Wednesday, July 16, 2008

Inflation grows at fastest pace in 27 years

WASHINGTON (AP) -- The economy showed the depth of its twin problems on Tuesday, slow growth and rising inflation, as the nation wrestled with a teetering financial system, a slumping dollar and rising prices for food and fuel.

The Labor Department reported that soaring costs for gasoline and food pushed inflation at the wholesale level up by a bigger-than-expected 1.8% in June, leaving inflation rising over the past year at the fastest pace in more than a quarter-century.

Over the past 12 months, wholesale prices are up 9.2%, the largest year-over-year surge since June 1981, another period when soaring energy costs were giving the country inflation pains.

Core inflation, which excludes energy and food, was better behaved in June, rising by just 0.2%, slightly lower than expectations.

Retail sales: A separate report from the Commerce Department showed that all the economy's problems were weighing on the consumer. Retail sales edged up by a tiny 0.1% in June, weaker than had been expected, as consumer spending was held back by a sharp plunge in sales at auto dealerships.

Stocks: U.S. stocks headed for a sharply lower open as the reports on inflation and retail sales failed to cool concerns about the financial sector. Banking stocks were pounded on Monday despite the government's efforts to calm concerns with a support package fashioned over the weekend for mortgage giants Fannie Mae and Freddie Mac.

Fed: Federal Reserve Chairman Ben Bernanke, who was scheduled to deliver his midyear report on the economy to Congress on Tuesday, was expected to highlight the threat posed by inflation pressures. The central bank at its June meeting brought an end to an aggressive rate-cutting campaign that had been designed to keep a prolonged housing slump and severe credit crunch from pushing the country into a deep recession.

The central bank is currently caught between the opposing forces of rising inflation and slumping economic growth.

Rising prices, weaker sales: For June, energy prices at the wholesale level shot up by 6%; the price of unleaded regular gasoline surged by 9% following an even bigger 9.6 % increase in May.

The 0.1% rise in retail sales was even weaker than the 0.4% gain that analysts had been expecting.

That small rise reflected a 3.3% drop in sales at auto dealerships, offsetting a big 4.6% jump in sales at gasoline stations, an increase that largely mirrored last month's huge jump in pump prices.

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Post-July 1, Borrowers Consolidate Student Loans at Rates as Low as 3.62%

PHOENIX, AZ--(MARKET WIRE)--Jul 14, 2008 -- Borrowers will now be able to consolidate their variable-rate federal student loans at significantly lower fixed interest rates, thanks to the Fed's flurry of rate cuts over the last year. Rate cuts made by the Fed largely in response to the subprime mortgage credit crisis added up to a 3-percent drop for student loan borrowers when the interest rate on variable-rate federal college loans reset on July 1, as it does every year.
The interest rate on a federal student loan consolidation is a fixed rate determined by the weighted average of the interest rates on the college loans being consolidated. With July 1 having brought a record-setting rate drop on variable-rate federal parent and student loans, weighted-average consolidated interest rates for these consolidation loans will also be down. Borrowers can take advantage of the current low rates by consolidating their variable-rate college loans and locking in a low fixed consolidated rate.

Borrowers holding variable-rate Stafford student loans that, prior to July 1, were carrying interest rates as high as 8.25 percent may be able to cut their repayment rate to a fixed rate as low as 3.62 percent if they choose to consolidate their student loans this year.

In order to be able to consolidate their federal student loans at the lowest current rates, borrowers must meet certain criteria: They must have taken out variable-rate Stafford loans prior to July 1, 2006; they must not have federal student loans that haven't already been consolidated; and they must consolidate their Stafford loans prior to the end of the six-month grace period they're granted once they leave school.

Those borrowers who have already passed their six-month grace period and are currently in repayment or in forbearance on their Stafford student loans may be able to consolidate at fixed rates as low as 4.25 percent.

Parent borrowers holding unconsolidated variable-rate PLUS loans that were taken out prior to July 1, 2006, will also benefit from the interest-rate reductions that went into effect on July 1. Parents may be able to consolidate their variable-rate federal PLUS loans at a fixed rate as low as 5.125 percent.

In their rush to consolidate their federal student loans and lock in a low interest rate, however, parent and student borrowers may find they have a hard time locating a lender with an active student loan consolidation program. After legislation in 2007 cut over $21 billion in subsidies to private lenders in the federal student loan program, federal consolidation loans became unprofitable to those student loan companies. Most private lenders -- lenders that together account for 83 percent of the education loan volume made last year, according to Mark Kantrowitz, publisher of -- have since suspended their federal student loan consolidation programs.

"Existing consolidation loans, even for banks, are not profitable," Kantrowitz explains. "The joke is, 'Congress took away half the lenders' profit and the credit crisis took away the other half.'"

Kantrowitz recommends that student loan borrowers looking to consolidate their federal parent and student loans at this year's low rates apply directly through the U.S. Department of Education's Direct Loan Program.

About NextStudent

NextStudent, Federal Lender Code 834051, is dedicated to helping students and their families find affordable ways to pay for college. NextStudent offers one-on-one education finance counseling and a portfolio of highly competitive education finance products and services, including a free online scholarship search engine, college loans, and information on parent loans, student loan consolidation programs, and college savings plans.

For more information about NextStudent and its student loan programs, please visit our website at

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Dow Falls Below 11,000, Despite Drop in Oil Prices

Stocks ended a volatile session in the red on Tuesday, despite a sharp drop in oil prices, after economic policy makers issued dour predictions and skepticism arose about the government’s efforts to shore up the nation’s financial sector.

The Dow Jones industrial average ended below 11,000 for the first time in two years, and the broader Standard & Poor’s 500-stock index declined 1.1 percent.

Fannie Mae and Freddie Mac, the beleaguered mortgage finance giants, fell for the fifth day in a row, despite attempts by President Bush and Treasury Secretary Henry M. Paulson Jr. to reassure investors about the government’s rescue plan for the companies. Freddie Mac shares lost 26 percent, and Fannie Mae ended down 27 percent.

Battered bank stocks also closed mostly in the red, although Lehman Brothers managed a 7 percent gain.

In a dizzying day, investors grappled with a spate of mostly bleak economic developments, including pessimistic testimony from Ben S. Bernanke, the Federal Reserve chairman, who warned that significant economic risks remained and that inflation would accelerate.

The dollar fell to a new low against the euro, General Motors said it would cut jobs and suspend its dividend and a report showed that consumer spending slowed in June more than economists had expected.

Stocks fell sharply in morning trading; the Dow was down 200 points after the opening bell.

But shortly after 10 a.m., as Mr. Bernanke was speaking to Congress, investors did a double-take as oil prices, previously trading at record highs, suddenly plunged by $10 a barrel.

“The only times you’ve seen moves like that are in the first gulf war,” Ric Navy, an analyst at BNP Paribas, said.

The surprise development led to a midmorning rally in the stock market, which surged back toward positive territory.

Oil closed down $6.44, at $138.74 a barrel, on the New York Mercantile Exchange, leaving analysts puzzled.

But the market revival did not last. After seesawing between positive and negative territory, the Dow slid in the late afternoon, closing down 92.65 points at 10,962.54. The broader Standard & Poor’s 500-stock index followed a similar trajectory, ending down 13.39 points, or 1.1 percent, at 1,214.91. The Nasdaq composite index closed up 0.1 percent, at 2,215.71.

Mr. Bernanke’s gloomy assessment was reinforced by two government reports released Tuesday, one showing that retail sales were nearly stagnant in June, even after Americans received tax rebates from the government’s stimulus plan, and the other showing that producer prices rose more than expected, a sign of accelerating inflation.

The trouble in the American stock market followed a painful day in overseas markets. European indexes all closed lower.

In London, the FTSE 100 fell 2.4 percent. The CAC-40 in Paris lost nearly 2 percent, and the DAX in Frankfurt slipped 1.9 percent. The Dow Jones Euro Stoxx 50 index, a benchmark of European blue chips, fell 2.29 percent.

The dollar fell to a record low against the euro on worries that the American government had taken on an enormous share of the nation’s financial risks. The dollar rebounded slightly during the day, and the euro settled at $1.5878.

“The U.S. dollar has come under broad selling pressure amid fear that the U.S. Treasury’s contingency plans for Fannie Mae and Freddie Mac will be drawn upon, leading to further strains in the financial system, prolonging the crisis,” Marc Chandler, a currency strategist at Brown Brothers Harriman, wrote in a note to clients.

General Motors shares rose nearly 5 percent after the company announced more job cuts and a suspension of its dividend. Wachovia fell 7.7 percent after a well-known Wall Street analyst, Meredith Whitney of Oppenheimer & Company, deemed the bank’s prospects “bleak.”

The price of the benchmark 10-year Treasury note rose 9/32, to 100 14/32, as some investors sought safety in government bonds. Its yield, which moves opposite its price, fell to 3.82 percent, from 3.86 percent..

Following are the results of Tuesday’s Treasury auction of four-week bills.

David Jolly in Paris and David Stout in Washington contributed reporting

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Giving It Up for Gas: Five Ways We’re Cutting Back

By: Allie Firestone (View Profile)

Thanks to the incessantly climbing prices at the gas station, the precarious balance known as my net worth is starting to teeter a little too far in the negative direction. My well-planned and always-justified indulgences may just have to be put on indefinite hold, at least until prices even out or until my pay catches up with the inflation. (Optimism, anyone?)

Turns out, I’m not the only one making sacrifices in the name of the oil gods. A recent study showed that over half of us are feeling the pressure to find other things to give up in the name of gas. Eighty-nine percent of survey takers admitted they’re still driving to work, meaning public transportation or carpooling just isn’t a viable option for many. When simple math tells us that more spending in one area means spending less somewhere else, where is that 89 percent scaling back?

“They’re cutting out the fat,” said Tanya Flynn of in a KCBS interview on the study’s findings, referring to the widespread willingness to forego things like happy hours, movie nights, and fancy restaurants.

At this point, all any of us can do is brush up on our miles per gallon basics and check out what everyone else is giving up to get some money-saving ideas.

Bye-Bye, Restaurants
Meals out are the main area in which people have reported cutting back—35 percent say paying more at the tank means less eating out on the town. Bummer? Sort of. But there are some delicious (and cheap) alternatives to that too-long wait for a table for four. Try an outdoor potluck or grill up a new take on dinner. If it’s ambience you’re after, throw together a picnic, complete with cocktails, corn on the cob, and apple pie.

Farewell, Fancy Markets
My grocery store shock (butter is how much now?) has put me in cutback and coupon-clipping mode. I’m not alone—27 percent of survey-takers are also cutting back on the fancy organics and pre-made gourmet counters.

“I’m not willing to give up on food quality. Period.” says Alexandra James, a junior development executive at a Hollywood-based production company. “Instead, I started really cutting back on the products I buy but don’t use, which was actually a lot.”

Cutting back doesn’t have to mean sacrificing quality … or quantity. Shopping the peripheral aisles of the supermarket can uncover plenty of healthy foods available for less than one dollar per serving, including kale, eggs, and potatoes.

So Long, Shopping and Vacations
Thirty-one percent of respondents reported sacrificing recreation and entertainment. “I always spend way too much money at those big, fancy bookstores on books I end up reading only once,” says Dayna Davis, a public relations assistant from Colorado. “But I’ve forced myself to start going to the library instead, and I’ve ended up saving a lot of money—and avoided piling up more books I don’t need.”

The best thing about entertainment is that we can be entertained sans spending. By using the recession as an opportunity, we can destroy the connection between spending and fun once and for all. Like getting our money’s worth out of cable we’re already paying for, for example. There are loads of free movies and access to episodes of popular shows in most cable packages. Bonding with family, or just having some fun together, doesn’t require going out and buying something. Break out the board games, playing cards, or head to a nearby park with the dogs.

And those lost vacations (sniff) that 21 percent of survery takers opted out of this year? Don’t underestimate the new recession cliché: the Staycation. Take those already-requested days off work anyway and pretend be a tourist in your own city—chances are you’ve never done the things that most people come there to do. Try a local ghost tour, museums (most have free admission days), or browse CitySearch to see what the latest hot spots are.

Hello, Priorities
Make like a dieter and cut the fat. I’ve saved a surprising amount of money just by eliminating a few little indulgences. (Trendy skirts and organic almond butter, I’ll think of you often.) Twenty-four percent of survey-respondents view clothing as an unnecessary expense; for 11 percent it’s extra cable services and magazines and 9 percent have simply opted not to attend events where bringing a gift is necessary. (Hey, no one said this was a guide to being generous.)

For most, kids and family activities have not fallen into the disposable category, at least not so far. Jeff Firestone, a Bay Area photographer, has seen this at the children’s dance school photo shoots he does every year. “Parents are still consistently buying pictures of their kids,” he says. “There hasn’t been less spending on photos this year—making and keeping memories for the family still seems to be high on everyone’s lists.” Try some gas-free day-trips to keep things fun with the fam for summer days and take advantage of free community perks, like pools and the YMCA.

It’s easy to cut back on fancy clothes and overpriced gifts when we look at the bigger picture—what’s a skirt compared to giving the kids (or ourselves) an appreciation for music, art, or baseball? Whether you drive a Prius or a Rover, there’s no shaking the doubled and tripled prices at the pumps, but one thing remains true—creativity is never too expensive.

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Most Lucrative College Majors

The field of psychoanalysis has gotten the Hollywood treatment over the past decade, being featured on a hit TV show, The Sopranos, and two movies starring Billy Crystal and Robert De Niro, Analyze This and Analyze That.

In the same period, the number of college students earning psychology degrees has jumped 22%; the Princeton Review pegs it as the second most popular major today. No doubt students have visions of striking it rich, listening to patients' problems while collecting $100-an-hour fees.

The reality is that few psychology majors move on to graduate school--and the career path for the rest of the group: not so rich. Psychology majors during their first few years out of school typically make around $35,000; those with 10 to 20 years' experience are pulling in $54,000. Those are the second-lowest incomes in both cases in our study of the most lucrative college majors. Only criminal justice majors fare worse.

In Pictures: Most Lucrative College Majors

The most lucrative college major today: computer engineering. Those with less than five years' experience are making $60,500, while those with 10 to 20 years' experience are banking $104,000 per year. "Everything today has a computer in it," says Al Lee, director of quantitative analysis at, an online compensation comparison tool.

Today's computer engineering majors are designing the integrated circuits that move information around, and employers like AT&T (nyse: T - news - people ), Cisco Systems (nasdaq: CSCO - news - people ) and Hewlett-Packard (nyse: HPQ - news - people ) can't hire enough of them.

To gauge the most lucrative majors, we turned to, which collects real-time salary information from 10 million users. They looked at 20 popular majors where most of the graduates go into the private sector; thus, some popular majors, like education and social work, were excluded.

We looked at median salaries to wipe out outliers at the top and bottom ends of the scale. Salaries included bonuses and commissions, but excluded any stock compensation. All jobs were included in the data, not just those specific to the major. Anyone who acquired an advanced degree was excluded from the study.

If you're looking for a big paycheck straight out of school, think about an engineering degree. The four highest paid majors for people with less than five years' experience were all engineering-based, with computer engineering leading the way. "It is a matter of supply and demand," says Lee, adding, "Engineers tend to stay at their jobs longer, so getting the good people right out of college is important." Despite the high pay, the number of engineering degrees issued has barely budged the past 10 years; 67,000 degrees were handed out in 2006, the latest year available.

One reason the number of engineering degrees has not grown much is that the programs tend to be very rigorous. This benefits the engineering students who can complete the coursework, though--employers know they're typically getting competent people straight out of school, and therefore are willing to dole out generous salaries.

There are several majors with better growth potential than the assorted engineering degrees. Engineering salaries tend to start high, but there is not huge growth on an annual basis. Witness the difference between engineering salaries for those with little experience compared to those with 10 to 20 years' experience: The experienced jobs tend to pay 55% to 60% higher. Meanwhile, the economics, finance and math majors are pursing jobs with salaries that often double once they've gotten some decent experience under their belts.

"The kinds of majors where you learn to integrate mathematics and science with the everyday world have a tremendous benefit in terms of earnings potential," says's Lee. These include economics, engineering, finance and mathematics.

For those still set on that psychology degree, plan on getting a doctorate, because a master's alone is not going to add much juice to your earnings potential. The typical salary for someone with a master's in psychology and 10 to 20 years' experience was $56,500, just $2,500 more than psych majors without advanced degrees.

Those numbers are scarier than anything Tony Soprano ever unleashed in Dr. Melfi's office.

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EBay Wins Lengthy Trademark Battle Against Tiffany

On the heels of a $61 million loss to French luxury goods group LVMH, eBay on Monday secured a legal victory in its trademark battle with jeweler Tiffany.

The online auction site has been battling with the luxury jewelry retailer since 2004, when Tiffany sued eBay for allegedly allowing the sale of counterfeit Tiffany items.

Judge Richard Sullivan with the Southern District Court of New York rejected the idea that eBay is responsible for policing its site for fake Tiffany items.

"The court is not unsympathetic to Tiffany and other rights owners who have invested enormous resources in developing their brands, only to see them illicitly and efficiently exploited by others on the Internet," Sullivan wrote in his 66-page ruling [PDF]. "Nevertheless, the law is clear: it is the trademark owner's burden to police its mark, and companies like eBay cannot be held liable for trademark infringement based solely on their generalized knowledge that trademark infringement might be occurring on their websites."

EBay said the judge's decision was a "victory for consumers."

"The ruling confirms that eBay acted reasonably and has adequate procedures in place to effectively address counterfeiting," the company said in a statement. "The ruling appropriately establishes that protecting brands and trademarks is the primary burden of rights owners."

EBay chastised Tiffany for taking the battle to court instead of working with the online auction site "to more effectively fight counterfeits."

Tiffany was not pleased.

"We're shocked and deeply disappointed in the district court's erroneous reading of the law," according to a spokesman. "The sale of counterfeit Tiffany merchandise on eBay is an issue not only for Tiffany but also for members of the public who may believe they are buying authentic tiffany items on eBay when in fact there is a great chance that they are buying counterfeit goods."

"We continue to believe that eBay is legally responsible for the trademark infringement of those selling counterfeit Tiffany jewelry and that eBay cannot avoid liability by placing the entire burden for enforcement on Tiffany and on other manufacturers of well-known brand-name products," he continued.

"I would be surprised if we didn't appeal" the ruling, the spokesman said, though he did not have a timetable for when that might occur.

"This decision sends a clear signal to intermediaries worried about their liability for their users' potentially infringing activity: it is not your job to police all potential infringement on your site," Michael Kwun, a senior staff attorney at the Electronic Frontier Foundation (EFF), wrote in a blog post. "That is a good thing for free speech of all kinds."

EBay was not as fortunate last month when a French court ordered the company to pay $61 million for allowing the sale of fake merchandise. EBay has vowed to fight the ruling.

Editor's Note: This story was updated at 6pm Eastern with comment from Tiffany.

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Anti-pope activists given legal right to 'annoy' Catholic pilgrims

A member of the NoToPope coalition wears a t-shirt during an "annoying" fashion show held outside the New South Wales state parliament

(Greg Wood/AFP)

A No To Pope activist protests in Sydney

Image :1 of 3

Anti-papal activists in Australia have won permission to annoy Catholic pilgrims at the World Youth Day celebrations in Sydney after a court upheld their right to hand out condoms and coat hangers.

The decision, by the Federal Court, strikes down a law introduced by the state of New South Wales that would have fined anyone “causing annoyance” to the estimated 225,000 pilgrims who have flocked to Sydney to celebrate with Pope Benedict XVI. The fines could have been up to A$5,500 (£2,700).

As soon as the court had given its ruling, Rachel Evans, one of two protesters from the No To Pope Coalition who brought the case, started handing out condoms to pilgrims. “We’re not seeking to annoy or inconvenience anyone,” she said, wearing a T-shirt declaring: “The Pope is wrong, put a condom on.”

Many Catholics took exception to her handouts, Ms Evans added, but others accepted them. “We welcome the Catholic youth. We’re going to talk to them about how we oppose the conservative contraception policy of the Pope.”

The New South Wales government had claimed that the new regulations extended to police the same rights to suppress trouble as they already had for big sporting events. It emphasised that a ban on causing inconvenience remained in force.

Ms Evans and another student activist, Amber Pike, argued that the law was unconstitutional because it infringed their right to peaceful protest. The judges ruled that the attempt to regulate annoying behaviour would affect freedom of speech because of uncertainty about how it could be defined.

“The statement from the judges was very clear,” Ms Evans said. “We have the right to peaceful assembly and these annoyance laws contravene that right. The judges specifically said condoms, T-shirts, coat hangers and so on.”

Protesters are handing out coat hangers as a reference to backstreet abortions — a consequence, they say, of Catholic opposition to contraception and abortion.

The ruling coincided with the start of the week-long youth festival yesterday at a Mass near Sydney Harbour that was attended by more than 150,000 people, with Cardinal George Pell, the Archbishop of Sydney, delivering the homily.

More than half a million worshippers are expected to be at the closing Mass on Sunday, which will be attended by Benedict XVI.

The protesters hope that the court decision will boost numbers at a rally on Saturday where they plan to wear T-shirts condemning the Pope and hand out condoms and leaflets.

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Losing Private Dwyer

The photo below captures everything that Americans wanted to believe about the Iraq war in the earliest days of the invasion in 2003. Pfc. Joseph Dwyer, an Army medic whose unit was fighting its way up the Euphrates to Baghdad, cradles a wounded boy. The child is half-naked and helpless, but trusting. Private Dwyer’s face is strained but calm.

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Warren Zinn/Army Times, via Associated Press

If there are better images of the strength and selflessness of the American soldier, I can’t think of any. It is easy to understand why newspapers and magazines around the country ran the photo big, making Private Dwyer an instant hero, back when the war was a triumphal tale of Iraqi liberation.

That story turned bitter years ago, of course. And the mountain of sorrows keeps growing: Mr. Dwyer died last month in North Carolina. He was 31 and very sick. For years he had been in and out of treatment for post-traumatic stress disorder and addiction. He was seized by fearful delusions and fits of violence and rage. His wife left him to save herself and their young daughter. When the police were called to Mr. Dwyer’s apartment on June 28, he was alone. They broke down the door and found him dying among pill bottles and cans of cleaning solvent that friends said he sniffed to deaden his pain.

He had been heading for a disastrous end ever since he came home.

Two of his best friends were Angela Minor and Dionne Knapp, fellow medics at Fort Bliss, near El Paso, Tex. For a while, they were part of a small, inseparable group that worked together, ate out, went to movies and called one another by their first names, which is not the military habit.

Joseph was a rock, Ms. Minor said, a guy who would change your oil and check your tires unasked and pick you up by your broken-down car at 3 a.m. Ms. Knapp said he was like an uncle to her son, Justin, who was having trouble in kindergarten and brightened whenever Mr. Dwyer went there to check on him.

Ms. Knapp was called up to Iraq, but Mr. Dwyer insisted on taking her place, because she was a single mom. He had no children at the time, and besides, he had enlisted right after 9/11 just for this. He went and stunned everybody by getting his picture all over the newspapers and TV.

A few months later, he was home. He was shy about his celebrity. He was also skinny and haunted. Ms. Minor said he was afraid. Ms. Knapp said paranoid was more like it.

It didn’t help that El Paso looked a lot like Iraq. Once he totaled his car. He said had seen a box in the road and thought it was a bomb. He couldn’t go to the movies anymore: too many people. In restaurants, he sat with his back to the wall.

He said that Iraqis were coming to get him. He would call Angela and Dionne at all hours, to talk vaguely about the “demons” that followed him all day and in his dreams. He became a Baptist, doggedly searching Scripture on his lunch hour — for solace. His friends knew he was also getting high with spray cans bought at computer stores.

“He would call me in the middle of the day,” Ms. Minor said. “I’d be like: ‘Why are you at Best Buy? Why aren’t you at work?’ I could tell he’d been drinking and huffing again.”

His friends tried an intervention, showing up at his door in October 2005 and demanding his guns and cans of solvent. He refused to give them up.

Hours later, gripped by delusions, he shot up his apartment. He was glad when the SWAT team arrived, Ms. Knapp said, because then he could tell them where the Iraqis were. He was arrested and discharged, and later moved to Pinehurst, N.C. His parents tried to get him help, but nothing worked. “He just couldn’t get over the war,” his mother, Maureen, told a reporter. “Joseph never came home.”

It’s not clear what therapy and medication could have saved Mr. Dwyer. He admitted lying on a post-deployment questionnaire about what he had seen and suffered because he just wanted to get back to his family. Ms. Minor said he sometimes skipped therapy appointments in El Paso. One thing that did seem to help, Ms. Knapp and Ms. Minor said, was peer counseling from a fellow veteran, a man who had been ambushed in Iraq and knew about fear and death. But that was too little, too late, and both women say they are frustrated with the military for letting Mr. Dwyer slip away.

Private Dwyer, who survived rocket-propelled grenades and shocking violence, made his way back to his family and friends. But part of him was also stuck forever on a road in Iraq, helpless and terrified, with nobody to carry him to safety.

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Canada to deport U.S. war deserter

VANCOUVER — U.S. army deserter Robin Long is slated to be deported back to his army base in Fort Knox, Ky., Tuesday, which would make him the first resister to the U.S. war effort in Iraq to be sent out of Canada.

Madam Justice Anne Mactavish of the Federal Court of Canada cleared the way for the deportation late Monday, dismissing a last-ditch attempt to delay the process while the 25-year-old pursued further appeals.

“I was just shocked at some things in [the] ruling,” Bob Ages, a spokesman for an informal group called Vancouver War Resisters Support Campaign, told reporters outside the courtroom. “It just flies in the face of everything that we and every Canadian know about the reality of what is going on.”

Mr. Ages said the court misunderstood the situation facing Mr. Long upon his return.

United States army deserter Robin Long, 24, is led to an immigration hearing room in Vancouver, BC, October 3, 2007.
Enlarge Image

United States army deserter Robin Long, 24, is led to an immigration hearing room in Vancouver, BC, October 3, 2007. (Lyle Stafford for the Globe and Mail)

“I do not think there is any doubt someone being up in Canada, and a vocal opponent to the war, will be treated harshly by the American military … there is no question he will be court-martialed and will receive severe punishment.”

Mr. Long's deportation would be a “terrible precedent for Canada, especially given our history of providing sanctuary for war resisters, over 100,000 draft dodgers and deserters during the Vietnam era,” he said earlier to reporters.

“This will be the first time Canada played gendarme to the American military,” Mr. Ages said, appealing to Prime Minister Stephen Harper or Immigration Minister Diane Finley to intervene. Members of the support group were to meet at the Peace Arch border crossing this morning to protest the deportation.

The war resisters support group is aware of about 50 deserters in Canada, Mr. Ages said, although the group has been told that “hundreds” are living underground in Canada.

Mr. Long, who fled to Ontario in 2005, had signed up to join the U.S. Army in July, 2003. He believed at that time that his country was justified in going to war in Iraq, his lawyer Shepherd Moss said at the court hearing to halt the deportation. Mr. Long intended to train as a tank commander. “He wanted to go to defend his country,” Mr. Moss said.

His perspective changed while in training at the army base at Fort Knox. After hearing that weapons of mass destruction had not been found in Iraq, Mr. Long thought the U.S. had no reason for being at war. Also, he was troubled by evidence of abuse of Iraqi detainees that came out in May of 2004, Mr. Moss said.

Mr. Long concluded the abuse was systemic and condoned by the U.S. administration, Mr. Moss said. After some soul-searching, Mr. Long decided he would not go to Iraq and would not participate or be complicit in what he believed were war crimes, the lawyer said.

Mr. Long fled to Ontario, but moved to B.C. last summer. He sought to be accepted as a refugee in September, 2006. His application for refugee status was denied on Feb. 15, 2007. An application for leave to appeal the decision was turned down.

In a final attempt to stay in Canada, Mr. Long applied Monday for a stay of the removal order in order to allow him further judicial appeals.

Mr. Long was not in court for the hearing Monday. He was in custody at a location outside Vancouver after failing on two previous occasions to report to authorities when he was required.

Caroline Christiaens, a lawyer with the federal Department of Justice, told the court that Mr. Long voluntarily joined the army, was not deployed to Iraq and did not apply to be recognized as a conscientious objector while in the United States.

No evidence was submitted on what Mr. Long would be required to do in Iraq, whether he could have requested an alternative assignment or even what would happen if he was sent back to the United States, she said.

If Mr. Long was returned to the United States and prosecuted as a deserter, he would have access to due process in a military court, she added.

Judge Mactavish said Mr. Long had to provide “clear and non-speculative evidence” that he would suffer irreparable harm if he were not allowed to stay longer in Canada. Mr. Long asserted he would face significant jail time and suffer adverse consequences as a result of a dishonourable discharge from the military.

The vast majority of American deserters have not been prosecuted for desertion, according to evidence before the court, the judge stated in a four-page decision. About 94 per cent of U.S. deserters from 2002 to 2006 were being dealt with administratively, receiving a less-than-honourable discharge from the military.

Judge Mactavish also stated that Mr. Long did not provide evidence to show he would be singled out for harsh treatment by the U.S. military because of the publicity associated with case.

Moreover, the United States has a sophisticated military-justice system that respects the rights of service personnel, she said.

The court heard that Mr. Long would likely be returned to his army unit, which would mete out whatever punishment he would receive.

Spokespersons from Citizenship and Immigration Canada did not respond to phone calls late Monday from The Globe and Mail.

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Iran's missiles may target Canadians

Jamejam Online/AFP/Getty ImagesThree missiles rise into the air as a forth remains in the launcher on the ground during a test-firing in an undisclosed location in the Iranian desert, July 9, 2008.

DUBAI, United Arab Emirates -The BBC has raised the possibility that Iran may target NATO forces in Afghanistan, which include several thousand Canadian troops stationed in the province of Kandahar, with short-range missiles.

Those who focused on the possibility of Iran and Israel going to war or a strike against the U. S. Fifth Fleet in the Persian Gulf have overlooked the chance that attacking elsewhere might also serve Iran's strategic interests, the BBC said in an article on its Web site last week.

"People always look towards the west of Iran, but we need to look east as well," Christopher Pang, head of African and Middle Eastern research for the highly respected Royal United Services Institute, told the British network. "There are plenty of U. S. interests and international troops stationed in Afghanistan which can be targeted from the east of the country."

Worried by what Tehran describes as its power-generating civilian nuclear program, Israel has been considering if and when to try to destroy Iran's nuclear sites with air strikes and missiles launched from submarines. The Jewish state has also been improving its air defence system to protect itself against the latest variants of Iran's Shahab-3 ballistic missiles, which could reach Tel Aviv with a one-ton conventional payload between 11 and 14 minutes after being launched.

But Iran is thought to have far more short-range Shahab-2 and Zelzal missiles in its arsenal. Though neither rocket is considered very accurate, they have enough legs to hit about half of Afghanistan, including Kandahar.

(While unconnected with developments regarding Iran, Canadian commanders in southern Afghanistan would have noted with keen interest that U. S. Marines who were rushed to Kandahar this spring were told last week their tours there had been extended by one month into November).

Months before any likely conflict between Iran and Israel or Iran and the United States, a fog of war is descending on the region causing even greater anxiety about the rising price of oil.

Iran responded last week to a major Israeli long-range bombing exercise conducted in June by test firing what it claimed were new, longer-range models of the Shahab-3. But Agence France-Presse quickly discovered that Iranian photos of the Shahabs' launch had been doctored to obscure the fact that one of them had apparently misfired.

Hours before Tehran's botched war games began, USS Abraham Lincoln slipped through the Strait of Hormuz and into the Arabian Sea, ostensibly so that the aircraft carrier's warplanes could more easily bomb Taliban and al-Qaeda targets in Afghanistan. But it was also true that the capital ship was safer from attack in the deeper waters off Iran's southern coast than in the narrow, shallow confines of the Persian Gulf.

Only a few days ago the U. S. Navy completed a five-day ballistic missile defence exercise in the Middle East designed to thwart a potential Shahab-3 attack, according to the Navy Times. Ships of the Fifth Fleet, which has its headquarters in Bahrain, have also begun exercises designed to prevent Iran from blocking the Strait of Hormuz -- the most vital link in the global energy supply system -- with sea mines and speedboat attacks.

Not to be outdone by Tehran's latest propaganda offensive, Israel, which possesses far more precise missiles than Iran does, publicly displayed for the first time last Thursday a new spy plane said to be capable of gathering sophisticated intelligence about Iran.

Some analysts have concluded that despite the White House labelling of Iran's missile tests as "a provocation," Tehran's sabre-rattling had failed to prove that its missile technology was improving. Other commentators guessed that the tests were part of a loud prelude to serious bargaining by Tehran in order to avert the imposition of ever more stringent international economic sanctions designed to try to force it to stop enriching uranium that could be used for either peaceful or military purposes.

Israel's Defence Minister, Ehud Barak, will be in Washington for three days this week to discuss Iran with senior officials such as Dick Cheney, the hawkish Vice-President. Mr. Barak's visit was to be followed a few days later by that of Israel's top general.

Although it has attracted little public notice yet, Ottawa, too, must be taking notice of the rising martial drumbeat and privately calculating what the risks of a war involving Iran might be for the Canadian battle group stationed less than 400 kilometres away from Tehran's eastern frontier.

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Japan's Killer Work Ethic

An exhausted salaryman rides a commuter train in Tokyo. Death from too much work has been a problem for decades, and the Japanese government has been largely unsuccessful in its efforts to set limits on work hours.
An exhausted salaryman rides a commuter train in Tokyo. Death from too much work has been a problem for decades, and the Japanese government has been largely unsuccessful in its efforts to set limits on work hours. (By Blaine Harden -- The Washington Post)

Washington Post Foreign Service

TOKYO -- Death from too much work is so commonplace in Japan that there is a word for it -- karoshi.

There is a national karoshi hotline, a karoshi self-help book and a law that funnels money to the widow and children of a salaryman (it's almost always a man) who works himself into an early karoshi for the good of his company.

A local Japanese government agency ruled June 30 for the widow and children of a 45-year-old Toyota chief engineer who died in 2006.

While organizing the worldwide manufacture of a hybrid version of the Camry sedan, the man had worked nights and weekends and often traveled abroad -- putting in up to 114 hours of overtime a month -- in the six months before he died in his bed of heart failure.

The cause of death was too much work, according to a ruling by the Labor Bureau of Aichi prefecture, where Toyota has its headquarters.

The engineer's daughter found his body on Jan. 2, 2006, the day before he was supposed to fly yet again to the United States for more work on the Camry launch, said Mikio Mizuno, an attorney for his wife.

The ruling by the labor bureau will allow the engineer's family to receive work insurance benefits, Mizuno said. The family has requested that the man's name not be released.

For decades, the Japanese government has been trying, and largely failing, to set limits on work and on overtime. The problem of karoshi became prevalent enough to warrant its own word in the boom years of the late 1970s, as the number of Japanese men working more than 60 hours a week soared.

Thirty years later, overtime rules remain so nebulous and so weakly enforced that the United Nations' International Labor Organization has described Japan as a country with no legal limits on the practice.

The consequences show up not only in claims for death and disability from overwork but in suicides attributed to "fatigue from work." Among 2,207 work-related suicides in 2007, the most common reason (672 suicides) was overwork, according to government figures released in June.

Twice in the past year, Toyota -- the world's largest carmaker and a much-admired company in Japan -- has been publicly embarrassed by the deaths of employees who worked what Japanese authorities have judged to be killingly long hours.

Kenichi Uchino, 30, a quality-control manager at Toyota, collapsed at work and died in 2002, after having worked more than 80 hours of overtime every month for the previous six months. A court ruled late last year that overwork, much of it for no pay, had caused his death and that his widow was entitled to compensation.

Unpaid overtime is routine in factories and offices across Japan.

At Toyota, it had been built into factory life -- in the form of long, after-hours quality-control sessions that were supposedly voluntary -- and was considered a key to the company's success. Participation in the sessions, though, often figured in a worker's prospects for promotion and higher pay.

Toyota announced in May that it would begin paying overtime to workers who take part in the quality-control sessions.

McDonald's Japan, having lost a lawsuit to a restaurant manager who claimed his health failed because of long hours, announced in May that it, too, would pay more overtime.

In the wake of the case of the engineer who died after working night and day on the hybrid Camry project, Toyota said last week that it would try to improve its monitoring of workers' health.

Special correspondent Akiko Yamamoto contributed to this report.

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UN pulls back staff from Darfur

A Unamid peacekeeper talks to civilians in Darfur (UN image from 2006)
Unamid is a joint UN mission with the African Union

The United Nations is pulling back some non-essential staff deployed in Sudan's restive Darfur region.

It says the decision comes after recent violence and as a precaution after an international prosecutor accused Sudan's president of genocide.

Judges at the International Criminal Court have still to decide if there are reasonable grounds to issue an arrest warrant against Omar al-Bashir.

Mr Bashir is quoted by Reuters as saying the accusations are lies.

On 8 July, seven Unamid peacekeepers were killed and 22 injured, seven critically, when they were attacked by heavily armed militia in northern Darfur.

One of my neighbours found a bullet in the gate of the house that he rents
UN worker in Darfur

A UN peacekeeping official told the BBC News website the decision to move non-essential UN staff temporarily to locations out of the country - many to Entebbe in Uganda - had been taken after that incident, and as a prudent measure in anticipation of possible Sudanese reaction to the prosecutor's announcement that he is seeking a warrant against Mr Bashir.

In the US, the White House said President George W Bush was "gravely concerned" by increased insecurity in Darfur and the impact it is having civilians and aid workers.

His spokeswoman said that the government of Sudan needed to live up to its commitment to provide increased security to humanitarian envoys.

As of May this year, the joint UN-African Union Darfur mission, Unamid, included nearly 9,600 uniformed personnel and about 1,300 civilian staff, both international and local.

It is not clear how many will be withdrawn. But Gen Martin Luther Agwai, Unamid force commander, said the peacekeepers would maintain their unit strength and would not stop patrolling.

Sudan's ambassador to the UN rejects the genocide charges

"We will continue to protect the UN personnel and UN facilities that are here and we will continue to help the humanitarian organisations to continue to do their job of rendering humanitarian services to the people in Darfur," Gen Agwai said.

A Sudanese official told the BBC that he had been informed by Unamid the evacuation would begin on Tuesday.

"This is a unilateral decision which the Sudanese government was not involved in," Mr Mutrif Seddeek told the BBC.

While clarifying that the ICC is an independent body over which it has no influence, the UN is nevertheless bracing itself for possible increased difficulties in western Sudan, the BBC's David Bamford reports.

But it is continuing to run, alongside other NGOs, large-scale humanitarian operations there and has thousands of peacekeepers in place, our correspondent notes.

Security Council attempts

Sudan's president was accused of genocide, crimes against humanity and war crimes in Darfur by ICC prosecutor Luis Moreno-Ocampo.

He told judges at The Hague that Mr Bashir bore criminal responsibility for alleged atrocities committed over the past five years.

Sudan has refused to hand over two suspects who Mr Moreno-Ocampo charged last year, Humanitarian Affairs Minister Ahmad Harun and militia leader Ali Kushayb.

It has also labelled Mr Moreno-Ocampo a criminal, and warned that any indictment could stall peace talks and cause mayhem in Sudan.

Sudanese cabinet minister al-Samani al-Wasila told the BBC the accusations were "politically motivated".

The BBC's Laura Trevelyan at the United Nations in New York says that Mr Ocampo was asked by the UN Security Council to investigate the killings in Darfur - and this means the 15-member body also has the power to suspend his work on the case for a year.

Behind the scenes, our correspondent says, Sudan has been lobbying China, Russia and African nations on the Security Council to see if it can win the nine votes needed to pass a resolution to do that.

It would be difficult for countries which recognise the ICC, like the Europeans, to vote to stop the prosecutor's work, as this would seem to undermine the court, she says.

I strongly support the ICC's move, I do not want to see people dying anymore.
Job, Sudan

But if there is a widespread feeling at the UN that Mr Ocampo's charges against Mr Bashir are destabilising Sudan, then the mood could change, our correspondent concludes.

Some 300,000 people have died as a result of the conflict in Darfur since 2003 while more than two million people have fled their homes, the UN estimates.

Sudan's government denies mobilising Arab Janjaweed militias to attack black African civilians in Darfur since rebels took up arms in 2003.

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First Guantanamo video released


The video was filmed secretly through an air duct

A videotape of a detainee being questioned at the US prison camp in Guantanamo Bay has been released for the first time.

It shows 16-year-old Omar Khadr being asked by Canadian officials in 2003 about events leading up to his capture by US forces, Canadian media have said.

The Canadian citizen is accused of throwing a grenade that killed a US soldier in Afghanistan in 2002.

He is seen in a distressed state and complaining about the medical care.

The footage was made public by Mr Khadr's lawyers following a Supreme Court ruling in May that the Canadian authorities had to hand over key evidence against him to allow a full defence of the charges he is facing.

One of those lawyers, Dennis Edney, told the BBC his client was seen in a distressed state because he had been "abused" by his American guards.

"He was deprived of sleep by being removed from his cell and to another cell every three hours on a 24-hour basis for three weeks solid, followed by three weeks of deep solitary confinement," Mr Edney told the BBC.

Uncontrollable sobbing

Mr Khadr, the only Westerner still held at the jail, was 15 when he was captured by US forces during a gun battle at a suspected al-Qaeda camp in Afghanistan.

During the 10-minute video of his questioning in Guantanamo a year later, he can be seen crying, his face buried in his hands, pulling at his hair and repeatedly chanting.

At one point he lifts his orange shirt to show the foreign ministry official and agents from the Canadian Security Intelligence Service (CSIS) wounds on his back and stomach which he says he sustained in Afghanistan.

"I'm not a doctor, but I think you're getting good medical care," one of the officials responds.

Mr Khadr says: "No I'm not. You're not here... I lost my eyes. I lost my feet. Everything!" in reference to how his vision and physical health were affected.

"No, you still have your eyes and your feet are still at the end of your legs, you know," a man says.

Sobbing uncontrollably, Mr Khadr tells the officials several times: "You don't care about me."

In an accompanying classified document describing the interrogation, Mr Khadr also says he was tortured while being held at the US military detention centre at Bagram air base in Afghanistan, and that everything he had said previously was a "lie" because of the "torture".

Public outcry?

The White House maintains that the US has treated all detainees held at Guantanamo in a humane way.

File pic of Omar Khadr before he was detained at the age of 15

The Bush administration argues that it needs flexibility and those it calls terrorists cannot be treated as if they are simply criminal defendants.

But one of Mr Khadr's lawyers, Dennis Edney, said he hoped the video would cause an outcry in Canada and pressure Prime Minister Stephen Harper to demand that the US does not prosecute their client.

"I hope Canadians will be outraged to see the callous and disgraceful treatment of a Canadian youth," Mr Edney told the Toronto Star.

"Canadians should demand to know why they've been lied to."

Mr Harper reiterated last week that he would not interfere in Mr Khadr's military tribunal, due to begin at Guantanamo on 8 October.

The human rights group Amnesty International described the video as "disturbing".

"We've always said that anyone suspected of involvement in international terrorism should be brought to justice, but what we see on this video is a travesty of justice," said Amnesty International UK's Sara Mac Neice.

She added that the US should abandon its attempt to put Guantanamo prisoners in front of what she called "unfair military commission trials", instead allowing them "proper civilian trials in appropriate safe countries".

Mr Khadr, now 21, faces multiple terrorism-related charges, the most serious of which is murder. He faces up to life in prison if convicted.

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This recession could easily tip into a depression

Today I am celebrating my 80th birthday, an age that seems less formidable when one has reached it than when one can see it only from afar.

I was born on July 14, 1928, about 15 months before the American boom of the 1920s came to its rather abrupt end. Like everyone else, I am naturally curious to see whether the global credit crunch is going to be a brief interruption in global prosperity, or the prelude to a longer and deeper depression.

I cannot claim to have clear memories of the 1929 Wall Street Crash, which occured when I was 1year old, or of Britain leaving the gold standard in 1931, when I was 3 years old.

I do however, remember newspaper articles about the later stages of the Depression. In the 1930s, my parents read The Times, the Financial Times and the Daily Mail.

I can remember the news stories of the Jarrow march of the unemployed. I also remember discussing with my mother a lead story which reported that farm workers' pay was to be raised 6d (2p) to what would now be £1.50 a week. The depression was a fact of existence in the North Somerset coalfield up to the outbreak of war in 1939.

Fortunately, there has only been one Great Depression in my lifetime, but there has also been a Great Inflation. In 2006 Pickering and Chatto, which I refounded in the 1980s, had the good timing to publish a three-volume History of Financial Disasters, under the general editorship of Mark Duckenfield.

His introduction to the 1929 crash on the New York Stock Exchange makes an important point: “Most of the stock market's loss in value took place in later years as the Depression deepened. Three years after its initial crash and shortly before the 1932 election, the Dow Jones Industrial Average had fallen to 34, a loss of more than 90 per cent in less than three years. The Dow did not return to its 1929 peak of 381 until a quarter of a century later at the end of 1954.”

On that basis, stock markets would get back to their 2007 levels in 2032.

There are various ways of measuring a recession. These are reasonably useful when applied to minor fluctuations of the stock market, or to minor adjustments of the world economy. But the big booms and slumps need to be measured by their broader impact over time.

The Great Depression can be regarded as lasting for ten years from 1929 to 1939; the Great Inflation ran for a similar period, from 1973 to 1982. Even these dates could be challenged, since both events were preceded by a build-up of debt and other warnings of trouble. Both were followed by aftershocks.

One can even argue about the correct date to take as the starting point of the present recession. It was certainly preceded by two great American bubbles, the dot-com bubble of the late 1990s and the US housing bubble of this century. On one view, the present recession began on August 7, 2007 - only a year ago - when the sub-prime mortgage crisis came to the surface. That date could also be used to mark the bursting of the US housing bubble, which is still having so damaging an impact on mortgage banking.

Alternatively, one could reasonably start the present recession from the bursting of the dot-com bubble itself, which was the beginning of a bear market on Wall Street. That happened in the early months of 2000, already eight years ago. If this is a depression, it is a matter of choice whether one regards it as one or eight years old.

A big inflation has many of the same consequences as a big depression. That is why many people made a dangerous mistake in the early 1970s. They saw that inflation was the immediate threat and assumed that it would raise the value of capital assets while liquidating debts. In fact, it raised interest rates on debt and actually reduced the value of many capital assets.

The inflation of the price of oil after 1973 was accompanied by a collapse of the British property market and the insolvency of the secondary banking sector in London. It is obvious that a big depression is bad for investors; a big inflation is bad for them as well.

The present recession has some characteristics which make me think that it will be a relatively long one. The recession is centred on banking and property. In an ordinary recession, one has to wait for consumers to regain their confidence, which, in turn restores the confidence of business. Now one has to wait for the bankers as well. At present, banks are too anxious even to lend to each other, let alone to expand consumer credit or business loans.

This recession has produced a succession of nasty surprises. Things are always proving to be worse than anyone had expected. Last week the crisis spread to the American mortgage giants Fannie Mae and Freddie Mac, created by President Roosevelt in 1938.

These are far bigger than the investment bank Bear Stearns and Northern Rock put together. They have brought the crisis from the level of billions of dollars, to the level of trillions. No doubt they will be saved because the US would be bust if they went down. But you cannot save six- trillion-dollar institutions without suffering on a large scale.

The debt crisis, the banking crisis, the property crisis, the oil crisis, the shift to Asia, the bear market in stocks, are huge global adjustments that have all come together at the same time.

If my birthday does not prove to be another Black Monday on Wall Street, I shall think myself rather lucky. There is now a momentum of negative events sweeping away financial flood defences; in the 1930s that force overturned democratic governments as easily as it overturned banks.

Before we get back to balance, we may see dramatic changes in politics, as well as in business and finance.

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