Adult download tax proposal awaits climax in Albany

BY Stephanie Gaskell
DAILY NEWS STAFF WRITER

Diver/Getty

Governor Paterson wants to tax Internet porn on top of music and movie downloads.

This is the best tax you ever had.

A state proposal to add a 4% tax for downloading movies and music will also apply to Internet porn.

Gov. Paterson recently suggested the so-called iPod tax to help close a $15 billion budget deficit, but few realized the levy would also apply to XXX-rated material.

The skin industry denounced the move as a cheap political stunt.

"The last thing any of us need isan additional tax," said Steven Hirsch, the CEO of Vivid Entertainment Group and self-proclaimed King of Porn. "These are very difficult times and nobody can afford to lose even one customer."

The new tax technically isn't a sin tax, since it applies to all "digitally delivered entertainment services."

It would also apply only to businesses located in New York State, leaving some to wonder if companies would relocate to avoid the tax.

A manager at DVD Video in Times Square said porn lures tourists to New York and helps boost the economy.

"When the tourists come, they come to us to buy things. We want to bring people here. We will make money, which is good for everyone," the manager said.

A cashier at World of DVD in Times Square said business has been falling during the past year.

"Customers already say they have no money," the cashier said.

Conservatives railed against the tax, but for a very different reason.

"By taxing it you're legitimizing it," said New York Conservative Party Chairman Michael Long, adding that government shouldn't profit from porn. "If you're taxing it - how can it be wrong? I don't know how you can sink much deeper."

State officials defended the proposed tax and said it has nothing to do with legitimizing porn.

"This is simply bringing the tax code in line with technology," said Matt Anderson, a spokesman for the state Division of the Budget.

"Regardless of whether or not an item is purchased at a brick-and-mortar store or online, it would be treated consistently."

Paterson also said last night that the rich will "share in the sacrifice" of closing New York's budget gap.

Paterson, in language almost identical to that used by supporters of the so-called millionaire's tax, said the wealthy will not be spared.

"Every New Yorker will share in the sacrifice to get this budget balanced," he told the New York State Association of Black and Puerto Rican Legislators.

Paterson has previously argued that spending cuts - not a new tax on the wealthy - should be the priority. His spokesman said the governor's new comments did not represent a shift in his position.

sgaskell@nydailynews.com

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Pre-Depression

I was driving down Highway 65 coming back from Little Rock and passed this sign. It hit me so hard I turned around and went back to take a picture of it. I don't know what to even say about it.

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Are Executives Worth Their Compensation?

Here's a fact we learned this week: Nearly 700 Merrill Lynch employees earned more than a million dollars last year, even though the company lost $27 billion and was forced to be sold to Bank of America.

It's the kind of news that raises the hackles of Rakesh Khurana, who teaches at Harvard Business School. He tells host Scott Simon that the highest paid person isn't always the best.

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(Nearly) nothing to fear but fear itself

In a guest article, Olivier Blanchard says that policymakers should focus on reducing uncertainty

CRISES feed uncertainty. And uncertainty affects behaviour, which feeds the crisis. Were a magic wand to remove uncertainty, the next few quarters would still be tough (some of the damage cannot be undone), but the crisis would largely go away.

From the Vix index of stockmarket volatility (see chart), to the dispersion of growth forecasts, even to the frequency of the word “uncertain” in the press, all the indicators of uncertainty are at or near all-time highs. What is at work is not only objective, but also subjective uncertainty, or what economists, following Chicago economist Frank Knight’s early 20th-century work, call “Knightian uncertainty”. Objective uncertainty is about what Donald Rumsfeld (in a different context) referred to as the “known unknowns”. Subjective uncertainty is about the “unknown unknowns”. When, as today, the unknown unknowns dominate, and the economic environment is so complex as to appear nearly incomprehensible, the result is extreme prudence, if not outright paralysis, on the part of investors, consumers and firms. And this behaviour, in turn, feeds the crisis.

It affects portfolio decisions. It has led to a dramatic shift away from risky assets to riskless assets, or at least assets perceived as riskless. It sometimes looks as if investors around the world only want to hold American Treasury bills. Why? At the start was the realisation that many of the new complex assets were in fact much riskier than they had seemed. This realisation has now morphed into a general worry about nearly all risky assets, and about the balance-sheets of the institutions that hold them. “Better safe than sorry” is the motto. Unfortunately, while the motto may make sense for individual investors, it is having catastrophic macroeconomic consequences for the world. It is triggering enormous spreads on risky assets, a credit crunch in advanced economies, and major capital outflows from emerging countries.

It affects consumption and investment decisions, and is largely behind the dramatic collapse in demand we have observed over the last three months. Sure, consumers have lost a good part of their wealth, and this is reason enough for them to retrench. But there is more at work. If you think that another Depression might be around the corner, better to be careful and save more. Better to wait and see how things turn out. Buying a new house, a new car or a new laptop can surely be delayed a few months. The same goes for firms: given the uncertainty, why build a new plant or introduce a new product now? Better to pause until the smoke clears. This is perfectly understandable behaviour on the part of consumers and firms—but behaviour which has led to a collapse of demand, a collapse of output and the deep recession we are now in.

Bloomberg NewsOlivier Blanchard is the IMF’s chief economist

So what are policymakers to do? First and foremost, reduce uncertainty. Do so by removing tail risks, and the perception of tail risks. On the portfolio side, establish a price, or at least a floor on the price, of the troubled assets. Ring-fence them or take them off bank balance-sheets. On the consumption side, commit to do whatever it will take to avoid a Depression, from fiscal stimulus to quantitative easing. Commit to do more in the future if necessary. Above all, adopt clear policies and act decisively. Do too much rather than too little. Delays in financial packages have cost a lot already. Further rounds of debate will stoke uncertainty and make things worse.

Second, undo the effects of uncertainty on the portfolio side, and help recycle the funds towards risky assets. The standard advice here is to return the private financial sector to health through recapitalisation. That is absolutely right, but easier said than done. And, while damage is slowly repaired, it makes sense for states to recycle part of the funds themselves. To caricature: if the world loves American Treasury bills but the funds would be more useful elsewhere, then the government should issue the bills, and use the proceeds to channel the funds where they are needed. It should buy some of the riskier assets, and return some of these funds back to emerging-market countries to offset capital outflows. This is indeed close to what America’s Federal Reserve is now doing with quantitative easing at home and swap lines to foreign central banks. The only difference is that the Fed issues money rather than treasury bills in exchange for its purchases. It would make more sense for the Treasury to be involved, and to separate more clearly the role of fiscal and monetary policy, but, in the current state of play, this is a minor wrinkle. Either will do.

Retail therapy

Third, undo the effects of the wait-and-see attitudes of consumers and firms on the demand side. Get them to spend more, and have the state do some of the spending itself. Offer incentives to buy now rather than later; for example, temporary subsidies to consumers who turn in a clunker and buy a new car, a measure adopted in France. Increase spending on public infrastructure, a central component of President Barack Obama’s programme. Both types of measures are indeed present in the fiscal programmes more and more countries are putting in place. If tailored and communicated well, these programmes cannot only stimulate and replace private demand, but also convince consumers and firms that they are not in for another Depression. This will ensure that they stop waiting and start spending again.

Coherent financial, fiscal and monetary measures are all needed. All three will have direct effects on demand. But, as importantly, they will help reduce uncertainty, lower risk spreads, and get consumers and firms spending again. If policymakers act decisively, private demand will recover sooner rather than later. And, within a year or less, we can be on the path to recovery.

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Down and out in NYC on $500,000 a year

Hilary Potkewitz

When President Barack Obama last week announced a $500,000 salary cap on pay for top brass at institutions receiving federal bailout funds, a collective shudder went through the corner offices of Manhattan. And the private clubs. And the trading floors.

You see, an estimated 75,000 New Yorkers earn more than $500,000 a year, according to 2007 data compiled by the Manhattan Institute, an economic think tank. Few of them carry the august C-suite titles targeted by the anti-exec crowd in the government bailout debate. Most are simply managing directors, partners and senior vice presidents of something or other.

The Big O vows to change the "culture of excess." In light of the crusade against seven-figure incomes, Crain's conducted a highly unscientific survey of the typical expenses of a Manhattan banking Brahmin to see how far $500,000 would take him or her. While half a million won't punt anyone to skid row, the results were not pretty.

Federal, state and city taxes cut that $500K nearly in half. The remainder is all but gone before groceries touch the granite countertop in the Park Avenue apartment or back-to-school clothes arrive for the two kids attending Brearley and Harvard. Never mind medical bills, holiday presents or the therapy sessions needed to adjust to the new regime.

"No doubt: If you were the guy who was making $20 million, and starting a month from now you'll only be making $500,000 for the rest of the year, that is a huge, huge adjustment," says Nicole Gelinas, a senior fellow at the Manhattan Institute.

It's an adjustment some top brass may be unwilling to make. Within a day of the president's announcement, Goldman Sachs announced intentions to opt out of the government's Troubled Asset Relief Program and repay its $10 billion federal loan in short order. The salary caps are not retroactive, but Goldman nonetheless cited a desire to limit government "scrutiny and pressure."

Plenty of other executives may have reason to be wary. "If the person has no capital to withstand this financial 'limitation,' then he's in deep trouble," says Neil Berkow, a CPA whose New York area practice mostly serves high-net-worth individuals. "He's going to have to move out, sell things, especially someone who works in the $1 million range. He's using that money just to live."

Some may wonder what part of their lives must change. Will the weekend home in Connecticut get the ax? (Good luck dumping it in today's market.) Perhaps the membership at the Westchester Country Club? A recent survey of the Metropolitan Golf Association's 200 clubs showed that 75% of respondents expect a big spike in leave-of-absence requests from members this year. Birdies and eagles won't be the only endangered species in New York.

LIFE ON A FERRAGAMO SHOESTRING BUDGET

INCOME: $500,000

TAXES: $201,070
You’re the top—tax bracket, that is. Washington, Albany and City Hall together
gobble up about 40% of your paycheck.

REMAINING: $298,930

HOUSING: $75,000
Figure $4,000 a month maintenance fees for the Park Avenue co-op and $15,000 a year in property taxes for the second home. Garage: $12,000.

REMAINING: $223,930

CHILDREN: $106,275
Includes tuition at Brearley ($33,025) and a year at Harvard ($52,650). Music lessons, sports teams and tutors quickly add up to another $8,000.

REMAINING: $117,655

CHARITIES: $25,000
Civic involvement is typically part of a top executive’s job description. A common charitable benchmark is 5% of your gross income.

REMAINING: $92,655

SOCIAL: $33,000
Harvard Club dues are $2,000 a year per couple, and Westchester County golf clubs typically charge $16,000; food and entertaining tabs are another $15,000.

REMAINING: $59,655

VACATIONS: $36,000
Three weeks at $12K a week for a family of four.

REMAINING: $23,655

FOOD: $15,000
Groceries for four ($10,000 a year), plus meals out (fancy and kidfriendly) two to three times a week.

REMAINING AMOUNT: $8,655

CLOTHING: $16,700
Total includes two new men’s suits per year at $3,000 a pop.

FINAL: $-8,045

Figures are rounded and assume that tax deductions have offset any investment income.

Sources: NYS Dept. of Tax and Finance, school Web sites, Manhattan Institute, National Retail Federation, U.S. Census Bureau, Zagat, Metropolitan Golf Association

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Crude oil is getting cheaper _ so why isn't gas?

from The Associated Press

Enlarge

A customer pumps gas at a gas station in Menlo Park, Calif., Thursday, Feb. 12, 2009. Murmurs of price gouging by gas station owners and big oil companies turned into a howl this week as benchmark crude prices fell to a yearly low on the same day that retail gas prices hit a new high. Associated Press © 2009

Enlarge

Gas prices posted at a Valero gas station in Hayward, Calif., Thursday, Feb. 12, 2009. Murmurs of price gouging by gas station owners and big oil companies turned into a howl this week as benchmark crude prices fell to a yearly low on the same day that retail gas prices hit a new high. Associated Press © 2009

NEW YORK February 15, 2009, 09:07 pm ET · Crude oil prices have fallen to new lows for this year. So you'd think gas prices would sink right along with them.

Not so.

On Thursday, for example, crude oil closed just under $34 a barrel, its lowest point for 2009. But the national average price of a gallon of gas rose to $1.95 on the same day, its peak for the year. On Friday gas went a penny higher.

To drivers once again grimacing as they tank up, it sounds like a conspiracy. But it has more to do with an energy market turned upside-down that has left gas cut off from its usual economic moorings.

The price of gas is indeed tied to oil. It's just a matter of which oil.

The benchmark for crude oil prices is West Texas Intermediate, drilled exactly where you would imagine. That's the price, set at the New York Mercantile Exchange, that you see quoted on business channels and in the morning paper.

Right now, in an unusual market trend, West Texas crude is selling for much less than inferior grades of crude from other places around the world. A severe economic downturn has left U.S. storage facilities brimming with it, sending prices for the premium crude to five-year lows.

But it is the overseas crude that goes into most of the gas made in the United States. So prices at the pump will probably keep going up no matter what happens to the benchmark price of crude oil.

"We're going definitely over $2, and I bet we'll hit $2.50 before spring," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service. "This is going to be an unusual year."

On the last day of 2008, gas went for $1.62 on average, according to the auto club AAA, the Oil Price Information Service and Wright Express, a company that tracks transportation data.

The recession in America has dramatically cut demand for crude oil, and inventories are piling up. So prices for West Texas crude have fallen well below what oil costs from places like the North Sea, Saudi Arabia and South America.

That foreign oil sells in some cases for $10 more per barrel — and that doesn't even include shipping.

Brent North Sea crude, which feeds some East Coast refineries — and therefore winds up at many gas pumps around America — now costs about $7 more per barrel than the West Texas crude. Deutsche Bank analysts say the trend should continue.

Historically, West Texas International crude has cost more. So nobody bothered building the necessary pipelines to carry it beyond the nearby refineries in the Midwest, parts of Texas and a handful of other places.

Now that the premium oil is suddenly very inexpensive, refiners elsewhere can't get their hands on it.

"It's so cheap," said Lynn Westphall, the senior VP of external affairs at San Antonio-based Tesoro, which owns a half dozen refineries on the West Coast and Hawaii. "But you can't just build a pipeline to everywhere. We know we can't get it."

Tesoro's refineries in North Dakota and Utah use locally drilled oil and Canadian oil, which also has been running about $10 more per barrel than West Texas crude.

So why not build more pipelines? Because investing billions of dollars over several years makes no sense when the prices could just flip a year from now to where they were before.

"How long is WTI going to be cheaper than Venezuelan oil? Than Canadian?" asked Charles T. Drevna, president of the National Petrochemical and Refiners Association. "You just don't build a pipeline like that."

At the same time, refiners have seen the same headlines as everyone else about job losses and consumer spending. They've slashed production just to avoid taking losses on gasoline no one will buy. Result: Higher gas prices.

"Why should a refiner produce more gasoline when the stuff we produce is not being used?" Drevna said.

Of course, complex explanations of the diverging price paths of West Texas crude and gas are unlikely to placate frustrated drivers. Memories of last summer's $4-plus gas have not receded.

"Drivers are being ripped off even more now than before," said Stuart Pollok, who was filling up recently at a Chevron station in downtown Los Angeles. He pointed out Exxon Mobil Corp. reeled in billions in profits last year when oil prices neared $150.

Others see the conspiracy reaching higher.

"It got really low during the elections and now it's going back up," said Christel Sayegh, a 23-year-old graphic designer in Los Angeles. "They do that every election, though, right?"

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Leonard Abess Jr Gives $60 Million To His Banking Employees

Lots of bosses say they value their employees. Some even mean it.

And then there's Leonard Abess Jr.

After selling a majority stake in Miami-based City National Bancshares last November, all he did was take $60 million of the proceeds -- $60 million out of his own pocket -- and hand it to his tellers, bookkeepers, clerks, everyone on the payroll. All 399 workers on the staff received bonuses, and he even tracked down 72 former employees so they could share in the windfall.

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With no budget, California to cut 20,000 state jobs

LOS ANGELES (Reuters) – California, which is on the brink of running out of cash, will notify 20,000 state workers on Tuesday their jobs may be eliminated, a spokesman for Governor Arnold Schwarzenegger said on Monday.

The announcement came a day after California lawmakers narrowly failed to pass a $40 billion budget that would have plugged the state's deficit with a mix of tax hikes and spending cuts.

"In the absence of a budget, the governor has a responsibility to realize state savings any way he can," said Aaron McLear, a spokesman for the Republican governor. "This is unfortunately a necessary decision."

The layoff notices will affect about 20 percent of state workers, McLear said, adding the cuts would extend to every part of state government.

The positions would be eliminated in June in preparation for California's next fiscal year, which starts in July.

California, America's most populous state and the world's eighth biggest economy, has experienced a dramatic fall in revenues because of the housing downturn, rising unemployment and a sharp pullback in consumer spending.

To conserve cash, the state has stopped public works projects, furloughed state employees for two days a month and postponed sending out tax refunds.

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Missing Iraq billions could be 'greatest fraud in US history'

Stephen C. Webster

The US Special Inspector General for Iraq Reconstruction (SIGIR), the Army's criminal Investigation Command and the Justice Department are investigating US soldiers and officials in the alleged misuse of a portion of the $125 billion initially sent to Iraq for reconstruction shortly after the fall of Saddam.

Monday, The Independent's Iraq correspondent Patrick Cockburn reported the inspectors believe misuse may account for over $50 billion, exceeding the scope of Bernie Madoff's massive Ponzi scheme and making it potentially the "greatest fraud in US history."

"In one case, auditors working for SIGIR discovered that $57.8m was sent in 'pallet upon pallet of hundred-dollar bills' to the US comptroller for south-central Iraq, Robert J Stein Jr, who had himself photographed standing with the mound of money," wrote Cockburn. "He is among the few US officials who were in Iraq to be convicted of fraud and money-laundering.

"Despite the vast sums expended on rebuilding by the US since 2003, there have been no cranes visible on the Baghdad skyline except those at work building a new US embassy and others rusting beside a half-built giant mosque that Saddam was constructing when he was overthrown."

The SIGIR auditor's report, entitled "Hard Lessons," was published in early February.

"'Hard Lessons,' a draft of which was leaked to the news media in December, concludes that the U.S. reconstruction effort in Iraq was a failure, largely because there was no overall strategy behind it," reported the Washington Post. "Goals shifted from 'liberation' and an early military exit to massive, ill-conceived and expensive building projects under the Coalition Provisional Authority of 2003 and 2004. Many of those projects -- over budget, poorly executed or, often, barely begun -- were abandoned as security worsened.

"In a preface to the 456-page book, Bowen writes that he knew the reconstruction was in trouble when he first visited Iraq in January 2004 and saw duffel bags full of cash being carried out of the Republican Palace, which housed the U.S. occupation government."

"As part of the inquiry, the authorities are taking a fresh look at information given to them by Dale Stoffel, an American arms dealer and contractor who was killed in Iraq in late 2004," reported the International Herald Tribune on Sunday.

"Before he was shot on a road north of Baghdad, Stoffel drew a portrait worthy of a pulp crime novel: tens of thousands of dollars stuffed into pizza boxes and delivered surreptitiously to the American contracting offices in Baghdad, and payoffs made in paper bags that were scattered in 'dead drops' around the Green Zone, the nerve center of the United States government's presence in Iraq, two senior federal officials said."

"Prosecutors have won 35 convictions on cases related to reconstruction in Iraq, yet most of them involved private contractors or midlevel officials. The current inquiry is aiming at higher-level officials, according to investigators involved in the case, and is also trying to determine if there are connections between those officials and figures in the other cases. Although Bell and Hirtle were military officers, they worked in a civilian contracting office."

So far, there have been just 35 convictions for the misuse of government funds during the reconstruction of Iraq.

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Israel seizes land for settlement expansion

By KARIN LAUB, Associated Press Writer

EFRAT, West Bank – Plans to expand a West Bank settlement by up to 2,500 homes drew Palestinian condemnation Monday and presented an early test for President Barack Obama, whose Mideast envoy is well known for opposing such construction.

Israel opened the way for possible expansion of the Efrat settlement by taking control of a nearby West Bank hill of 423 acres. The rocky plot was recently designated state land and is part of a master plan that envisions the settlement growing from 9,000 to 30,000 residents, Efrat Mayor Oded Revivi said.

Israeli officials said any new construction would require several years more of planning and stages of approval.

The outgoing government of Prime Minister Ehud Olmert has said it reserves the right to keep building in large West Bank settlement blocs that it wants to annex as part of a final peace deal with the Palestinians. Efrat is in one of those blocs.

The composition of Israel's next government is not clear yet, because last week's elections were inconclusive. However, right-wing parties are given a better chance to form a ruling coalition, with hard-line leader Benjamin Netanyahu as prime minister.

Speaking to U.S. Jewish leaders Monday, the two contenders for leading the new Israeli government expressed their differences over the Palestinian issue.

Foreign Minister Tzipi Livni, whose centrist Kadima party won 28 of the 120 seats in parliament, said Israel must withdraw from "parts of the Land of Israel," a reference to the West Bank, in a peace deal.

Netanyahu, whose hawkish Likud won 27 seats, said he does not want to govern Palestinians but insisted on Israeli control of borders, airspace and electronic communications.

Netanyahu supports settlement expansion and has derided peace talks with the Palestinians as a waste of time, saying he would focus instead on trying to improve the Palestinian economy. Palestinian President Mahmoud Abbas has called Netanyahu's approach unacceptable, and his aides said recently that peace talks can resume only if settlement construction is halted.

"We oppose settlement activity in principle, and if the settlement activity doesn't stop, any meetings (with the Israelis) will be worthless," Abbas said Monday.

Settlement expansion is likely to create friction not only with the Palestinians, but with Obama, whose Mideast envoy, George Mitchell, has long pushed for a freeze on the expansion of Jewish settlements.

Still, settlements have grown steadily, including during the past year of U.S.-backed peace talks that ended without results.

Nearly 290,000 Israelis live in West Bank settlements today, or 95,000 more than in May 2001, when Mitchell led a U.S. fact-finding mission to the West Bank to find ways of ending several months of Israeli-Palestinian violence and resuming peace talks.

At the time, Mitchell called on Palestinian authorities to rein in militants involved in deadly bombings and shootings against Israelis, and he said Israel must freeze all settlement construction.

The newly designated state land, called "Eitam Hill" by settlers, is more than 2 kilometers (a mile) north of Efrat and just east of a cluster of Palestinian towns and villages, with biblical Bethlehem at the center.

Abdel Rahman al-Haj, a Palestinian plumber in Bethlehem, said that he owns 5.5 acres (2 hectares) between Efrat and Eitam Hill and that intruders with bulldozers had repeatedly tried to clear a dirt road across his land since last month, in an apparent attempt to create access to Eitam Hill. The dirt road was clearly visible during a visit Monday.

Al-Haj said he filed a complaint with the Israeli police and obtained a stop-work order from Israel's Civil Administration, the branch of the Israeli military that deals with West Bank land use. Civil Administration officials had no immediate comment on the case.

Revivi, the Efrat mayor, said he was unaware of bulldozers clearing al-Haj's land. "Everything is done in accordance with what the government is allowing us to do," he said.

However, Efrat municipal engineer Moshe Ben Elisha wrote in a recent edition of the settlement's newspaper, Efraton, that "efforts are currently under way to create continuity between Olive Hill (an area of Efrat) and Eitam Hill." He did not elaborate.

Yesh Din, an Israeli human rights group involved in the case, said Monday that over the years Israel's government has assigned almost all areas designated as state land to settlements. Yesh Din said that is a violation of international law, which requires an occupying power to act for the benefit of the local population.

"Declaring these huge amounts of land as `state land,' as done by the Civil Administration, is only for expanding the settlement and not for the local Palestinian population," Yesh Din said.

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Experts say U.S. "war on terror" eroded rights worldwide

By Laura MacInnis

GENEVA (Reuters) - Washington's "war on terror" after the September 11 attacks has eroded human rights worldwide, creating lingering cynicism that the United Nations must now combat, international law experts said on Monday.

Mary Robinson, who was the U.N. High Commissioner for Human Rights when al Qaeda militants flew hijacked planes into the World Trade Centre and Pentagon in 2001, said the United States caused harm with some of the ways it responded.

"Seven years after 9/11 it is time to take stock and repeal abusive laws and policies," the former Irish president said, warning that harsh U.S. detentions and interrogations in Iraq, Afghanistan, and Guantanamo Bay, Cuba gave a dangerous signal to other countries that could easily follow suit.

While new U.S. President Barack Obama has announced he will close Guantanamo to break from the practices of his predecessor George W. Bush, Robinson said sweeping changes needed to take place to ensure Washington abandons its "war paradigm."

"There has been severe damage and it needs to be addressed," she told a news conference in Geneva. "We are not more secure. We are more divided, and people are more cynical about the operation of laws."

Arthur Chaskalson, former chief justice of South Africa, said that the United States should launch an inquiry into its counter-terrorism practices, including acts of torture by individual security and intelligence agents.

Although counter-terrorism issues have faded from the front pages since the change of government in Washington, Chaskalson said such practices have shifted around the world and could keep restricting liberties if they are not confronted head-on.

"We all have less rights today than we had five or 10 years ago, and if nothing happens, we will have even less," he told a Geneva briefing to launch an International Commission of Jurists (ICJ) report on counter-terrorism and human rights.

ABUSE MONITORING

The report found that many undemocratic states have referred to U.S. counter-terrorism practices to justify their own abuses, a trend Robinson said was particularly alarming.

She called on the U.N. Security Council and Human Rights Council to step up their abuse monitoring and to assist poorer nations with police training to better target rights violators.

Counter-terrorism policies worldwide should also be put under the microscope, according to Robinson. "It could warrant a special session of the Human Rights Council," she said.

The 47-member-state body has previously had special sessions on Israel and the Palestinians, Sudan's Darfur region, Myanmar, the Democratic Republic of Congo, and high food prices, and will assess the global financial crisis on Friday.

Robinson also questioned the effectiveness of the Council's universal periodic review, under which every U.N. member has its rights record assessed on a regular rotation.

"We have looked at some of the universal periodic reviews of countries that we know from our hearings have severely abused human rights in their counter-terrorism measures, and it is a soft review, there is no accountability," she said. "There is a necessity now for leadership at the United Nations."

Countries recently reviewed by the Council include China, Russia, Germany, Canada, Saudi Arabia, and Mexico. Hearings for the ICJ report took place in Bogota, Nairobi, Sydney, Belfast, London, Rabat, Washington, Buenos Aires, Jakarta, Moscow, Delhi, Islamabad, Toronto, Ottawa, Jerusalem, Cairo, and Brussels.

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U.S. "war on terror" eroded rights worldwide: experts

By Laura MacInnis

GENEVA (Reuters) - Washington's "war on terror" after the September 11 attacks has eroded human rights worldwide, creating lingering cynicism that the United Nations must now combat, international law experts said on Monday.

Mary Robinson, who was the U.N. High Commissioner for Human Rights when al Qaeda militants flew hijacked planes into the World Trade Center and Pentagon in 2001, said the United States caused harm with some of the ways it responded.

"Seven years after 9/11 it is time to take stock and repeal abusive laws and policies," the former Irish president said, warning that harsh U.S. detentions and interrogations in Iraq, Afghanistan, and Guantanamo Bay, Cuba gave a dangerous signal to other countries that could easily follow suit.

While new U.S. President Barack Obama has announced he will close Guantanamo to break from the practices of his predecessor George W. Bush, Robinson said sweeping changes needed to take place to ensure Washington abandons its "war paradigm."

"There has been severe damage and it needs to be addressed," she told a news conference in Geneva. "We are not more secure. We are more divided, and people are more cynical about the operation of laws."

Arthur Chaskalson, former chief justice of South Africa, said that the United States should launch an inquiry into its counter-terrorism practices, including acts of torture by individual security and intelligence agents.

Although counter-terrorism issues have faded from the front pages since the change of government in Washington, Chaskalson said such practices have shifted around the world and could keep restricting liberties if they are not confronted head-on.

"We all have less rights today than we had five or 10 years ago, and if nothing happens, we will have even less," he told a Geneva briefing to launch an International Commission of Jurists (ICJ) report on counter-terrorism and human rights.

ABUSE MONITORING

The report found that many undemocratic states have referred to U.S. counter-terrorism practices to justify their own abuses, a trend Robinson said was particularly alarming.

She called on the U.N. Security Council and Human Rights Council to step up their abuse monitoring and to assist poorer nations with police training to better target rights violators.

Counter-terrorism policies worldwide should also be put under the microscope, according to Robinson. "It could warrant a special session of the Human Rights Council," she said.

The 47-member-state body has previously had special sessions on Israel and the Palestinians, Sudan's Darfur region, Myanmar, the Democratic Republic of Congo, and high food prices, and will assess the global financial crisis on Friday.

Robinson also questioned the effectiveness of the Council's universal periodic review, under which every U.N. member has its rights record assessed on a regular rotation.

"We have looked at some of the universal periodic reviews of countries that we know from our hearings have severely abused human rights in their counter-terrorism measures, and it is a soft review, there is no accountability," she said. "There is a necessity now for leadership at the United Nations."

Countries recently reviewed by the Council include China, Russia, Germany, Canada, Saudi Arabia, and Mexico. Hearings for the ICJ report took place in Bogota, Nairobi, Sydney, Belfast, London, Rabat, Washington, Buenos Aires, Jakarta, Moscow, Delhi, Islamabad, Toronto, Ottawa, Jerusalem, Cairo, and Brussels.

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Airstrike in Afghanistan kills Taliban commander

By HEIDI VOGT and AMIR SHAH, Associated Press Writers

KABUL – A coalition airstrike has killed a powerful Taliban commander who broke a promise to renounce violence after village elders persuaded President Hamid Karzai to free him from prison, officials said Monday.

The Sunday night attack destroyed a building housing Ghulam Dastagir and eight other militants in the village of Darya-ye-Morghab, near the Turkmenistan border, the U.S. military said in a statement.

Dastagir was responsible for a surge in violence in the province in recent months, including a November attack on an Afghan army convoy that killed 13 soldiers, the statement said.

"He was like the shadow governor of Badghis," said Gen. Mohammad Ayub Nizyar, the former police chief of the province.

Dastagir had previously been captured and imprisoned in Herat province, but he was released about four months ago after elders of his home district pleaded with Karzai and high-level officials to let him go, saying he would not return to violence, according to provincial police spokesman Noorhan Nekzad. Karzai issued a decree ordering his release.

"The government trusted the guarantee of the villagers" and released Dastagir, said Badghis Gov. Ashraf Nasery. "Unfortunately, as soon as he was released he rejoined the Taliban."

Sunday's "precision strike" did not destroy any other buildings and nearby structures only had minor external damage, the military statement said.

Defense Ministry spokesman Gen. Mohammad Zahir Azimi confirmed the incident, but said more people may have been killed. He said he had reports of up to 12 deaths.

Separately Monday, a service member with NATO forces died "of wounds caused by indirect fire" in eastern Afghanistan, according to a statement by NATO forces. The statement did not give more details or the troop's nationality. The majority of forces in the east are American.

In the south, five people died when a minibus hit a roadside bomb in Uruzgan province. One other person was seriously wounded, said Gulab Khan, the deputy provincial police chief.

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Soldiers banned from MySpace and Facebook

By Lucy Cockcroft

Facebook: The move has angered troops who regularly use networking sites to keep in touch with family and friends Photo: GETTY

Posting information on the internet through blogging, joining in forum discussions or online multiplayer games is now considered "public disclosure of information".

There are concerns that British Army personnel may inadvertently disclose confidential information.

However, the move has angered troops who regularly use networking sites to keep in touch with family and friends.

An NCO in Afghanistan told The Sun: "The fun police have taken over. I can't talk to my wife and kids or even play Call of Duty 5. Do they really think we're going to give away secrets?"

Another soldier said: "It's the most offensive thing I've ever heard. We're prepared to die for the country and are treated like children.

"I am going to ignore it. A lot of the lads are going to do the same."

Even officers are not exempt from the rule.

Generals who wish to talk with the media is now advised to ask permission of a Government minister.

It is also believed that Ministry of Defence officials want to stop criticism of defence policy on military chat forums like the Army Rumour Service.

The order, titled Contact With The Media and Communicating In Public, was issued on February 4.

British Armed Forces Federation spokesman Adrian Weale told The Sun: "You can't treat service personnel like children. They are in the front-line of the war against terrorism but the MoD doesn't trust them to behave responsibly online."

However, an MoD spokesman said the guidelines were not an outright ban.

He said: "Of course soldiers are allowed to go on Facebook and contribute to blogs.

"But we need to ensure sensitive information is not inadvertently placed in the public domain. A routine instruction has merely been refreshed and reissued."

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65 Trillion - U.S. Financial Obligations Exceed The Entire World's GDP

Posted by Shattered Paradigm

The total liabilities of the United States government, including future social security and medicare payments that the U.S. government is already committed to pay out, now exceed 65 TRILLION dollars, which is more than the entire GDP of the whole world.

According to the 2008 Financial Report of the United States Government, which is an official United States government report, the U.S. actually had a budget deficit of 5.1 trillion dollars in 2008.

So why did the Congressional Budget Office report that the federal budget deficit was only 455 billion dollars (which is certainly a total disaster) in 2008?

The difference lies in accounting. The CBO's figures are based on cash accounting, while the 2008 Financial Report of the United States Government is based on GAAP accounting. GAAP accounting is what is used by all the major firms on Wall Street and it is regarded as a much more accurate reflection of financial reality.

So why is there such a big difference?

Well, what the Congressional Budget Office does is some really bad accounting. When you pay social security taxes, the federal government takes that money and instead of putting it away to pay your social security benefits in the future, it takes that money and spends it however it wants.

So what about the future social security and medicare benefits that the government owes you?

There is no money there for those payments.

The government is using that money right now to make the budget look better.

That's right, you have been conned.

And as bad as the numbers from 2008 look, they do not reflect any significant money from the monstrous financial bailouts that Congress has passed.

So 2009 is going to look MUCH worse.

Pretty picture, eh?

The reality is the the United States of America is a total financial disaster.

Already, 13 banks have already failed in 2009. All of the bailouts certainly don't seem to be helping much yet.

But that doesn't mean that the federal government is going to give up trying to help. It seems a new "bailout" or a new "stimulus" is being passed almost weekly now.

Instead of accepting the fact that we must adopt a lower standard of living and deal with the reality of our massive debt, the politicians are trying to crank up the debt spiral one more time.

The truth is that all of this government spending will help the economy in the short term, but it will make the long term problems of the U.S. government far worse.

So who is going to buy all of this new government debt? China has serious doubts about who is going to buy all of America's new debt. The reality is that the only way that the government can "bailout" anyone or pay for any "stimulus" bill is to borrow.

So America borrows and borrows and borrows and borrows.

If your own personal finances were like that, how do you think it would end?

Ah, you are starting to get the picture.....

The "American Dream" is quickly becoming the "American Nightmare" and most of the politicians don't have a clue.

What are you going to do when the economy collapses and everything you ever worked for starts coming apart?

It is time for all of us to start thinking about what is truly important.....

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Chávez Reaches Out to Obama Ahead of Vote

By SIMON ROMERO

CARACAS, Venezuela — President Hugo Chávez said Saturday that he was ready to engage in direct talks with President Obama in a bid to repair relations with the United States. The statement marked an evolution in Mr. Chávez’s view of Mr. Obama, whom he described last month as having the “same stench” as his predecessor in the White House.

“Any day is propitious for talking with President Barack Obama,” Mr. Chávez said at a news conference here with foreign journalists ahead of a referendum on Sunday that could open the way for him to hold on to power indefinitely. Mr. Chávez said he would be willing to meet with Mr. Obama before a summit meeting in April of Western Hemisphere nations. The White House has not yet responded.

Mr. Chávez initially expressed optimism over Mr. Obama’s electoral victory and a willingness to re-engage with the United States. But Mr. Chávez cooled to Mr. Obama in January after the American leader voiced concern over reports of Venezuelan assistance to Colombian guerrillas. Ties between the two nations had deteriorated sharply in 2008.

The Obama administration seems to have adopted a nonbombastic approach to dealing with Venezuela, even as it was faced with questions over a referendum campaign here which had been marked by attacks by pro-Chávez partisans on institutions viewed as critical of Mr. Chávez, like the Israeli Embassy and the Vatican’s diplomatic mission, and threats against prominent opponents of the president.

“That’s an internal matter with regard to Venezuela,” Robert Wood, a State Department spokesman, said when asked this month about the referendum.

The vote on Sunday over lifting term limits for Mr. Chávez and other elected officials has again brought out the aggressive campaigning tactics of the president and his allies. His government shifted attention from festering domestic issues like a surge in homicides by expelling a Spanish lawmaker on Saturday who was here as an electoral observer.

The Spanish member of the European Parliament, Luis Herrero, had publicly described Mr. Chávez as a “dictator” in criticism of the electoral process.

“What a coarse man!” Mr. Chávez said on Saturday of Mr. Herrero, who was shoved into a car outside his hotel here by security forces Friday night and placed on a red-eye flight to São Paulo, Brazil. “He set off a fan of excrement.”

The referendum is the second time in 15 months that Mr. Chávez has sought to extend his stay in power beyond 2013, when his six-year term ends. Voters narrowly rejected an attempt in December 2007, which was bundled within a broader constitutional overhaul. Summing up the referendum on Saturday, Mr. Chávez said, “Venezuela is continuing on its march toward greatness.”

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Saudi King appoints first woman to council

(CNN) -- Saudi King Abdullah has appointed a woman to the council of ministers for the first time as part of a Cabinet reshuffle, networks including Saudi state-run Channel One reported Saturday.

Saudi King Abdullah has appointed a woman to his council of ministers for the first time.

King Abdullah announced a new supreme court chief, minister of health, justice minister and information minister as part of the reshuffling, according to Channel One.

King Abdullah appointed Noor Al-Fayez to the Saudi Council of Ministers. She will serve in a new position as deputy minister for women's education.

"I'm very proud to be nominated and selected for such a prestigious position," Al-Faiz told CNN on Saturday. "I hope that other ladies, females, will follow in the future."

"People are very excited about this," said Khaled Al-Maeena, editor-in-chief of Arab News, an English-language daily newspaper in Saudi Arabia. "This sends a clear signal that the King means business. Instead of appointing some bureaucrat, he appointed a woman."

Jamal Khashoggi, editor-in-chief of the Al-Watan Daily newspaper, told CNN the reshuffle signals a major change in his country.

"This is a huge step forward, in education, women's place in society," said Khashoggi.

Al-Faiz said she's confident she won't just be a token member of the council.

"I think by being the second person after the minister, I think I have enough power to work in the improvement of girls' education," she said.

The new appointments are the largest council shakeup since King Abdullah took power in 2005.

Maeena also said the other new appointments by King Abdullah were very "progressive" moves.

Some other new appointments were:

Prince Faisal bin Abdullah bin Mohammed, new minister of education

Faisal Al-Moammar, new deputy minister of education

Sheikh Mohammed Al-Isa, new minister of justice

Abdulaziz Al-Khowja, new minster of culture and information

Dr. Abdullah Al-Rabeeah, new minister of health

Sheikh Abdulaziz Al-Humain, new head of the Commission for the Promotion of Virtue and Prevention of Vice.

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Spain offers 200,000 a get-out-of-Cuba card

BY MIAMI HERALD STAFF

Marisabel, a warehouse clerk in her 40s, wants to leave Cuba and move to Spain. A tattered piece of paper -- her grandmother's Spanish birth certificate -- may allow her to do that.

Marisabel is one of thousands of Cubans who have applied for Spanish passports since Spain enacted a new citizenship law in December. Officially known as the Law of Historic Memory, it grants citizenship to the children and grandchildren of Spaniards who fled the country during the Spanish Civil War or were exiled during the regime of Gen. Francisco Franco.

The Spanish government estimates that more than a million people worldwide will become citizens, including as many as 210,000 Cubans, or 1.9 percent of the population of the island. The Spanish Consulate in Miami is also expecting several thousand applications, mostly from South Floridians of Cuban and Venezuelan descent.

For Cubans still living on the island, the new law offers a legal, safe and not terribly difficult alternative to the way so many have escaped -- spending $10,000 to ride a fast boat across the Florida Straits, or marrying a foreigner.

Since the law was passed, the Spanish newspaper El País has called the consulate in Havana the ''factory of Spaniards'' because so many people are eligible and trying to take advantage of it.

''There was a large migration to the island of Cuba from the beginnings of the last century until the 1930s and 1940s and later,'' explained Pablo Barrios, the Spanish consul general in Havana.

The law, often referred to as the law of grandchildren, was passed as an effort to make amends to the families of people forced to flee Spain during some of the darker moments of that country's recent history. The law makes it possible for people to apply for Spanish passports for the next two years, with a provision for the deadline to be extended for another year.

When it was passed, the Spanish government was expecting 75,000 and 100,000 applications in Havana every year.

''Now it looks like it will be closer to 100,000,'' Barrios said.

His office already has set up appointments to interview 40,000 Cubans and is talking with about 220 a day, he said. He hopes to interview 350 a day once a variety of technical problems with the process are worked out. The problems include misinformation spreading through Havana's rumor mill and an inability to get more phone lines installed in the consulate to handle the volume of inquiries.

The consular staff in Havana was nearly doubled to handle all the work, and Barrios expects to issue between 50,000 and 70,000 new Spanish passports each year the law is in effect.

HIGH INTEREST

The consulate in Miami has been inundated with requests for information, receiving as many as 4,000 calls a day, according to Santiago Cabañas, consul general. His office did 572 interviews in January and is booked for interviews through October. He has hired more staff members and has rented a second office to handle the volume.

''We would like to attend to everyone well,'' he said. ``Sadly, we have not been able to do it faster.''

He expects to issue several thousand new passports in South Florida. People here are applying for nostalgic reasons, and some want to be able to work in Europe, which Spanish citizenship would allow.

''The employees at the consulate are working very hard,'' Cabañas said. ``We don't want to leave anyone unable to exercise their rights.''

The consulate in Cuba has been able to issue its first new Spanish passport, but the process in Miami is moving more slowly because of a requirement that the birth of the new citizen be registered in the consulate of the country where that person was born. Most of Miami's applications have to be sent to Havana or Caracas to accomplish that.

Even after they receive their passports, Cubans living on the island will have to get permission from the Cuban government to travel, a process that can take years. And while some Cubans have been denied the right to travel, Cuba's historic ties to Spain may make it hesitant to do that to Spanish citizens.

THE MONEY GAME

The possibility of not being allowed to leave the island, even after obtaining the Spanish passport, certainly hasn't deterred the tens of thousands who have applied to the consulate. One reason is that becoming an instant citizen eliminates the need on a visa application to prove wealth that few Cubans have.

Even Cubans who have managed to save money by working in the black market have a hard time proving it. Many countries require visa applicants to show that they have money in a bank account, but Cubans who have made money illegally face unique risks if they try to put that money into a Cuban bank.

''How do you explain the money you put in the bank to the Cuban government, which owns the bank?'' Amaury, a musician, said.

For many Cubans on both sides of the Florida Straits, documenting their ancestry has been difficult.

Some families in Florida that have been exiled twice in three generations are having trouble locating paperwork to prove that they started their journey in Spain. While they are able to travel to Spain to get copies of birth records issued there, they may not be able to get copies of Cuban documents that close the circle by showing that the grandmother born in Spain gave birth to a son in Cuba.

In Cuba, the problem is often obtaining the necessary Spanish documents.

Yineth, a hairdresser, cut Marisabel's hair while she listened to her story of joyfully discovering her Spanish grandmother's birth certificate while rooting through old documents and photos. Marisabel was lucky, Yineth said.

Yineth would like to apply for Spanish citizenship so she can get a passport allowing her to travel through Europe. She wants to see Paris and Greece.

Her own birth certificate shows the name of her father, and his Cuban birth certificate shows her grandparents' names. But to get copies of her grandparents' birth certificates, to show they were born in Spain, she would have to travel to their hometown, Pontevedra, on Spain's northwest coast.

''I need a visa to get a visa,'' she said sadly.

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British and French Nuke Subs Crash

HMS Vanguard ... carries 16 Trident missiles

By TOM NEWTON DUNN

BRITISH and French nuclear submarines which collided deep under the Atlantic could have sunk or released deadly radioactivity, it emerged last night.

The Royal Navy’s HMS Vanguard and the French Navy’s Le Triomphant are both nuclear powered and were carrying nuke missiles.

Between them they had around 250 sailors on board.

Calls have today been made for an urgent inquiry in to the international incident.

A senior Navy source said: “The potential consequences are unthinkable. It’s very unlikely there would have been a nuclear explosion.

“But a radioactive leak was a possibility. Worse, we could have lost the crew and warheads. That would have been a national disaster.”

Le Triomphant ... French nuclear sub

The collision is believed to have taken place on February 3 or 4, in mid-Atlantic. Both subs were submerged and on separate missions.

Row

As inquiries began, naval sources said it was a millions-to-one unlucky chance both subs were in the same patch of sea. Warships have sonar gear which locates submarines by sound waves.

But modern anti-sonar technology is so good it is possible neither boat “saw” the other.

A senior military source said: “The lines between London and Paris have been hot.”

The MoD insisted last night there had been no nuclear security breach. But this is the biggest embarrassment to the Navy since Iran captured 15 sailors in 2007. The naval source said: “Crashing a nuclear submarine is as serious as it gets.”

Vanguard is one of Britain’s four V-Class subs forming our Trident nuclear deterrent. Each is armed with 16 ballistic missiles.

She was last night towed into Faslane in Scotland, with dents and scrapes visible on her hull. Triomphant limped to Brest with extensive damage to her sonar dome.

Triomphant has a crew of 101. Vanguard weighs 16,000 tons, is 150 metres long and has a crew of 140.

The MoD said it did not comment on submarine operations.

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