Watchman Newsletter

Banks Won Concessions on Tests

The Wall Street Journal (Link) - David Enrich, Dan Fitzpatrick and Marshall Eckblad (May 9, 2009)

The Federal Reserve significantly scaled back the size of the capital hole facing some of the nation's biggest banks shortly before concluding its stress tests, following two weeks of intense bargaining.

In addition, according to bank and government officials, the Fed used a different measurement of bank-capital levels than analysts and investors had been expecting, resulting in much smaller capital deficits.

The overall reaction to the stress tests, announced Thursday, has been generally positive. But the haggling between the government and the banks shows the sometimes-tense nature of the negotiations that occurred before the final results were made public.

Government officials defended their handling of the stress tests, saying they were responsive to industry feedback while maintaining the tests' rigor.

Under Restructuring, GM To Build More Cars Overseas

The Washington Post (Link) - Peter Whoriskey (May 8, 2009)

The U.S. government is pouring billions into General Motors in hopes of reviving the domestic economy, but when the automaker completes its restructuring plan, many of the company's new jobs will be filled by workers overseas.

According to an outline the company has been sharing privately with Washington legislators, the number of cars that GM sells in the United States and builds in Mexico, China and South Korea will roughly double.

The proportion of GM cars sold domestically and manufactured in those low-wage countries will rise from 15 percent to 23 percent over the next five years, according to the figures contained in a 12-page presentation offered to lawmakers in response to their questions about overseas production.

As a result, the long-simmering argument over U.S. manufacturers expanding production overseas -- normally arising between unions and private companies -- is about to engage the Obama administration.

Netanyahu: Israel will never withdraw from Golan

Haaretz (Link) - Barak Ravid (May 8, 2009)

Prime Minister Benjamin Netanyahu told a group of Russian-language reporters Thursday that Israel will never withdraw from the Golan Heights. "Remaining on the Golan will ensure Israel has a strategic advantage in cases of military conflict with Syria," Netanyahu said during a briefing he gave to the reporters. His comments were published Friday on several Russian-language Israeli Web sites.

A week-and-a-half out from Netanyahu's scheduled visit to Washington, the prime minister stressed that he is ready to stand up to U.S. President Barack Obama and that he would not give up on matters that in his opinion are critical to Israel's security.

Netanyahu said that he intends to emphasize to Obama the need to deal with Iran and its "nuclear program, which is a major obstacle to peace in the Middle East."

"If Iran turns into a nuclear power they will force all Arab states to ally with it, and the extreme Iranian regime that revealed its plan to eliminate Israel will not allow Arab states to normalize relations with Israel," Netanyahu said.

Netanyahu also told the reporters that he would not present preconditions for negotiations with the Palestinians and would not accept preconditions from them. He said relations with Russia are important, but called the Russian supply of weapons to Iran a mistake.

U.S. threatens to rescind stimulus money over wage cuts

Los Angeles Times (Link) - Evan Halper (May 8, 2009)

The Obama administration is threatening to rescind billions of dollars in federal stimulus money if Gov. Arnold Schwarzenegger and state lawmakers do not restore wage cuts to unionized home healthcare workers approved in February as part of the budget.

Schwarzenegger's office was advised this week by federal health officials that the wage reduction, which will save California $74 million, violates provisions of the American Recovery and Reinvestment Act. Failure to revoke the scheduled wage cut before it takes effect July 1 could cost California $6.8 billion in stimulus money, according to state officials.

The news comes as state lawmakers are already facing a severe cash crisis, with the state at risk of running out of money in July.

Czechs clear way for Lisbon treaty

AFP (Link) (May 7, 2009)

Czech senators on Wednesday approved the European Union's troubled Lisbon Treaty, leaving an Irish referendum as the last major stumbling block to major reform of the bloc.

Members of the upper house in the country which currently holds the EU presidency, approved the treaty, which aims to streamline decision-making in the 27-nation group, by 54 votes to 20.

The treaty must be ratified by all 27 members to take effect. It now depends largely on Ireland, which will hold a second referendum by November, following its rejection by voters there last year.

But the Czech ratification still requires the signature of President Vaclav Klaus, a eurosceptic and fierce opponent of the treaty.

Klaus made it clear he was in no rush to ratify the document. The senators, had "turned their backs on the Czech Republic's interests," he said.

Report: Turkey To Break With NATO On Iran

The Bulletin (Link) - David Bedein (May 7, 2009)

A report issued by the Washington Institute says Turkey has moved steadily away from its NATO allies and toward Iran, Russia and Syria.

The report, titled “The AKP’s Foreign Policy: The Misnomer of Neo-Ottomanism” and authored by senior researcher Soner Cagaptay, says Turkey’s new foreign policy — led by the ruling Justice and Development Party, or AKP according to its Turkish initials — has come at the expense of Ankara’s relations with Israel, the European Union and the United States.

“Ankara will likely opt out of a NATO consensus on Iran, clash with the United States on how to handle Hamas and Hezbollah, and disagree with the EU and the U.S. on Russia,” the report said.

The report says Turkey has developed friendlier relations with Russia and the Islamic world than with the West. Mr. Cagaptay cited Hamas, Hezbollah, Iran, Qatar, Saudi Arabia, Sudan and Syria as examples of Turkey’s growing ties in the Islamic world.

'Abbas to form new gov't without Hamas'

The Jerusalem Post (Link) - AP (May 7, 2009)

Palestinian Authority President Mahmoud Abbas plans to ask his prime minister within the coming week to form a new government without Hamas, a senior aide said Thursday. Months of power-sharing talks between Fatah and Hamas have gone nowhere. "If they continue like this, it could last for years," aide Yasser Abed Rabbo said.

Formation of a new government enjoys "external support," he added, referring to Egypt, which has mediated the floundering power-sharing talks. There was no immediate comment from Egyptian officials.

Abed Rabbo said the next round of Egyptian-brokered contacts would take place on May 16 as planned, but Hamas shared his pessimism regarding their outcome. "There are no signals on the horizon of a power-sharing deal with Fatah," said Mahmoud Ramahi, a Hamas leader.

Global Crisis ‘Vastly Worse’ Than 1930s, Taleb Says

Bloomberg (Link) - Shiyin Chen and Liza Lin (May 7, 2009)

The current global crisis is “vastly worse” than the 1930s because financial systems and economies worldwide have become more interdependent, “Black Swan” author Nassim Nicholas Taleb said.

“This is the most difficult period of humanity that we’re going through today because governments have no control,” Taleb, 49, told a conference in Singapore today. “Navigating the world is much harder than in the 1930s.”

The International Monetary Fund last month slashed its world economic growth forecasts and said the global recession will be deeper than previously predicted as financial markets take longer to stabilize. Nouriel Roubini, 51, the New York University professor who predicted the crisis, told Bloomberg News yesterday that analysts expecting the U.S. economy to rebound in the third and fourth quarter were “too optimistic.”

“Certainly the rate of economic contraction is slowing down from the freefall of the last two quarters,” Roubini said. “We are going to have negative growth to the end of the year and next year the recovery is going to be weak.”

Federal Reserve Chairman Ben S. Bernanke told lawmakers May 5 that the central bank expects U.S. economic activity “to bottom out, then to turn up later this year.” Another shock to the financial system would undercut that forecast, he added.

Column One: Obama's green light to attack Iran

The Jerusalem Post (Link) - Caroline Glick (May 7, 2009)

Arctic winds are blowing into Jerusalem from Washington these days. As Prime Minister Binyamin Netanyahu's May 18 visit to Washington fast approaches, the Obama administration is ratcheting up its anti-Israel rhetoric and working feverishly to force Israel into a corner.

Using the annual AIPAC conference as a backdrop, this week the Obama administration launched its harshest onslaught against Israel to date. It began with media reports that National Security Adviser James Jones told a European foreign minister that the US is planning to build an anti-Israel coalition with the Arabs and Europe to compel Israel to surrender Judea, Samaria and Jerusalem to the Palestinians.

According to Haaretz, Jones was quoted in a classified foreign ministry cable as having told his European interlocutor, "The new administration will convince Israel to compromise on the Palestinian question. We will not push Israel under the wheels of a bus, but we will be more forceful toward Israel than we have been under Bush."

He then explained that the US, the EU and the moderate Arab states must determine together what "a satisfactory endgame solution," will be.

As far as Jones is concerned, Israel should be left out of those discussions and simply presented with a fait accompli that it will be compelled to accept.

Bank of America, Citigroup, GMAC Need More Capital

Bloomberg (Link) - Rebecca Christie (May 6, 2009)

Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and GMAC LLC are among the companies judged to need additional capital according to results of regulators’ stress tests on the 19 largest U.S. banks.

Bank of America has the biggest shortfall, at $34 billion, according to people familiar with the matter. Citigroup’s requirement for deeper reserves to offset potential losses over the coming two years is about $5 billion, people with knowledge of that bank’s results said. Wells Fargo requires about $15 billion, while GMAC’s need is $11.5 billion, one person said.

Morgan Stanley may need between $1 billion and $2 billion, according to people familiar with the matter. Earlier today, Bloomberg News reported that Morgan Stanley needed no new capital, citing a person familiar with the matter. Any capital requirement would result from Morgan Stanley’s plans to pay $2.7 billion to take control of Citigroup’s Smith Barney brokerage venture, one of the people said.

The Federal Reserve and other regulators said today that banks that have to bolster their capital will have until June 8 to develop a plan. Goldman Sachs Group Inc., MetLife Inc., JPMorgan Chase & Co., Bank of New York Mellon Corp., American Express Co., BB&T Corp. and Capital One Financial Corp. were deemed not to need additional funds, the results show.

'EU to decide on upgrading ties after Israel reviews strategy'

Haaretz (Link) - Reuters (May 6, 2009)

The European Union will decide what to do about a frozen upgrade in ties with Israel once Israel unveils its Palestinian strategy review, EU foreign policy chief Javier Solana said on Wednesday.

Solana said "not much has advanced" in a meeting with Foreign Minister Avigdor Lieberman in Prague and the Israeli side was fully aware of the EU's position, which insists on a two-state solution.

"They are in the process of review," he told reporters. "They have to see how they can make something that is compatible with that." Solana said the Israeli side said it would have clearer ideas on the Palestinian policy around the middle of May.

Analysis: Iran-Syria alliance in harmony

The Jerusalem Post (Link) - Jonathan Spyer (May 6, 2009)

President Mahmoud Ahmadinejad of Iran and President Bashar Assad of Syria reconfirmed the close alliance between their two countries during the Iranian president's visit to Damascus this week.

Ahmadinejad's visit came on the eve of the return of two senior US officials, Jeffrey Feltman and Daniel Shapiro, to Damascus. Their visit is part of ongoing US efforts at engagement with Syria. The tone struck by Ahmadinejad and Assad this week, however, did not suggest a mood for compromise.

Syrian President Bashar Assad, in his address to the joint press conference held by the two presidents after their meeting, accurately summed up the Iranian-Syrian alliance as based upon both "principles and interests."

It is sometimes suggested that the Syrian-Iranian alliance is a marriage of convenience between two essentially incompatible regimes. This view is incorrect. The alliance is of long standing, is rooted in shared interests and expresses itself in a shared ideological conception - that of the idea of muqawama (resistance) to the supposed ambitions of the West and Israel in the region.

Bigger Than Watergate?

Financial Sense (Link) - Oliver Garret (May 6, 2009)

Reportedly, Bill O’Reilly referred to a recent story out of our nation’s capital as “bigger than Watergate.” Whether the story is bigger than Watergate or not, it is definitely a scandal of huge proportions.

To sum it up, on April 23, 2009, New York Attorney General Andrew Cuomo sent a letter to Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs Chris Dodd; Chairman of the House Financial Services Committee Barney Frank; SEC Chairwoman Mary Schapiro; and Chairwoman of the Congressional Oversight Panel Elizabeth Warren.

The letter outlined how former Treasury Secretary Paulson and Fed Chairman Ben Bernanke forced Bank of America’s acquisition of Merrill Lynch – even though Bank of America CEO Ken Lewis and the board of directors tried to pull the plug on the deal after it turned out that Merrill Lynch was far deeper in debt than it had admitted.

Report: Obama’s Master Plan for the Middle East

Israel National News (Link) - Tzvi Ben Gedalyahu (May 6, 2009)

U.S. President Barack Obama told Jordan's King Abdullah two weeks ago to meet with leading Muslim Arab countries and persuade them to accept changes in the Saudi 2002 Initiative, according to the London-based Arabic language Al-Quds Al-Arabi newspaper.

The report reflects the president’s swift action on the Middle East since he was elected last November.President Obama’s major proposed alteration in the Saudi peace plan is for Arab countries to grant citizenship to approximately five million Arabs who are descendants of former Israelis while allowing them the right to move to a new Palestinian Authority country.

Israel Outraged at 'Biased' UN Report on Gaza Operation

Israel National News (Link) - Hana Levi Julian (May 5, 2009)

The Foreign Ministry expressed outrage Tuesday in response to a United Nations report that accused the IDF of deliberately targeting United Nations buildings during Operation Cast Lead in Gaza.

The report was "unbalanced, biased and ignores the facts," Israel said in its rejection. It called on the U.N. to take a second look at the "complex reality in which a terror organization operates in proximity" to its facilities.

U.N. Secretary-General Ban Ki-moon is expected to submit his response to the report to the Security Council on Tuesday, when he will release the full report.

EU wants 'Internet G12' to govern cyberspace

EU Observer (Link) - Leigh Phillips (May 5, 2009)

The European Commission wants the US to dissolve all government links with the body that 'governs' the internet, replacing it with an international forum for discussing internet governance and online security.

The rules and decisions on key internet governance issues, such as the creation of top level domains (such as .com and .eu) and managing the internet address system that ensures computers can connect to each other, are currently made by the Internet Corporation for Assigned Names and Numbers (ICANN), a private, not-for profit corporation based in California which operates under an agreement with the US Department of Commerce.

The decisions made by ICANN affect the way the internet works all around the world.

Iran's Ahmadinejad in new tirade against Israel

Breitbart (Link) - AFP (May 5, 2009)

Iranian President Mahmoud Ahmadinejad slammed Zionism as "occupation" and "aggression" Tuesday as he delivered his latest diatribe against the Jewish state on a visit to key Middle East ally Syria.

"The Zionist occupiers are destructive microbes, because Zionism itself is occupation, aggression, the use of assassination and annihilation," he told a joint news conference with President Bashar al-Assad in the Syrian capital.

"Zionism was created to threaten us. To support the Palestinian resistance is a humanitarian and popular obligation," Ahmadinejad said in remarks in Farsi that were translated into Arabic.

"Syria and Iran are united in supporting the Palestinian resistance."

The Iranian president's comments came barely two weeks after he sparked a European walkout from a UN anti-racism conference in Geneva by equating Zionism with racism.

He has gone further in the past, predicting that the Jewish state is doomed to be wiped from the map and describing the Holocaust as a myth.

Ahmadinejad asked why it was the Islamist Hamas movement which controls Gaza that is blacklisted by the European Union and the United States, and not Israel after its devastating offensive against the territory at the turn of the year.

Brian McLaren Wants End Time Believing Christians Robustly Confronted

Lighthouse Trails Research Project (Link) (May 4, 2009)

[B]eloved, I now write unto you; in both which I stir up your pure minds by way of remembrance: That ye may be mindful of the words which were spoken before by the holy prophets, and of the commandment of us the apostles of the Lord and Saviour: Knowing this first, that there shall come in the last days scoffers, walking after their own lusts, And saying, Where is the promise of his coming? II Peter 3:1-4

If you are a Christian who believes that the Bible is God's inspired Word and believe that Jesus Christ will be coming again, you are being marginalized. And you might not even know it. It may surprise you to know where this marginalization is coming from. We're not speaking of the world today . . . we are talking about people who say they are Christians and who happen to be very influential. In fact, one of them, Rick Warren, was just named by Time magazine as one of the 100 most influential people in the entire world.¹

In an April 2009 article in Sojourner's magazine by emerging church leader, Brian McLaren, McLaren clearly has targeted Christians. But not just any Christians. McLaren is talking about Christians who believe Jesus Christ is coming back again, suggesting that these type of Christians are the reason there is no peace in the Middle East. He says what these end-time believing Christians are doing is "terrible," "deadly," and "distorted."

Obama's judicial dictators

One News Now (Link) - Peter Heck (May 4, 2009)

Alexander Hamilton, perhaps the brightest of all the Founding Fathers, once spoke of the role of the judiciary in this way: "It may truly be said to have neither force nor will, but merely judgment." In other words, judges do not determine the law, nor enforce it. They merely gauge whether actions brought to them in various cases fall within the parameters of legality established by the political branches, and then rule accordingly with no regard for the persons involved.

This responsibility is precisely why the Founders isolated judges from the political winds, giving them life tenures. Judges should not be forced to consider popular opinion or cultural fads in the course of determining what the law says. Indeed, it may be necessary for the courts to defy those very trends in order to uphold the law as written by the people through the elected branches of government. If the people wish to change their law, they do so through the ballot box -- not the courtroom.

To illustrate what Hamilton meant, it is helpful to consider the role of an umpire whose responsibility is to call balls and strikes based on a predetermined strike zone. The umpire does not change the strike zone throughout the course of the game. Nor does he consider the socioeconomic, athletic, or racial background of the individual batter. He doesn't determine for himself whether it is "fair" that one team's pitcher seems to be more skilled than the other, and then seek to "even the playing field." He is a neutral party with neither force nor will, merely judgment.

House Democrats seek $94.2 billion in emergency funds

Reuters (Link) - Jeremy Pelofsky and Richard Cowan (May 4, 2009)

Democrats in the U.S. House of Representatives will seek passage in coming weeks of $94.2 billion in emergency money for the wars in Iraq and Afghanistan and other programs, including $2 billion more to prepare for an influenza pandemic.

House Appropriations Committee Chairman David Obey, outlining the legislation for reporters, also said the legislation would include $2.2 billion to fund some C-17 airplanes for the Pentagon. But it will not address future purchases of a refueling tanker airplane sought by the Air Force.

Obey said $80 million to close the U.S. prison in Guantanamo, Cuba, would not be included in the bill because no details were provided by the administration on how that move would be carried out.

Last month, President Barack Obama asked Congress to give him $83.4 billion more to pay for the wars in Iraq and Afghanistan. He is hoping to use the money to begin phasing out combat operations in Iraq while building up U.S. forces in Afghanistan where al Qaeda and Taliban fighters are gaining strength.

The Pentagon wants the U.S. Congress to approve the money promptly, before a congressional recess that is scheduled to start at the end of May.

White House links Iran nukes to Palestinian state

Israel Today (Link) (May 4, 2009)

The Obama Administration on Sunday did what Israelis have long feared and pleaded with the US to avoid when White House Chief of Staff Rahm Emanuel linked the resolution of the Iran nuclear crisis to the creation of a Palestinian state.

Speaking at the annual Washington conference of the American-Israel Public Affairs Committee (AIPAC), Ynet quoted Emanuel as insisting that the ability to confront Iran and reach a diplomatic solution over its defiant nuclear program was solely dependent on progress toward the birth of "Palestine."

Emanuel said that with Israeli Prime Minister Benjamin Netanyahu scheduled to meet with US President Barack Obama later this month, Israel now faces a moment of truth - it can either acquiesce to international demands and in return have its most serious threats dealt with, or maintain the status quo and have those threats persist.

“Destruction in eleven days” Iran threatens Israel

n-tv.de (Link) - Ulrich W. Sahm (May 3, 2009)

Iran indicated for the first time, in which period it considers the destruction of Israel possible in case of an armed conflict. The Israeli television showed an interview with the Iranian general chief of staff Attalah Salihi in the Lebanese television. Literally this said: “The truth is that Israel does not have the courage to attack us. If we should be subjected to an attack, I do not believe to extinguish that we need more than eleven days, the existence of Israel.”

The Arabia expert Oded Granot explained as it: “Ever we did not hear a so clear and open announcement Iran.” President Ahmadinejad announced the destruction of Israel again and again “in large courses and as a political goal”, but never so concretely and with date, as it did Salihi.

Before the USA with the consideration had gotten “better bomb straight than bombarding” that one had resigned oneself in Washington under president Barack Obama to the building of an Iranian atom bomb. The high-ranking Europeans, such an exclusive report of the Israeli television, would have these estimates to the “few surprised” Israelis passed on.

The Israelis came already for some time in the end the fact that the Americans did not let themselves convince today any longer so easily of intelligence data and that therefore also the rather diffuse information about the possible Iranian development of an atom bomb to a preventive American impact against Teheran will not lead. Accordingly wish to Washington also no military impact of other countries as for instance Israel against the atomic mechanisms in Iran.

Israel Accepts Two-State Route to Peace, Ayalon Says

Bloomberg (Link) - Gwen Ackerman and Jonathan Ferziger (May 3, 2009)

Israel agrees that a comprehensive peace agreement with the Palestinians will entail a two-state solution, Deputy Foreign Minister Daniel Ayalon said.

“The government of Israel, because of our democratic tradition and because of the continuity principle, is going to abide by all previous commitments the former government took, including the acceptance of the road map to peace which will lead to a two-state solution,” Ayalon said, referring to the internationally backed 2002 peace plan.

Ayalon spoke in his Jerusalem office before a series of meetings Prime Minister Benjamin Netanyahu’s government will hold abroad with foreign leaders. Foreign Minister Avigdor Lieberman heads to Europe tomorrow and President Shimon Peres is scheduled to meet with President Barack Obama on May 5. Netanyahu will visit Washington later this month.

The prime minister has so far stopped short of endorsing Palestinian statehood. Netanyahu, who was skeptical of peace talks held with the Palestinians by his predecessor Ehud Olmert, has said he will focus on improving the Palestinian economy in the West Bank.

Strong quake shakes Guatemala: USGS

Breitbart (Link) - AFP (May 3, 2009)

A strong, 6.1-magnitude earthquake shook Guatemala Sunday, the US Geological Survey said. The temblor hit at 10:21 am (1621 GMT) some 10 kilometers (six miles) from the town of Santiago Atitlan and 68 km (42 miles) from the capital Guatemala City. The quake was deep, centered 104 km (64 miles) below the earth's surface.