Obama talks tougher on Iran, says US 'appalled and outraged' at violence

WASHINGTON - Dramatically hardening the U.S. reaction to Iran's disputed elections and bloody aftermath, President Barack Obama on Tuesday condemned the violence against protesters and lent his strongest support yet to their accusations the hardline victory was a fraud.

Obama, who has been accused by some Republicans of being too timid in his response to events in Iran, declared himself "appalled and outraged" by the deaths and intimidation in Tehran's streets - and scoffed at suggestions he was toughening his rhetoric in response to the criticism.

He suggested Iran's leaders will face consequences if they continue "the threats, the beatings and imprisonments" against protesters. But he repeatedly declined to say what actions the U.S. might take, retaining - for now - the option of pursuing diplomatic engagement with Iran's leaders over its suspected nuclear weapons program.

"We don't know yet how this thing is going to play out," the president said. "It is not too late for the Iranian government to recognize that there is a peaceful path that will lead to stability and legitimacy and prosperity for the Iranian people. We hope they take it."

Obama borrowed language from struggles throughout history against oppressive governments to condemn the efforts by Iran's rulers to crush dissent in the wake of June 12 presidential elections. Citing the searing video circulated worldwide of the apparent shooting death of Neda Agha Soltan, a 26-year-old young woman who bled to death in a Tehran street and now is a powerful symbol for the demonstrators, Obama said flatly that human rights violations were taking place.

"No iron fist is strong enough to shut off the world from bearing witness to peaceful protests of justice," he said during a nearly hourlong White House news conference dominated by the unrest in Iran. "Those who stand up for justice are always on the right side of history."

The eighth extended news conference of Obama's presidency also veered into the intricacies of the U.S. health care reform debate, the effectiveness of the economic stimulus package and a revealing personal moment in which he acknowledged he still is an occasional smoker despite trying to quit.

The past 10 days in Iran have posed the strongest challenge to that nation's clerical rule since the system was established 30 years ago in the 1979 Islamic revolution. Before Tuesday, Obama mostly kept to a modulated response, calculating that, given Iranians' distrust of American involvement in their country, anything viewed as internal meddling from the White House would do the demonstrators more harm than good.

He also is deeply interested in preserving his promised policy concerning Iran and the threat its nuclear program poses: He contends the danger has only grown through decades of ruptured diplomatic relations between the U.S. and Tehran, particularly in the past eight years under President George W. Bush, and it is time to try to change that by re-establishing direct talks.

But Obama has been taken to task by some Republicans, accused of being too passive. Even with Iran's blackout of foreign press and attempted communications shutdowns, chaotic images of riot police beating and shooting protesters have seized the world's attention. At least 17 people have been killed.

Last Sunday, Sen. Lindsey Graham, a Republican, said: "The president of the United States is supposed to lead the free world, not follow it. He's been timid and passive more than I would like."

Obama chose a less cautious approach on Tuesday, more directly challenging Iran's leaders to ease off and holding out the possibility of consequences if they do not.

"The Iranian government should understand that how they handle the dissent within their own country, generated indigenously, internally, from the Iranian people, will help shape the tone, not only for Iran's future, but also its relationship to other countries," Obama said.

He made clear that one recent overture to Iran - the authorization for U.S. embassies to invite Iranian officials to July 4 Independence Day parties - was likely to disappear without changes. "That's a choice the Iranians are going to have to make," Obama said.

With an array of U.S. sanctions already in place against Iran, there are few options at Obama's disposal other than withdrawing his offer to talk. Regardless, Obama said it is too early for him to be more specific. "We are going to monitor and see how this plays itself out before we make any judgments about how we proceed," he said.

Obama was plainer than ever that the protesters' beliefs that the election was stolen from opposition candidate Mir Hossein Mousavi may be legitimate. The government declared an overwhelming re-election victory for President Mahmoud Ahmadinejad and, while promising to look into scattered reports of irregularities, has ruled out annulling those results.

"We can't say definitively what exactly happened at polling places throughout the country," Obama said. "What we know is that a sizable percentage of the Iranian people themselves, spanning Iranian society, consider this election illegitimate. It's not an isolated instance, a little grumbling here or there. There is significant question about the legitimacy of the election."

In Obama's comments, there also was a notable shift away from previous respectful references to Iran's most powerful cleric, Ayatollah Ali Khamenei, as the "Supreme Leader." Obama didn't use the term on Tuesday.

Asked if his stronger language was influenced by pressure from Republicans such as Graham and Sen. John McCain, Obama scoffed: "What do you think?" And he shot back at Republican critics: "Only I'm the president of the United States."

Advisers realize the new tone poses a risk that the U.S. president will become a scapegoat for Iran's leaders - just what Obama has sought to avoid. Administration officials, speaking on condition of anonymity to describe a sensitive strategy, said the disturbing images of the past few days warranted the tougher stance.

"I congratulate him for that, and we need to keep the pressure on them," House Minority Leader John Boehner, said after the news conference.

-

AP National Security Writer Anne Gearan contributed to this story.

Citigroup Has a Plan to Fatten Salaries

After all those losses and bailouts, rank-and-file employees of Citigroup are getting some good news: their salaries are going up.

The troubled banking giant, which to many symbolizes the troubles in the nation’s financial industry, intends to raise workers’ base salaries by as much as 50 percent this year to offset smaller annual bonuses, according to people with direct knowledge of the plan.

The shift means that most Citigroup employees will make as much money as they did in 2008, although some might earn more and others less. The company also plans to award millions of new stock options to employees in an effort to retain workers and neutralize a precipitous drop in the value of their stock holdings.

Like Citigroup, financial companies, like Bank of America and Morgan Stanley, are raising employees’ base salaries to try to shift attention away from bonuses and curb excessive risk-taking. So are banks like UBS and other European competitors.

The Citigroup proposals, discussed internally this week, present a crucial test for the Obama administration, which has vowed to rein in runaway compensation at companies that have received large taxpayer-financed bailouts. Citigroup has gotten not one but two rescues from Washington. Soon the government will assume a 34 percent stake in the company, whose share price has plunged nearly 84 percent in the last year.

Despite Washington’s new role at Citigroup, and public anger over big paydays on Wall Street, administration officials have little power to prevent the company and others in the industry from raising salaries for rank-and-file employees.

Kenneth R. Feinberg, the administration’s new “pay czar,” has the authority to set compensation for only the top 100 employees at troubled companies. The rest — which at Citigroup, means fewer than 300,000 people — can be paid as executives see fit, provided any increase does not rank them among the 100 most highly paid workers.

Outsize pay on Wall Street, particularly the industry’s bonus culture, is widely seen as having encouraged the risk-taking that led to the gravest financial crisis since the Depression. But industrywide, total compensation is expected to rise 20 to 30 percent this year, approximately to the levels of 2005, before the crisis, according to Johnson Associates, a compensation consulting firm. Total industry pay would still be below the record levels of 2007, but only a bit.

“You can say it is outrageous,” said Alan Johnson, the president of the firm. “But maybe it’s a little like the canary in the mine, and you say that things are getting better.”

Indeed, despite the simmering anger over Wall Street pay, some of the 10 big banks that repaid their federal aid this month — a big step toward disentangling themselves from the government — are gearing up to pay outsize bonuses. For many, profits are up, despite the troubled economy. On Monday, Goldman Sachs, which returned $10 billion of bailout funds, denied reports that it planned to pay out the highest bonuses in its 140-year history.

Mr. Feinberg, the special master for compensation, is the person who ensures that companies receiving federal bailout money are abiding by executive pay guidelines. This week, Mr. Feinberg, who oversaw the federal government’s compensation fund for victims of the Sept. 11, 2001, terrorist attacks, held introductory meetings with Citigroup executives and their counterparts at several other companies that have received two federal bailouts. He will start reviewing pay packages for the 25 highest-paid employees, as well as compensation formulas for the next 75, in the next two months. He declined to comment on Tuesday.

For months, Citigroup executives have sought guidance from the Treasury Department about how to alter compensation. But after reviewing the new rules, the bank determined it did not need Mr. Feinberg or other government officials to sign off on pay for the rank and file. While Mr. Feinberg can request information on the pay polices at financial companies that have received two federal bailouts, the companies can reject his guidance.

Citigroup executives are so eager to keep employees from fleeing, that in some cases, they are offering them guaranteed pay contracts. Managers began notifying bank employees of the proposed changes this week. They could take effect shortly.

For some Citigroup investment bankers and traders, the changes could mean salary increases of as much as 50 percent, depending on their position. Legal and risk management employees, as well as those in the credit card and consumer banking units, whose pay is typically skewed toward salary, rather than bonuses, are expected to receive smaller increases.

Citigroup executives said the changes were aimed at retaining employees. Some Citigroup workers have already left for small, boutique investment banks or large rivals that are not so beholden to the government.

Citigroup officials declined to discuss the issue on the record, given its sensitive nature. But they said that the changes would bring the bank’s compensation plan in line with the widespread view on Wall Street that bonuses were not one-time payouts, but rather a form of deferred salary. They said the new system would let them adjust bonuses more sharply to reflect employees’ performance.

Stephen Cohen, a Citigroup spokesman, said that any changes would be intended to adjust the balance between salaries, which are fixed, and bonuses, which vary from year to year.

Citigroup also plans to introduce a new stock option program later this year. Under the plan, it will award employees one stock option for every share of restricted stock they have accumulated. The program could open the floodgates for the release of tens of millions of stock options that could be cashed out over the next three years.

It is unclear what the strike price will be. But the hope is that the options program will give employees another incentive to stay despite offers from rivals.

A Chilling Phone Call

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Police discover unrest HQ in Tehran

The Tehran Police say a building has been identified in the city which has been used as a 'headquarters' to promote post-election unrest.

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Unrest in Tehran

The Intelligence and Security Department of the Tehran Police has declared that the building -- located on Tehran's Haft-e-Tir Square -- was investigated on Monday night after a search warrant was obtained, IRNA reported.

The plotters have been arrested and are currently under investigation.

Documents found in the building indicate an ongoing plot against Iran's security was being implemented, the police said in a statement.

“After scrutinizing the building, which was the campaign office of a presidential candidate, it was discovered that the organization of illegal gatherings, the promotion of unrest, and efforts to undermine the country's security were carried out from the building,” the statement added.

Evidence has been found in the building that reveals the role of foreign elements in planning post-election unrest.

The building has in fact been a “headquarters for a psychological war against the country's security,” the police said.

The building, sources told Press TV, was used by a Mir-Hossein Mousavi election campaign.

The U.S. and the U.K. Will Both Default on Their Debt by the End of Summer

As anticipated by LEAP/E2020 as early as October 2008, on the eve of summer 2009, the question of the US and UK capacity to finance their unbridled public deficits has become the central question of international debates, thus paving the way for these two countries to default on their debt by the end of this summer.

(1) At this stage of the global systemic crisis' process of development, contrary to the dominant political and media stance today, the LEAP/E2020 team does not foresee any economic upsurge after summer 2009 (nor in the following 12 months)

(2) On the contrary, because the origins of the crisis remain unaddressed, we estimate that the summer 2009 will be marked by the converging of three very destructive rogue waves.

(3) illustrating the aggravation of the crisis and entailing major upheaval by September/October 2009. As always since this crisis started, each region of the world will be affected neither at the same moment, nor in the same way

(4) However, according to our researchers, all of them will be concerned by a significant deterioration in their situation by the end of summer 2009

This evolution is likely to catch large numbers of economic and financial players on the wrong foot who decided to believe in today's mainstream media operation of "euphorisation�.

In this special Summer 2009 edition, our team describes in detail these three converging rogue waves and their impact, and gives a number of strategic recommendations (currencies, gold, real estate, bonds, stocks, currencies) to avoid being swept away in this deadly summer.

LEAP/E2020 believes that,

(5) instead of green shoots (those which international media, experts and the politicians who listen to them kept perceiving in every statistical chart in the past two months),

(6) what will appear on the horizon is a group of three destructive waves of the social and economic fabric expected to converge in the course of summer 2009, illustrating the aggravation of the crisis and entailing major changes by the end of summer 2009… more specifically, debt default events in the US and UK, both countries at the centre of the global system in crisis. These waves appear as follows:

1. Wave of massive unemployment: Three different dates of impact according to the countries in America, Europe, Asia, the Middle East and Africa

2. Wave of serial corporate bankruptcies: companies, banks, housing, states, counties, towns

3. Wave of terminal crisis for the US Dollar, US T-Bond and GBP, and the return of inflation

In fact, these three waves do not appear in quick succession like the sisters rogue waves. They are even more dangerous because they are simultaneous, asynchronous and non-parallel. Hence their impact on the global system accentuates the risks because they hit at various angles, at different speeds and with varying strength. The only certain thing at this stage is that the international system has never been so weak and powerless to face such a situation. The IMF and global governance institutions' reforms announced by the London G20 are at a standstill

(7) The G8 becomes more like a moribund club whose utility is increasingly questioned

(8) US leadership is the shadow of what it used to be, mostly concerned by desperately trying to find purchasers for its T-Bonds

(9) The global monetary system is in a process of disintegration, with the Russians and Chinese in particular accelerating their positioning in the post-Dollar era. Companies foresee no improvement in the business climate and speed up the pace of layoffs. A growing number of states falter under the weight of their accumulated debt created to "rescue banks� and are about to be faced with a welter of failings by the end of this summer

(10) And, last but not least, the banks, once they have squeezed money out of naive savers thanks to the market upsurge orchestrated in the past few weeks, will be have to admit that they are still insolvent by the end of summer 2009.

In the United States and United Kingdom in particular, the colossal public financial effort made in 2008 and at the beginning of 2009 for the sole benefit of large banks became so unpopular that it was impossible to consider injecting more public money into banks in spring 2009, despite the fact that they were still insolvent

(11) It then became necessary to invent a "fairy tale� to convince the average saver to inject his/her own money into the financial system. By means of the « green shoots » story, overpriced stock indices based on no real economic grounds and promises of « anticipated public funding repayment », the conditioning was achieved. Hence, while big investors from oil-producing and Asian countries

(12) withdrew capital from these banks, large numbers of small individual investors returned, full of hope. Once these small investors discover that public funding repayment is only a drop in the ocean of public aid granted to these banks (to help them dispose of their toxic assets) and that, after three or four months at best (as analyzed in this GEAB N°36), these banks are again on the verge of collapse, they will realize, powerless, that their share is worth nothing once again.

Intoxicated by financiers, world political leaders will be surprised - once again – to see all the problems of last year reappear, all the more severe since they were not addressed but only buried under piles of public money. Once that money has been squandered by insolvent banks compelled to rescue even more insolvent rivals, or by ill-conceived economic stimulus plans, problems will re-emerge, further exacerbated. For hundreds of millions of citizens in America, Europe, Asia and Africa, the summer 2009 will be a dramatic transition towards lasting impoverishment due to the loss of their jobs, with no hope of finding new ones in the next two, three or four years, or due to the disappearance of their savings invested in stocks or capital-based pension funds, or in banking investments linked to stock markets or denominated in US dollars or British pounds, or investment in shares of companies pressured to desperately wait for an improvement not coming soon.

Notes:

(1) Not even the « jobless recovery » many experts are trying to make us believe in. In the United States, United Kingdom, Eurozone and Japan, it is a « recoveryless recovery » we must expect, i.e. a pure invention aimed at convincing US and UK insolvent consumers to start buying again and keeping US T-Bonds' and UK Gilts' country purchasers waiting as long as possible (until they decide that there is really no future selling their products to the lands of the US Dollar and British Pound.

(2) Rogues waves are very large and sudden ocean surface waves which used to be considered as rare, though we now know that they appear in almost every storm above a certain strength. « Rogue waves » can reach heights of 30 meters (98 ft) and exert tremendous pressure. For instance, a normal 3 meter-high wave exerts a pressure of 6 tons/m². A 10 meter-high tempest wave exerts a pressure of 12 tons/m². A 30 meter-high rogue wave can exert pressure of up to 100 tons/m². No ship yet built is able to resist such pressures. One specific kind of rogue wave is called the "three sisters�, i.e. a group of three rogue waves all the more dangerous in that, even if a ship had time to react properly to the first two waves, there is no way she could be in the right position to brave the third one. According to LEAP/E2020, it is a similar phenomenon that the world is about to encounter this summer; and no country (ship) is in a favourable position to face them, even if some countries are more at risk than others, as explained in this GEAB (N°36).

(3) LEAP/E2020 estimate that their anticipations of social and economic trends in the various regions of the world - published in GEAB N°28 (10/16/2008) – are still relevant.

(4) More precisely, in every region, media and stock markets will no longer be able to hide the deterioration.

(5) Our readers have not failed to notice that the same people, media and institutions, considered everything was for the best in the best of worlds 3 years ago, that there was no risk of a severe crisis 2 years ago, and that the crisis was under control a year ago. Their opinion is therefore highly reliable!

(6) As regards US economic statistics, it will be interesting to follow the consequences of the revision of the indexing formula by the Bureau of Economic Analysis due to take place on 07/31/2009. Usually, this type of revision results in further complexity of historical comparisons and favourable modification of important figures. For example, some previous revisions enabled the division of the average level of measured inflation by three. Source: MWHodges, 04/2008.

(7) Except at a regional level where each political entity is organized the way that it wants. For instance, the EU is taking advantage of the political fading away of the UK - mired in a financial, economic and political crisis - and taking supervisory control of the City of London (source: Telegraph, 06/11/2009). It is likely that summer 2009 will be the end of 300 years of the City's supremacy at the centre of British power. On this subject, it is instructive to read George Monbiot's article in The Guardian dated 06/08/2009 and take the time to read John Lanchester's brilliant essay published in the London Review of Books dated 05/28/2009 entitled It's finished.

(8) Who cares any more about G8 final statements, such as that following the June 13th G8-Finance meeting (source: Forbes, 06/13/2009), at a time when each player in fact plays by his own rules: Americans on one side, Canadians and Europeans on another, British and Japanese in the middle, while the Russians play a complete different game?

(9) US Treasury's Secretary of State, Timothy Geithner, recently suffered a very embarrassing experience whilst giving a speech in front of Beijing University students: his audience simply burst into laughter when he reassured that the Chinese government had made the right choice investing their holdings in US T-Bonds and Dollars (source: Examiner/Reuters, 6/02/2009)! There is nothing worse than arousing irony or ridicule when you are an established power because that power is nothing without respect (on the part of both friends and enemies), especially when the one mocking is supposed to be "trapped� by the one mocked. According to LEAP/E2020, this laughter is worth a thousand explanations of the fact that China does not feel at all trapped by the US dollar and the Chinese authorities know exactly what tracks greenbacks and T–Bonds are following. This kind of situation was unthinkable only 12 months, maybe even 6 months ago, first because the Chinese were still naive, second because they thought it was in their interest to make everyone believe they were naive. Obviously, on the eve of summer 2009, this situation has vanished: no need to pretend anymore, as highlighted by this survey of 23 famous Chinese economists, published on the first day of Timothy Geithner's visit to Beijing, and revealing that most of them deem US assets risky (source: Xinhuanet, 05/31/2009). This student burst of laughter will continue to echo for many months to come...

(10) Not only in the US will shareholders be systematically prejudiced by the state under the pretext of higher common interest, as in the case of pension fund and bondholder losses related to the Chrysler and GM bankruptcies, or when the US government and Federal Reserve pressured Bank of America to hide the calamitous state of Merrill Lynch from its shareholders at the time of the latter's takeover. Sources: OpenSalon, 06/10/2009 / WallStreetJournal, 04/23/2009. In the UK, Europe and Asia, the same causes will produce the same effects: the raison d'etat has always been the simplest excuse to justify large-scale plundering ... and severe crises are perfect times to call in the raison d'etat.

(11) Germany has a similar problem due to next September's national election. After the election, the country's banking problems will be in the headlines, as several hundreds of billions of risky assets on the balance sheets of a number of banks, mainly regional ones, will need dealing with. It is far from the scope of US and UK banking problems, nevertheless Berlin will probably be faced with a number of potential bank failures. Source: AFP/Google, 04/25/2009. In the United States, the banks bailed out by the federal state have simply lowered the amount of loans granted when they are supposed to do the contrary. Source: CNNMoney, 06/15/2009

(12) Sources: Financial Times, 06/01/2009; YahooFinance, 06/04/2009; StreetInsider+Holdings/4656921.html, 05/15/2009; Financial Times, 06/01/2009

First Sound Recording

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Uncounted - Clint Curtis: Million Dollar Programmer

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