Thursday, April 22, 2010

DiNapoli Warns State Could Run Short on Cash

ALBANY, NY (WKBW) -- State Comptroller Thomas P. DiNapoli today reported that New York State finished the 2009-10 fiscal year with a General Fund balance of $2.3 billion.

The state only ended the fiscal year in the black because the Governor delayed $2.9 billion in payments, and DiNapoli warns that by pushing these payments into the new fiscal year, the state could run out of money in June.

“The state is starting the new fiscal year the way we ended the old one,” DiNapoli said. “The state’s finances are very shaky. Big bills are piling up, and there may not be enough cash to cover them. We need the Governor and the Legislature to agree on a realistic budget that aligns revenue with spending and isn’t a replay of last year’s buy-time budget. Without a responsible spending plan, our cash shortfalls may be much worse than last year.”

The state Division of the Budget projects the General Fund will end the months of May, June, July and August with a negative balance.

Below are highlights of the state's cash position in the General Fund at the end of the fiscal year:

- Through March 31, total General Fund revenues, including transfers, totaled $52.6 billion. Total revenues were $156.4 million below projections and $1.2 billion lower than last year.

- General Fund tax revenue totaled $37.1 billion, which was $1.2 billion less than last year, primarily due to lower personal income tax collections.

- General Fund spending, including transfers, was $52.2 billion through March 31. This was $1.1 billion below projections and $2.4 billion, or 4.4 percent, lower than last year. Much of this reflects the shift of spending by Governor into the next fiscal year.

For a full copy of the report, click here.

State Revenues Down $130 Million

State revenues are down for fiscal years 2010 and 2011 by more than $130 million dollars.

The Kansas Division of the Budget released its latest figures Friday afternoon.

The figures bring grim news to an already strapped budget. Kansas Governor Mark Parkinson released a statement saying " This estimate confirms what we have predicted since the start of the year - despite having already cut more than a billion dollars in state spending, Kansas still faces a $510 million budget shortfall.
This hole is too big to fill with additional cuts. $510 million in cuts would decimate our schools, public safety programs and safety net services for our most vulnerable Kansas.
Instead, we must implement a temporary solution so that we can create lasting economic recovery. That’s why I reiterate my call for the legislature to return to Topeka at the end of the month prepared to raise the revenue we need to prevent permanent damage to the foundation of our state. The only cost we cannot bear is the cost of doing nothing.”

Lawmakers return for the wrap up session next week as they try to balance the budget.

State $319M short

BATON ROUGE — Gov. Bobby Jindal said he and the Legislature will "do everything we can to mitigate cuts" to higher education and health care, but the plan for cutting or using other funds to fill a $319 million budget hole won't be complete until Friday.

Jindal said "everything is on the table" for consideration as ways to cover the shortfall — except increased taxes.

Action must be taken because the state constitution requires a balanced budget.

The Revenue Estimating Conference acceptance of Legislative Fiscal Office economist Greg Albrecht's estimate that state revenues are down $319 million set in motion talks among the governor and legislators on how best to handle the problem.

Senate President Joel Chaisson, D-Destrehan, said making the cuts at such a late date "is going to be painful."

Implementing any cuts at this time will be "very traumatic, very problematic," said Jerry LeBlanc, vice president for finance at the University of Louisiana at Lafayette.

LeBlanc served as chairman of the House Appropriations Committee while he was in the Legislature and later served as commissioner of administration — the chief financial officer — in the Gov. Kathleen Blanco administration.

"I don't recall that we've ever had two cuts in one year," he said. "Even when Katrina hit, we had just one midyear cut of almost $1 billion."

It's hard on all of state government, LeBlanc said, but particularly bad for higher education because the vast amount of budgets is salaries "and by this time in the year 95 percent of your budget is gone."

"It's really difficult when you have to make up all the cut in eight weeks," he said. "This late in the year there's less and less on the table and whatever's left takes a greater impact. Our options are dwindling. What's left we almost have to wipe out. On a college campus it comes to just about shutting down and massive furloughs."

LeBlanc said his university has adopted the philosophy "protect the academic core and protect the students."

Despite the almost frantic activity to drill natural gas wells in the Haynesville Shale area of northwestern Louisiana, the state can't depend on that as a bailout from the financial problems, Albrecht said. In fact, state severance tax revenues are down 18.5 percent.

The major reason, he said, is a 1992 law that was designed to stimulate directional drilling and other methods of extracting oil from abandoned wells. The law grants a two-year exemption from paying severance taxes, so the major production from Haynesville wells is tax exempt.

Don Briggs, president of the Louisiana Oil and Gas Association, says the major production in the shale area is in the first year of production, with wells producing about 20 million mcf per day.

At 31 cents per mcf (1,000 cubic feet), that could be major severance tax revenue for the state, but by the time the tax kicks in, wells will be producing an average of 400 mcf a day, Briggs said.

At 400 mcf, the state would get $124 a day per well at 31 cents severance tax.

Albrecht said the only way the state could get significant revenue is if there are a number of wells producing at that rate for a lengthy time.

Briggs said "several thousand" wells could be producing for 20-to-30 years, "some as long as 50 years, so the state will realize severance tax revenues."

The state is benefitting from all the investments drilling companies are making, he said. A study found $7 billion was spent in northwestern Louisiana on drilling operations in 2009.

Declining state revenue leads to hard budget decisions for leaders

DEXTER - Much like a family that has to make hard spending decisions when times are tough, leaders in Missouri have had to make hard budget decisions this year in light of declining state revenues.

The Missouri Senate Appropriations Committee has been a key player in this process, working closely with the Governor Jay Nixon and with the members of the House of Representatives.

It's been a long, hard road, as the state's economy has reflected the nation's, and state leaders hat to look at a shrinking state pool of revenue.

The committee and its chairman, State Sen. Rob Mayer, R-Dexter, recently completed in committee a budget plan that cut more than $500 million from the budget for next year -- thus meeting budget goals set earlier this year.

The cuts range from items of just a few dollars to large cuts millions of dollars from programs in an effort to keep Missouri's budget balanced.

Mayer said declining state revenue coupled with uncertain federal funding meant that at least $500 million had to be trimmed from the budget.

Missouri is bound by the state constitution to have a balanced budget -- to not spend more than the state has in revenue.

"We're in a horrendous economic time. We're having to do things we normally would not support and would not want to do," Mayer said in a recent interview in his Dexter office. "I don't think people realize just how bad the situation really is. I don't like making these cuts -- I really don't. But the money just isn't there. "

This week, the whole Senate debated the original Appropriations budget bill, and late Wednesday restored some funding. The chamber passed a plan with fewer cuts than the original submitted by the appropriations Committee. But the revised Senate budget still has more than $450 million trimmed from the budget originally proposed in January by Nixon.

Part of the Appropriation Committee's original budget plan called for the elimination of a popular program with many Missouri school districts and teachers, the Career Ladder. On Wednesday, senators restored $37.5 million to the program.

Career Ladder was created in 1985 and pays teachers an extra $1,500 to $5,000 annually for taking on extra duties, such as after-school tutoring. The program's cost is shared by the state and local school districts. Last year, about one-quarter of the public K-12 teachers in Missouri participated in the program.

Mayer said last week that he liked the Career Ladder program and thought it was a positive, beneficial program for the state's teachers.

Mayer's wife, Nancy, even participated in the Career Ladder program when she taught in the Blue Springs school district (near Kansas City) when the state senator was in law school. Nancy Mayer retired from teaching last year with the Dexter Public Schools and was elected this month to the Dexter Board of Education.

"If we can find a way to restore it, I'm all for that," Mayer said of Career Ladder. But he cautioned that with an original goal of trimming $500 million, there wasn't much room to find funding for its restoration.

However, this week Mayer had a change in heart, partly because of the way in which local school districts receive the state's share of Career Ladder funding.

Unlike most state programs, teachers are paid for their work in the following budget year. That means trimming money from the program would prohibit the state from paying teachers who already have done the work. .

Mayer said his change of heart came in part because of that unique funding system.

"When somebody works for you, you pay them what you told them you would pay them. And you pay them as promptly as possible," Mayer said.

Even as work on next year's budget is being wrapped up, Mayer says more budget worries lie ahead.

"It's bad now, but we haven't seen the worst yet," he said." The worst really is yet to come."

Mayer said projections call for the state's financial picture to only get worse in fiscal year 2012.

Legislators must have a completed budget on Nixon's desk by May 7. This year's session of the General Assembly ends May 14.

Editor's note: This is the first installment of a series focused on Missouri's budget challenges

The Associated Press provided some information for this report.

Fed Official: We Can Just Print Money, Damn It!

In an odd post, WSJ analyzes the Fed's just released financial statements as though it were simply a bank like any other, and concludes:
It has a more risky portfolio than it’s ever had before, including $1.25 trillion in mortgage securities that could lose market value if interest rates rise, if defaults climb or if it has to sell them quickly. A 4% loss on that portfolio would equal almost all of its capital.
Coming back to reality, WSJ then notes:
Of course the Fed can print money itself. (As opposed to a bank, which depends on the backing of depositors and other creditors to fund its operations.) Thus, as a Fed official notes, on condition of anonymity, it would be able to continue operating even if its capital becomes depleted.

Republicans Warn Bank Bill Could Backfire as Dems Push for a Deal

Senate Democrats are meeting with key Republicans in a bid to reach a deal on a Wall Street regulation package by the end of the week -- but Republicans are standing firm on objections to several proposals they say would clamp down on economic growth and encourage big banks to take more risks, not fewer.

Senate Democrats are meeting with key Republicans in a bid to reach a deal on a Wall Street regulation package by the end of the week, but Republicans are standing firm on objections to several proposals they say would clamp down on economic growth and encourage big banks to take more risks, not fewer.

The mood of negotiations is slightly better than it was a week ago, when all 41 Republican senators wrote to Senate Majority Leader Harry Reid stating their "united" opposition to the bill and demanding he take a "bipartisan and inclusive" approach.

Despite the name-calling and browbeating from both sides, Senate Banking Committee

Chairman Chris Dodd, D-Conn., is meeting with his GOP counterpart, Sen. Richard Shelby, R-Ala., to set the stage for a bill that can hit the floor by next week.

But conservatives and liberals alike are expressing concerns that the package has been hastily thrown together and could backfire. While it aims to protect consumers and rein in Wall Street, it could have the opposite effect, they say.

Here's some of what the bill does and why some people want it changed:

-- Establishes a $50 billion bailout fund financed by banks. Intended to be used to liquidate failing financial institutions before they do damage to the rest of the system, the fund has been panned as an incentive for risky behavior. The Obama administration is now calling for the fund to be stripped from the bill, and some Senate Democrats, including Dodd, appear open to the idea.

The chief complaint is that the fund could encourage risky bet-making, since banks would know they have a bailout of last resort. The fund has generated some bipartisan concerns as well. A host of top liberal economists, finance professionals and former officials sent a letter to Senate leaders this week slamming the bill and calling for Congress to eliminate the "perpetual system of government sponsored corporate bailouts financed by the government or private industry." Co-signers included former Labor Secretary Robert Reich, former Lehman Brothers Vice Chair Peter Solomon and former Securities and Exchange Commission official Lynn Turner.

"Failure means failure," Shelby said in a statement last week opposing the fund.

"You put a $50 billion fund out there, and I guarantee you we'll use it," Senate Minority Leader Mitch McConnell said Tuesday.

Some top Democrats were holding fast to the fund, though. Delaware Sen. Tom Carper told Fox News he doesn't buy the argument that the fund would encourage risk since the Federal Deposit Insurance Corporation provides a similar cushion.

"The FDIC experience doesn't suggest that's the case," he said.

But Dodd said late Tuesday that a "trust" could work, noting that the legislation could make clear that the money could be used for no other purpose than the orderly unwinding of a failing institution.

-- Creates a Bureau of Consumer Financial Protection. The bill would establish a new federal regulatory entity for lenders housed at the Federal Reserve, but many are concerned the new agency would have way too much power and far too much influence over thousands of small banks and institutions on which other small businesses rely for credit.

The Chamber of Commerce, in a letter to the Senate, wrote this week that the bureau would have "unchecked and unprecedented power," held largely by a single director.

Sen. John Thune, R-S.D., said Tuesday that the bureau would impose "new mandates, new regulations, new costs on small lenders, community banks, credit unions" -- all institutions making loans to small businesses. The concern that the bureau's regulations could dry up credit to small businesses at a time when the economy needs new and growing employers has some lawmakers calling for the provision to be scaled back.

-- Establishes a Financial Stability Oversight Council. The nine-member council would have broad power to work with the Federal Reserve in identifying risks in the financial system. The body, with a two-thirds vote, would be able to clear the Federal Reserve to break up large companies if they are deemed a threat to the overall system.

It would also be able to put non-bank firms under the regulation of the Federal Reserve if they are deemed a threat, and would work with the Fed to put added restrictions on banks as they grow in size. McConnell and others have expressed concerns that the council could play favorites -- getting tough on some firms while protecting others.

Lawmakers are continuing to debate how to regulate the complex derivatives market. And another concern starting to emerge this week is that the bill does not address mortgage giants Fannie Mae and Freddie Mac, which were taken over by the federal government in 2008.

House Republican Leader John Boehner on Wednesday said those firms should be privatized to limit the risk to taxpayers, a call echoed by the conservative Americans for Limited Government. The letter from liberal economists also called on Congress to address this issue.

The letter warned that the current bill will not go far enough to crash-proof the financial system.

"Neither the bill passed earlier this year by the House, nor the one currently under consideration in the Senate would have prevented the crisis. Without serious restructuring, they will not prevent a future crisis," the letter said.

Even if the legislation passes, Sen. Bob Corker, R-Tenn., said he is confident Wall Street will find a way to get into trouble again by betting against bad investments.

"We'll have another problem, something else that creates it and unfortunately history repeats itself, we'll have another crisis, no question," he told Fox News.

Obama accused of playing politics with the law over Goldman Sachs

President Obama
(JEWEL SAMAD/AFP/Getty Images)

President Obama used a fundraiser in California to mock Republican links to Wall Street and said he would veto a Bill that did not regulate derivatives

Goldman Sachs was at the centre of a political storm last night as senior Republicans began an investigation into the possibility that the White House colluded with Wall Street’s regulator over the decision to sue the bank for alleged fraud.

They are demanding proof that the Securities and Exchange Commission (SEC) did not communicate improperly with the White House, the Democratic Party or any Democrats in Congress before suing the bank last Friday for allegedly withholding vital information from investors in the build-up to the crash of 2008.

Wall Street and its allies have claimed with increasing anger that the Goldman suit was timed to help the Obama Administration to force Republicans into backing a financial regulatory reform Bill designed to prevent banking crises in the future.

However, a letter addressed to the SEC’s chairman yesterday, and seen by The Times, is the first formal accusation of wrongdoing by the commission or complicity by the US Administration.

The timing of the lawsuit “has created serious questions about the commission’s independence and impartiality”, the letter states. It was drafted by Darrell Issa, the ranking Republican on the House Committee on Oversight and Government Reform, and signed by seven other Republican members of the committee.

The letter adds that subsequent revelations — including details of a vote along party lines within the SEC to approve the lawsuit — have fuelled “legitimate suspicion” that the commission was trying to help the White House, breaching its own ethics guidelines in the process.

Mary Schapiro, the SEC’s chairman, who was appointed by President Obama, joined two Democrats on a five-member panel within the commission to approve the decision to sue the Wall Street powerhouse instead of seeking to settle out of court — a more normal practice in such cases. In another break with convention, the bank says that it was given “no clue” of the impending litigation.

Democrats have seized on claims of fraud at Goldman, which announced yesterday a year-on-year increase of 91 per cent in quarterly profits to $3.46 billion (£2.25 billion). They are struggling to pass a financial reform Bill stalled in the Senate because of Republican threats to defeat it by filibuster.

At the same time a separate Bill that would regulate the trading of complex derivatives for the first time came under attack yesterday from hundreds of lobbyists who descended on Washington to argue that an unregulated derivatives industry is vital for farms and manufacturers that use it to hedge against market downturns.

Mr Obama has said he will veto any financial reform Bill that does not regulate derivatives. He mocked Republicans’ closeness to Wall Street lobbyists at a fundraiser for Senator Barbara Boxer in California on Monday. Confident that voters support him even if Republicans refuse to, he will travel to New York tomorrow to press his case for an overhaul of the system that led the US economy to the brink of collapse in 2008.

A senior administration official has described financial reform as a “win-win-win” proposition for Mr Obama on the ground that it will take only one Republican defector to ensure passage of a Bill. If all 41 Republican senators oppose it they will only help Democrats who want to brand them the party of “no” in the months leading to November’s midterm elections.

Timothy Geithner, the Treasury Secretary, held meetings with Republican moderates on Monday, hoping to prise them away from their party with an offer to drop a provision in the reform Bill for a $50 billion fund for winding up troubled financial firms. Republicans argue that the fund amounts to a continued commitment to support institutions deemed “too big to fail”.

Senator Susan Collins, from Maine, emerged from her meeting with Mr Geithner unpersuaded but two other moderate conservatives — senators Olympia Snowe and Bob Corker — have hinted that they will back the Bill.

That would give new protections against mis-sold mortgages for consumers and new authority for the Treasury and the Federal Reserve to step in and dismantle failing banks. A victory on financial reform would also give Mr Obama his second historic victory on Capitol Hill in as many months — a scenario that Republicans dread.

Mr Issa has given the SEC until Tuesday to provide the names of anyone at the commission who communicated with congressional Democrats or administration officials on the subject of the Goldman suit before it was filed. The White House has denied any advance knowledge.

Even so, as Mr Issa noted: “It must be nice for Democrats that the SEC’s filing . . . so conveniently fits into their political agenda.”

Homeowner Bailout Program Won’t Fix Housing Crisis

Connie Hair at Human Events reports:

A new report released yesterday (.pdf) by Neil Barofsky, special inspector general for the Troubled Asset Relief Program (TARP) warns that Obama administration efforts to bailout homeowners through the Home Affordable Modification Program (HAMP) are ineffective and will not stem the sweeping tide of foreclosures.
The $75 billion HAMP program was created with a promise to bailout 3 to 4 million homeowners in foreclosure, paying lenders to modify troubled mortgages. Foreclosures reached 2.8 million in 2009 and are on track to exceed that total with over 932,000 foreclosures filed in the first three months of 2010, the report found.
The inspector general found the program “has made very little progress in stemming this onslaught” in a year with only 230,000 loans permanently modified. . . .
Rep. Jeb Hensarling (R-Texas), top Republican on the House Financial Services Subcommittee on Financial Institutions and Consumer Credit put a fine point on the bailouts rewarding bad behavior.
“We must remember that 93.6% of households rent, own free and clear, or are current on their mortgages,” Hensarling stated. “Programs like HAMP that force the responsible majority to subsidize the irresponsible minority should be rejected. . . .
“Not only is this expensive program ineffective, it is completely unfair,” Hensarling said. “HAMP forces responsible taxpayers, struggling to make their own mortgage payments, to pay their neighbor’s mortgage. . . ."
Meanwhile, Hensarling is offering a bill that would repeal the Community Reinvestment Act, the Jimmy Carter-era legislation that helped spawn the mortgage meltdown.

Not only is the failure of HAMP the latest evidence that Obamanomics still isn't working, but this SIGTARP report is yet further confirmation of my hunch last summer -- when the "IG-Gate" scandal heated up -- that Barofsky was "the IG most likely to get a Cabinet secretary sent to federal prison."

But we really don't want to start talking about Tim Geithner and Goldman Sachs, do we?

8 Invented Diseases Big Pharma Is Banking on

Sleep sweating? Here are some new ways the pharmaceutical plans to make money.

Since direct-to-consumer drug advertising debuted in 1997, pharma's credo has been When The Medication Is Ready, The Disease (and Patients) Will Appear. Who knew so many people suffered from restless legs?

But pharma's recent plan to move from mass-market molecules into more lucrative vaccines and biologics did not see the anti-vaxer movement coming: millions of Americans saying You Want to Vaccinate Me -- and My Child -- with WHAT?? and condemning vials of H1N1, rotavirus and MMR vaccines to sit, well, way past their expiration dates. Nor were fears of an international vaccine conspiracy helped by former CDC Director Julie Gerberding resurfacing as President of Merck Vaccines in December. (Nice revolving door if you can catch it.)

Now pharma is back to creating new diseases, patients, risks and "awareness campaigns" faster than you can say thimerosal (the vaccine preservative that started the backlash.)

1. SERM deficiency

A pill to prevent postmenopausal osteoporosis packs the "magic three" of drug sales-- fear, forever and faith--since you never know if it's working or you need it but fear stopping. But 15 years after women began swallowing bisphosphonates like Boniva and Fosamax because pharma-planted bone density machines in medical offices revealed they had "osteopenia,"* bisphosphonates are linked to jaw bone death, esophageal cancer and causing the fractures they were supposed to prevent. Sorry about that. Now pharma is hawking Selective Estrogen Receptor Modulators (SERMs) like Evista and Tamoxifen to prevent osteoporosis and even some cancers. Unfortunately they can cause others…

2. Statin Deficiency

If it seems like the whole world is on statins, it's not your imagination. Last year the FDA approved AstraZeneca's Crestor for children as young as 10 and in March it approved Crestor for 6.5 million people who have no cholesterol or heart problems at all! (See: fear, forever and faith.) Many say, since lead investigator of the Justification for the Use of Statins in Primary Prevention study Paul Ridker of Brigham and Women's Hospital in Boston is co-patent holder/inventor of the C-reactive protein (CRP) test which "proves" Crestor's effectiveness, there's a conflict of interest. Others say, since CRP isn't necessarily even a marker for heart disease and statins can cause Type 2 diabetes, it's bad science along with a conflict of interest.)

3. Circadian Dysrhythmia

Insomnia is a gold mine for pharma because everyone sleeps -- or watches TV when they can't. But Ambien, Lunesta, Sonata and Rozerem have reached market saturation, so pharma is rolling out subcategories like nocturnal, middle-of-the-night (MOTN) and terminal insomnia and sleep eating, sleep walking and sleep sweating (yes sweating) to boost the franchise. Meanwhile another demo is swelling Circadian Dysrhythmia numbers: Thanks to restless legs syndrome, sleep apnea, shift work sleep disorder, people who skimp on sleep and of course insomnia meds themselves, there's an epidemic of excessive sleepiness! Enter Provigil --"a mood-brightening and memory-enhancing psychostimulant which enhances wakefulness and vigilance," -- Adderall and Vyvanse, known in the days of Lenny Bruce -- also an "excessive sleepiness" sufferer -- as speed.

4. Adult Autism, ADHD and Refusal to Play Nicey

Having marketed adult diseases like depression, bipolar disorder and schizophrenia in 4-year-olds to death, pharma is now finding childhood diseases in adults. Adults with ADHD have hyperactivity, impulsivity, "executive function deficits" and "difficulty with organization and time management," says Harvard Medical School's Joseph Biederman, in a 2004 JAMA. The disease, found in most people's brother-in-laws, requires "lifelong" medication says Biederman, who was accused of pushing Risperdal and hiding pharma income by Congress in 2008. Adults may suffer from autism too says a 2008 article in Psychiatric News, if they're "unsociable, extremely rigid, given to angry outbursts" and "acutely sensitive to light, heat, and pain." Luckily, in two studies "SSRI antidepressants led to a decrease in repetitive behaviors and to somewhat more socializing," in adults with autism says Psychiatric News.

The Wrong Man

In the fall of 2001, a nation reeling from the horror of 9/11 was rocked by a series of deadly anthrax attacks. As the pressure to find a culprit mounted, the FBI, abetted by the media, found one. The wrong one. This is the story of how federal authorities blew the biggest anti-terror investigation of the past decade—and nearly destroyed an innocent man. Here, for the first time, the falsely accused, Dr. Steven J. Hatfill, speaks out about his ordeal.

By David Freed

Image credit: Melissa Golden/Redux

The first anthrax attacks came days after the jetliner assaults of September 11, 2001. Postmarked Trenton, New Jersey, and believed to have been sent from a mailbox near Princeton University, the initial mailings went to NBC News, the New York Post, and the Florida-based publisher of several supermarket tabloids, including The Sun and The National Enquirer. Three weeks later, two more envelopes containing anthrax arrived at the Senate offices of Democrats Tom Daschle and Patrick Leahy, each bearing the handwritten return address of a nonexistent “Greendale School” in Franklin Park, New Jersey. Government mail service quickly shut down.

The letters accompanying the anthrax read like the work of a jihadist, suggesting that their author was an Arab extremist—or someone masquerading as one—yet also advised recipients to take antibiotics, implying that whoever had mailed them never really intended to harm anyone. But at least 17 people would fall ill and five would die—a photo editor at The Sun; two postal employees at a Washington, D.C., mail-processing center; a hospital stockroom clerk in Manhattan whose exposure to anthrax could never be fully explained; and a 94-year-old Connecticut widow whose mail apparently crossed paths with an anthrax letter somewhere in the labyrinth of the postal system. The attacks spawned a spate of hoax letters nationwide. Police were swamped with calls from citizens suddenly suspicious of their own mail.

Video: The author and Steven Hatfill speak with The Today Show’s Matt Lauer

Americans had good reason to fear. Inhaled anthrax bacteria devour the body from within. Anthrax infections typically begin with flu-like symptoms. Massive lesions soon form in the lungs and brain, as a few thousand bacilli propagate within days into literally trillions of voracious parasitic microbes. The final stages before death are excruciatingly painful.As their minds disintegrate, victims literally drown in their own fluids. If you were to peer through a microscope at a cross-section of an anthrax victim’s blood vessel at the moment of death, it would look, says Leonard A. Cole, an expert on bioterrorism at Rutgers University, “as though it were teeming with worms.”

The pressure on American law enforcement to find the perpetrator or perpetrators was enormous. Agents were compelled to consider any and all means of investigation. One such avenue involved Don Foster, a professor of English at Vassar College and a self-styled literary detective, who had achieved modest celebrity by examining punctuation and other linguistic fingerprints to identify Joe Klein, who was then a Newsweek columnist, as the author of the anonymously written 1996 political novel, Primary Colors. Foster had since consulted with the FBI on investigations of the Unabomber and Atlanta’s Centennial Olympic Park bombing, among other cases. Now he was asked to analyze the anthrax letters for insights as to who may have mailed them. Foster would detail his efforts two years later in a 9,500-word article for Vanity Fair.

Surveying the publicly available evidence, as well as documents sent to him by the FBI, Foster surmised that the killer was an American posing as an Islamic jihadist. Only a limited number of American scientists would have had a working knowledge of anthrax. One of those scientists, Foster concluded, was a man named Steven Hatfill, a medical doctor who had once worked at the Army’s elite Medical Research Institute of Infectious Diseases (USAMRIID), which had stocks of anthrax.

On the day al-Qaeda struck the World Trade Center and the Pentagon with hijacked jetliners, Hatfill was recovering from nasal surgery in his apartment outside the gates of Fort Detrick, Maryland, where USAMRIID is housed. We’re at war, he remembers thinking as he watched the news that day—but he had no idea that it was a war in which he himself would soon become collateral damage, as the FBI came to regard him as a homegrown bioterrorist, likely responsible for some of the most unsettling multiple murders in recent American history. His story provides a cautionary tale about how federal authorities, fueled by the general panic over terrorism, embraced conjecture and coincidence as evidence, and blindly pursued one suspect while the real anthrax killer roamed free for more than six years. Hatfill’s experience is also the wrenching saga of how an American citizen who saw himself as a patriot came to be vilified and presumed guilty, as his country turned against him.

“It’s like death by a thousand cuts,” Hatfill, who is now 56, says today. “There’s a sheer feeling of hopelessness. You can’t fight back. You have to just sit there and take it, day after day, the constant drip-drip-drip of innuendo, a punching bag for the government and the press. And the thing was, I couldn’t understand why it was happening to me. I mean, I was one of the good guys.”

Don Foster, the Vassar professor, was among those who set the wheels of injustice in motion. Scouring the Internet, Foster found an interview that Hatfill had given while working at the National Institutes of Health, in which he described how bubonic plague could be made with simple equipment and used in a bioterror attack. Foster later tracked down an unpublished novel Hatfill had written, depicting a fictional bioterror attack on Washington. He discovered that Hatfill had been in Rhodesia (present-day Zimbabwe) during an anthrax outbreak there in the late 1970s, and that he’d attended medical school near a Rhodesian suburb called Greendale—the name of the invented school in the return address of the anthrax letters mailed to the Senate. The deeper Foster dug, the more Hatfill looked to him like a viable suspect.

“When I lined up Hatfill’s known movements with the postmark locations of reported biothreats,” Foster later wrote, “those hoax anthrax attacks appeared to trail him like a vapor cloud.”

In February 2002, Foster tried to interest the FBI in Hatfill, but says he was told that Hatfill had a good alibi. “A month later, when I pressed the issue,” Foster wrote, “I was told, ‘Look, Don, maybe you’re spending too much time on this.’”

Meanwhile, Barbara Hatch Rosenberg, a passionate crusader against the use of bioweapons, was also convinced that an American scientist was to blame for the anthrax attacks. In an interview with the BBC in early 2002, she theorized that the murders were the result of a top-secret CIA project gone awry, and that the FBI was hesitant to arrest the killer because it would embarrass Washington. A molecular biologist and professor of environmental science who had once served as a low-level bioweapons adviser to President Clinton, Rosenberg had taken it upon herself to look into the anthrax murders, and her investigations had independently led her to Hatfill. (Hatfill says he believes Rosenberg was made aware of him by a former acquaintance, a defense contractor with whom Hatfill had clashed over a proposed counter-anthrax training program intended for the U.S. Marshals Service.) Rosenberg wrote a paper she called “Possible Portrait of the Anthrax Perpetrator,” which was disseminated on the Internet. Although Rosenberg would later deny ever having identified him publicly or privately, the specific details of her “Portrait” made it clear she had a particular suspect in mind: Steven Hatfill.

Foster says he met Rosenberg over lunch in April 2002, “compared notes,” and “found that our evidence had led us in the same direction.” Weeks dragged on while he and Rosenberg tried to interest the FBI in their theories, but the bureau remained “stubbornly unwilling to listen.” Two months later, her “patience exhausted,” Rosenberg, according to Foster, met on Capitol Hill with Senate staff members “and laid out the evidence, such as it was, hers and mine.” Special Agent Van Harp, the senior FBI agent on what by then had been dubbed the “Amerithrax” investigation, was summoned to the meeting, along with other FBI officials.

Rosenberg criticized the FBI for not being aggressive enough. “She thought we were wasting efforts and resources in a particular—or in several areas, and should focus more on who she concluded was responsible for it,” Harp would later testify.

“Did she mention Dr. Hatfill’s name in her presentation?” Hatfill’s attorney, former federal prosecutor Thomas G. Connolly, asked Harp during a sworn deposition.

“That’s who she was talking about,” Harp testified.

Exactly a week after the Rosenberg meeting, the FBI carried out its first search of Hatfill’s apartment, with television news cameras broadcasting it live.

In his deposition, Harp would dismiss the timing of the search as coincidental.

Beryl Howell, who at the time of the investigation was serving as Senator Patrick Leahy’s point person on all matters anthrax, recently told me that asking Harp and other lead agents to sit down with the “quite persistent” Rosenberg was never meant to pressure the FBI to go after Hatfill. The meeting, Howell says, was intended simply to ensure that investigators cooperated with other experts outside the bureau and objectively considered all theories in the case in order to solve it more quickly.

“Whether or not Rosenberg’s suspicions about Hatfill were correct was really not my business,” Howell says. “It was really law enforcement’s prerogative to figure that one out.”

There was enough circumstantial evidence surrounding Hatfill that zealous investigators could easily elaborate a plausible theory of him as the culprit. As fear about the anthrax attacks spread, government and other workers who might have been exposed to the deadly spores via the mail system were prescribed prophylactic doses of Cipro, a powerful antibiotic that protects against infection caused by inhaled anthrax. Unfamiliar to the general population before September 2001, Cipro quickly became known as the anti-anthrax drug, and prescriptions for it skyrocketed.

As it happened, at the time of the anthrax attacks, Hatfill was taking Cipro.

Hatfill’s eccentricity also generated suspicion among colleagues and FBI agents. Bench scientists tend toward the sedate and gymnasium-challenged. Steve Hatfill was a flag-waving, tobacco-chewing weight lifter partial to blood-rare steaks and black safari suits that showed off his linebacker’s physique, a physician with a bawdy sense of humor and a soldier’s ethos, who told stories over cocktails of parachuting from military aircraft and battling Communists in Africa. While few people who knew him could deny his intellect or his passion as a researcher, some found him arrogant and blustery. Others feared him. Even his allies acknowledge that Hatfill could sometimes come across as different. “If you try to link Steve and the word normal, they’re not going to match up,” says Jim Cline, a retired Special Forces sergeant major and anti-terror expert who worked with Hatfill from 1999 to 2002 at Science Applications International Corporation (SAIC), a large defense contractor.

It also happened that Hatfill was familiar with anthrax. He had done his medical training in Africa, where outbreaks of anthrax infections have been known to occur among livestock herds. In 1999, after going to work for SAIC, Hatfill had a hand in developing a brochure for emergency personnel on ways to handle anthrax hoax letters. In the long run-up to Operation Iraqi Freedom, he also oversaw the construction of a full-scale model designed to show invading U.S. troops what a mobile Iraqi germ-warfare lab might look like and how best to destroy it. But while he possessed a working knowledge of Bacillus anthracis, Hatfill had never worked in any capacity with the spore-forming, rod-shaped bacterium.

“I was a virus guy,” he told me, “not a bacteria guy.”

Still, when FBI agents asked to interview him 10 months after the anthrax murders, Hatfill says, he wasn’t surprised. In their hunt for what he believed were the foreign terrorists who had sent the letters, Hatfill assumed that agents were routinely interviewing every scientist who’d ever worked at USAMRIID, including those, like himself, who had never set foot in the high-security laboratory where anthrax cultures were kept. Hatfill answered the agents’ questions and willingly took a polygraph test, which he says he was told he passed.

“I thought that was the end of it,” Hatfill says. “But it was only the beginning.”

In June, agents asked to “swab” his apartment. Hatfill complied, feeling he had nothing to hide. On June 25, 2002, after signing a consent form at the FBI’s field office in nearby Frederick, Maryland, he came home to find reporters and camera crews swarming. TV helicopters orbited overhead. “There’s obviously been a leak,” Hatfill says one of the agents told him. He was driven to a Holiday Inn to escape the crush of news media and sat in a motel room, watching incredulously as a full-blown search of his home played out on national television. The experience was surreal.

Agents conducted a second search five weeks later amid a repeated media circus. This time they came equipped with a warrant and bloodhounds. The dogs, Hatfill would later learn, had been responsible for false arrests in other cases. Hatfill says he innocently petted one of hounds, named Tinkerbell. The dog seemed to like him. “He’s identified you from the anthrax letters!” Tinkerbell’s handler exclaimed.

“It took every ounce of restraint to stop from laughing,” Hatfill recalls. “They said, ‘We know you did it. We know you didn’t mean to kill anyone.’ I said, ‘Am I under arrest?’ They said no. I walked out, rented a car, and went to see an attorney about suing the hell out of these people.”

The FBI raided Hatfill’s rented storage locker in Ocala, Florida, where his father owned a thoroughbred horse farm; the agency also searched a townhouse in Washington, D.C., owned by his longtime girlfriend, a slim, elegant accountant whom Hatfill calls “Boo.” (To guard her privacy, he asked that her real name not be used.) Agents rifled through Boo’s closets and drawers, breaking cherished keepsakes. “They told me, ‘Your boyfriend murdered five people,’” she said to me recently, unable to talk about it without tears.

Hatfill was fired from SAIC. The official explanation given was that he had failed to maintain a necessary security clearance; the real reason, he believes, was that the government wanted him fired. He immediately landed the associate directorship of a fledgling Louisiana State University program designed to train firefighters and other emergency personnel to respond to terrorist acts and natural disasters, a job that would have matched the $150,000 annual salary he’d been getting at SAIC. But after Justice Department officials learned of Hatfill’s employment, they told LSU to “immediately cease and desist” from using Hatfill on any federally funded program. He was let go before his first day. Other prospective employment fell through. No one would return his calls. One job vanished after Hatfill emerged from a meeting with prospective employers to find FBI agents videotaping them. His savings dwindling, he moved in with Boo.

By this time, the FBI and the Justice Department were so confident Hatfill was guilty that on August 6, 2002, Attorney General John Ashcroft publicly declared him a “person of interest”—the only time the nation’s top law-enforcement official has ever so identified the subject of an active criminal investigation. Agents grilled Hatfill’s friends, tapped his phone, installed surveillance cameras outside Boo’s condo, and for more than two years, shadowed him day and night, looking for any grounds on which to arrest him.

Many of Hatfill’s friends, worried for their own reputations, abandoned him as the FBI gave chase. Certain of Hatfill’s innocence, his former colleague Jim Cline was among the few who stood by him, afraid that his increasingly socially isolated friend would kill himself to escape his torment. “When you have the world against you,” Cline says, “and only a few people are willing to look you in the eye and tell you, ‘I believe you’—I mean, to this day, I really don’t know how the guy survived.”

Virtually everywhere Hatfill went, the FBI went too, often right behind him—a deliberately harassing tactic called “bumper locking.” Hatfill believes that local authorities joined in tormenting him at the behest of the Justice Department. Coming home from dinner one Friday night, he was pulled over by a Washington, D.C., police officer who issued him a warning for failing to signal a lane change. Three blocks later, another cop stopped him, again for not using his turn signal. The officer asked if he’d been drinking. Hatfill said he’d had one Bloody Mary. He was ordered out of his car. “Not unless you’re going to arrest me,” Hatfill says he responded indignantly. The officer obliged. Hatfill spent the weekend in jail and would later be ordered to attend a four-day alcohol counseling program. The police, he says, refused to administer a blood-alcohol test that would have proved he wasn’t drunk.

Connolly, Hatfill’s attorney, offered to have Hatfill surrender his passport and be outfitted with a tracking device, to have FBI agents ride with him everywhere, to show them that they were wasting their time. The offer was rejected. “They were purposely sweating him,” Connolly says, “trying to get him to go over the edge.”

Much of what authorities discovered, they leaked anonymously to journalists. The result was an unrelenting stream of inflammatory innuendo that dominated front pages and television news. Hatfill found himself trapped, the powerless central player in what Connolly describes as “a story about the two most powerful institutions in the United States, the government and the press, ganging up on an innocent man. It’s Kafka.”

With Hatfill’s face splashed all over the news, strangers on the street stared. Some asked for his autograph. Hatfill was humiliated. Embarrassed to be recognized, he stopped going to the gym. He stopped visiting friends, concerned that the FBI would harass them, too. Soon, he stopped going out in public altogether. Once an energetic and ambitious professional who reveled in 14-hour workdays, Hatfill now found himself staring at the walls all day. Television became his steady companion.

“I’d never really watched the news before,” Hatfill says, “and now I’m seeing my name all over the place and all these idiots like Geraldo Rivera asking, ‘Is this the anthrax animal? Is this the guy who murdered innocent people?’ You might as well have hooked me up to a battery. It was sanctioned torture.”

Hatfill decided to redecorate Boo’s condo as a distraction from the news. He repainted, hung wallpaper, learned to install crown molding. He also began drinking.

An afternoon glass of red wine became three or more. At night, Hatfill would stay up late, dipping Copenhagen tobacco and getting drunk while waiting in a smoldering rage for his name to appear on television, until finally he would pass out and wake up gagging on the tobacco that had caught in his throat, or stumble around and “crash into something.” Boo would help him to bed. After a few anguished hours of sleep, Hatfill would see her off to work, doze past noon, then rise to repeat the cycle, closing the blinds to block the sun and the video camera the FBI had installed on a pole across the street. For a while, Boo bought newspapers, so the two of them could fume over the latest lies that had been published about him. But soon he asked her to stop bringing them home, because he couldn’t take it anymore.

« Previous Page 1 2 3 4 Next »

12 Reasons Americans Are Incredibly Angry About The State Of The U.S. Economy

(This is a guest post from The Economic Collapse.)

We have reached a very interesting turning point in American history. More than at any other point in modern times, Americans are deeply angry about the state of the economy. In fact, it is no stretch to say that millions of U.S. citizens are hopping mad about the economic situation. Most of them don't know exactly what is wrong, and even fewer of them have any idea about how to go about fixing things, but they do know one thing. They know that they are mad.

As Americans, we were raised with the belief that our overwhelmingly powerful economic machine would always provide good jobs and prosperity for all of us as long as we worked hard. But we have come to learn that is not true. We have come to learn that our politicians and our leaders have squandered the great inheritance that our forefathers left for us. We have come to learn that the financial future of our nation is beyond bleak. We have come to learn that our government has piled up the biggest mountain of debt in the history of the world. Now the foolish decisions of the past several decades are catching up with us.

The U.S. economy is experiencing structural failure, and the American people are angry. They want answers. They want someone to fix things. They want things to go back to the way they used to be.

But that isn't going to happen. Once the American people truly start realizing that, the anger that will erupt will dwarf what we are seeing now (Not that they aren't already incredibly steamed).

Here's 12 Reasons Americans Are Furious About The State Of The Economy >

Keiser Report №35: Markets! Finance! Scandal!

Click this link ......

Goldman says SEC distorted facts in fraud charges

NEW YORK — Goldman Sachs said Tuesday that the Securities and Exchange Commission misrepresented important facts when it charged last week that the financial services giant had fraudulently sold an investment that was pre-ordained to fail.

"We would never intentionally mislead anyone, and certainly not our clients," general counsel Gregory Palm said in a conference call with Wall Street analysts to discuss the company's first-quarter earnings.

Strong investment banking and trading results helped propel net profit to $3.5 billion in the quarter, up 91% vs. the same period last year, on revenue of $12.8 billion, up 36%.

The results reflect "more signs of growth across the economy," CEO Lloyd Blankfein said. Still, CFO David Viniar said, "The broader economic environment remains fragile."

But Goldman shares declined 2.1% to $159.98 as investors mulled its growing legal challenges.

Financial regulators in the United Kingdom said they have begun an investigation of Goldman Sachs International, the company's London-based operation. That followed the SEC's civil complaint Friday alleging that Goldman duped ACA Capital and IKB Deutsche Industriebank in 2007. Goldman urged them to invest in a $1 billion security it created that was tied to the value of subprime mortgages.

Unbeknownst to the buyers, the SEC said, the security — a collateralized debt obligation named ABACUS 2007-AC1 — was initiated and partly shaped by hedge fund manager John Paulson, who planned to bet that it would collapse.

A collateralized debt obligation is a contract that enables investors to wager on the future value of certain assets. It does not include the properties themselves.

Still, the ABACUS security became worthless within months as the housing market collapsed.

Palm said ACA and IKB "well understood the risks they were taking." Goldman had hired ACA to pick the mortgages to be referenced in ABACUS, and to insure Goldman if the security lost value.

Palm minimized Paulson's role, saying that "ACA had sole responsibility for determining the final portfolio, and was paid a fee." ACA, Palm added, "rejected more than half of the securities suggested by Paulson."

Goldman denied the SEC's charge that Goldman let ACA believe that Paulson would support ABACUS, not bet that its value would decline.

"We have no idea where ACA got the impression that Paulson was an equity investor," Palm said.

He told analysts that he does not know how the SEC case will unfold, nor how long it will take.

He added that there have been "no conversations whatsoever" with the Justice Department to indicate that it might make criminal charges.

SEC begins formal inquiry into Lehman 'tricks'

The 2,200-page report which uncovered the murky world of Repo 105 and off-balance sheet accounting at Lehman Brothers has led to a formal investigation by the Securities and Exchange Commission (SEC) into the investment bank's collapse.

SEC begins formal inquiry into Lehman 'tricks'
People walk under a ticker sign announcing Lehman Brothers financial losses September 10, 2008 in New York. Photo: Getty

Mary Schapiro, the financial regulator's chairman, disclosed for the first time it is looking into the accounting techniques used by the bank, techniques former chairman Dick Fuld yesterday denied any knowledge of at the time.

Ms Schapiro, who took over the running of the SEC in January last year, four months after Lehman's collapse, said there are questions to be asked about financial disclosures by the bank and its senior management team as a result of Anton Valukas's report into the demise of Lehman: "We're also looking very much at the truthfulness of the disclosure that was in the public documents," she said, during a Congressional hearing on the bank's final days.

"Although each firm is fully responsible for providing accurate information to its regulators, in certain instances it appears there was insufficient follow-up on issues that should have raised potential concerns," she said.

Ms Schapiro admitted the SEC didn't have the staff, the resources or the mind-set to be a prudential regulator of the world's biggest financial institutions at the time of Lehman's collapse. But she said the SEC is considering whether new rules are needed to stop techniques such as Repo 105 – which masked Lehman's debt at the end of a quarter – are necessary.

Her comments were backed up by Christoper Cox, her predecessor, who said that the bank could face charges as a result of Mr Valukas's court-appointed report.

The duo made the comments during the House of Representatives' financial services committee's hearing into Lehman's downfall in September 2008, at which Mr Fuld said he took full responsibility for the bank's collapse: "One day we had a firm. The next day we did not. A lot of people got hurt by that, and I have to live with that."

However he put up a robust if at times drawn-out defence to the inquiring politicians present, blaming speculators and the media for exacerbating the company's problems which ultimately led to its bankruptcy filing.

"We did not need a capital bailout," protested Mr Fuld, who said the bank instead needed a "liquidity bridge" which never came. He also branded the accusation that Lehman's leverage was a debt:equity ratio of 30:1 as a "misconception", saying that at least 50pc of its balance sheet was funded by short-term "matchbook" funding with "very little risk".

The hearing was in part to look back on what led up to Lehman's downfall, and what lessons can be learnt from it.

Tim Geithner, the US Treasury Secretary, told the hearing: "Failure is inevitable in financial systems. The challenge for governments is to devise a system where failures of private firms cannot cause catastrophic damage to the economy."

Congressman Paul Kanjorski agreed, saying: "Lehman's unscrupulous practices illustrate exactly why the Senate needs to quickly pass – and the Congress needs to swiftly finalise – a Wall Street reform bill." The House of Representatives has already passed a bill, devised by the financial services committee, that would force banks to hold more capital and reduce leverage.

Carlyle/Riverstone and Goldman Sachs to Invest $500 Million in Cobalt International Energy, a New Oil & Gas Exploration and Production Company

Houston, TX - With $500 million in financial backing by Carlyle/Riverstone and Goldman Sachs Capital Partners, a team of petroleum industry leaders today announced the launch of Cobalt International Energy, L.P., which will engage in oil and gas exploration and production in the Deepwater Gulf of Mexico and other high-potential global basins. The company will be headquartered in Houston, Texas.

Leading the effort are five outstanding and highly experienced industry executives: Joseph H. Bryant, Chairman and Chief Executive Officer (former President and Chief Operating Officer of Unocal Corporation); Samuel H. Gillespie, Vice Chairman (former General Counsel of Mobil Corporation and Unocal Corporation); James H. Painter, Executive Vice President of Exploration (former Senior Vice President of Exploration at Unocal Corporation and Ocean Energy); and James W. Farnsworth (Vice President for World-Wide Exploration and Technology at BP), who will join Cobalt as President and Chief Operating Officer effective February 1, 2006. Also forming part of the leadership team is Laura E. Muñoz of Wachtell, Lipton, Rosen & Katz, who will join the team in early January as Executive Vice President and General Counsel.

“I believe that the outstanding team that we have formed, utilizing the best technology and backed by a group of respected investors, will yield impressive results,” said Mr. Bryant. “We will immediately hire critical technical team members who are experts in the basins where we will focus. In addition, we have begun discussions with strategic industry players in the international exploration and production sector that may join the Cobalt investor team. We expect that from the outset we will be competitive explorers in the Deepwater Gulf of Mexico and select international basins.”

"Oil and natural gas prices are high because of strong growth in demand. Exploration needs to keep pace with future growth," Mr. Bryant added. “This makes Cobalt’s concentrated, technology-focused exploration all the more timely. We believe that substantial oil and gas remain to be discovered, and we will quickly be in a position to deliver outstanding exploration and business results.”

David M. Leuschen, Co-founder of Riverstone Holdings and Managing Director of Carlyle/Riverstone Global Energy and Power Funds, said, “Joe has assembled a stellar executive team, which is among the most experienced, respected and skilled in the global exploration and production industry. Along with the rest of the Cobalt team, we believe they will create a 'super-explorer' enterprise that will deliver great results."

Kenneth Pontarelli, Managing Director of Goldman Sachs Capital Partners, said, “We expect the Cobalt team to be formidable players from day one. They will engage in high-impact exploration on a global scale. The investor team of Goldman Sachs and Carlyle/Riverstone provides Cobalt the means to compete anywhere in the world.”

Executive Team:

Joseph H. Bryant: Mr. Bryant is a petroleum industry veteran with 28 years of experience. Until September 2005 he was President and Chief Operating Officer of Unocal Corporation. From 1993 to 2004, he previously served as President of BP Angola, BP Canada and of an Amoco/CNOOC joint venture in China. He has also held executive leadership positions for Amoco business units in The Netherlands and the Gulf of Mexico and numerous engineering, financial and operational assignments throughout the continental United States. Mr. Bryant earned his B.S. in Mechanical Engineering from the University of Nebraska. Mr. Bryant currently serves on the Board of Directors of Berry Petroleum Corporation.

Samuel H. Gillespie: Mr. Gillespie is an attorney with 25 years industry experience. He comes to Cobalt from his position as General Counsel of Unocal Corporation, where he served from 2003 to September 2005. From 1994 to 2000, he was General Counsel of Mobil Corporation. At Mobil, he led key negotiations, including the global merger with Exxon Corporation. He was instrumental in the expansion of Mobil’s exploration and production opportunities in Kazakhstan, Turkmenistan, Qatar, Indonesia, Russia, Azerbaijan, Nigeria, Cameroon, Vietnam, Venezuela and Peru. Mr. Gillespie earned his B.A. from Middlebury College and his J.D. from Vanderbilt University.

James W. Farnsworth: Mr. Farnsworth is an industry veteran with 25 years of experience. He comes to Cobalt from BP, where he has served in various capacities since 1983, and since 2002 as Vice President of World-Wide Exploration and Technology. In this role, he was responsible for BP’s global exploration strategy and execution. Prior positions at BP include: VP of North America Exploration; VP of Gulf of Mexico Exploration; and Deepwater Gulf of Mexico Production Manager. Mr. Farnsworth earned his B.S. in Geology from Indiana University and his M.S. in Geophysics from W. Michigan University.

James H. Painter: Mr. Painter has 25 years of industry experience. He comes to Cobalt from Unocal Corporation, where he was Senior Vice President of Exploration and Technology since 2004. Prior to that, he was Senior Vice President of GOM and International Exploration at Ocean Energy, Inc., where he developed the successful strategy and execution of the Ocean Energy GOM Deepwater Program. Prior to his position at Ocean, he was Vice President, Gulf of Mexico Exploration, at Ocean predecessor Flores and Rucks. Prior industry experience includes positions at Forest Oil, Mobil Oil and Superior Oil. Mr. Painter earned his B.S. in Geology from Louisiana State University.

Laura E. Muñoz: Ms. Muñoz comes to Cobalt from the law firm of Wachtell, Lipton, Rosen & Katz, where she is a corporate attorney specializing in mergers and acquisitions. She is a magna cum laude graduate of Harvard College (1994) and a graduate of Yale Law School (J.D., 2000). She also has an M.Phil. in European Studies from the University of Cambridge, which she attended on Harvard's Paul W. Williams Scholarship for studies in international government. Following graduation from the University of Cambridge, she was a professor of international relations in Mexico at the Centro de Estudios Profesionales de Chiapas “Fray Bartolomé de las Casas” and at the Instituto Tecnológico y de Estudios Superiores de Monterrey in Tuxtla Gutiérrez, Chiapas. During the 2000-2001 term, she clerked for the Honorable Judith W. Rogers of the U.S. Court of Appeals for the District of Columbia Circuit.

For further information, please contact Cobalt International Energy at

* * * * *

Goldman Sachs

Founded in 1869, Goldman Sachs is one of the oldest and largest investment banking firms. Goldman Sachs is also a global leader in private corporate equity and mezzanine investing. Established in 1991, the GS Capital Partners Funds are part of the firm’s Principal Investment Area in the Merchant Banking Division. Goldman Sachs’ Principal Investment Area has formed 11 investment vehicles aggregating $26 billion of capital to date. With $8.5 billion in committed capital, GS Capital Partners V is the current primary investment vehicle for Goldman Sachs to make privately negotiated equity investments.

# # #

Barbara Hollingsworth: Fannie Mae owns patent on residential 'cap and trade' exchange

When he wasn't busy helping create a $127 billion mess for taxpayers to clean up, former Fannie Mae Chief Executive Officer Franklin Raines, two of his top underlings and select individuals in the "green" movement were inventing a patented system to trade residential carbon credits.

Patent No. 6904336 was approved by the U.S. Patent and Trade Office on Nov. 7, 2006 -- the day after Democrats took control of Congress. Former Sen. John Sununu, R-N.H., criticized the award at the time, pointing out that it had "nothing to do with Fannie Mae's charter, nothing to do with making mortgages more affordable."

It wasn't about mortgages. It was about greenbacks. The patent, which Fannie Mae confirmed it still owns with Cantor Fitzgerald subsidiary, gives the mortgage giant a lock on the fledgling carbon trading market, thus also giving it a major financial stake in the success of cap-and-trade legislation.

Besides Raines, the other "inventors" are:

* Former Fannie Vice President and Deputy General Counsel G. Scott Lesmes, who provided legal advice on Fannie Mae's debt and equity offerings;

* Former Fannie Vice President Robert Sahadi, who now runs GreenSpace Investment Financial Services out of his 5,002-square-foot Clarksburg home;

* 2008 Barack Obama fundraiser Kenneth Berlin, an environmental law partner at Skadden Arps;

* Michelle Desiderio, director of the National Green Building Certification program, which trains "green" monitors;

* Former Cantor Fitzgerald employee Elizabeth Arner Cavey, wife of Democratic donor Brian Cavey of the Stanton Park Group, which received $200,000 last year to lobby on climate change legislation; and

* Jane Bartels, widow of former CEO Carlton Bartels. Three weeks before Carlton Bartels was killed in the Sept. 11 attacks, he filed for another patent on the software used in 2003 to set up the Chicago Climate Exchange.

The patent, which covers both the "cap" and "trade" parts of Obama's top domestic energy initiation, gives Fannie Mae proprietary control over an automated trading system that pools and sells credits for hard-to-quantify residential carbon reduction efforts (such as solar panels and high-efficiency appliances) to companies and utilities that don't meet emission reduction targets. Depending on where the Environmental Protection Agency sets arbitrary CO2 standards, that could be every company in America.

The patent summary describes how carbon "and other pollutants yet to be determined" would be "combined into a single emissions pool" and traded -- just as Fannie's toxic portfolio of subprime mortgages were.

"Fannie Mae earns no money on this patent," communications director Amy Bonitatibus told the Washington Examiner. "We can't conjecture as to the cap-and-trade legislation."

But passage of the legislation would create an artificial, government-mandated, trillion-dollar carbon trading market that would drive up the price of energy, indirectly making housing more expensive.

If the proprietary emissions trading system functions like other exchanges such as the New York Stock Exchange, which makes most of its revenue on listing and trading fees, its owners could see extremely generous profits, especially with a patent that keeps out competition for two decades.

So Fannie Mae, a quasi-governmental entity whose congressionally mandated mission is to make housing more affordable, has been a behind-the-scenes participant in a carbon trading scheme that would do just the opposite.

In January, Europol announced that up to 90 percent of the volume in the European Union's own carbon-trading market was fraudulent, costing EU members $5 billion during the previous 18 months. That would be just the tip of the iceberg if the Congress were to make a similar mistake.

But if it does, thanks to Raines and his fellow "inventors," Fannie Mae will be laughing all the way to the (bailed-out) bank.

Barbara F. Hollingsworth is the Examiner's local opinion editor.

why lehman brothers was allowed to fail

Click this link .....

Districts warn of deeper teacher cuts

‘This may be our new economic reality,’ says one superintendent

School districts around the country, forced to resort to drastic money-saving measures, are warning hundreds of thousands of teachers that their jobs may be eliminated in June.

The districts have no choice, they say, because their usual sources of revenue — state money and local property taxes — have been hit hard by the recession. In addition, federal stimulus money earmarked for education has been mostly used up this year.

As a result, the 2010-11 school term is shaping up as one of the most austere in the last half century. In addition to teacher layoffs, districts are planning to close schools, cut programs, enlarge class sizes and shorten the school day, week or year to save money.

“We are doing things and considering options I never thought I’d have to consider,” said Peter C. Gorman, superintendent of the Charlotte-Mecklenburg schools in North Carolina, who expects to cut 600 of the district’s 9,400 teachers this year, after laying off 120 last year. “This may be our new economic reality.”

Districts in California have pink-slipped 22,000 teachers. Illinois authorities are predicting 17,000 public school job cuts. And New York has warned nearly 15,000 teachers that their jobs could disappear in June.

‘An emergency’
Secretary of Education Arne Duncan estimated that state budget cuts imperiled 100,000 to 300,000 public school jobs. In an interview on Monday, he said the nation was flirting with “education catastrophe.”

“We absolutely see this as an emergency,” he said.

Some of the deepest cuts are in Los Angeles, where Superintendent Ramon C. Cortines sent notices to 5,200 of the district’s 80,000 employees last month, telling them that they were losing their jobs.

“I’ve been superintendent in five major school districts, and had responsibility for cuts for years — but not this magnitude, not this devastating,” Mr. Cortines said.

And there is no end in sight, he said. He cut his district’s $12 billion budget this school year by $1 billion, has prepared $600 million in cuts for the term beginning in the fall and is looking ahead to a deficit for the following year of $263 million.

“I don’t see this being over in the year 2014-15,” Mr. Cortines added.

Stimulus money running out
In the economic stimulus bill passed in February 2009, Congress appropriated about $100 billion in emergency education financing. States spent much of that in the current fiscal year, saving more than 342,000 school jobs, about 5.5 percent of all the positions in the nation’s 15,000 school systems, according to a study by the Center on Reinventing Public Education at the University of Washington.

States will spend about $36 billion of the stimulus money in the next fiscal year, leaving their budgets short by some $144 billion, according to the Center on Budget and Policy Priorities, a liberal-leaning research group.

About a quarter of all state spending goes to public schools, said Jon Shure, a state fiscal expert at the center, so without new aid, the continuing job losses will add to the nation’s employment woes.

Warning of an educational emergency, Senator Tom Harkin, Democrat of Iowa, proposed a $23 billion school bailout bill last Wednesday that would essentially provide more education stimulus financing to stave off the looming wave of school layoffs.

“This is not something we can fix in August,” said Mr. Harkin, chairman of the Senate education committee. “We have to fix it now.”

Learning to live with less
Michael J. Petrilli, who served in the Education Department under President George W. Bush, predicted that the bill could attract significant support. But even if it is approved, Mr. Petrilli said, it would leave an underlying problem unresolved.

“Is the federal government going to try to prop up states and districts forever?” he said. “If not, we’re just kicking the can down the road. Eventually, districts need to learn to live with less.”

Senior Democratic aides said that because Mr. Harkin’s bill would add to the deficit, it was unlikely to pass.

A survey by the American Association of School Administrators found that 9 of 10 superintendents expected to lay off school workers for the fall, up from two of three superintendents last year. The survey also found that the percentage considering a four-day school week had jumped to 13 percent, from 2 percent a year ago.

One of those districts is the Atwater-Cosmos-Grove City system in Minnesota, which has asked the state for permission to shorten the school week. The district’s business manager, Dan Tait, called the measure “another tool in the toolbox” for reducing costs.

“We’re a district that’s spread across 340 square miles, so we spend an inordinate amount of money on transportation for our 812 students,” Mr. Tait said.

The current round of cuts is particularly wrenching, superintendents said, because their financing was already cut to the bone last year. For example, Barbara Thompson, superintendent of the Montgomery public schools in Alabama, said the state used to give her district $975 per student for supplies, technology and library costs.

“They cut it to zero,” Ms. Thompson said. “So they can’t cut it any more.”

CONTINUED : Some states escape the worst of it
1 | 2 | Next >

The 10 biggest health care lies in America

(NaturalNews) Mainstream health care isn't based on "health" or "caring." It's actually based on an ingrained system of medical mythology that's practiced -- and defended -- by those who profit from the continuation of sickness and disease. This system of medical mythology might also simply be called "lies", and today I'm sharing with NaturalNews readers the top ten lies that are still followed and promoted under mainstream health care in America today.

Lie #1) Vaccines make you healthy

Vaccines have emerged as the greatest and most insidious mythology yet fabricated by western medicine. The idea that vaccines protect you from infectious disease is blatantly false in the long term because this year's flu shot actually makes you more susceptible to next year's influenza (

On top of that, even the theoretical short-term effectiveness of vaccines is dwarfed by the far more effective protection offered by vitamin D and other immune-modulating nutrients. (

Lie #2) Pharmaceuticals prevent disease

The big push by Big Pharma is now focused on treating healthy people with drugs as if pharmaceuticals were nutrients that could somehow prevent disease. This is the new push with cholesterol drugs: Give 'em to everyone, whether they have high cholesterol or not!

But pharmaceuticals don't prevent disease, and medications are not vitamins. Your body has no biological need for any pharmaceuticals at all. People who believe they need pharmaceuticals have simply been the victims of "fabricated consent" engineered by Big Pharma's clever advertising and P.R. spin.

Lie #3) Doctors are experts in health

Doctors don't even study health; they study disease. Modern doctors are taught virtually nothing about nutrition, wellness or disease prevention. Expecting a doctor to guide you on health issues is sort of like expecting your accountant to pilot a jet airliner -- it's simply not something he or she has ever been trained in.

That's not to say doctors aren't intelligent people. Most of them have high Iqs. But even a genius can't teach you something they know nothing about.

Lie #4) You have no role in your own healing

Doctors, drug companies and health authorities all want you to believe that your health is determined by their interventions. If you believe them, you have virtually no role in your own health or healing -- it's all managed by their drugs, their screening, their surgeries and their interventions.

Lie #5) Disease is a matter of bad luck or bad genes

Western medicine wants you to believe in the mythology of spontaneous disease -- disease that strikes without cause. This is equivalent to saying that disease is some sort of voodoo black magic and that patients have no way to prevent disease through their own diets or lifestyle choices.

It's funny, actually: Western medicine claims to be driven by scientific, rational thinking, and yet the entire industry still fails to acknowledge that chronic disease always has a cause and that most of the time, that cause has everything to do with nutritional deficiencies, exposure to toxic chemicals and a lack of exercise.

Disease is almost never a matter of bad luck or bad genes.

Lie #6) Screening equals prevention

Western medicine doesn't believe in disease prevention. Rather, the industry believes in screening while calling it prevention. But screening isn't prevention by even the wildest stretch of the imagination. In fact, virtually all the popular screening methodologies actually promote diseases.

Mammography, for example, emits so much radiation that it causes breast cancer in tens of thousands of women each year ( Imaging dyes used in radiological scans can cause horrific side effects, and psychiatric "disorder" screening is little more than a thinly-disguised patient recruitment scheme disguised as medicine.

Lie #7) Health insurance will keep you healthy

This is a favorite lie of those who recently pushed for the Big Pharma-sponsored health care reform that has swept across America. The lie supposes that merely having health insurance will provide some sort of magical protection against disease. But in reality, health insurance doesn't make you healthy! It is only YOU and your choices about foods, exposures to toxic chemicals, pursuit of exercise and time in nature that can make you healthy.

Health insurance is, in effect, a wager that you will get sick. How does gambling on your sickness provide any protection whatsoever for your health? It doesn't. Personally, I'd rather bet on health than sickness, and the way to do that is to invest in nutritional supplements, organic produce, superfoods, physical fitness and non-toxic personal care products.

Lie #8) Hospitals are places of health and healing

If you want to stay healthy or get healthy, a hospital is the very last place you want to find yourself: They are unhappy, unhealthy places that are infested with antibiotic-resistant superbugs. Hospitals usually serve disease-promoting foods and lack health-enhancing sunlight, and potentially deadly mistakes with pharmaceuticals or surgical procedures now appear to be frighteningly common in U.S. hospitals.

Certainly, emergency rooms in hospitals play an important role in urgent care for injuries and accidents -- and emergency room physicians do an amazing job saving lives -- but for people with chronic, degenerative disease, a hospital is a very dangerous place to be. Unless you really need immediate critical care, try to avoid hospitals.

Lie #9) Conventional medicine is "advanced" state-of-the-art medicine

Even though doctors and health authorities try to pass off western medicine as being "advanced" or "modern," the whole system is actually pathetically outdated and stuck in the germ theory of disease. Western medicine has yet to even acknowledge the role of nutrition in preventing disease -- something that has been scientifically documented for at least the last several decades. Western medicine fails to acknowledge mind-body medicine and hilariously believes the mind plays virtually no role in healing.

Neither does western medicine acknowledge the bio energy field of living systems, nor that organ transplants carry memories, nor that living food is qualitatively different from dead food. Seriously: Conventional doctors still believe that dead food is exactly the same as living food! (And the USDA food pyramid still makes no distinction between the two...)

"Modern" medicine isn't so modern, it turns out. It is, in fact, hopelessly outdated and desperately needs to upgrade its approach to health and wellness if it hopes to survive the next hundred years.

Lie #10) More research is needed to find "cures"

This lie is especially hilarious because western medicine does not believe in any "cure" for any disease. They aren't even looking for cures! This lie has been repeated since the 1960's, when cancer scientists claimed they were only a few years away from curing cancer. Today, four decades later, can you think of a single major disease that western medicine has cured? There aren't any.

That's because drug companies make money from sick people, not cured people. A patient cured is a patient lost. It is far more profitable to keep patients sick and pretend to "manage" their disease through a lifetime of pharmaceuticals. So when drug companies and disease non-profits claim to be searching for a "cure," what they're really doing is taking your money to fund more drug research to patent more medications that don't actually cure anything.

Remember this the next time you're asked to donate to some search for "the cure." The cures already exist in nutrition, herbal remedies and naturopathic medicine, but Big Pharma and the conventional medicine cartel isn't interested in real cures -- they only want to promote the idea of a cure while pumping patients full of drugs that don't cure anything.

Beyond the ten lies

When it comes to western health care, there are more than 10 lies, of course, but these big 10 lies are perhaps the most relevant to your own health decisions. By avoiding being suckered in by these lies, you can take charge of your own health and avoid the health care scam by staying healthy!

Staying healthy isn't as difficult as you think, and it doesn't require health insurance or disease screening. It only requires making informed, intelligent decisions about what to eat, what to put on your skin and how to get more sunshine and physical exercise. Once you do these basic things, you'll find that you are no longer held victim by a western medicine health care system based on lies and outdated medical mythology.

It's time for a revolution in medicine... A revolution that finally advances past the mental roadblock of a system of medical mythology stuck in the 1940's. Don't get me wrong, 1940's medicine was great in the 1940's. But this is no longer the 1940's, and the germ theory of disease is hopelessly outdated when it comes to the primary diseases that are striking the population today. Yet the profiteers of our dishonest, outmoded health care system are doing everything in their power to keep us all stranded in the past, a past based on treating the body like a chemical battleground and attacking every disease with a patented pharmaceutical.

That whole approach to health care is so far outdated that it's hilarious it can still be pushed with a straight face. No wonder doctors only spend an average of two minutes with patients these days. That's the limit of how long they can hold their faces without breaking out in laughter at how stupid this whole "treat the symptoms and forget the causes" approach to health care really is. Even they know it! That's why most doctors actually eat superfoods and take vitamins themselves, even if they never dare suggest it to patients.

True fact: It is illegal in every U.S. state for a doctor to recommend any vitamin, nutrient or food for the prevention or treatment of any disease. Doing so can cause a doctor to have his medical license permanently revoked. How crazy and outdated is that?

Global warming blamed for European air traffic collapse

The FINANCIAL -- Global warming, which altered European winds, was partially to blame for flight disruptions in Europe caused by an ash cloud from an Icelandic volcano, the New Scientist has said, according to RIA Novosti.

Altered weather patterns worsened the effects of the eruption by causing ash clouds to stay over Europe for a longer period, according to Christophe Cassou and Eric Guilyardi of the European Centre for Research and Advanced Training in Scientific Computation in Toulouse, France.

The scientists have developed a climate model which shows that western winds common in the area are currently being blocked by a high-pressure weather system. Because of this, more and more ash-laden air is being blown over Europe.

"We predict that the frequency and length of blocking events will increase in a warmer climate," Cassou was quoted as saying by the New Scientist.

The eruption on the Eyjafjallajokull Glacier in Iceland, which began last Wednesday, has paralyzed air traffic throughout central and northern Europe, leaving thousands of travelers stranded and forcing more than 20 European countries to close their airspace.

It was earlier announced that air traffic in Europe is likely to begin returning to normal from Tuesday, although it is expected to be a lengthy process. However, Eyjafjallajoekull's activity, which almost stopped on Monday, is on the increase again.

British meteorologists, who said in the previous report that the volcano was spewing ash at the height not exceeding 200 meters, reported recently that clouds of volcanic ash now rise to 3,000-3,500 meters.

Icelandic volcanologist Niels Oskarsson warned on Monday that Eyjafjallajoekull eruption could trigger the explosion of a more powerful Icelandic volcano, Katla.

Last time, in the 19th and 17th centuries, Katla eruptions started after Eyjafjallajoekull eruptions, and they were at least 100 times larger.