. The Swedish government seized control of two of the biggest banks and split off their troubled assets into a state-owned company. The Finnish government took over more than 40 savings banks and combined them into a state-owned Savings Bank of Finland. Stefan Ingves, a senior official at the International Monetary Fund, was working for the Swedish government at the time. In a speech, he said that the principal lesson he learned was "that you cannot rely on the private sector or markets alone to solve systemic banking problems."

On this side of the Atlantic, we are still looking for market solutions to the credit crisis. First, there was the idea of setting up a privately funded "super" investment vehicle to digest the mess. In that scenario, bailout money would come from the banks themselves. Then came the sovereign wealth funds, with their injections of Middle Eastern and Asian cash into Citigroup and Merrill Lynch, and then a "voluntary" rate freeze on subprime mortgages. Now the big banks and Warren Buffett are vying to "rescue" the municipal-bond insurers. Behind the scenes, the Fed and the Treasury Department have been quietly orchestrating a mortgage bailout, using the Fed's lending facilities and other government-sponsored institutions, such as Fannie Mae and Freddie Mac, but even these efforts are too opaque and indirect to restore confidence, which is their ultimate goal. Lost trust takes a very long time to recover.

Until the solvency of the financial system is confronted head-on, with realistic write-offs and large-scale recapitalizations, there is little prospect of an economic recovery. Ask the Japanese. Back in the early 1990s, at the same time that the Nordic governments were recapitalizing their banks, the crony capitalists who ran Japan's financial system, which had undergone a similar boom-and-bust cycle, were busy trying to disguise the losses they had suffered. The result: an entire decade in which the Japanese economy hardly grew at all.

Bernanke, Summers, and other leading economists spent years studying how the Japanese got it so wrong. It is past time for them to read up on how the Scandinavians got it right.

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Taco Bell, Wal-Mart, NRA hired 'black ops' company that targeted environmental groups

Dumpster-diving firm collected Social Security numbers of activists

A private security firm managed by former Secret Service officers spied on myriad environmental organizations throughout the 1990s and the year 2000, thieving documents, trying to plant undercover operations and collecting phone records of members, according to a new report.

Documents obtained by James Ridgeway, a Mother Jones correspondent formerly with the Village Voice, reveals the contractor collected confidential internal records -- donor lists, financial statements -- even Social Security numbers, for public relations outfits and "corporations involved in environmental controversies."

Beckett Brown International also offered "intelligence" services to the Carlyle Group, the controversial DC-based investment company; "protective services" for the National Rifle Association; "crisis management" for the Gallo wine company and for Pirelli; "information collection" for Wal-Mart.

"Also listed as clients in BBI records," Ridgeway reveals: "Halliburton and Monsanto."

Like other firms specializing in snooping, Beckett Brown turned to garbage swiping as a key tactic. BBI officials and contractors routinely conducted what the firm referred to as "D-line" operations, in which its operatives would seek access to the trash of a target, with the hope of finding useful documents. One midnight raid targeted Greenpeace. One BBI document lists the addresses of several other environmental groups as "possible sites" for operations: the National Environmental Trust, the Center for Food Safety, Environmental Media Services, the Environmental Working Group, the U.S. Public Interest Research Group, and the Center for Health, Environment and Justice, an organization run by Lois Gibbs, famous for exposing the toxic dangers of New York's Love Canal. For its rubbish-rifling operations, BBI employed a police officer in the District of Columbia and a former member of the Maryland state police.

Taco Bell genetic corn fiasco

The documents reveal spy thriller-like absurdities: a spy job on groups that had discovered Kraft's Taco Bell was using genetically-engineered corn not approved for human consumption and planned to make a fuss. A former Secret Service agent working for the company emailed another man on the payroll -- an erstwhile Maryland police officer.

Received a call from Ketchum yesterday afternoon re three sites in DC. It seems Taco Bell turned out some product made from bioengineered corn. The chemicals used on the corn have not been approved for human consumption. Hence Taco Bell produced potential glow-in-the-dark tacos. Taco Bell is owned by Kraft. The Ketchum Office, New York, has the ball. They suspect the initiative is being generated from one of three places:

1. Center for Food Safety, 7th & Penn SE

2. Friends of the Earth, 1025 Vermont Ave (Between K & L Streets)

3. GE Food Alert, 1200 18th St NW (18th & M)

#1 is located on 3rd floor. Main entrance is key card. Alley is locked by iron gates. 7 dempsters [sic] in alley—take your pick.

#2 is in the same building as Chile Embassy. Armed guard in lobby & cameras everywhere. There is a dumpster in the alley behind the building. Don't know if it is tied to bldg. or a neighborhood property. Cameras everywhere.
#3 is doable but behind locked iron gates at rear of bldg.

Taco Bell has also raised the heckles of activists for the price it paid those who produced its tomatoes. After a protracted campaign by a Florida group, the firm agreed to pay an extra penny for each pound of tomatoes it buys from farm workers.

The company took three years to increase their payment per pound by a cent, which they did in 2005.

Taking out Greenpeace's trash

An eyewitness described a 'black op' on Greenpeace, one of the world's largest environmental activist groups.

"It was Mission Impossible-like," the witness remarked. The firm collected internal reports from Greenpeace's garbage. They attempted to crack the codes on the organization's front doors.

Technically, the firm has dissolved. But they're not down and out.

"As for BBI's principals," Ridgeway writes, "they are still operating. Tim Ward now runs a security firm called Chesapeake Strategies, which bills itself as 'a multinational security and investigative firm comprised of professionals with extensive security experience.' Jay Bly works there. Its website boasts that it maintains affiliated offices in Paris, Beijng, Tokyo, Qatar, and Kuwait and that 'many team members continue to hold Secret and Top Secret government security clearances.'

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Why isn't there more public outrage over gas prices?

The media reports the increases in the price of crude per barrel daily almost as if they are reporting the weather. Congress held a farce of an investigation that was largely ignored by the media and general public. Posts have been made here and many other places wondering why more isn't being done. The comments received here indicate a partial desire by the public to defend the oil companies. These comments do not offer any definitive or credible reason for the surge in crude oil prices or for the increase in prices at the pump, but they seem to want to defend the fact that they are being forced to pay double the amount at the pump in a short amount of time in spite of the fact that this one commodity will affect the price of everything else they need to buy.


One possible reason is that people don't want to admit they have been duped. No one likes to feel as though they have been made a fool of and that is exactly what has happened.

The cost to retrieve oil has not doubled in the past 7 years. The cost to research alternative fuel sources has not doubled in the past 7 years. The cost to research and develop new sites to drill has not doubled in the past 7 years. Demand has not doubled in the past 7 years.

Oil companies have been posting huge profits for a loooooong time the past few decades. The argument that they need those profits to "plan for a rainy day" fails in light of the fact that they have had many years of sunshine. What would happen if, like nearly every other company in the world, they posted a loss for one quarter or even an entire fiscal year? (Gasp!) Nothing. Nothing except the executives might not get their million dollar bonus checks and have to scrape by on $500,000 or so.

So, why don't more people care? Partially, I feel the media is to blame for not making a bigger deal about this. They are content to make those who are upset by it look like tin-foil hat wearing eco-nazis who bike to work and drink soy milk. I am upset and I do not bike to work, drink soy milk or wear a tin foil hat. I have been screwed. I am mad as hell and I am not gonna take it anymore.

I am going to keep writing about this. I am going to send letters to every damn politician I can find. I am going to keep talking about this and encourage others to do the same. Our voice deserves to be heard!

Please check out these article for more information:

Congresspedia - Excellent article that follows the history of big oil companies royalties. It outlines exactly why the R&D argument fails. Oil companies do not pay for research and development - we do. We always have. Why? Do we pay for research and development in other companies? Not through the government we don't; we may pay for it indirectly with the purchase of their product but whether or not you own a car, every citizen pays for oil company R&D. The oil companies are supposed to pay royalties to the US government for the right to drill on public land. They have missed more than a few payments.

US News - Another great article regarding these royalty payments discussing just how the oil companies weasel out of paying these royalties. (Along with everything else - remember, they still haven't ponied up for what they owe on the Valdez oil spill.)

These companies are run by criminals and our government is aiding and abetting them...which, my friends means US. We have allowed this to happen. Duped or not, my blindfold is off and I plan to speak up about it!

Original here

GE Plunges as Profit Misses Estimates, Forecast Cut (Update9)

April 11 (Bloomberg) -- General Electric Co. slumped the most in more than two decades after profit unexpectedly fell and Chief Executive Officer Jeffrey Immelt cut the company's annual forecast just a month after pledging to meet it.

GE declined 13 percent in New York trading, wiping out about $47 billion in market value and sending U.S. and European stock markets lower. Immelt slashed the company's 2008 forecast of $2.42 a share, a goal he said in December was ``in the bag'' and repeated on March 13.

The profit miss shook investors and analysts, who grilled Immelt about GE's ability to shield itself from the crisis in financial markets he blamed for the lower earnings. Analysts at Goldman Sachs Group Inc., Credit Suisse Group, Deutsche Bank AG and Citigroup Inc. cut their ratings on the shares.

``The miss and cut to guidance raises credibility concerns for GE,'' Deane Dray, an analyst at New York-based Goldman, wrote in a report today. ``Disappointments were spread across the GE portfolio, with both industrial and financial businesses well below expectations.''

Profit from continuing operations dropped 12 percent to $4.36 billion, or 44 cents a share, from $4.93 billion, or 48 cents, a year earlier. GE was expected to earn 51 cents a share, the average of 15 analyst estimates in a Bloomberg poll. Revenue rose 8 percent to $42.2 billion, missing GE's forecast of about $44 billion. Including discontinued operations, net income declined 5.8 percent to $4.3 billion, or 43 cents a share.

Bear Impact

Fairfield, Connecticut-based GE's stock dropped $4.70 to $32.05 at 4:15 p.m. in New York Stock Exchange composite trading, the biggest percentage decline since October 1987. The shares had fallen less than 1 percent this year compared with a 7.3 percent decline in the Standard & Poor's 500 index.

Immelt blamed the earnings decline on a seize-up in capital markets that forced GE to write down the value of loans and Chinese securities it held and thwarted some asset sales in the quarter's final two weeks. The situation worsened after the Federal Reserve announced a rescue of Bear Stearns Cos. on March 14, the day after he had confirmed his annual earnings forecast on a Webcast with investors.

The Fed's action created ``a different world'' in financial markets, Immelt said today. GE is trying to sell its U.S. credit card and Japanese consumer finance divisions.

Earnings at the commercial finance unit, which lends to midsized business and invests in real estate, missed GE's own forecast and cut per-share profit by 5 cents in the quarter. The shortfall means annual earnings will now be between $2.20 and $2.30 a share, the company said. Profit at GE's health-care unit also trailed expectations.

Immelt Grilled

Immelt was questioned by investors and analysts on a conference call today about his strategy, GE's ability to forecast earnings and its reputation as a safe investment.

``The pressure is on like it's never been on before for all senior management at GE,'' said Nicholas Heymann, an analyst with Sterne Agee & Leach Inc. ``This is one of the biggest misses that GE's had in quite some time.''

Profit fell short of forecasts in four of six main segments: GE Commercial Finance, GE Healthcare, GE Industrial and NBC Universal. In commercial finance, GE fell short by about $270 million, Chief Financial Officer Keith Sherin said.

``You're shocked'' by such results, Benjamin Pace, chief investment officer of Deutsche Bank Private Wealth Management in New York, told Bloomberg Television.

Why No Warning

Immelt and Sherin said today GE didn't warn investors because they wanted to be sure to first have a clear outlook on the rest of the year. GE reported just 11 days after the end of the quarter.

``We knew we had risks in the middle of March,'' Sherin said in an interview. ``But we also had action plans and activities that if things went our way, we would have been in our guidance. And in the end, not much went our way after the middle of March.''

Analysts at Goldman and Credit Suisse cut GE's rating to ``neutral,'' and Deutsche Bank lowered its rating on the stock to ``hold.'' Fourteen analysts recommend buying the stock, and five suggest holding it, according to Bloomberg data. None recommend selling. Before today, 16 analysts rated the stock ``buy'' and four rated it ``hold.''

Immelt Strategy

Immelt, who became CEO in 2001, has spent his tenure crafting GE so that it wouldn't' be exposed to severe market fluctuations. He sold units with annual revenue of about $50 billion that were involved with economically sensitive areas like plastics and insurance. He protected the AAA credit rating, and at the same time, spent more than $70 billion buying higher- return companies in businesses like power plant equipment, aviation, health care and media.

``We believe that the strategy and the fundamentals remain strong,'' Immelt said.

Immelt said on the GE-owned CNBC television network that ``We hate disappointing investors. It's not part of the company. It's not part of the culture. We take accountability for that.''

GE Commercial Finance was hurt when, as required once a quarter, it marked the value of securities it held on its books. Three areas hurt profit: equities including the value of Chinese securities, specifically a wind energy company whose value fell 45 percent. Another $4 billion in loans GE originates to sell declined in value, as did about $1.5 billion in securitizations for retained interest.

Unit Results

Sales at GE Real Estate, part of the commercial unit, also fell behind because it wasn't able to close on about $900 million in expected transactions, Sherin said.

Finance units may have a profit decline of 5 percent to 10 percent this year and non-financial units will increase 10 percent to 15 percent. That will make profit from continuing operations little-changed to up 5 percent, GE said.

GE Healthcare, the world's biggest maker of medical imaging equipment, had a profit decline of 17 percent, below the predicted 5 percent rise. GE hasn't shipped its OEC X-ray machines from a plant for 20 months as it works to comply with an FDA consent decree. That cost about 1 cent a share, Immelt said.

GE Infrastructure, the largest of the six main segments, has units that focus on oil and gas equipment, jet engines, locomotives, power-turbines, water-treatment and aircraft leasing. Its revenue climbed 23 percent, more than forecast, driving a 17 percent increase in earnings, which matched GE's prediction.

Dollar's Impact

GE, which makes more than half of its revenue outside the U.S., may get a boost from the decline in the dollar, said investors including Joseph Keating, chief investment officer of First American Asset Management in Birmingham, Alabama,

``There's probably a very good buy in here,'' said Keating, whose firm manages $3 billion, including GE shares. ``They have a worldwide franchise in industrial products and with the decline of the dollar, their products are competitive worldwide.''

The cost of protecting bonds of GE, the biggest U.S. corporate borrower, reached the highest in almost two weeks. Credit-default swaps on GE's General Electric Capital Corp. increased 6 basis points to 127 basis points, according to broker Phoenix Partners Group in New York.

Moody's Investor Service reaffirmed GE's debt rating at Aaa with a stable outlook, and Standard & Poor's reiterated its AAA, the highest possible.

``GE will have to reestablish investor credibility and earnings consistency before valuation can move higher,'' wrote Citigroup analyst Jeffrey Sprague, who cut his rating on the stock to ``hold'' from ``buy'' today, in a note to investors. ``GE may have reached the point that its size and complexity have become a hindrance to effective management.''

To contact the reporter on this story: Rachel Layne in Boston at

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Paramilitary Olympics: Beijing: at least 94,000 security staff – but only 10,500 athletes

What used to be called the Olympics are likely this summer to become the Paramilitary Games. China is planning to deploy more than 94,000 security personnel at the Beijing celebration in August, which means that uniformed and plain-clothes operatives will outnumber the 10,500 athletes by nearly nine to one.

Leading what will be the biggest security effort the world has ever seen is the People's Armed Police, a 660,000-strong militia force, which has been involved in the crackdown on Tibetan demonstrators in Lhasa. The PAP is also believed to have provided the squads of blue and white tracksuited paramilitaries who formed the controversial phalanx of guards for the Olympic torch as it made its chaotic way across London, Paris and San Francisco last week. On Thursday, the People's Armed Police News reported that the PAP force was told to prevent any security threats that could upset the Games. The paper issued a "political mobilisation order" to PAP troops telling them to prepare for an arduous time ensuring order and control before and during the Games.

Beijing is worried that activists from abroad, who have disrupted the journey of the Olympic torch relay, will also stage protests inside China over Tibet, Darfur, human rights and other issues before and during the Games. As a result, security experts forecast that the PAP's ranks will swell further. There has already been high-profile shows of strength by the militia in Beijing, public display exercises to show its carefully honed organisation.

The willingness of the torch's minders over the past week to weigh in and protect the flame – even on foreign soil where the guards have no jurisdiction – introduced the force's strict approach to a wider, worldwide audience for the first time and reflects the way security forces in China can pretty much do what they like on their own territory. About 20 government agencies – from the world's largest standing army, the two-million strong People's Liberation Army, to the fire service – will be involved in the security operation for the Olympics, supported by thousands of volunteers recruited from military and police academies. Organisers in Beijing insist they have spent less on security than the Athens Games in 2004, glossing over the argument that the last Olympics were considered a special case because they were the first to be held after the 11 September attacks on the United States. Even then, security personnel in Greece numbered between 50,000 and 70,000 operatives, far fewer than will be ready for action in Beijing.

The worldwide relay passed through Buenos Aires on Friday night with a comparatively smooth ride. Disruption had been expected but a tossed water balloon was the stiffest challenge faced by the heavy police guard. But the path ahead remains rocky. India has severely cut back the route and warned Chinese officials that it will not attempt to stop peaceful protests when the torch arrives. A similar stance has been taken in Indonesia. Japan has also mapped out a strategy, banning the PAP force from running beside its own police officers when it passes through Nagano. And all of that precedes the most controversial passage ofall: an ascent of Mount Everest in May followed by a tour of the Tibetan capital of Lhasa, the scene of rioting in March.

The focus on Chinese state television for the past week has been on the larger crowds of well-wishers who lined the route of the torch relay and showed nothing of the protests, although commentators did mention "vile" disruptive elements. After disturbances in Paris, the communist newspaper The People's Daily led with stirring reports of a disabled athlete who fought to keep the "sacred flame" alight against the threat of Tibetan "splittists". In China, where all areas of media activity are tightly controlled by the government, where dissent is forbidden and can result in a jail sentence, the Olympic torch relay has been portrayed as an outstanding success so far. The coverage on the official news agency, Xinhua, has shown mostly smiling athletes and civic leaders passing the torch. The news reports quote leaders and passers-by wishing Beijing well.

Ever since Beijing was granted the Games in 2001, there has been an automatic assumption that security would be no problem for the Chinese authorities, who have a lengthy track record of keeping the streets safe and a lid on dissent. Public demonstrations of protest in China are illegal and China is ruthlessly efficient at dealing with protest within its borders, as was seen in Tibet last month and in Tiananmen Square in June 1989.

China is freer now than it has ever been. It has the biggest number of internet users in the world, and its citizens enjoy more liberty than they ever did under the emperors or under the Communist Party before or during the Cultural Revolution. They have money in their pockets and they can express their views relatively openly on the streets. That said, the Chinese government is deadly serious when it comes to containing public displays of dissent at the Olympics.

Last summer, dozens of security guards with metal pipes beat up a group of construction workers at the National Stadium, centrepiece of the Olympic Games, who were having a cigarette break in breach of a strict no smoking rule. More recently, Beijing claimed to have uncovered a plot by Muslim separatists in Xinjiang to sabotage the celebrations with suicide bombings and kidnappings.

Asked on US television on Friday whether he wanted the world to boycott the Beijing Games, the Dalai Lama, Tibet's exiled spiritual leader, said no before sending the message to China: "We are not against you – and I'm not seeking separation." Chinese President Hu Jintao said he was ready to meet the Dalai Lama but accused him of trying to "ruin the Beijing Olympics". He said talks could open only if he desisted from trying to "split the motherland" and "incite violence". President Hu said: "Our conflict with the Dalai clique is not an ethnic problem, not a religious problem, nor a human rights problem. It is a problem of either preserving national unity or splitting the motherland."

International Olympic Committee president Jacques Rogge, who visited Beijing this week for planning meetings, was pressed on whether he could help to bring the two sides together, but ruled out an intervention. He said: "This is the line we do not have to cross. This is a political matter in which the IOC cannot enter. This is a sovereign matter for China to decide."

Focus has also centred on world leaders who may or may not be at August's opening ceremony. Gordon Brown and German Chancellor Angela Merkel will not be there – even if both are insisting this does not amount to a boycott. US President George Bush has been left with a dilemma. John McCain, the Republican senator has already said he would not go unless China cleaned up its act on human rights, while Democrat candidates Barack Obama and Hillary Clinton have called on Bush to swerve the opening ceremony.

Bush, who needs Chinese help to confront Burma's military junta and North Korea's nuclear programme, has indicated he will go and that it will allow him to put concerns directly to President Hu. His former Asia adviser Michael Green said: "The problem with a boycott is you end up taking 1.3 billion Chinese – who have different views of democracy, of the United States, of human rights, but all want the Olympics to be successful – and you turn them all against the United States."

The Chinese government also has a balancing act on security. If it reacts in too severe a fashion, China risks the ire of the international community. Appear too soft on the terrorist threat, and it risks being labelled incompetent and unstable. More than half a million foreign visitors are expected for the Olympics, and two million Chinese, so if the skirmishes around the torch relay prove to be a prelude to bigger protests, the scope for an international incident is there

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Misfired artillery crashes into girl's bed

JEFFERSON TOWNSHIP, New Jersey (AP) -- A piece of artillery that was apparently misfired by the military crashed through the roof of a New Jersey home miles away Friday and injured a young girl's cat, which had to be euthanized, officials said.

No people were injured when the two-pound piece hit the Jefferson Township home about two-and-a- half miles from the Picatinny Arsenal and landed in the girl's bed, said Peter Rowland, arsenal spokesman. She wasn't home, but her cat was sleeping on the bed.

The homeowner told authorities she heard a loud noise around 2:40 p.m. and found the 6-by-4-inch object.

Picatinny officials told The Star-Ledger of Newark they were investigating. The base had been conducting tests Friday, and it wasn't immediately clear what type of artillery hit the home.

Picatinny is the site of the Armament Research, Development and Engineering Center, whose mission is to conduct research, development and engineering for weapons systems.

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How Hunger Could Topple Regimes

U.N. peacekeepers patrol in an armoured vehicle during protests on a street in Port-au-Prince, Haiti.

The idea of the starving masses driven by their desperation to take to the streets and overthrow the ancien regime has seemed impossibly quaint since capitalism triumphed so decisively in the Cold War. Since then, the spectacle of hunger sparking revolutionary violence has been the stuff of Broadway musicals rather than the real world of politics. And yet, the headlines of the past month suggest that skyrocketing food prices are threatening the stability of a growing number of governments around the world. Ironically, it may be the very success of capitalism in transforming regions previously restrained by various forms of socialism that has helped create the new crisis.

Haiti is in flames as food riots have turned into a violent challenge to the vulnerable government; Egypt's authoritarian regime faces a mounting political threat over its inability to maintain a steady supply of heavily subsidized bread to its impoverished citizens; Cote D'Ivoire, Cameroon, Mozambique, Uzbekistan, Yemen and Indonesia are among the countries that have recently seen violent food riots or demonstrations. World Bank president Robert Zoellick noted last week that world food prices had risen 80% over the past three years, and warned that at least 33 countries face social unrest as a result.

The sociology of the food riot is pretty straightforward: The usually impoverished majority of citizens may acquiesce to the rule of detested corrupt and repressive regimes when they are preoccupied with the daily struggle to feed their children and themselves, but when circumstances render it impossible to feed their hungry children, normally passive citizens can very quickly become militants with nothing to lose. That's especially true when the source of their hunger is not the absence of food supplies but their inability to afford to buy the available food supplies. And that's precisely what we're seeing in the current wave of global food-price inflation. As Josette Sheeran of the U.N. World Food Program put it last month, "We are seeing food on the shelves but people being unable to afford it."

When all that stands between hungry people and a warehouse full of rice and beans is a couple of padlocks and a riot policeman (who may be the neighbor of those who're trying to get past him, and whose own family may be hungry too), the invisible barricade of private-property laws can be easily ignored. Doing whatever it takes to feed oneself and a hungry child, after all, is a primal human instinct. So, with prices of basic foods skyrocketing to the point that even the global aid agencies — whose function is to provide emergency food supplies to those in need — are unable, for financial reasons, to sustain their current commitments to the growing army of the hungry, brittle regimes around the world have plenty of reason for anxiety.

The hunger has historically been an instigator of revolutions and civil wars, it is not a sufficient condition for such violence. For a mass outpouring of rage spurred by hunger to translate into a credible challenge to an established order requires an organized political leadership ready to harness that anger against the state. It may not be all that surprising, then, that Haiti has been one of the major flashpoints of the new wave of hunger-generated political crises; the outpouring of rage there has been channeled into preexisting furrows of political discontent. And that's why there may be greater reason for concern in Egypt, where the bread crisis comes on top of a mounting challenge to the regime's legitimacy by a range of opposition groups.

The social theories of Karl Marx were long ago discarded as of little value, even to revolutionaries. But he did warn that capitalism had a tendency to generate its own crises. Indeed, the spread of capitalism, and its accelerated industrialization and wealth-creation, may have fomented the food-inflation crisis — by dramatically accelerating competition for scarce resources. The rapid industrialization of China and India over the past two decades — and the resultant growth of a new middle class fast approaching the size of America's — has driven demand for oil toward the limits of global supply capacity. That has pushed oil prices to levels five times what they were in the mid 1990s, which has also raised pressure on food prices by driving up agricultural costs and by prompting the substitution of biofuel crops for edible ones on scarce farmland. Moreover, those new middle class people are eating a lot better than their parents did — particularly more meat. Producing a single calorie of beef can, by some estimates, require eight or more calories of grain feed, and expanded meat consumption therefore has a multiplier effect on demand for grains. Throw in climate disasters such as the Australian drought and recent rice crop failures, and you have food inflation spiraling so fast that even the U.N. agency created to feed people in emergencies is warning that it lacks the funds to fulfill its mandate.

The reason officials such as Zoellick are sounding the alarm may be that the food crisis, and its attendant political risks, are not likely to be resolved or contained by the laissez-faire operation of capitalism's market forces. Government intervention on behalf of the poor — so out of fashion during globalization's roaring '90s and the current decade — may be about to make a comeback.

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Exclusive: Mugabe prepares for war

Robert Mugabe is preparing to defy international pressure and launch a systematic crackdown in Zimbabwe aimed at reversing his defeat in the presidential election two weeks ago, according to dissident policemen who have been briefed on his plans.

Through an intermediary, the policemen told The Independent on Sunday that they have been ordered to be ready to deploy today or tomorrow. With their ranks swollen by so-called "war veterans" given police uniforms, they would take over constituency "command centres" used in the 29 March elections.

Two weeks ago the ruling Zanu-PF party not only lost its majority in the House of Assembly, but, in the presidential contest, Mr Mugabe is believed to have finished well behind Morgan Tsvangirai, leader of the opposition Movement for Democratic Change (MDC).

The growing crisis over the government's failure to release the election results, coupled with rising violence in rural areas where the MDC did well, has reinforced fears of a crackdown. Mr Mugabe has also defied international pressure to declare the result, spurning a regional summit on Zimbabwe's problems called yesterday by the President of neighbouring Zambia.

On Friday, police banned all political rallies, a move initially thought to be aimed at an MDC protest meeting in the capital Harare today. A police spokesman said the force did not have enough officers to handle rallies because many were still guarding ballot boxes or preventing post-election violence. But it appears the order may also have been issued to give the police time to move into position around the country. Once they are deployed, opposition parties believe, the government could announce the presidential result and the date of the second round, claiming no candidate won an overall majority. This would also forestall the MDC's High Court action demanding the immediate release of the results, on which a judge has promised to rule tomorrow.

The dissident policemen said that "war veterans" – in reality Zanu-PF enforcers – would be given police uniforms, and, for the first time, police numbers, making it impossible to distinguish them from regular officers.

In rural constituencies, the policemen said they had been told their role would be to campaign openly for Mr Mugabe. Some areas would be closed altogether to outsiders. "This is a national plan," they told the intermediary. They added that the "war veterans" had been recruited to act as watchdogs over any policemen reluctant to carry out orders.

President Thabo Mbeki of South Africa met Mr Mugabe in Harare yesterday before going on to Zambia, but said there was "no crisis" in Zimbabwe and called for patience. Yesterday, Gordon Brown called for the election results to be published "immediately".

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The long run to freedom

Burundian runner Gilbert Tuhabonye (photo by
Tuhabonye still bears the scars of his ordeal
"There was no way to escape. People were waiting outside - if someone tried to jump out, they would attack them with machetes."

Of the 36,000 runners lining up in Sunday's London Marathon, 33-year-old Burundian Olympic hopeful Gilbert Tuhabonye has perhaps the most remarkable story.

In 1993, Tuhabonye, then 19, was looking forward to graduating from his high school in Kibimba and taking up an athletics scholarship at Tulane University in America.

But one October day, Tuhabonye and 100 of his fellow Tutsis were captured by rival Hutus, herded into a petrol station and set on fire.

"They were doing everything they could to make sure everybody in the building died," says Tuhabonye.

He was the sole survivor of the massacre as he smashed a window, climbed out and ran for his life.

Eventually he found safety in a hospital and began the slow recovery process.

Miraculously, less than 18 months after having the flesh burnt off his right shin down to the bone, Tuhabonye was running again, competing at the 1995 World Student Games in Japan.

The following year, as one of Burundi's most promising young talents, he was selected to go to an International Olympic Committee training camp for athletes from developing nations.

It was the greatest moment of my life. If I can let someone who tried to kill me go free, I can do anything - it inspired me."
Gilbert Tuhabonye

There, in a gesture of greater symbolism than the organisers could possibly have imagined, Tuhabonye carried the torch for the Atlanta Olympics on the relay through the streets of Birmingham, Alabama, the birthplace of the civil rights movement.

"That fire had been burning me, but now I had it in my hand - it was amazing," he said.

"They told us to go slowly, but I didn't listen to what they said - I was running so fast. It was an unbelievable feeling." In 1996, Tuhabonye came face to face with one of the people who tried to kill him.

"He collapsed at my feet, begging forgiveness," he said.

"Here was the guy who was in charge of putting everybody in that building. Some of my friends were approaching, and I knew that if I didn't let him go, they would kill him. So I said 'Go, get out of here.' He couldn't believe it.

"As I watched him go, it was the greatest moment of my life.

"If I can let someone who tried to kill me go free, I can do anything - it inspired me."

Now settled in Austin, Texas, Tuhabonye has become something of an inspiration himself to hundreds of runners who are part of his running club, Gilbert's Gazelles.

And coaching them led to the former middle distance runner stepping up to marathon running.

Burundian runner Gilbert Tuhabonye (photo by
Tuhabonye now runs a thriving running club in Austin, Texas

"In 2001 I was coaching a lot of people at distance running. I'd run with them for two hours or so, and it was pretty easy.

"One day I did 30km on 5:10 mile pace, so I thought, 'Maybe I should do a marathon'.

"In my first race I ran just over five minutes a mile pace until 23 miles, but failed to drink any water and so had to walk the last three miles. But it gave me hope that I could be a marathon runner."

Going into the London Marathon, Tuhabonye's personal best is two hours 22 minutes and seven seconds.

That is four minutes outside the 'B' standard qualifying time for the Olympics and seven minutes off the 'A' standard.

"If I could get to Beijing it would be a tremendous message about forgiveness," he says.

"I've moved away from the past and forgiven the people who tried to kill me. For the world to be a better place, we have to leave the past behind and move on."

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'World peace' hitcher is murdered

Pippa Bacca (left) and Silvia Moro hitchike in Lubiana  (14 March 2008) (Photo: Pippa Bacca/FotoUp)
Ms di Marineo (L) was hitch-hiking to the Middle East with a fellow artist

An Italian woman artist who was hitch-hiking to the Middle East dressed as a bride to promote world peace has been found murdered in Turkey.

The naked body of Giuseppina Pasqualino di Marineo, 33, known as Pippa Bacca, was found in bushes near the northern city of Gebze on Friday.

She had said she wanted to show that she could put her trust in the kindness of local people.

Turkish police say they have detained a man in connection with the killing.

Reports say the man led the police to the body.


Ms di Marineo was hitch-hiking from Milan to Israel and the Palestinian Territories with a fellow artist on their "Brides on Tour" project.

They had separated in Istanbul, planning to reunite in Beirut.


Ms di Marineo was last seen on 31 March in Gebze.

An Italian embassy official told the Associated Press news agency police tracked the man when he put a new SIM card into Ms di Marineo's mobile phone.

Local media identified the suspect only by the initials MK and said he had a previous conviction for theft.

Ms di Marineo's sister, who had gone to Turkey to look for her, identified the body. An autopsy is being conducted in Istanbul.

"Her travels were for an artistic performance and to give a message of peace and of trust, but not everyone deserves trust," another sister, Maria, told the Italian news agency, Ansa.

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Pope won't break bread with Bush

Pontiff not attending dinner in his honor, White House says

The White House has scheduled a dinner next week in honor of Pope Benedict XVI's first visit to the United States, but one guest will be conspicuously absent from the proceedings: the pope himself.

There are no competing events listed on the pope's schedule, and the White House was unable to explain Benedict's absence from the dinner.

The pontiff will be greeted by the president and first lady upon his arrival to the US Tuesday and participate in a Rose Garden appearance and Oval Office meeting with President Bush the next day. A dinner scheduled for later Wednesday night didn't make it onto the Benedict's schedule, White House spokesman Scott Stanzel said Friday.

From Friday's press briefing:

Q Just to clarify, for the pope's visit to the White House, you said that now there's a dinner in the East Room in honor of the pope?
Q Will the pope actually be attending that dinner?
MR. STANZEL: I don't believe so, no.
Q Okay. Thank you.
Q I'm sorry. The pope doesn't attend a dinner in his honor?
Q (Off mike.)
MR. STANZEL: He doesn't come into the building.
Q Well, then it's not a dinner for the pope, is it?
MR. STANZEL: It's in honor of his visit. There will be leaders from the Catholic community from all over the country who are in town for that visit.
Q Is there a reason the pope doesn't attend the dinner?
MR. STANZEL: I don't know. I don't have the full extent of his schedule.

Benedict's schedule does not indicate any events that would conflict with his ability to attend the 7:30 p.m. dinner that Wednesday. He is just scheduled to return to the Vatican embassy in Washington at the same time after a meeting with US bishops at the National Shrine of the Immaculate Conception in Washington.

It's unclear why the Pope won't be attending the dinner in his honor, but he is expected to touch on issues upon which he and President Bush disagree during the visit, especially the Iraq war.

During his visit to the United Nations a few days later, the Pope will address "the false notion that might makes right," according to a Vatican representative.

Some experts also predict the Pope would criticize the "culture of fear" in the United States. The Rev. David Hollenbach, director of Boston College's Center for Human Rights, said recently that this culture is seen as integral to the US involvement in Iraq.

"Fear can lead to angry responses," Hollenbach said, according to the Connecticut Post. "I think the pope's message is going to be 'Don't be afraid.' I think the overcoming of fear can take away the impulse for war."

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Brazil Senate orders Google to identify website pedophiles

BRASILIA (AFP) — A Brazilian Senate panel ordered Google on Wednesday to give it access to 3,261 profiles containing suspected pedophile material on a highly popular social-networking website.

Federal authorities have complained that Internet giant Google refuses to identify users who post criminal material on the social-networking website Orkut.

Under its order, the Brazilian Senate committee that investigates pedophilia would receive all the material that was sought by the authorities, the Senate's official agency reported.

The federal prosecutor for Sao Paulo, Sergio Suiama, told the Senate panel that in the last two years, nearly 90 percent of the 56,000 pedophilia complaints on the Internet were related to Orkut.

Orkut, the Brazilian answer to MySpace and Facebook, counts 27 million users in the South American country.

Suiama said that pedophile actions on Orkut have been helped by a tool allowing users to create private albums only accessible to their contacts.

"The dissemination of Orkut in Brazil has turned the country into a distributor of child pornography and Google doesn't seem to be worried by that," he said.

One-third of Brazil's 42 million Internet surfers are between 10 and 15 years old, making measures to combat child pornography on Orkut a matter of urgency, Suiama said.

Google's chief in Brazil, Alexandre Hohagen, said his company may implement in the next few months a filter blocking child pornography that could also help notify authorities about cases of pedophilia.

Brazilian prosecutors have threatened Google with civil and criminal action if it failed to reveal to authorities the private albums on Orkut that contain child pornography by Wednesday.

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Girlfriend: Davidson said Christian was forced to shoot Newsom

Assistant U.S. Attorney Tracy Stone, right, questions KPD Investigator Todd Childress, left, as Eric Dewayne “E” Boyd, in foreground, on trial as an accessory to a fatal carjacking, listens.

Illustration by Don Wood/News Sentinel

Assistant U.S. Attorney Tracy Stone, right, questions KPD Investigator Todd Childress, left, as Eric Dewayne “E” Boyd, in foreground, on trial as an accessory to a fatal carjacking, listens.

The girlfriend of the accused ringleader in a fatal carjacking told jurors this afternoon her now ex-beau claimed Channon Christian was forced to kill her boyfriend.

"He told me Channon shot Christopher (Newsom) ... that they made her do it," Daphne Sutton acknowledged under cross-examination by defense attorney Phil Lomonaco on behalf of Eric Dewayne "E" Boyd.

Lomonaco was trying to show that Sutton knew about the fatal carjacking and her boyfriend Lemaricus "Slim" Davidson's involvement and yet harbored him and failed to notify police of what she knew.

Boyd is on trial for allegedly hiding out Davidson after Sutton would no longer allow him to stay with her in the days following the January 2007 torture/slayings of the University of Tennessee student and her boyfriend.

In opening statements earlier this week, Assistant U.S. Attorney David Jennings told jurors that Newsom was shot three times, one that he called a "kill shot" to the head by one of the four charged with kidnapping, raping and killing Christian and Newsom.

Jennings indicated in his questioning of Sutton that Davidson told several lies to Sutton in a bid to convince her to give him a place to stay.

Sutton, whose uncle is Knoxville Police Department Officer Dennis R. Bible, has not been charged, and Lomonaco has alleged she was spared prosecution, both because she is white and the remaining suspects black, and her uncle works for the lead investigative agency in the case.

Sutton admitted lying to police in the hours after Christian's body was found inside the Chipman Street house she had shared with Davidson.

"We were scared," Sutton said of her and two girlfriends she was staying with at the time. "We didn't know what to do ... I had just found out he (Davidson) had killed somebody."

There has never been an indication in any court records or hearings that authorities believe Christian was forced to shoot Newsom.

However, prosecutors have repeatedly said that the only people who know what happened are either behind bars and keeping quiet or dead.

Lomonaco this morning demanded a mistrial, arguing federal prosecutors were trying to sneak in evidence implicating his client in a fatal carjacking when he is charged only with being an accessory.

"Clearly this is evidence of uncharged crimes that is only intended to inflame the jury and to suggest to the jury Mr. Boyd was involved in this carjacking," Lomonaco said as the trial's second full day of testimony began in U.S. District Court in Knoxville.

Assistant U.S. Attorney Tracy Stone countered that he and Jennings must prove that Boyd knew about the carjacking in order to prove he helped hide out one of the carjacking suspects, alleged ringleader Lemaricus "Slim" Davison.

"The United States did not create the facts in this case. They are what they are," Stone said.

Judge Tom Varlan shot down the mistrial request, saying that the jury would be properly informed of the relevance of testimony yesterday that arguably could place Boyd at the scene of the slayings of Christian, 21, and Newsom, 23.

"The court does not find these motions to be well taken," Varlan said.

This morning's mistrial effort by Lomonaco comes after prosecutors Thursday mounted what sounded more like a case for murder than accessory to a fatal carjacking.

"We've got (some) evidence now," Knoxville Police Department Investigator Todd Childress responded when unsuccessfully pressed by Boyd's defense Thursday to label as lies statements implicating Boyd in the torture slayings of Christian and Newsom and the carjacking that preceded the deaths.

"There's not enough at this time I can prove," Childress continued, putting an emphasis on the words "at this time."

Childress' promise of a continued prosecutorial push to unearth evidence of Boyd's alleged involvement in the slayings came in the first full day of testimony offered up by Jennings and Stone.

The investigator's comments also came at the end of a day chock full of testimony laced with circumstantial proof that Boyd was alongside Davidson and at least two other suspects already charged in the slayings during the hours Christian and Newsom were held captive, raped and ultimately killed.

First came Waste Connections of Tennessee employee Xavier Jenkins, who was parked in the firm's Chipman Street lot next to the house where the couple was, unbeknownst to him, being held captive. Jenkins said he immediately noticed something odd about that house.

"It was busy," he said. "The porch light was on, looked like a couple of lights were on side. There were cars parked out front. It looked like there was traffic going in and out of the house."

He also noticed a silver Toyota 4 Runner since identified as Christian's carjacked vehicle parked in front of the house. The vehicle's parking lights were on. He also saw parked behind the Toyota a white Pontiac Sunbird.

Jenkins later saw the Toyota headed toward him as he sat in his vehicle eating a snack.

"The truck, the SUV, it slowed down to look at me like, 'Why are you here at 2 o'clock in the morning?' I took the attitude, 'Hey, I'm supposed to be here. Why are you here?' They gave me attitude so I gave them one back. … It slowed down so much I could tell how many people were in that truck."

Jenkins, who is black, said he saw four black men inside Christian's 4 Runner. After the brief encounter, Jenkins said the driver essentially circled the block as if heading back to the Chipman Street house before he lost sight of it.

"It made me feel like they wanted to come by and see who I was and then go back," he said.

Jenkins reported to work. A few hours later, he and some co-workers again saw the 4 Runner. It was parked in the firm's lot.

"The car was out of place," he said. "Initially we thought we were going to find some teenagers making out because it was kind of dark out there."

The Toyota instead appeared abandoned. Authorities contend it would later be wiped down and distinctive stickers removed from its rear hatch.

In a bit of "Law & Order" style drama, Stone then showed Jenkins - in full view of the jury - a photographic lineup of white vehicles in search of a match of the Sunbird he also saw parked at the Chipman Street house during a time when authorities believe Christian and Newsom were being held captive and brutalized.

"That particular car with that pinstripe is the car," Jenkins said, pointing out a particular photograph.

"How sure are you this was the car you saw in back of that 4 Runner?" Stone asked.

"One hundred percent sure," Jenkins responded.

Stone then sent to the witness stand Adrienne Nicole Mathis, who is Boyd's cousin.

"That's my car," she said when shown the same photograph.

When Stone asked her where her car had been on the weekend of the slayings, she answered, "Someone borrowed it."

"Who borrowed your car?" Stone asked as the courtroom fell silent.

"Eric Boyd," she said.

She said she next saw the car on Monday, Jan. 8, 2007. It was "broken down" in front of Boyd's mother's Ridgebrook apartment. Inside, she said she saw a sandwich bag of bullets and heard Boyd talking on a cellular phone, saying, "He might be in some trouble."

Mathis confessed she had lied to police and a federal grand jury because of "pressure from my family," which included a phone call Wednesday night from her sister warning her not to testify.

Defense attorney Phil Lomonaco has told jurors Mathis drove Boyd to the Chipman Street house sometime in the evening of Jan. 7, 2007, but that he never saw Christian or Newsom and was unaware of the fatal carjacking. Mathis denied that on the witness stand. Lomonaco tried to paint her a liar not then but now.

"This is the story prosecutors want you to tell, is it not?" he demanded.

"No," she answered.

More details as they develop online and in Saturday's News Sentinel.

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Top officials OK’d harsh interrogation tactics

WASHINGTON - Bush administration officials from Vice President Dick Cheney on down signed off on using harsh interrogation techniques against suspected terrorists after asking the Justice Department to endorse their legality, The Associated Press has learned.

The officials also took care to insulate President Bush from a series of meetings where CIA interrogation methods, including waterboarding, which simulates drowning, were discussed and ultimately approved.

A former senior U.S. intelligence official familiar with the meetings described them Thursday to the AP to confirm details first reported by ABC News on Wednesday. The intelligence official spoke on condition of anonymity because he was not authorized to publicly discuss the issue.

Between 2002 and 2003, the Justice Department issued several memos from its Office of Legal Counsel that justified using the interrogation tactics, including ones that critics call torture.

"If you looked at the timing of the meetings and the memos you'd see a correlation," the former intelligence official said. Those who attended the dozens of meetings agreed that "there'd need to be a legal opinion on the legality of these tactics" before using them on al-Qaida detainees, the former official said.

Meetings after Sept. 11 attacks
The meetings were held in the White House Situation Room in the years immediately following the Sept. 11 attacks. Attending the sessions were then-Bush aides Attorney General John Ashcroft, Secretary of State Colin Powell, CIA Director George Tenet and national security adviser Condoleezza Rice.

The White House, Justice and State departments and the CIA refused comment Thursday, as did a spokesman for Tenet. A message for Ashcroft was not immediately returned.

Sen. Edward M. Kennedy, D-Mass., lambasted what he described as "yet another astonishing disclosure about the Bush administration and its use of torture."

"Who would have thought that in the United States of America in the 21st century, the top officials of the executive branch would routinely gather in the White House to approve torture?" Kennedy said in a statement. "Long after President Bush has left office, our country will continue to pay the price for his administration's renegade repudiation of the rule of law and fundamental human rights."

A call for an investigation
The American Civil Liberties Union called on Congress to investigate.

"With each new revelation, it is beginning to look like the torture operation was managed and directed out of the White House," ACLU legislative director Caroline Fredrickson said. "This is what we suspected all along."

The former intelligence official described Cheney and the top national security officials as deeply immersed in developing the CIA's interrogation program during months of discussions over which methods should be used and when.

At times, CIA officers would demonstrate some of the tactics, or at least detail how they worked, to make sure the small group of "principals" fully understood what the al-Qaida detainees would undergo. The principals eventually authorized physical abuse such as slaps and pushes, sleep deprivation, or waterboarding. This technique involves strapping a person down and pouring water over his cloth-covered face to create the sensation of drowning.

The small group then asked the Justice Department to examine whether using the interrogation methods would break domestic or international laws.

"No one at the agency wanted to operate under a notion of winks and nods and assumptions that everyone understood what was being talked about," said a second former senior intelligence official. "People wanted to be assured that everything that was conducted was understood and approved by the folks in the chain of command."

The Office of Legal Counsel issued at least two opinions on interrogation methods.

Defining torture
In one, dated Aug. 1, 2002, then-Assistant Attorney General Jay Bybee defined torture as covering "only extreme acts" causing pain similar in intensity to that caused by death or organ failure. A second, dated March 14, 2003, justified using harsh tactics on detainees held overseas so long as military interrogators did not specifically intend to torture their captives.

Both legal opinions since have been withdrawn.

The second former senior intelligence official said rescinding the memos caused the CIA to seek even more detailed approvals for the interrogations.

The department issued another still-secret memo in October 2001 that, in part, sought to outline novel ways the military could be used domestically to defend the country in the face of an impending attack. The Justice Department so far has refused to release it, citing attorney-client privilege, and Attorney General Michael Mukasey declined to describe it Thursday at a Senate panel where Democrats characterized it as a "torture memo."

Not all of the principals who attended were fully comfortable with the White House meetings.

The ABC News report portrayed Ashcroft as troubled by the discussions, despite agreeing that the interrogations methods were legal.

"Why are we talking about this in the White House?" the network quoted Ashcroft as saying during one meeting. "History will not judge this kindly."

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