Watchman Newsletter

IMF Says New Reserve Currency to Replace Dollar Is Possible

Bloomberg (Link) - Alexander Nicholson (June 6, 2009)

The International Monetary Fund said it’s possible to take the “revolutionary” step of creating a new global reserve currency to replace the dollar over time.

The IMF’s so-called special drawing rights could be used as the basis for a new currency, First Deputy Managing Director John Lipsky told a panel discussing reserve currencies at the St. Petersburg International Economic Forum today.

“There are many, many attractions in the long run to such an outcome,” Lipsky told a panel discussing reserve currencies at the St. Petersburg International Economic Forum today. “But this is not a quick, short or easy decision,” he said, adding that it would be “quite revolutionary.”

The SDRs would have to be delinked from other currencies and issued by an international organization with equivalent authority to a central bank in order to become liquid enough to be used as a reserve, he said.

Massive e-cash surge hits Japan's shops

Tech Radar (Link) - J Mark Lytle (June 6, 2009)

Will cash die out if RFID money becomes the norm?

We've seen before how pervasive RFID-based electronic money is in Japan, but it comes as a bit of a shock to note that the country now has exactly one e-cash card in circulation for every member of the population.

The surprising statistic comes from Nomura Research Institute, which says the end of April this year saw the number of e-cash cards reach 127 million - one for every Japanese resident.

Tower of Babel

More than ten variations on the basic RFID electronic money card are available, as well as several different standards embedded in phones.

That mix initially created something of a problem in finding a single reader/writer terminal to allow retail outlets to accept e-cash.

However, the advent of terminals that can support multiple standards seems to be behind the surge in popularity of e-cash.

Bright future

And Nomura predicts the future can only get brighter - it forecasts Japanese e-cash purchases hitting a staggering ¥3 trillion (£19 billion) in less than four years and that's excluding the Oyster Card-like travel cards that are already ubiquitous there.

Bond-market rout lifts mortgage cost

My Way (Link) - AP - Rachel Beck (June 6, 2009)

The Federal Reserve announced a $1.2 trillion plan three months ago designed to push down mortgage rates and breathe life into the housing market.

But this and other big government spending programs are turning out to have the opposite effect. Rates for mortgages and U.S. Treasury debt are now marching higher as nervous bond investors fret about a resurgence of inflation.

That's the Catch-22 threatening to make an awful housing market potentially worse and keep the economy stuck in a funk. Kick-starting the economy requires higher spending, but rising rates mean fewer Americans will be able to refinance their home loans. And some potential buyers will be shut out of the market by higher monthly payments they won't be able to afford.

To understand how this is all connected, you have to think like a bond trader. Inflation is their enemy because it means the purchasing power of the dollars they receive when bonds eventually are paid off will be diminished. The only question is by how much.

Yields on 10-year Treasury notes, a benchmark for home mortgages and other consumers loans, jumped from 2.5 percent in March around the time of the Fed announcement to as high as 3.7 percent in recent days as signs that efforts to stabilize the financial system and economy were starting to pay off. And 30-year mortgage rates jumped more than a quarter-point this week to 5.29 percent, the highest level since December, Freddie Mac reported.

"If the meltdown continues in the bond market, then mortgage yields will soon be at levels that choke off refinancing activity," said economist Ed Yardeni, who runs his own investment firm. "Even worse, they could abort any necessary recovery in home sales and prices."

Jerusalem rips Iran, Syria over IAEA reports

The Jerusalem Post (Link) - Herb Keinon & AP (June 5, 2009)

Breaking with its practice of issuing laconic one or two-line reactions to reports about Iran's nuclear progress, Jerusalem responded Saturday to the most recent International Atomic Energy Agency report on Iran, which said Iran continued to expand its uranium enrichment program despite three sets of UN Security Council sanctions meant to pressure Teheran into freezing such activities.

"The report on Iran again reveals grave findings about intensified uranium enrichment in Iran, thereby violating UN Security Council resolutions, and also other actions which it is possible to connect to a military nuclear program," the statement, issued by the Israel Atomic Energy Commission, said.

This is one of the few times that statements about the issue have been issued by this agency.

The agency also said that the report, issued Friday, revealed the inability of the IAEA to effectively supervise the nuclear development in Iran, because of a lack of Iranian cooperation. The report, the statement said, showed that neither the international community, nor Israel, could rely on IAEA supervision inside Iran.

President Obama commends Alliance of Civilizations

Alliance of Civilizations (Link) (June 4, 2009)

Speaking in Cairo, US President Obama called for a new era of cooperative relations between the West and Muslim world and hailed "Turkey's leadership in the Alliance of Civilizations."

Reacting to President Obama's speech at the University of Cairo today, UN High Representative for the Alliance of Civilizations Jorge Sampaio "welcomed the bold vision set forth by the American President to inaugurate a new era of peace and cooperation between the "Muslim world" and the West based on mutual respect, trust and partnership."

"From the Alliance of Civilizations' perspective, this approach provides a strong framework, not only for advancing Muslim-Western relations, but also for engagement between diverse communities and cultures around the world. It constitutes our best hope to turn tides of mistrust that have beset us in past decades and forge a new beginning.

"President Obama's speech provides a clear path for constructive engagement with the Muslim world, a path that doesn't attempt to paste over differences, but builds on common aspirations. Most importantly, he emphasizes the need to address the various sources of tensions - including violent extremism and the conflict between Israelis and Palestinians - and join forces to confront them. Moreover, President Obama recognized the realization of human rights, freedom and development opportunities for all as a main goal to be achieved through concrete actions", High Representative Sampaio said.

In his speech, President Obama welcomed initiatives that turned his vision into practical results and commended the Alliance of Civilizations.

The full transcript of President Obama's speech can be found at the link above.

The President’s Speech in Cairo: A New Beginning

White House Blog (Link) - Barack Obama (June 4, 2009) Video of full speech at bottom

Thank you very much. Good afternoon. I am honored to be in the timeless city of Cairo, and to be hosted by two remarkable institutions. For over a thousand years, Al-Azhar has stood as a beacon of Islamic learning; and for over a century, Cairo University has been a source of Egypt's advancement. And together, you represent the harmony between tradition and progress. I'm grateful for your hospitality, and the hospitality of the people of Egypt. And I'm also proud to carry with me the goodwill of the American people, and a greeting of peace from Muslim communities in my country: Assalaamu alaykum. (Applause.)

We meet at a time of great tension between the United States and Muslims around the world -- tension rooted in historical forces that go beyond any current policy debate. The relationship between Islam and the West includes centuries of coexistence and cooperation, but also conflict and religious wars. More recently, tension has been fed by colonialism that denied rights and opportunities to many Muslims, and a Cold War in which Muslim-majority countries were too often treated as proxies without regard to their own aspirations. Moreover, the sweeping change brought by modernity and globalization led many Muslims to view the West as hostile to the traditions of Islam.

Violent extremists have exploited these tensions in a small but potent minority of Muslims. The attacks of September 11, 2001 and the continued efforts of these extremists to engage in violence against civilians has led some in my country to view Islam as inevitably hostile not only to America and Western countries, but also to human rights. All this has bred more fear and more mistrust.

So long as our relationship is defined by our differences, we will empower those who sow hatred rather than peace, those who promote conflict rather than the cooperation that can help all of our people achieve justice and prosperity. And this cycle of suspicion and discord must end.

Meet Brian Deese

Glenn Beck (Link) (June 3, 2009)

Here's the one thing and there's absolutely nothing funny about it: the wunderkind in charge of saving our auto industry is a 31-year-old with about as much experience as a summer intern.

Despite having no formal business education, no business experience and no auto industry experience, 31-year-old Brian Deese is now in charge of dismantling General Motors.

So what does this guy's resume look like? It should be impressive, considering he's managing America's $458,000 per day involuntary investment.

Deese grew up in a Boston suburb, the son of a political science professor at Boston College. He moved to Vermont and attended Middlebury College, where he studied political science and also took time to host a campus radio show called "Bedknobs and Beatniks," described in one write-up as "a format of music, news, discussion and banter."

Ballmer Says Tax Would Move Microsoft Jobs Offshore

Bloomberg (Link) - Ryan J. Donmoyer (June 3, 2009)

Microsoft Corp. Chief Executive Officer Steven Ballmer said the world’s largest software company would move some employees offshore if Congress enacts President Barack Obama’s plans to impose higher taxes on U.S. companies’ foreign profits.

“It makes U.S. jobs more expensive,” Ballmer said in an interview. “We’re better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S.”

Obama on May 4 proposed outlawing or restricting about $190 billion in tax breaks for offshore companies over the next decade. Such business groups as the National Foreign Trade Council, the U.S. Chamber of Commerce and the Business Roundtable have denounced the proposed overhaul.

U.S. tax rules let companies defer paying corporate rates as high as 35 percent on most types of foreign profits as long as that money remains invested overseas. Obama says he wants to end such incentives to keep foreign profits tax-deferred so that companies would invest them in the U.S.

EXCLUSIVE: Al Qaeda eyes bio attack from Mexico

The Washington Times (Link) - Sara A. Carter (June 3, 2009) Video

U.S. counterterrorism officials have authenticated a video by an al Qaeda recruiter threatening to smuggle a biological weapon into the United States via tunnels under the Mexico border, the latest sign of the terrorist group's determination to stage another mass-casualty attack on the U.S. homeland.

The video aired earlier this year as a recruitment tool makes clear that al Qaeda is looking to exploit weaknesses in U.S. border security and also is willing to ally itself with white militia groups or other anti-government entities interested in carrying out an attack inside the United States, according to counterterrorism officials interviewed by The Washington Times.

The officials, who spoke only on the condition they not be named because of the sensitive nature of their work, stressed that there is no credible information that al Qaeda has acquired the capabilities to carry out a mass biological attack although its members have clearly sought the expertise.

The video first aired by the Arabic news network Al Jazeera in February and later posted to several Web sites shows Kuwaiti dissident Abdullah al-Nafisi telling a room full of supporters in Bahrain that al Qaeda is casing the U.S. border with Mexico to assess how to send terrorists and weapons into the U.S.

EU watches as angry UK kicks off EU elections

EU Observer (Link) - Honor Mahony (June 3, 2009)

The rest of Europe has been watching agog at the buildup of an almost insurrectionary feeling in the UK following revelations of MPs' abuses of the expenses system. The outpouring of anger could have significant implications for EU politics, as Britons unleash their fury via the ballot box and opposition parties call for an early general election.

The UK, along with the Netherlands, will kick off voting in the European elections and local elections on Thursday (4 June), with the governing Labour party facing the prospect of its worst electoral defeat in history.

The beleaguered Labour prime minister, Gordon Brown, charged with reacting too slowly and then inadequately to the unfolding scandal, has been buffeted further in recent days by announcements that four members of his government, including two ministers, are leaving.

The weakened government has emboldened the opposition Conservatives, who feel 10 Downing Street is within their grasp sooner rather than later.

Climate of hate, world of double standards

One News Now (Link) - Michelle Malkin (June 3, 2009)

When a right-wing Christian vigilante kills, millions of fingers pull the trigger. When a left-wing Muslim vigilante kills, he kills alone. These are the instantly ossifying narratives in the Sunday shooting death of late-term abortion provider George Tiller of Kansas versus the Monday shootings of two Arkansas military recruiters.

Tiller's suspected murderer, Scott Roeder, is white, Christian, anti-government and anti-abortion. The gunman in the military recruitment center attack, Abdulhakim Mujahid Muhammad, is black, a Muslim convert, anti-military and anti-American.

Both crimes are despicable, cowardly acts of domestic terrorism. But the disparate treatment of the two brutal cases by both the White House and the media is striking.

President Obama issued a statement condemning "heinous acts of violence" within hours of Tiller's death. The Justice Department issued its own statement and sent federal marshals to protect abortion clinics. News anchors and headline writers abandoned all qualms about labeling the gunman a terrorist. An almost gleeful excess of mainstream commentary poured forth on the climate of hate and fear created by conservative talk radio, blogs, and Fox News in reporting Tiller's activities.

By contrast, Obama was silent about the military recruiter attacks that left 24-year-old Pvt. William Long dead and 18-year-old Pvt. Quinton Ezeagwula gravely wounded. On Tuesday afternoon -- more than 24 hours after the attack on the military recruitment center in Little Rock, Ark. -- Obama held a press conference to announce his pick for Army secretary. It would have been exactly the right moment to express condolences for the families of the targeted Army recruiters and to condemn heinous acts of violence against our troops.

UFOs spotted in Cambridgeshire

Telegraph UK (Link) (June 3, 2009)

A number of people claim to have seen UFOs in Cambridgeshire after dazzling orange lights flashed across the night sky. Witnesses claimed to have seen up to 50 of the mystery bright beams at around 11.30pm in Huntingdon.

Scott Boswell, 37, a former pilot and soldier from nearby Hinchingbrooke, captured some of the lights on his camera. Mr Boswell, a banker in the City of London, said: "I noticed three lights floating past our house, probably a couple of kilometres away, and thought nothing of it.

"But then I noticed a big long string of lights coming from the direction of Brampton and heading over the Stukeley Meadows direction. This was about 11.30pm and I got a couple of blurred shots. I'm pretty sure these weren't aircraft.

"There was no noise, no navigation lights and their heading and height was relatively constant until they disappeared out of sight."

Democrats agree to IMF money in U.S. war bill

Reuters (Link) - Jeremy Pelofsky (June 2, 2009)

Democrats in the U.S. Congress have reached a deal to boost support to the International Monetary Fund, lawmakers' aides said on Tuesday, a victory for President Barack Obama who pledged to help the lender assist countries in the global economic crisis.

The war funding measure will provide a $100 billion credit line to the IMF, increase the U.S. member contribution to the IMF by $8 billion and authorize the United States to back the IMF's plan to sell 400 tons (12.97 million ounces) of gold, said the aides, who declined further identification.

Obama had pleaded with the House of Representatives and the Senate to approve the provisions and the full funding package is expected to be completed in the coming days.

Magnitude 6.5 quake hits near Vanuatu, no damage

The Star Online (Link) (June 2, 2009)

A sharp 6.5 magnitude earthquake shook the Vanuatu group of islands in the South Pacific on Tuesday _ one of three to hit the area in 38 minutes - but there were no immediate reports of injury or damage.

The first quake, at a depth of 24 miles, struck just 28 miles out at sea from the main island of Ifate and the capital, Port Vila, shortly after 1:17 p.m. local time (0217 GMT), the U.S. Geological Survey reported.

The Pacific Tsunami Warning Center in Hawaii said a destructive Pacific-wide tsunami was not expected from the temblor and no tsunami warning had been issued.

Nine minutes later a magnitude 5.6 quake struck 33 miles west of Port Vila at a depth of 22 miles. It was followed by a magnitude 5.2 temblor some 45 miles west of the capital, also at a depth of 22 miles. While all three were felt in the Port Vila area, police said they had no reports of injury or damage.

Vanuatu - a chain of 83 islands - lies just over 2,200 kilometers (1,400 miles) northeast of Sydney and in part of the Pacific "Ring of Fire" - an arc of earthquake and volcanic zones stretching from Chile in South America through Alaska and down through Vanuatu to Tonga in the South Pacific.

US invites Iranian envoys to July 4 parties

The Jerusalem Post (Link) - AP - San Pedro Sula (June 2, 2009)

In a new overture to Iran, the Obama administration has authorized US embassies around the world to invite Iranian officials to Independence Day parties they host on or around July 4th.

A State Department cable sent to all US embassies and consulates late last week said that US diplomats could ask their Iranian counterparts to attend the festivities, which generally feature speeches about American values, fireworks, hot dogs and hamburgers.

The notice, sent on Friday, said that the posts "may invite representatives from the government of Iran" to the events, a State Department official said Tuesday, quoting from the document. The official spoke on condition of anonymity to discuss an internal communication.

It was not immediately clear how many embassies and consulates would actually invite Iranian diplomats to the July 4 parties or whether any Iranians would accept the invitations. The cable was first reported by The New York Times.

South Asia hunger 'at 40-year high': UN reports

National Post (Link) - Karen Hawthorne (June 2, 2009)

A global economic downturn could mean less eating out, "staycations" for holiday time, or forgoing wardrobe additions here in North America. Take a look at poorer countries, such as those in South Asia, and you'll find more poverty and hunger.

The United Nations reports that hunger in South Asia is at a 40-year high — the result of rising food and fuel prices compounded by the downturn, the BBC says. The report states that 100 million more people in the region are going hungry compared with two years ago — the worst affected areas are Nepal, Bangladesh and Pakistan.

Blueprint for New World Order

WorldNet Daily (Link) - Joseph Farah (June 2, 2009)

If you want to know what the globalist elite really have in mind for us, you should keep your eye on Foreign Policy Magazine, as I do. The May-June issue is nothing short of a blueprint for where the powers that be plan to take us – and it ain't pretty. Never before have I seen this crew let their hair down quite so obviously.

The cover sports a photo montage of Karl Marx's face made up of bread, tools and fruit. The headline reads: "Marx, Really? Why he matters now." The edition is called "The Big Think Issue" – but it's actually much more than that, more like a wish list.

Founded by major grants of the Carnegie Mellon Foundation, since January Foreign Policy has been published by the Slate Group of the Washington Post Company. It is sustained largely by special advertising supplements by the European Union, which boasts in the current issue how the Barack Obama administration is moving America closer to the policies of socialist, oligarchic Old Europe.

"Today, with the pillars of capitalism falling all around us, it might seem odd to wonder what world-changing shifts this Great Recession will help bring to life – what Next Big Thing is just around the corner," the cover story begins with a certain restrained glee. "But moments of rupture such as these are precisely what true innovators seek to exploit, creating new paradigms and leaving a trail of winners and losers in their wake. Companies, technologies, and ideas that survive this latest tide of creative destruction will emerge sharper, stronger, and more resilient for it."

Here's what's coming, according to the editors: "Massive structural shifts are no doubt in store for capitalism itself, with the once mighty financial industry on its knees and market fundamentalism in retreat. In world politics, power may be fragmenting, but a humbled America stands poised to be an unlikely beneficiary of the crash its financial wizards created. Awareness of the Earth's vulnerability is growing, but perhaps not fast enough to combat environmental decline. And in the new field of bioengineering, scientists are steadily perfecting technologies that may forever alter what it means to be human."

Apocalypse Sun?

Investors Business Daily (Link) (June 2, 2009)

NASA predicts the lowest sunspot activity since 1928. Is a major solar storm in the offing? While we worry about man-made warming, the sun may soon show us who's boss.

It's the sort of news that makes one's eyes glaze over. "If our prediction is correct, Solar Cycle 24 will have a peak sunspot number of 90, the lowest of any cycle since 1928 when Solar Cycle 16 peaked at 78," said Doug Biesecker of the National Oceanic and Atmospheric Administration's Space Weather Prediction Center.

Yes, space has weather, in the form of solar radiation that varies with solar activity in the form of sunspots and solar flares. Biesecker heads an NOAA panel that keeps an eye on such things and released this latest report.

But this dry statistic has more significance for the earth and its climate than all of Al Gore's gloom and doom about tailpipe emissions and rising sea levels. Whether the warm-mongers like it or not, the sun rules earth's climate — always has and always will.

Potential Conflicts Abound in Government Role

The Wall Street Journal (Link) - Neil King Jr., Jeffrey McCracken & Mike Spector (June 1, 2009)

Even after nine months of extraordinary government intervention, the scope and complexity of the General Motors Corp. rescue present a thicket of conflicts unlike any seen before in Washington.

The federal government is likely within weeks to emerge as the principal owner of a storied U.S. corporation whose factories and products touch the lives of tens of millions of Americans. It will simultaneously serve as the company's regulator, tax collector, customer, pension backstop and lender.

The administration put out a set of overarching principles Sunday meant to guide its interactions with GM and other companies in which the U.S. has an equity stake. The points stressed that the administration has no desire to own parts of companies and would do so only under extreme conditions. Once helping a company such as GM restructure, the government would manage its stake "in a hands-off, commercial manner" and not get involved in issuing day-to-day directives to GM, the guidelines said.

Obama aides have wrestled for weeks over how to portray the government's increasing involvement as an active player in the private sector.

But given the size of the $50 billion U.S. investment, it will be hard for President Barack Obama and Congress to say they will remain uninvolved in a company saved only by taxpayer largesse. Already the administration has said it wants to direct GM to make more fuel-efficient small cars, a potential threat to the company's near-term profitability. And members of Congress successfully pressured GM to roll back a decision to ship some jobs to China.

"There obviously is a balancing act," White House spokesman Robert Gibbs said Friday. "While not running an auto company on a day-to-day basis, obviously there will be concern about investments by the taxpayer, as there should be."

Cassini Equinox Titan Update

Thunderbolts.info (Link) - Stephen Smith (June 1, 2009)

On October 15, 1997 NASA launched the Cassini-Huygens spacecraft on a mission to explore Saturn and its family of moons, particularly Titan. It was the largest payload ever sent out to deep space, weighing almost six tons. It needed most of the seven year journey to Saturn for gravity boosts from Venus, Earth, and Jupiter because it could not carry enough onboard fuel to blast straight out to its target. As it was, the proposed decade-long flight, with engine burns, instrument usage, and radio transmissions to Earth, required that it carry several kilograms of plutonium as its primary power source.

On January 14, 2005 the Huygens probe separated from its mothership and successfully landed on the frigid moon. In June of 2008, the official mission timeline came to an end. It was renamed Cassini Equinox to commemorate the change of seasons on Saturn as the Sun passed through Saturn's equinox and began to illuminate the giant planet from the North. For the four year term of its original mission, Saturn was lit from the South, so NASA engineers are taking advantage of this rare opportunity.

Cassini recently flew close by Titan, and on June 6, 2009 its cameras will once again trace out a swath of radar images as it skims past the planet-sized moon at a distance of 965 kilometers from the surface. It is expected that the same low-lying regions NASA scientists refer to as "lakes," as well as the dendritic channels referred to as "river valleys," will dominate the conversation once the images are analyzed.

General Motors files for bankruptcy protection

Yahoo! News (Link) - AP (June 1, 2009)

General Motors filed for Chapter 11 bankruptcy protection Monday as part of the Obama administration's plan to shrink the automaker to a sustainable size and give a majority ownership stake to the federal government.

GM's bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has $172.81 billion in debt and $82.29 billion in assets.

"The General Motors board of directors authorized the filing of a Chapter 11 case with regret that this path proved necessary despite the best efforts of so many," GM Chairman Kent Kresa said in a written statement. "Today marks a new beginning for General Motors. ... The board is confident that this New GM can operate successfully in the intensely competitive U.S. market and around the world."

As it reorganizes, the fallen icon of American industry will rely on $30 billion of additional financial assistance from the Treasury Department and $9.5 billion from Canada. That's on top of about $20 billion in taxpayer money GM already has received in the form of low-interest loans.

Late Monday, U.S. bankruptcy court judge Robert Gerber gave interim approval for the Detroit-based automaker's use of a total of $33.3 billion in bankruptcy financing, with $15 billion available for use over the next three weeks. He will rule on final approval of the financing on June 25. Gerber also approved GM's sale procedures, setting a sale approval hearing for June 30.

Mapping the Economy: Measuring Financial Strain

Stan Deyo (Link) - AP (June 1, 2009)

The 31-Year-Old in Charge of Dismantling G.M.

The New York Times (Link) - David E. Sanger (May 31, 2009)

It is not every 31-year-old who, in a first government job, finds himself dismantling General Motors and rewriting the rules of American capitalism.

But that, in short, is the job description for Brian Deese, a not-quite graduate of Yale Law School who had never set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the American automotive industry.

Nor, for that matter, had he given much thought to what ailed an industry that had been in decline ever since he was born. A bit laconic and looking every bit the just-out-of-graduate-school student adjusting to life in the West Wing — “he’s got this beard that appears and disappears,” says Steven Rattner, one of the leaders of President Obama’s automotive task force — Mr. Deese was thrown into the auto industry’s maelstrom as soon the election-night parties ended.

“There was a time between Nov. 4 and mid-February when I was the only full-time member of the auto task force,” Mr. Deese, a special assistant to the president for economic policy, acknowledged recently as he hurried between his desk at the White House and the Treasury building next door. “It was a little scary.”

Analysis: Bloodshed becomes focus of PA-Hamas relations

The Jerusalem Post (Link) - Khaled Abu Toameh (May 31, 2009)

Sunday's confrontation between an armed Hamas cell and Palestinian Authority policemen in Kalkilya shows that the Islamic movement still has a military presence in the West Bank - one that it is hoping to use to topple Mahmoud Abbas's regime there.

PA security officials said the two Hamas operatives who were killed in the clash, Muhammad Samman and Muhammad Yassin, headed a cell that possessed large amounts of weapons, including explosives and automatic rifles, some of which had been hidden in a basement of a mosque in the city.

The weapons, according to the officials, were supposed to be used by Hamas against members of the PA security forces and Fatah and PA officials. The officials revealed that Hamas members had long been collecting information about PA security officials and installations in the context of what they alleged was a scheme to stage a "coup" similar to the one that the movement carried out in the Gaza Strip in the summer of 2007.

But while the elimination of Hamas's Kalkilya cell may have foiled or hindered the movement's attempts to undermine the PA, the incident is seen as the final nail in the coffin of Palestinian unity talks.

Election fever sweeps Iran

The Jerusalem Post (Link) - Sabina Amidi (May 31, 2009)

As election fever sweeps Iran, freedom and civil liberties are turning into the dominant theme of Mir Hossein Mousavi's presidential campaign. Mesmerized by his promises of "change," youngsters are crowding the streets, holding up posters of the former prime minister and chanting idealistic slogans.

In the same fashion as US President Barack Obama and his "Yes, we can" change mantra, Mousavi has brought together a coalition of young people who know exactly what they want: Mahmoud Ahmadinejad out of office and a reformist at the helm.

"We need to get rid of Ahmadinejad. He gives the international community a wrong impression of Iranians," a university student who backs Mousavi insisted in a recent conversation. "The workers and even religious conservatives are more concerned with how they are going to put bread and butter on the table. Since Ahmadinejad became president, he has spent more money purchasing weapons from North Korea than on feeding the people. But that will change when Mousavi is elected."

Many young Iranian observers share this sense that former prime minister Mousavi can steer Iran away from Ahmadinejad's suffocating domestic and irrational foreign policies.

But behind Mousavi's reformist façade, older Iranians recall, he does not exactly fit the mold of an ideal "progressive" leader and has a lot more in common with his conservative counterparts than his energized young supporters may want to admit.

The 70th Week Countdown - What Curt Thinks

Fulfilled Prophecy (Link) - Curt Meili (May 31, 2009)

FP reader Curt Meili suggests one way events could play out in the next year, if the ENP is the seven-year covenant of Daniel 9.

President Obama and Israeli Prime Minister Benjamin Netanyahu met, two weeks ago today, at the White House for their first face-to-face talks since both leaders came into office. During their meeting President Obama pressured Netanyahu to commit to a two-state solution with the Palestinians.

As I suspected Netanyahu failed to commit to this idea, mainly because in the past the Palestinian people and the terrorist organization Hamas have failed to recognize that Israel has the right to exist. Hamas has repeatedly stated their desire to wipe Israel off the face of the earth, and there really are no signs that this mindset has changed. Netanyahu is right to not negotiate toward a two-state solution until, at the very least, the Palestinians agree to let Israel live peacefully without fear of annihilation.

This, of course, does not look like it is going to happen anytime soon, and it is the major problem that many world leaders have tried to solve over the past 60 years. Which brings me to where I think we might be today. Keep in mind that the following is just my opinion and, of course, I could be wrong.

Israel Begins its Biggest Civil Defense Drill

Voice Of America (Link) - Robert Berger (May 31, 2009)

Israel is holding the biggest civil-defense drill in its history. Amid growing tensions with Iran, Israel is training soldiers, emergency crews, and civilians for the possibility of all-out war. Major Chezi Deutch is an officer in Israel's Home Front Command.

"It is part of the overall plan to increase preparedness and readiness in the country, dealing with civil defense and with emergencies in the civilian population," Deutch said.

The scenarios include massive missile attacks possibly with chemical or biological weapons. "What we are expecting, what we would like to see is to have the population act as they would in time of a real crisis," Deutch said.

The crisis Israel fears is a massive rocket and missile barrage on all fronts: from Iran in the East, to Syria and Lebanese Hezbollah guerrillas in the North, to the Palestinian militant group Hamas on Israel's southern border in the Gaza Strip.

That could happen if Israel carries out its threat to launch a pre-emptive strike on Iran's nuclear facilities. With the Iranian president threatening to wipe the Jewish state "off the map," Israel has warned time and again that it will not allow Iran to acquire nuclear weapons. And the civil-defense drill seems to be a clear message to Teheran that the military option remains on the table.