It's About the Infrastructure, Stupid

Rachel Maddow once again figures out what the politicians don't seem to understand. The solution to solving the economic crisis is investing in the infrastructure, which is collapsing. Barack needs to read this:

The economy is in crisis because people aren‘t buying enough stuff. There is supply, right? People make stuff that is to be sold and then there‘s demand. Demand is buying.

Right now, there‘s not enough buying. So, what they teach you in the very easiest semester of the very easiest economics class, because it‘s really easy to understand even if you are a total dunderhead about more completed macroeconomics stuff, what they teach is that the government can turn around an economic crisis that‘s caused by not enough demand—by making demand. Stimulating demand, they call it—economic stimulus.

On the continuum between rocket science and duh, understanding the concept of economic stimulus is closer to duh. It is not the most complicated policy idea. If no one else has anything to spend and the economy is collapsing because of it, the government should spend and it should try to spend in a way that gets everybody else spending, too. That‘s the whole kitten caboodle, that‘s the whole idea.

Last night, 90 percent of Senate Republicans voted for something they called an economic stimulus that had zero government spending in it. That‘s like calling a rack of lamb a fruit cocktail. That‘s a big meat tax cut there you, guys. But how about we get back to the idea of economic stimulus, you know, to save ourselves from having to eat cat food while we live in our cars for the rest or our lives?

It is reality check time here. Economic stimulus, most efficiently, is government spending. The most purely stimulative spending would probably be just to give envelopes full of cash to the poorest people in the country. Statistically, they‘d be the most likely to spend it.

In the absence of a political reality, that would make something like that possible, an almost ideal strategy is government spending, say, on infrastructure of which the American Society of Civil Engineers just said we could use $2.2 trillion worth. It‘s good jobs that can‘t be outsourced, immediately, that have the long-term benefit of dragging our country into the 21st century in terms of our ability to compete economically with the rest of the world.

As they said—duh. Not complicated. Ask your friendly neighborhood governors. They will tell you.

Joining us is Democratic Pennsylvania Governor Ed Rendell.

Governor Rendell, thank you very much for joining us tonight.

GOV. ED RENDELL, (D) PENNSYLVANIA: That was brilliant, Rachel.

Here's someone who really knows something about saving an economy and infrastructure:

At the age of 80, you’re about to bring out a new book, “Bold Endeavors: How Our Government Built America and Why It Must Rebuild Now,” an ode to the Erie Canal, the transcontinental railroad and other legends of American infrastructure.
I think this is a very important subject. At the same time, because it’s not Marilyn Monroe with the wind blowing, it’s not so easy to write about.

Until now, infrastructure has not been seen as the sexiest issue.
That’s right, because it’s such a terrible word.

Perhaps we need to revive the term “public works” or come up with a new coinage.
I’ve tried. I thought of calling my book “Rebuilding America.” That is kind of yuck.

You could also use a better name for the National Infrastructure Bank, which you’re trying to create, and which is not a bank.
I’ll be speaking about that on Feb. 22, at the National Governors Association conference in Washington.

We should point out that you’re the investment banker credited with solving New York’s fiscal woes in 1975 and saving the city from bankruptcy.
The New York City crisis was less dangerous than the current situation. Maybe for the first time in history, the U.S. is faced with doubts about its destiny. In less than 50 years, we have gone from the American Century to the American Crisis.

What do you make of President Obama’s $800-billion-plus stimulus package?
I totally support Obama, but I would argue in favor of a greater amount of infrastructure investment and probably fewer tax cuts. There should be less concern about rapid liquidation and greater emphasis on long-term investments.

The emphasis now seems to be on shoring up levees and making repairs to crumbling structures instead of building new ones.
Repairs are very important, as is new construction, and there should be a mix of both. If we have a major nuclear program in the next 25 years, for instance, then we have to do something about the infrastructure that goes with that, from creating an energy grid to dealing with nuclear-waste disposal.

This economist makes the case for a separate infrastructure spending package apart from the current bailout plan:

PRESIDENT OBAMA is the first urbanite in the White House since Teddy Roosevelt. He certainly knows the vital role that cities play in America. Yet despite the Chicagoan on Pennsylvania Avenue, infrastructure spending in the House stimulus bill follows a business-as-usual pattern that discriminates against density. The only way to break that pattern is to take non-repair-related infrastructure spending out of the stimulus, and craft a separate bill that looks beyond the current recession. Major infrastructure projects, especially in cities, cannot be done quickly.

Per capita transportation spending in the House stimulus package, including transit, is more than 50 percent higher in the 10 least dense states than in the 10 densest states, including Massachusetts. Yet America's highways and rails already make it easy to move goods and people across America's open spaces. The hard slog is getting across dense downtowns. Other elements in the stimulus package also favor farm over city. The subsidies for broadband infrastructure are unnecessary in already-connected cities. Access to the latest technologies is, after all, one reason for cities' economic success. The $6 billion for weatherizing homes will surely do more for rural America than for apartment dwellers. There is urban spending in the bill, but money spent rehabilitating public housing is not the transformative investment that will make cities more productive.

Infrastructure is the skeleton on which the economy hangs. In the 19th century, America built a great transportation network of rails and canals that enabled the wealth of the land to make its way east. America's 19th-century cities - Chicago, Detroit, Pittsburgh - were nodes on that network that grew along with it. In the 20th century, Americans built a highway system that decentralized urban areas. Brown economist Nathaniel Baum-Snow documents that with each extra interstate highway ray, cutting from suburb to city, central city population declined by about 10 percent relative to its suburbs. That suburban exodus reminds us that infrastructure can have far-reaching consequences. Serious, time-consuming planning is needed to make sure that adverse consequences are anticipated and minimized.

A visionary infrastructure strategy cannot fit into a stimulus package. For stimulus, speed is vital. The Big Dig took 21 years. Working in cities is particularly slow because it takes time to tunnel, and because community opposition holds up urban mega-projects. A need for speed will always create an anti-urban bias.

America needs both a stimulus package and new infrastructure, but combining the two in one bill is a mistake. Congress should eliminate any pretense that the stimulus plan is addressing long-run infrastructure needs, and leave in only those infrastructure expenditures, like rehabilitating decaying roads and bridges, that require minimal planning, public approval, and time to implement.

A separate infrastructure bill would take cost-benefit analysis seriously, and direct spending to the projects with the highest returns. This means breaking the infrastructure spending status quo. As the Office of Management and Budget's expectmore.gov website notes, highway infrastructure "funding is not based on need or performance and has been heavily earmarked." To reduce boondoggle projects, localities, particularly wealthier ones, should provide a significant share of the funding. Requiring locales to pony up their own cash helps ensure that new projects are really valued.

The role of cities is vital. According to County Business Patterns, 56 percent of America's wages are earned in the 22 mega-metropolitan areas with more than 2 million people each. A serious infrastructure bill would aid metropolitan areas, but ask for sacrifice in return for subsidy.

Local opposition has the ability to make projects slower, more expensive, and far less efficient. The train ride to New York would be much quicker if Connecticut had allowed the Acela line to run straight. Federal aid needs to be made contingent on efficient routes and limited cost overruns.

The cities that stand at the center of the economy need new infrastructure, but that can't be built in two years. To ensure an infrastructure plan that does not shortchange metropolitan America, major infrastructure needs to come out of the stimulus package and get a bill of its own.

But we've known for years about the infrastructure neglect but this criminally inept government has chosen to ignore the issue; just as they've ignored all the threats to our nation. Now it could be too late.

America's infrastructure is full of cracks, leaks and holes and is getting worse, according to an analysis by civil engineers that concludes the nation's transportation, water and energy systems have shown little improvement since they were given an overall grade of D-plus in 2001.

A report by the American Society of Civil Engineers released Thursday assessed trends over the last two years in the condition of 12 categories of infrastructure, including roadways, bridges, drinking water and energy.

The report blamed the deteriorating infrastructure on a weak economy, limited federal programs, population growth and the threat of terrorism, which diverted money to security.

"Americans' concerns about security threats are real, but so are the threats posed by crumbling infrastructure," Thomas Jackson, ASCE president, said in a statement. "It doesn't matter if the dam fails because cracks have never been repaired or if it fails at the hands of a terrorist. The towns below the dam will still be devastated."

There was no progress for schools, which received the worst grade — D-minus — from the engineers in 2001. The report said three out of four school buildings are inadequate. They estimate it will cost more than $127 billion to build new classrooms and modernize outdated schools.

Energy transmission earned a D-plus two years ago, and the engineers said the trend is getting worse. Investment in transmission fell by $115 million annually, to $2 billion a year in 2000 from $5 billion in 1975. Actual capacity increased by only 7,000 megawatts a year, 30% less than needed to keep up with power demand.

Roads didn't fare much better. "The nation is failing to even maintain the substandard conditions we currently have," the report said, adding that the average rush hour grew by more than 18 minutes between 1997 and 2000.

The engineers' report also saw no improvement on bridges, noting that 27.5% of U.S. bridges were structurally deficient or obsolete in 2000.

Transportation systems showed signs of decline, despite increased spending over the past six years. "Efforts to maintain the systems are outpaced by growth in ridership," the report said.

Economic Crisis not Just U.S. Problem

The pundits in the press and politicians seem not understand that the economic mess is not just an American problem. Washington seems to think that by them sending money (that we don't have) to Wall St. is the cure. The reality is that it could be beyond the control of the craven politicians in American, or in the West as a whole. The financial monster that has dominated the World for the last 2 decades is bigger than any one government and their ability to intervene. If any government has control it would be the Chinese rulers in Beijing. America, in particular, is a debtor nation that cannot pay it's bills alone. We depend on the unreliable and unpredictable Chinese. All Washington seems to be doing is pretending to act thus giving an illusion on doing something. If America really knew the truth we would march on the Capitol and string-up each member of Congress.

The auto industry's historic meltdown showed no signs of relenting in
January, with Ford Motor Co., General Motors Corp. and Chrysler on Tuesday posting U.S. sales declines of more than 40% -- below even the lowest of Wall Street targets.

Toyota Motor Corp., on the brink of posting its first-ever operating loss, fared only slightly better as the entire global auto industry continues to suffer.

Worst in 27 years:

Ford (F.N) posted a 40 percent drop in January sales in the United States, the sharpest decline for the No. 2 U.S. automaker in 10 months of double-digit sales declines in the world's largest market for new cars and trucks.

Toyota (7203.T), the world's largest automaker, was hit with a 34 percent sales decline, a drop that underscores how the U.S. recession has tripped up even the industry's strongest players.

Sales for Nissan (7201.T) were off almost 30 percent.

The results from Toyota, Ford and Nissan on Tuesday were among the first from major automakers for a month expected to show overall sales near 27-year lows, extending a stretch of 15 months of consecutive auto sales declines.

America: Collapsing Like the Roman Empire?

Anderson Cooper asked recently whether America is collapsing like the final days of the Roman Empire. Most Americans would probably disagree. But the parallels are great. We have become an economic disaster. We're are broke with a crumbling infrastructure and fighting endless wars. And just like the Roman Empire are borders are unsecured and being overrun. This article is a rallying cry not an obituary:

COOPER: Well, as you all remember, there was a lot of talk during the campaign about fixing our infrastructure, but today a reminder that the government needs to do more than just talk. In a report card issued by the American Society of Civil Engineers, America's infrastructure earned the barely passing grade of D. From failing bridges to leaky water mains, the country's infrastructure is in such bad repair, the report estimates it's going to take five years and $2.2 trillion to fix it.

Tom Foreman tonight is "Keeping them Honest."

(BEGIN VIDEOTAPE)

TOM FOREMAN, CNN CORRESPONDENT (on camera): Anderson, Americans have witnessed dramatic infrastructure failures in recent years. It sounds boring, but it's really not. Think about the levee collapses in New Orleans during Katrina, all those lives lost, billions of dollars in damage done down there.

Think about what happened up in Minneapolis when that bridge fell down during rush hour; 13 people killed in 2007, a major commuter road shut down, as well. And then just a few weeks ago, here in Washington, D.C. -- nobody killed -- but a water main broke just outside of town and turned a road into river in seconds. Civil engineers have long warned of a tidal wave of these infrastructure problems. Barack Obama talked about it on the campaign trail too.

OBAMA: We can rebuild our electricity grid, put people back to work right now, rebuilding our infrastructure. Right now repairing and rebuilding our roads and our bridges and our schools. If we can spend $10 billion a month in Iraq, we can spend $10 billion here in the United States of America.

FOREMAN: The latest report card from the American Society of Civil Engineers is stark. Out of 15 systems we use every day for transportation, drinking water, garbage disposal, the highest grade was a C plus for the way we're managing solid waste, the vast majority as you can see got D's. Some particular points of worry, bridges out there: one in four structurally deficient or obsolete. Four thousand dams are considered in need of some kind of attention. Almost half high hazards because they could flood communities downstream.

(END VIDEOTAPE)

FOREMAN: And almost incredibly, think about this, the report found that we're losing seven billion gallons of clean drinking water every day through leaky pipes, public schools, parks, airports, railways, roads, and so much more since the last report card in 2005. The Society says almost all have grown worse and the cost of fixing them has only gone higher -- Anderson.

COOPER: All right, Tom, thanks.

The costs are not just financial, congested highways, fragile power grids, second-rate ports. Experts say that not only makes us less productive as a nation, it leaves us more vulnerable to terrorists. We're literally rotting from within. At $2.2 trillion or whatever the price tag almost triple President Obama's current economic stimulus package. The question is can we afford to fix it?

Let's dig deeper with Stephen Flynn, author of the book "Edge of Disaster" and a frequent guest on our program. This is not a sexy topic. It doesn't grab anyone in, but it's a national security issue.

STEPHEN FLYNN, AUTHOR "EDGE OF DISASTER": Well, it really is fundamentally one in that when our competitiveness is at stake, our safety and quality of life is at stake, but also our national security. The more brittle we are the more soft targets we essentially are. We get a three-for by investing in infrastructure: better economy, better quality of life, we actually improve our security. COOPER: And everyone sort of thinks -- I mean, I was surprised David Gergen said I think five percent of this thing is being spent on this kind of road building infrastructure. Everyone thinks the stimulus is really all about rebuilding this infrastructure in a massive way. It's really not yet.

FLYN: It's a very small down payment on what we really need to do. The big crisis we really haven't have talked about -- obviously the president in this campaign trail highlighted it. And it's been the first time in almost 30 years we started talking about our failing infrastructure. And I said we're like a generation who has inherited our grandparents' mansion and we decided to not do the upkeep anymore. Everybody's thinking it's a nice house but the wiring's gone to heck and the plumbing has gone bad. And not investing in it is a bit like not changing your oil on your car because you think it's a hassle and a little expensive.

COOPER: And both Democrats and Republicans haven't been doing this. I mean, this is not one...

FLYNN: Well, right now the debate in Washington is really almost the same old debate. It's simplistic to say it's just about jobs. There's no question this is an investment in our economy, and jobs over the long run will be produced by investing in this.

At the same time, this whole "this is robbing the taxpayer of his honest dollars." Well, you need infrastructure to be in an advanced society. Our grandparents and great-grandparents bequeathed to us the greatest legacy in terms of infrastructure since the Roman Empire. But this report today reads just like something that's going on in the eve of the collapse of the Roman Empire.

COOPER: The problem -- I read you said something that this is like in the last days of the Roman Empire. This is the kind of report card they would have gotten, which is a terrifying thought. In terms of how the money is being spent, though, it seems like we're kind of just throwing the money at the states and letting the states decide what the priorities are for their infrastructure. Is that the way it should be done?

FLYNN: Well, in the near term, moving money quickly, there are a lot of projects the states have got cleared because they got the environmental impact done. They're in the works but they ran out of cash. So getting cash into them probably makes sense as a Band-Aid.

But the real challenge, Anderson, we're not looking at the nation's infrastructure as a nation. It's a patchwork quilt, basically, of local projects. Some bridges are more important than others. Today we learned, yet again, 150,000 bridges in bad shape. There's probably a hundred of them more important than the other 150,000 that you don't have done. So where are they? We don't have a system in this country to even do this analysis. They pointed out levees...

COOPER: On a national level, we don't have a system?

FLYNN: There's nowhere you can say where are the top 100 bridges that are most broken...

COOPER: Really?

FLYNN: ... that we need to fix. Because historically, the federal government hasn't played that role; it's the states and governors that do it. So the solution going forward is that one of the things that certainly the president can do to get out ahead of this problem is to put together a bipartisan commission, get the input from the states, and prioritize with the expertise we have in this country, like the American Society of Civil Engineers, the National Academy of Science. We have shovel-ready expertise in the citizens in this country, the universities and so forth. We can do this.

The thing that is amazing is that we somehow decided that we can't afford to maintain an infrastructure that our forebears built with their sweat, with their equity, with their inventiveness, and not investing in it costs us a lot of money.

Is Caroline Kennedy the Democrats' Sarah Palin?

Caroline Kennedy will be the next Senator from New York (video below) despite not being qualified. That is why she is sounding a lot like Sarah Palin every time she opens or doesn't open her mouth. The press in NY is in a uproar that Ms. Kennedy is refusing to answer questions. Doesn't that remind you of the Alaska Governor during the recent presidential election? Pedigree rules in American politics. She doesn't have to answer questions. She is U.S. royalty, after all. Hillary Clinton had zero qualifications before she became a NY Senator. Now an equally unqualified person wants her job. And all because Ms.Kennedy is part of a powerful elite in America. Doesn't sound like what we fought against over 200 years ago when we became a democracy.

This from the BBC:

Caroline Kennedy's latest attempt to press her case to be the replacement for Hillary Clinton as a senator for New York has been widely criticised in the US media.

Ms Kennedy - daughter of former President John F Kennedy - broke weeks of silence on her bid, by giving a series of interviews at the weekend.

But she was criticised for being unknowledgeable on key policy areas, being unable to articulate why she was seeking public office for the first time - and even for possessing a verbal tic.

NEW YORK DAILY NEWS

Under the headline "Caroline Kennedy no whiz with words", the New York Daily News mimicked Ms Kennedy's speech pattern during the round of interviews.

"Caroline Kennedy, you know, might need, you know, a speech coach, um, if she, you know, wants, um, to be a senator," the paper said.

Totting up the number of "verbal tics" during its 30-minute interview, the paper counted "you know" more than 200 times... and added that "'um' was fairly constant, too".

Asked if President George W Bush's tax cuts on the wealthy should be repealed immediately, Ms Kennedy replied: "Well, you know, that's something, obviously, that, you know, in principle and in the campaign, you know, I think that, um, the tax cuts, you know, were expiring and needed to be repealed," the paper reported.

[...]
Columnist Michael Goodwin wrote: "The wheels of the bandwagon are coming off. Fantasy is giving way to inescapable truth. That truth is that Kennedy is not ready for the job and doesn't deserve it. Somebody who loves her should tell her."

[...]THE ASSOCIATED PRESS

The Associated Press said "Kennedy offered no excuses for why she failed to vote in a number of elections since registering in New York City in 1988".

"I was really surprised and dismayed by my voting record," she told AP. "I'm glad it's been brought to my attention."

AP reported that "since word of her interest leaked out in early December, Kennedy has faced sometimes sharp criticism that she cut in line ahead of politicians with more experience and has acted as if she were entitled to it because of her political lineage".

Natural disasters 'Killed over 220,000' in 2008

Natural disasters killed over 220,000 in 2008 worldwide. More evidence that global warming is having a devastating impact on the world. Governments, including in the U.S., need to begin taking in account the effect weather has on all our lives. More preventative measures must be taken. There has to be greater awareness and funding of programs that educate the public on preparedness. As for the naysayers, they will continue to ignore the overwhelming evidence of how global warming is impacting the planet.

Natural disasters killed over 220,000 people in 2008, making it one of the most devastating years on record and underlining the need for a global climate deal, the world's number two reinsurer said Monday.

Although the number of natural disasters was lower than in 2007, the catastrophes that occurred proved to be more destructive in terms of the number of victims and the financial cost of the damage caused, Germany-based Munich Re said in its annual assessment.

"This continues the long-term trend we have been observing. Climate change has already started and is very probably contributing to increasingly frequent weather extremes and ensuing natural catastrophes," Munich Re board member Torsten Jeworrek said.

Most devastating in terms of human fatalities was Cyclone Nargis, which lashed Myanmar on May 2-3 to kill more than 135,000 people and leave more than one million homeless.

Just days later an earthquake shook China's Sichuan province, leaving 70,000 dead, 18,000 missing and almost five million homeless, according to official figures, Munich Re said.

Around 1,000 people died in a severe cold snap in January in Afghanistan, Kyrgystan and Tajikistan, while 635 perished in August and September in floods in India, Nepal and Bangladesh.

Typhoon Fengshen killed 557 people in China and the Philippines in June, while earthquakes in Pakistan in October left 300 dead.

Six tropical cyclones also slammed into the southern United States, including Ike which, with insured losses of 10 billion dollars, was the industry's costliest catastrophe of the year.

In Europe, an intense low-pressure system called Emma caused two billion dollars worth of damage in March, while a storm dubbed Hilal in late May and early June left 1.1 billion dollars' worth.

The earthquake in Sichuan province was the most expensive overall single catastrophe of 2008, causing around 85 billion dollars worth of damage, helping to make the year the third most expensive on record, Munich Re said.

With 200 billion dollars' worth of damage, only 2005, when a large number of hurricanes slammed into the southern United States, and 1995, year of the Kobe earthquake in Japan, wreaked more destruction since records began in 1900.

According to provisional estimates from the World Meteorological Organization, 2008 was the tenth warmest year since the beginning of routine temperature recording and the eighth warmest in the northern hemisphere.

This means that the ten warmest years ever recorded have all occurred in the last 12 years, Munich Re said.

Israel Attack on Gaza A Prelude to Full War?

Israel's latest bombing of the Gaza Strip (video below) could be a preparation for full war with Hamas, reminiscent of the Lebanese invasion of several years ago. If something isn't done this could escalate to a World War. It could be the Israelis want a war before the Obama administration comes in. This neocon controlled White House would certainly support whatever Israel decided to do. President-elect needs to say more than just repeating the same line about there being only one President. This is very dangerous.

Goaded by Islamist guerrillas' cross-border attacks, Israel goes to war with a surprise aerial onslaught. Troops and tanks follow, to gain ground and pressure foreign powers into imposing a truce the Israelis can live with.

The strategy used by Prime Minister Ehud Olmert for an offensive in Lebanon in 2006 could again be deployed against Hamas in the Gaza Strip.

But there are big differences in the handling of the military operation in Gaza, which the Israeli air force started pounding on Saturday, and it is not clear how regional stability might benefit, let alone peace talks with Palestinians.

For now, Israeli officials sound satisfied with an operation in Gaza that shows few of the tactical mistakes of the 2006 war on Lebanese Hezbollah.

Fewer than half of Gaza's many dead are civilians, Israeli border towns were better prepared this time for retaliatory rocket fire and the Olmert government has not promised big victories.

International censure has so far been largely limited to urging a return to an Egyptian-brokered ceasefire that expired on Dec 19.

"Israel certainly underwent a lesson-learning process" after Lebanon, cabinet secretary Oved Yehezkel told Israel Radio.

Hamas has made a new ceasefire conditional on Israel ending an embargo on Gaza, and Israeli officials have hinted they also want new terms met -- such an end to arms smuggling by Hamas and the release of a captive soldier, Gilad Shalit.

It certainly looks like Israel intends on invading:

Israel called up 6,500 reserve soldiers and moved infantry and armored units to the Gaza border for a possible ground invasion. Some 280 Palestinians died in the first 24 hours of the campaign against Gaza rocket squads.

Most of the dead were Hamas police, but the airstrikes also claimed the lives of civilians, including a 15-year-old boy killed inside a greenhouse.

Unbowed by 250 Israeli airstrikes, militants fired dozens of rockets and mortars at border communities Sunday. Two rockets struck close to the largest city in southern Israel, Ashdod, some 38 kilometers (23 miles) from Gaza, reaching deeper into Israel than ever before. The targeting of Ashdod confirmed Israel's concern that militants are capable of putting major cities within rocket range. No serious injuries were reported in any of the attacks Sunday. One Israeli died in a rocket attack Saturday.

Despite the call for reserves, Israeli Foreign Minister Tzipi Livni said there were no plans to occupy Gaza. Speaking Sunday on "Meet the Press," Livni said the Israeli assault came because Gaza's Hamas rulers were smuggling weapons and building up "a small army."

Madoff $50 billion Scandal: Why we Shouldn't Bail out Wall St.

Wall St. financier Bernard Madoff ripped-off investors possibly at cost of $50 billion. Why should we bail out an industry that the government failed to regulate for years? We are in this mess because Congress allowed the profiters to run amok. The government, including Obama, should be working to bail out the economy not the crooks that got us in trouble.

Two major European-based banks said they have exposure worth billions of dollars to a US broker accused of a $50bn (£33bn) Wall Street fraud scheme.

Spain's largest bank, Santander, said one of its funds had $3.1bn invested in the firm run by Bernard Madoff.

France's largest listed bank, BNP Paribas, estimated its exposure to be more than $460m.

Mr Madoff has been charged with fraud, in what is being described as one of the biggest-ever such cases.

Correspondents say the case is likely to fuel uncertainty about the entire hedge fund industry.

Mr Madoff is alleged to have used money from new investors to pay off existing investors in the fund.

Investors are assessing their exposure to the alleged fraud Mr Madoff is said by prosecutors to have confessed to.

US Prosecutors say Mr Madoff, a former head of the Nasdaq stock market, masterminded a fraud of massive proportions through his hedge fund and investment advisory business.

A federal judge has appointed a receiver to oversee Mr Madoff firm's assets and customer accounts, while the 70-year-old banker has been released on $10m bail.

"While BNP Paribas has no investment of its own in the hedge funds managed by Bernard Madoff Investment Services, it does have risk exposure to these funds through its trading business and collateralised lending to funds of hedge funds," BNP said in a statement.

Santander said its exposure to Madoff was through its investment fund Optimal.

UK-based asset management firm Bramdean Alternatives accused US regulators of "systemic failures".

The firm saw its share value drop by over 35% after it revealed that about £21m - nearly 10% of its holding - was exposed to the New York broker.

"It is astonishing that this apparent fraud seems to have been continuing for so long, possibly for decades, while investors have continued to invest more money into the Madoff funds in good faith," the firm said.

"The allegations made appear to point to a systemic failure of the regulatory and securities markets regime in the US."

Where were the regulators?

Bernard Madoff’s investment advisory business, alleged to be a Ponzi scheme that cost investors $50 billion, was never inspected by U.S. regulators after he subjected it to oversight two years ago, people familiar with the case said.

The Securities and Exchange Commission hasn’t examined Madoff’s books since he registered the unit with the agency in September 2006, two people said, declining to be identified because the reviews aren’t public. The SEC tries to inspect advisers at least every five years and to scrutinize newly registered firms in their first year, former agency officials and securities lawyers said.

Madoff, 70, who had advised the SEC how to regulate markets and donated regularly to politicians, was arrested Dec. 11 and charged with operating what he told his sons was a long-running Ponzi scheme in the New York-based firm’s business advising rich people, hedge funds and institutions. His ability to avoid detection may fuel debate about the SEC’s effectiveness and the adequacy of its resources for policing money managers.

“Given what the SEC claims is the magnitude of the fraud, this is something you would hope an inspection would have uncovered,” said Mercer Bullard, a University of Mississippi law professor and former mutual-fund attorney at the SEC. “It’s hard to imagine a fraud of this alleged size not being accompanied by significant and pervasive compliance problems.”

Madoff is scheduled to appear in federal court in Manhattan on Dec. 19 at noon for a hearing in the SEC case, according to his lawyer, Ira “Ike” Sorkin, of Dickstein Shapiro LLP in New York.

“This is a tragedy,” said Sorkin, a former U.S. prosecutor and SEC enforcement lawyer. “We are going to fight through these events and try to minimize the losses as much as possible.”

[...]More than a decade earlier, in 1992, Madoff faced regulatory scrutiny as part of a lawsuit the SEC brought against two Florida accountants, whom it accused of raising $441 million while selling unregistered securities over three decades, according to SEC statements and a press report at the time.

Madoff told the Wall Street Journal at the time that he had managed the funds unaware they had been raised illegally. The SEC determined that the investors’ money was all accounted for, and didn’t accuse him of wrongdoing, according to the report.

President Obama on Meet the Press: Transcript (12-7-08)

President-elect Barack Obama appeared on Meet the Press (12-7-08) on Tom Brokaw's last show. Read the complete transcript and see the video here.

MR. BROKAW: Very nice to have you with us. As we saw in the opening, the world has gotten considerably worse since your election. There is no evidence that it's cause and effect, you should be happy to know. But, nonetheless, we now are officially in a recession. It's around the world, and most analysts think it's going to get worse before it gets better. Sixty-seven years ago this day, one of your predecessors, Franklin Roosevelt, faced Pearl Harbor.

PRES.-ELECT OBAMA: Right.

MR. BROKAW: What are the differences between his challenges and the ones that you face?

PRES.-ELECT OBAMA: Well, first of all, I think it's important for us to remember that as tough as times are right now, they're nothing compared to what my grandparents went through, what the "greatest generation" went through. You know, at this point you already had 25, 30 percent unemployment across the country, and we didn't have many of the social safety nets that emerged out of the New Deal. So there's no doubt that Franklin Roosevelt had to re-create an entire economic structure that had entirely collapsed, and we've got some strengths that he didn't, he didn't have.

But, look, if you look at the unemployment numbers that came out yesterday, if you think about almost two million jobs lost so far, if you think about the fragility of the financial system and the fact that it is now a global financial system, so that what happens in Thailand or Russia can have an impact here, and obviously, what happens on Wall Street has an impact worldwide, when you think about the structural problems that we already had in the economy before the financial crisis, this is a big problem and it's going to get worse. And, and one of the things that I'm constantly mindful of are all the people I met during the campaign who were already struggling before things got worse. You know, mothers and fathers who were working hard every day but didn't have health care, couldn't figure out how to send their kids to college. Now they're looking at pink slips, jobs being shipped overseas that devastate entire towns. And that's why my number one priority coming in is making sure that we've got an economic recovery plan that is equal to the task.

MR. BROKAW: Here's what you had to say a short time ago to the national conference of governors. It was kind of a reality check for them to put it in some kind of a context. Let's share that with our audience now, if we can.

(Videotape, Tuesday)

PRES.-ELECT OBAMA: We're going to have to make hard choices. Like the ones that you're making right now in your state capitals, we're going to have to make in Washington. And we are not, as a nation, going to be able to just keep on printing money; so, at some point, we're also going to have to make some long-term decisions in terms of fiscal responsibility and not all of those choices are going to be popular.

(End videotape)

MR. BROKAW: On this program about a year ago, you said that being a president is 90 percent circumstances and about 10 percent agenda. The circumstances now are, as you say, very unpopular in terms of the decisions that have to be made. Which are the most unpopular ones that the country's going to have to deal with?

PRES.-ELECT OBAMA: Well, fortunately, as tough as times are right now--and things are going to get worse before they get better--there is a convergence between circumstances and agenda. The key for us is making sure that we jump-start that economy in a way that doesn't just deal with the short term, doesn't just create jobs immediately, but also puts us on a glide path for long-term, sustainable economic growth. And that's why I spoke in my radio address on Saturday about the importance of investing in the largest infrastructure program--in roads and bridges and, and other traditional infrastructure--since the building of the federal highway system in the 1950s; rebuilding our schools and making sure that they're energy efficient; making sure that we're investing in electronic medical records and other technologies that can drive down health care costs. All those things are not only immediate--part of an immediate stimulus package to the economy, but they're also down payments on the kind of long-term, sustainable growth that we need.

Oscar De La Hoya's Latest Pay Per View Ripoff

Oscar De La Hoya is fighting in another Boxing pay-per-view ripoff. The Golden Boy has lost half his fights since 2003, and has lost 39 percent of fights since beating Oba Carr in May of 1999. Don't be a sucker. Save your money:

[...]the Golden Boy's ring pursuits mainly have been about ringing up the cash register. And he definitely has been successful in that arena.

De La Hoya is the most bankable star in boxing. He runs his own company, Golden Boy Enterprises, which includes his boxing promotions business, interest in several U.S. Spanish language newspapers, real estate holdings in California and New York and a charitable foundation.

This from eastsideboxing.com:

I’ve made no secret of my distaste for super-fights – carefully orchestrated farces that rely more on past glory and name recognition than real talent. The boxing press ignores more meaningful fights, the real boxing fans get ignored in favor of the mainstream, and everyone pays $50 for a disappointment.

[...]It Has Lasting Impact: If Oscar wins, he’ll continue avoiding legitimate threats like Forrest or Margarito. If Pacquiao wins, he WILL NOT stay at welterweight. He knows damned well that at 147 he’ll eventually run into actual entities like Margarito who are actually quite dangerous. Pacquiao will likely just slim down to lightweight again, albeit with a bigger paycheck and a reference on SportsCenter the next morning.

Likewise, Calzaghe-Jones promised nothing. Calzaghe said he would retire; Jones was a non-entity in the division who jumped over scores of worthier opponents. The fight should have happened back when Jones really mattered.

[...]You know what De La Hoya-Pacquiao is to me as a committed boxing fan? A middle finger.

If you really love boxing, that fight is not made for you. It’s a fight tailored to self-proclaimed boxing “experts” who ignore pugilism for 364 days of the year, then pretend like they follow it full-time.

From Examiner.com:

Despite his less than appealing record in the ring lately, (3 victories in his last 6 fights), Oscar De La Hoya has managed to keep himself in the sports spotlight, landing at least one colossal mega fight per year.

Many view this fight with high skepticism, partly because it pairs two fighters at totally opposite ends of the weight spectrum.

Oscar De La Hoya has spent his last 7 years fighting as a light middleweight, (154bs), while Pacquiao has spent his entire career 24 pounds (and far more) below.

The dynamics behind this fight make for a very intriguing affair, but in the end, it's clearly a lose, lose situation for the 'Goldenboy'.

If Oscar wins, pundits are gonna say that he beat the smaller guy that he had no business in the ring with.

If Oscar loses, that'll make him 0-6 against future hall-of-famers he faced who were also in their prime (Mosley twice, Mayweather, Hopkins, Trinidad, and then Pacquiao).

What makes it worst is that there is so much meaningful talent in their respective divisions, yet somehow in a recession driven economy, fans are being forced to shell out $55 to watch a fight that probably shouldn't be happening.

And Oscar has the nerve to try to warm the fight public up to a showdown between he and Ricky Hatton (140 lbs) in the summer of '09? Really?....

All of this mega fight stuff is probably good for these guys' pockets, but my parting question for those reading: "How much of it is actually good for the true fight aficionado that actually wants to see a substantive fight"?

I'm a junkie so I'll pay to watch the action, but at the end of the day, I'm not quite sure I totally buy the 'act'.

Do you?

Robbers in Drag Steal $102M in Jewel Heist

Armed Robbers in Paris, France got away with a Jewelry robbery worth $102 million (in U.S.). Some of the robbers were dressed as women (drag).

A bigger theft is going on in Washington:

Detroit automakers and the UAW made headway Thursday in their bid for government aid they say they need to survive, as key senators said they would consider approving at least some of the $34 billion the industry wants.

But the senators at the five-hour Senate Banking Committee hearing also made clear that any loans would come with strict conditions and might require that the carmakers prove by March 31 that they were making progress on their turnaround plans.

A few senators said bankruptcy should remain an option for General Motors Corp. or Chrysler LLC, but more said that letting the automakers fail would deepen the growing recession. Sen. Chris Dodd, D-Conn., who ran the hearing and would oversee any plan in the Senate, said that inaction "plays Russian roulette with the entire economy."

Still, he warned that getting a plan approved next week remains daunting.

"Nothing concentrates the mind like a death sentence, and we're looking at a death sentence if we don't respond intelligently and prudently," Dodd said.

Dodd and other Democratic leaders in Congress urged President George W. Bush late Thursday to use his powers under the $700-billion financial industry bailout to make emergency loans to the automakers, saying his administration had all the authority it needed to set strict rules over the industry in return for rescue.

The Bush administration has said the $700 billion needed to be spent on rescuing banks and other financial businesses, but Democrats cited new research showing that a collapse of the Detroit automakers and their suppliers could deliver a severe blow to credit markets.

"The failure of the Big Three would indeed have a major direct and negative impact on the financial sector, not just on the economy as a whole," said Senate Majority Leader Harry Reid, D-Nev., House Speaker Nancy Pelosi, D-Calif., Rep. Barney Frank, D-Mass., and Dodd.

White House spokesman Blair Jones said late Thursday that the bailout was not meant for automakers and that Democrats can't agree on how to help the industry.

The tone of Thursday's hearing was markedly different from two weeks ago, when several senators suggested the auto industry might not be worth saving and criticized the automakers' chief executive officers for lackluster presentations and coming to Washington in corporate jets. On Thursday, the CEOs arrived in hybrid vehicles, including a prototype Chevrolet Volt plug-in hybrid that GM Chairman Rick Wagoner drove to the Senate office building.

Many on the committee, and the automakers themselves, said they favored government overseers with broad powers. One senator suggested such a position could require GM and Chrysler to merge -- an idea the two companies said could save up to $10 billion annually, and one of the CEOs did not oppose.

There were few conditions that the automakers suggested they would not agree to. Chrysler Chairman Bob Nardelli said he'd be willing to resign as part of a government-ordered merger, Wagoner said GM would even agree to file for bankruptcy if it could not prove progress on its survival plan by March 31.

"We're here today because we made mistakes, which we're learning from, and because some forces beyond our control have pushed us to the brink," Wagoner said. "And most importantly because saving General Motors and all this company represents is a job worth doing."

Ford CEO Alan Mulally also noted past mistakes, but contended that Ford was on the right path now, inviting senators "to visit us in Dearborn to kick the tires."

Republican Congresswoman Hangs up on Obama

Congresswoman Ileana Ros-Lehtinen of Florida hung up on Obama and Rohm Emmanuel Twice. Ros-Lehtinen claims she thought she was being punked just like Sarah Palin was several weeks ago.

When President-elect Barack Obama called Rep. Ileana Ros-Lehtinen at her South Florida district office Wednesday, she hung up on him.

'I thought: `Why would Obama want to call a little slug on the planet like me?' '' Ros-Lehtinen said.

A short time later, Rahm Emanuel, Obama's designated chief of staff, called. Ros-Lehtinen hung up on him, too.

''I thought it was one of the radio stations in South Florida playing an incredible, elaborate, terrific prank on me,'' Ros-Lehtinen said. ``They got Fidel Castro to go along. They've gotten Hugo Chavez and others to fall for their tricks. I said, 'Oh, no, I won't be punked'.''

Ros-Lehtinen was in Miami when she received Obama's first call about 1 p.m. on her cell phone from a Chicago-based number. The person on the line told Ros-Lehtinen, a Republican, that the President-Elect would like to speak to her.

A man, who Ros-Lehtinen said sounded like Obama, got on the line and congratulated her on her reelection and said he was looking forward to working with her as the ranking Republican member of the House Foreign Affairs committee.

The conversation lasted just a minute when Ros-Lehtinen cut Obama off, telling him she wasn't falling for the hoax and that he was a better impersonator than the guy on Saturday Night Live.

Then Emanuel called, and she hung up on him. It finally took Rep. Howard Berman, chairman of the Foreign Affairs Committee, to persuade Ros-Lehtinen that the president-elect indeed wanted to talk to her.

''I asked Howard to tell me a private joke we share about colleagues in the House to make sure it really was him,'' Ros-Lehtinen said. ``When he did, I realized it was the real deal.''

Ros-Lehtinen said she then told Berman: ``I know this sounds very presumptuous, but please tell President-elect Obama he can call me now and I will take his call.''

Obama called back, and Ros-Lehtinen said she told him she ''wasn't playing hard to get,'' but thought it was a joke like Alaska Gov. Sarah Palin getting the call from someone pretending to be French President Nicolas Sarkozy.

This would be the second time in two days the people of Florida got punked. What is it about Conservative Republican women and the fear of getting punked.

Marc Ambinder is reporting that Jeb Bush is considering a run for the Senate to replace the retiring Mel Martinez:

Two sources close to Jeb Bush, including one who has spoken to the former Florida governor within the past few hours, say he is seriously considering a run for Senate now that incumbent Republican Mel Martinez has retired.


"He is receiving a lot of encouragement from both in and out of the state," an longtime Bush adviser said tonight. "He is going to take his time and approach this very methodically." Bush will weigh, according to this adviser, how a run would impact his family, his business, and whether the Senate would be the best platform for the causes he'd advocate -- education, immigration, GOP solutions to health care and energy.

Bush did not respond to an e-mail seeking comment.

If he decides to run, Republicans expect the field to clear for him. Maybe. Gov. Charlie Crist, with whom Bush has not had the warmest of relations, is said to be interested in moving to the Senate. Florida Attorney General Bill McCollum is weighing a bid, as is former state House Speaker Marco Rubio, Orange County executive Richard Crotty, and U.S. Rep. Connie Mack.

Via ThinkProgress, in an interview with NewsMax, President Bush's brother Jeb says the Republican party should not cave to a Democratic majority. Rather, they should set up a "shadow government" to provide a counter-agenda.

Former Florida Gov. Jeb Bush tells Newsmax that the GOP must broaden its appeal to avoid becoming "the old white-guy party," and recommends that Republicans create a "shadow government" to engage Democrats on important issues as the incoming Obama administration seeks to enact its agenda.


In a wide-ranging interview with Newsmax, the popular former governor and younger brother of President George W. Bush said the 2008 election was neither "transformational" nor a landslide. For example, he noted that Barack Obama's significant fundraising advantage over John McCain played a key role in Democratic success this year.

Bush urged Republicans not to abandon their core conservative principles in favor of a "Democratic-lite" agenda. Still, the GOP does need to do some real soul-searching, he said.

Should the Auto Industry be Bailed Out?

Congress will once again consider whether it will bail out the auto industry. The other option being debated is bankruptcy for the big three. But even if they are "bailed out" is it any guarantee that these companies will survive. Isn't there a better solution? How about loans with strings attached? So far the bailing out of the financial markets has been a big flop.

The heads of the big three U.S. automakers are to testify before a U.S. Senate committee Thursday, to make the case for why the government should spend $34 billion to bail them out.

General Motors, Ford and Chrysler are reporting their worst sales in 26 years. GM and Chrysler say they may be out of business by February without government help.

But Senate Majority Leader Harry Reid, a Democrat, tells the Associated Press there are not enough Senate votes at this time to bail out the carmakers.

All three have submitted plans for rebuilding their businesses, severely hurt by the global recession, a lack of consumer credit, and selling large gas-guzzling cars many customers no longer want.

Along with promises to build more environmentally friendly hybrid and electric vehicles, the companies promise to cut jobs and slash executive pay and bonuses.

The United Auto Workers Union says it will renegotiate its contracts with the companies.

Ralph Nader has an opinion on all these bailouts:

In the past ten weeks, “government capitalism” has been a patsy, absorbing huge taxpayer dollars and liabilities to save an assortment of Wall Street financial corporations. Washington is guaranteeing a clutch of securitized mortgages and consumer loans and even guaranteeing, for the first time, 4 trillion dollars of money market funds.

The bailout of Citigroup illustrates the paucity of reciprocity. It is a sweetheart deal. With Citigroup’s co-executive. Robert Rubin rushing to Washington to structure the deal to save his bank and his own stock portfolio, the Bush regime took on $20 billion in preferred shares and put taxpayers at risk for over $300 billion in the big bank’s loan portfolio. Earlier in October, taxpayers were compelled to buy $25 billion in Citi preferred shares.

Whereas the Feds earlier took a potential 79% ownership of Freddie Mac and Fannie Mae to save those companies, for Citi the government only took 7.8% stake and left the management and board of directors intact.

Since these enormous bailouts and revisions of bailouts largely occur over weekends in frantic secret huddles between government officials formerly from Wall Street and their former colleagues from Wall Street, the actual agreements are not disclosed. They are considered official secrets, assuming they even have been finalized beyond mere memoranda of understanding.

Since all these deals, and more seem to be coming from other commercial and industrial pleaders, are general and appear to be open-ended, resourceful government capitalism can advance shareholder rights across the board and compel a variety of corporate reforms and accountabilities long-desired by progressives and conservatives alike.

[...]Let’s have a level playing field here and treat all corporate welfare demanders under equal procedural rules shaped on Capitol Hill. Remember the Constitution. It says all spending bills start with the House of Representatives and then go to the Senate and then to the President. Secret taxpayer bailouts by Executive Branch press releases are not what the framers had in mind when they wrote the Constitution.

With the installation of a new president and a new Congress next month, the process must be reversed and these White House-corporate “understandings” have to be reconsidered and, if maintained, revised.

This is a rare moment in American economic history. Just as the multinational corporations were about to complete the entrenchment of the corporate state in Washington, D.C., — what President Franklin Delano Roosevelt described in 1939 as a condition of fascism—their speculative greed, recklessness, mismanagement and de-regulatory license turned them into massive supplicants at the taxpayers’ trough.

The public does not think the bailing out of the auto industry is a good idea. They are right:

A national poll suggests that six in 10 Americans oppose using taxpayer money to help the ailing major U.S. auto companies.

Sixty-one percent of those questioned in a CNN/Opinion Research Corp. survey out Wednesday are dead set against the federal government providing billions of dollars in assistance for the automakers, with 36 percent favoring such a bailout.

The poll, conducted Monday and Tuesday, also indicates that a majority of Americans, 53 percent, don't think government assistance for the automakers will help the U.S. economy.

"Only 15 percent say that they would be immediately affected if the auto companies went bankrupt," CNN Polling Director Keating Holland said. "Seven in 10 say that a bailout would be unfair to American taxpayers."

In early November, polls indicated that nearly half the public supported federal assistance to the big automakers when this issue first came before Congress.

Chris Matthews: Why Doesn't the Government Just Buy General Motors?

Chris Matthews, on Hardball, seems to be arguing that the government should buy General Motors rather than just bailing out the car industry. Read the transcript here (12-2-08).

CHRIS MATTHEWS, HOST: Is what`s bad for General Motors bad for America?

Let`s play HARDBALL.

Good evening. I`m Chris Matthews. Leading off tonight, take two for the big three. To paraphrase that 18th century author Samuel Johnson, nothing concentrates your mind so much as the realization you might go bankrupt in the morning.

Two weeks ago, the heads of the big three flew to Washington in separate private jets, all pleading poverty. Now Ford`s CEO is driving to Washington in a hybrid, and all the CEOs say they`re going to work for a dollar a year. They`re all submitting their turn-around plans to Congress today, but can they convince the government to bail them out? We`ll talk to one industry expert who says it`s time -- catch this -- to simply nationalize General Motors -- just buy the baby.

And speaking of people with their hands out, the country`s governors met with President-elect Obama in Philadelphia today. They`re asking for a big chunk of Obama`s planned federal stimulus package.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: I`m not simply asking the nation`s governors to help implement our economic plan, I`m going to be interested in you helping to draft and shape that economic plan.

(END VIDEO CLIP)

MATTHEWS: More on what the governors want in a moment.

And those Nixon White House tapes are the gift that just keeps on giving. Nearly 200 hours worth were released today, including this sugar plum between President Nixon and Henry Kissinger, who was then his national security adviser and who had just met with Ivy League presidents, people Nixon didn`t like.

(BEGIN AUDIO CLIP)

RICHARD M. NIXON, PRESIDENT OF THE UNITED STATES: The Ivy League presidents? Why, I`ll never let those sons of bitches ever in this White House again. Never, never, never. They`re finished. The Ivy League schools are finished.

Henry, I would not have had them in. Don`t ever do that again. Don`t ever have them in. They came out against us when it was tough.

Don`t ever go to an Ivy League school again ever. Never, never, never.

(END AUDIO CLIP)

MATTHEWS: Like him already. There`s so much more where that came from, and we`ll talk to former White House counsel -- boy, he knows what he`s talking about -- John Dean. He`s coming to HARDBALL tonight.

Also, voters are going to the polls, of course, tonight in that Georgia run-off election for the Senate between incumbent senator Saxby Chambliss and his Democratic challenger, Jim Martin. Plus, there`s news about Senate seats in Florida, Illinois. And here`s the wild card for everybody watching HARDBALL -- could Bill Clinton replace Hillary Clinton in New York in that Senate seat? More of that in tonight`s "Politics Fix."

And if Sarah Palin is thinking of running for the Senate in two years, she`s getting the "Bring it on" treatment from her fellow Alaska Republican who now holds that seat, Lisa Murkowski. And Alaska snowball fight in the HARDBALL "Sideshow" tonight.

But we begin tonight with the bail-out of those big three auto makers. Joining us from Detroit is the president and chief operating officer of General Motors, Fritz Henderson. Mr. Henderson, well, you look like a happy guy tonight, sir.

FREDERICK "FRITZ" HENDERSON, GM PRES. & COO: I don`t know, Chris. I`m just glad to be here. Thanks for taking the time with us.

MATTHEWS: Well, let me ask you about this. There`s been a proposal out there that the government simply buy General Motors. If we`re going to pay for the bail-out and the bail-out of a company that`s basically broke, why not just buy the company and produce cars at the federal level? If the private sector is not working, why not try the public sector?

HENDERSON: Chris, I guess a couple things. First, we`ve crafted a plan, drafted a plan that`s intended to allow us to be competitive, viable. We`ve asked for support. We have a plan to repay the support. And we think we can get General Motors on the right path. I do have some experience working around the globe, including a number of places where governments have owned auto makers in total, and generally, it doesn`t work.

MATTHEWS: You know, Lee Iacocca, when he borrowed the money for Chrysler back in the `80s, repaid that billion dollars. Can you guarantee that you`ll repay it? If this is a bridge loan, then you should be able to repay it. And what terms do you offer the government in exchange for borrowing $18 billion?

HENDERSON: We -- our plan -- what we did is we sized our plan based upon a number of different scenarios, including a very pessimistic or downside scenario in order to stress-test it.

MATTHEWS: Yes.

HENDERSON: Based upon that scenario, we certainly feel confident that we`ll be able to repay the loan. And in terms of protections, we would offer the normal taxpayer protections, senior status, warrants, ability to call the loan in case we don`t meet milestones, and frankly, an oversight process to make sure we`re hitting our milestones.

MATTHEWS: How do you hit milestones, as you put them, sales goals, if we`re going into a long recession, it looks like? According to the National Bureau of Economic Research, we`ve been in one for a year. Projections are that it could be a long and deep one. How can you sell cars when people really don`t have to buy cars, they choose to in most cases because they want a new car? What stops people from keeping the old car in a recession?

HENDERSON: Well, we`ve been in a blizzard-like recession, actually, since over the last year in our industry. Consumer durables -- second largest for a consumer. The auto business has been turning down. And if I look at this year, first quarter down versus `07. Second quarter down versus the first quarter. Third quarter down versus the second quarter. And then October and November have just been bleak.

MATTHEWS: Yes.

Why did the Indian Government Ignore Warnings Prior to the Mumbai Attack?

The Indian government was warned prior to the Mumbai terror attacks by it's own intelligence agency well in advance (see video below). Why did they ignore the warnings? It is reminiscent of what happened prior to 9-11 and before the London terror attack.

India's intelligence agency warned as recently as November 18 that Pakistan-based militants were preparing to launch an attack on Mumbai - warnings that the Indian authorities are now accused of ignoring in the months before gunmen stormed the country's financial capital, killing at least 174 people.

Indian and European intelligence officials tell CBS News correspondent Sheila MacVicar the information gathered was specific enough to cite threats to Mumbai's main hotels, and the possibility that Islamic militants might use boats to penetrate the city's weak coastal defenses.

The investigation into last week's attack is still developing, but law enforcement officials have said about 10 well-armed, well-trained terrorists came ashore on small boats Tuesday night before methodically ambushing guests at two of Mumbai's most exclusive hotels.

The head of an Indian fishermens' union says he warned the government that militants were using sea routes to smuggle explosives four months ago, reports MacVicar, and a captured Lashkar-e-Taiba operative told Indian interrogators months ago that he had carried out reconnaissance of both the Taj Mahal and Oberoi hotels.

Lashkar-e-Taiba, or LET, is the Pakistan-based group increasingly suspected as being behind the Mumbai attacks. Intelligence sources tell CBS News that the LET is still getting some level of logistical and financial support from members of Pakistan's powerful military spy agency.

[...]"One of the problems is that they had so many warnings that they didn't know which ones to take seriously," said Michael Clarke, a terrorism expert and director of the Royal United Services Institute.

Clarke told CBS News that India's counterterrorism apparatus is in bad shape; used to getting so many warnings that they've become "out of the habit of taking them seriously."

"If you look at the pattern of attacks there (there were two previous attaks in Mumbai) it's astonishing that it's not better," said Clarke.

Senior Indian government officials, including ministers, have already resigned, but angry protesters have been taking to the streets, demanding to know why all the warnings were ignored.

Watch CBS Videos Online
There had been similar terror attacks in Mumbai. The Indian government should have been prepared. This incident is from 2006:

Prime Minister Manmohan Singh praised this wounded city for its strength Wednesday, vowing that “no one can make India kneel,” while a senior investigator said the Mumbai train attacks that killed at least 200 people could be linked to a Kashmiri militant group.

A Foreign Ministry official demanded that Pakistan dismantle all terrorist networks on land it controls — but fell short of directly accusing India’s nuclear-armed rival for the attacks.

Singh highlighted the achievements of this city of 16 million, which staggered back to life despite attacks on the commuter train network Tuesday that killed at least 200 people and wounded more than 700.

“Your resilience and resolve will triumph over the evil designs of the merchants of death and destruction,” Singh said in a televised speech. “Let me say again, no one can make India kneel. No one can come in the path of our progress.”

Eight bombs ripped through packed trains at rush hour, stunning a city that sees itself as the embodiment of India’s global ambitions, where the country’s business community and entertainment world come together. The number of dead has risen steadily as rescuers have found more bodies and people died of their injuries.

President Obama Press Conference (12-1-08)

President-elect Obama held a press/news conference to introduce his new Secretary of State, Hillary Clinton. Read the complete transcript here.

Last week, we announced our economic team, which is working as we speak to craft an economic recovery program to create jobs and grow our struggling economy. Today, Vice President-elect Biden and I are pleased to announce our national security team.

The national security challenges we face are just as grave and just as urgent as our economic crisis. We are fighting two wars. Our old conflicts remain unresolved, and newly assertive powers have put strains on the international system. The spread of nuclear weapons raises the peril that the world's deadliest technologies could fall into dangerous hands. Our dependence on foreign oil empowers authoritarian governments and endangers our planet.

America must also be strong at home to be strong abroad. We need to provide education and opportunity to all our citizens, so every American can compete with anyone, anywhere. And our economic power must sustain our military strength, our diplomatic leverage, and our global leadership.

The common thread linking these challenges is the fundamental reality that in the 21st century our destiny is shared with the world's. From our markets to our security, from our public health to our climate, we must act with that understanding that, now more than ever, we have a stake in what happens across the globe. And as we learned so painfully on 9/11, terror cannot be contained by borders, nor safely provided by oceans alone.

Last week, we were reminded of this threat once again when terrorists took the lives of six Americans among nearly 200 victims in Mumbai. In the world we seek, there is no place for those who kill innocent civilians to advance hateful extremism. This weekend, I told Prime Minister Singh of India that Americans stand with the people of India in this dark time. And I am confident that India's great democracy is more resilient than killers who would tear it down.

And so, in this uncertain world, the time has come for a new beginning, a new dawn of American leadership to overcome the challenges of the 21st century and to seize the opportunities embedded in those challenges. We will strengthen our capacity to defeat our enemies and support our friends. We will renew old alliances and forge new and enduring partnerships. We will show the world once more that America is relentless in the defense of our people, steady in advancing our interests and committed to the ideals that shine as a beacon to the world -- democracy and -- (audio break) -- because American values are America's greatest export to the world.

To succeed, we must pursue a new strategy that skillfully uses, balances and integrates all elements of American power: our military and diplomacy, our intelligence and law enforcement, our economy and the power of our moral example.

The team that we've assembled here today is uniquely suited to do just that. In their past service and plans for the future, these men and women represent all of those elements of American power, and the very best of the American example. They have served in uniform and as diplomats; they have worked as legislators, law enforcement officials and executives. They share my pragmatism about the use of power, and my sense of purpose about America's role as a leader in the world.

I have known Hillary Clinton as a friend, a colleague, a source of counsel and a tough campaign opponent. She possesses an extraordinary intelligence and a remarkable work ethic. I am proud that she will be our next secretary of State. She is an American of tremendous stature who will have my complete confidence, who knows many of the world's leaders, who will command respect in every capital, and who will clearly have the ability to advance our interests around the world.

Hillary's appointment is a sign to friend and foe of the seriousness of my commitment to renew American diplomacy and restore our alliances. There is much to do -- from preventing the spread of nuclear weapons to Iran and North Korea, to seeking a lasting peace between Israel and the Palestinians, to strengthening international institutions. I have no doubt that Hillary Clinton is the right person to lead our State Department, and to work with me in tackling this ambitious foreign policy agenda.

At a time when we face an unprecedented transition amidst two wars, I have asked Secretary Robert Gates to continue as secretary of Defense, and I'm pleased that he's accepted. Two years ago, he took over the Pentagon at a difficult time. He restored accountability. He won the confidence of military commanders, and the trust of our brave men and women in uniform, as well as their families. He earned the respect of members of Congress on both sides of the aisle for his pragmatism and competence. He knows that we need a sustainable national security strategy, and that includes a bipartisan consensus at home.

Charlie Gibson Interviews an Unapologetic George Bush

ABC's Charlie Gibson interviewed the soon to be President George Bush. Read the complete transcript and see the video here.

GIBSON: Do you feel in any way responsible for what's happening?

BUSH: You know, I'm the President during this period of time, but I think when the history of this period is written, people will realize a lot of the decisions that were made on Wall Street took place over a decade or so, before I arrived in President, during I arrived in President.

I'm a little upset that we didn't get the reforms to Fannie and Freddie -- on Fannie and Freddie, because I think it would have helped a lot. And when people review the history of this administration, people will say that this administration tried hard to get a regulator. And there will be a lot of analysis of why that didn't happen. I suspect people will find a lot of it didn't happen for pure political reasons.

[...]GIBSON: That's the second time I've heard you use the word "joyful" about the presidency, and that might take people by surprise. Even in really tough times?

BUSH: Oh, yes. As I said, some times are happy, some not happy. I don't want people to misconstrue. It's not -- I don't feel joyful when somebody loses their life, nor do I feel joyful from somebody loses a job. That concerns me. And the President ends up carrying a lot of people's grief in his soul during a presidency. One of the things about the presidency is you deal with a lot of tragedy -- whether it be hurricanes, or tornadoes, or fires, or death -- and you spend time being the Comforter-in-Chief. But the idea of being able to serve a nation you love is -- has been joyful. In other words, my spirits have never been down. I have been sad, but the spirits are up.

[...]GIBSON: Was the election in any way a repudiation of the Bush administration?

BUSH: I think it was a repudiation of Republicans. And I'm sure some people voted for Barack Obama because of me. I think most people voted for Barack Obama because they decided they wanted him to be in their living room for the next four years explaining policy. In other words, they made a conscious choice to put him in as President.

GIBSON: But both candidates wound up criticizing you a lot.

BUSH: Yes, well, that's what happens when you're the incumbent during a tough economic time, but --

GIBSON: Hurt?

BUSH: No, not really. You know, I've been around politics a long time. Remember, I was the guy in 2000 who campaigned for change. I campaigned for change when I ran for governor of Texas. The only time I really didn't campaign for change is when I was running for reelection.

[...]GIBSON: Do you feel the divisions are deeper, the enmities perhaps a little stronger, the language a little tougher now than it was January 20, 2001?

BUSH: Yes, I do. I do. I think -- I don't know, the close election created some pretty harsh language. But once I was President I think people decided that, well, let's try to work with him, and I said, I'd like to work with you, and we did some pretty good things. But having said that, Washington has always been politics. I mean, if you, like, for example, study the early Presidents, there's some pretty tough language when it came to Abraham Lincoln, or the relationship between George Washington and Thomas Jefferson.

So I didn't go into this naively, I knew it would be tough. But I also knew that the President has the responsibility to try to elevate the tone. And, frankly, it just didn't work, as well as I'd like to have it work.

GIBSON: I guess the bottom-line question I'm asking you is, do you feel you were in any way able to change Washington? Or do you feel --

BUSH: I think we did. I think we brought a results-oriented government, and we insisted that people focus on results, not process, and on a variety of reforms. Whether it be No Child Left Behind, or like the PEPFAR Initiative, or the Malaria Initiative, the question we always asked was, are we achieving the results?

Washington can be a very process-oriented town. The budget process -- let's just pass money because the program sounds good. We worked hard to say, is the program achieving the results? If not, let's eliminate it.

Obama Ignores Hispanics in Cabinet Picks

President-elect Obama has not chosen any Hispanics is top cabinet post picks, including snubbing Governor Bill Richardson. Latino voters were instrumental in the new President's election. Not to mention that Richardson supported Obama during the primaries and was called a traitor for doing so. He proved his loyalty, not Hillary. Why is he ignoring them?

If there is one message President-elect Barack Obama’s transition team has broadcast about Cabinet picks, it is that ethnicity and gender will not be the first considerations when filling the slots.

Credentials over tokenism, after all, was a fundamental principle of Obama’s presidential campaign that highlighted his ideas and community values over his African-American background. Still, if all goes as planned, Cabinet members with hefty résumés will present a picture of diversity.

Hispanic political leaders agree. Their expectations for seats at the president’s top policy table are not about meeting quotas but about advancing the reality that within this fastest-growing ethnic group are seasoned policy experts who understand the economic, foreign and domestic policy concerns shared by everyone.

Obama promised hope and change, and Hispanics hoped for the usual two Latinos in the Cabinet. And heck, why not three or four? Now that would be a change.

But at this early stage in the appointments process, there is a trickle of disappointment running through the Latino community.

First, the most prominent Hispanic leader, New Mexico Gov. Bill Richardson, lost the plum secretary of state assignment to New York Sen. Hillary Rodham Clinton. Last spring, Richardson angered the Clintonistas by backing Obama over Clinton during the heated Democratic Primary contest, only to now see her being offered the top diplomatic post.

“There’s nobody more prepared and experienced” for the job than Richardson, said Arturo Vargas, executive director of the National Association of Latino Elected and Appointed Officials. Richardson was energy secretary and ambassador to the United Nations during the Clinton administration, and he helped free hostages in North Korea, Iraq and Cuba.

Bush had more hispanic-Americans in his cabinet than Obama. How could the multi-cultural, inclusive Obama be less diverse than the Republican Bush?

If the president-elect fails to deliver, he and his Latino surrogates will be held accountable. If Obama doesn't at least match President Bush's good record of Latino appointments, they will have "problemas" explaining it to their own constituents.

Yet as more and more people are appointed -- or reported to be shoo-ins for various nominations -- the cards being drawn have only black and white faces. The brown-faced cards are not coming up.

In fact, the main card Latinos have in this game -- bearing the face of New Mexico Gov. Bill Richardson -- has been switched.

Instead of secretary of state, which is the job Richardson is most qualified to fill and the high-level appointment Latinos expected from Obama, it looks as if Richardson will be relegated to commerce secretary.

Ironically, Sen. Hillary Clinton, the presidential candidate who enjoyed the most Hispanic support during the primaries, is now the leading candidate for the high-level job that could have gone to a Latino. Richardson, a former Cabinet member under President Clinton, was called a traitor for supporting Obama over Clinton during the Democratic primaries. Now it is Clinton who is getting the secretary of state position, the job Richardson wanted, and it is Latinos who still are waiting for the appointments they feel they earned on Election Day.

To do better than recent presidents, Obama would have to name a significant number of Latinos not only to his inner circle of White House advisers and his Cabinet but also throughout his administration. According to a Brookings Institution study, in 1993, 6 percent of President Clinton's initial round of appointments went to Latinos. In 2001, Latinos got 8 percent of President Bush's appointments.

In 2009 will Obama do better? He should! More Latinos voted for him than for any other president.

Of course, Obama himself helped to raise Latinos' expectations. "When I'm president, I'll be asking many of you to serve at every level of government," Obama said during a speech to the Congressional Hispanic Caucus Institute in September.

Meet The Press Transcript (11-30-08)

First lady Laura Bush and Ted Turner appeared on Meet the Press this week. Read the complete transcript (11-30-08).

MS. BUSH: Life under the Taliban is so hard and repressive, even small displays of joy are outlawed--children aren't allowed to fly kites; their mothers face beatings for laughing out loud. Women cannot work outside the home, or even leave their homes by themselves. ... Only the terrorists and the Taliban forbid education to women. Only the terrorists and the Taliban threaten to pull out women's fingernails for wearing nail polish. The plight of women and children in Afghanistan is a matter of deliberate human cruelty, carried out by those who seek to intimidate and control. ... In America, next week brings Thanksgiving. After the events of the last few months, we'll be holding our families even closer. And we will be especially thankful for all the blessings of American life. I hope Americans will join our family in working to insure that dignity and opportunity will be secured for all the women and children of Afghanistan.

(End audiotape)

MR. BROKAW: Not too long after that, great progress was made in Afghanistan.

MS. BUSH: That's right.

MR. BROKAW: Women became involved in politics, they're members of the parliament. They've taken a much more active role in that country. But as we all know, the Taliban have come back into Afghanistan in larger numbers, and now there were 15 schoolgirls that were attacked...

MS. BUSH: That's right.

MR. BROKAW: ...with acid in Kandahar just recently. Some arrests have been made...

MS. BUSH: Mm-hmm.

MR. BROKAW: ...but that's pretty discouraging, isn't it?

MS. BUSH: It is discouraging. But on the other hand, there has been lots of progress. Are there steps back? Yes. And they're terrible, brutal happenings like the girls who were just walking to school and were targeted just because they were going to school, and disfigured with acid. The really good news is these--the people who did it have been arrested. There is an Afghan police force now and an Afghan army that are building up to be able to protect the people of Afghanistan internally like the--like we want them to. We all want them to. And there are many, many signs of progress. When I was in Bamiyan this year I met with a governor, female governor, I met with female police officers. Are there--are women afraid to step out and have some of these roles? Sure, to some extent they are. But these sort of happenings are more isolated than they sound when we read about them in the newspaper, because they are so horrific when we read about it.

MR. BROKAW: And it's much worse in the south and in the rural areas...

MS. BUSH: That's right.

MR. BROKAW: ...than it is in the north.

MS. BUSH: That's--and Kabul is in much better shape, I think, than it has been. Violence is down there in the city. But in certain parts of Afghanistan, because there are still so many very conservative people, women themselves are afraid. I met with a group of women, parliamentarians, members of parliament, who were in the United States recently, and they said, "This is our chance, and if we don't take this chance, if we don't succeed now then when will we ever be able to?" And I think the main thing that that says to me is that we need to stay with them, we have to continue to support them.

Recently when there was a terrorist bombing in Afghanistan, a group of people--1,000 protesters actually came out to protest. Most people in Afghanistan want to be able to build their country, live a decent life, not be afraid of a terrorist attack, and the fact is we just need to keep working with them so they can do it.

Food Prices on The Rise

Why are food/grocery prices on the rise when the price for everything else are going down?

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