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Date Posted: 09:45:02 11/03/07 Sat
Author: part 1
Subject: November 3, 2007

ICLC BRIEFING INTERNATIONAL VERSION

[A7-44-6/BFG001]:BFG:L: [07/11/02][06:1 ]AM BRIEFING, ENGLISH [1]
STAND:[1.1.00/ ][0.1.00/ ][ . . / ] [ : ]
SUBJT:[5.0.00/ ][4.0.00/ ][3.0.00/ ] [ : ]
TOPIC:[060.000 :AM BRIEFING ]
SUB-T:[061.000 :AM BRIEFING, ENGLISH ]
TITLE:[AM BRIEFING SATURDAY NOV 3 2007 ] 1 of Pages

SYNOPSIS:

TO:ALL POINTS BY: JEFF STEINBERG, WFW/JWS
RE:MORNING BRIEFING SATURDAY, NOVEMBER 3, 2007

+---------------------------------------------------------------+
| |
| |
| MORNING BRIEFING |
| |
| Saturday, November 3, 2007 |
| |
| |
+---------------------------------------------------------------+

WILL "9/11 AND BAE FACTORS" DERAIL
CHENEY'S ONGOING PLAN TO BOMB IRAN?

by Jeffrey Steinberg

Two recent events, both occurring in the context of Saudi Arabian
King Abdullah's visit to London at the end of October, have once
again cast the dark shadows of 9/11 and the BAE scandal over Vice
President Dick Cheney. Coupled with mounting opposition to
Cheney's war schemes from within the U.S. military and factions
of the Bush Administration, as well as from Persian Gulf states,
Russia, and even Israel, the revived spotlight on two of the
biggest Cheney-linked scandals, could help derail the Vice
President's accelerating drive for a U.S. bombing of Iran, and
avert what would certainly devolve into a new Eurasian Hundred
Years War.

Finger Pointing on 9/11

On Nov. 1, 2007, Prince Bandar bin-Sultan, the longtime
Saudi ambassador in Washington, who is now the national security
advisor to King Abdullah, gave an interview to the Arab-language
satellite TV network Al-Arabiya, in which he made the incredible
claim that the Sept. 11, 2001 attacks could have been avoided, if
the U.S. had taken Saudi intelligence efforts more seriously.
Prince Bandar claimed that Saudi intelligence was "actively
following" most of the 911 hijackers "with precision," prior to
the attacks on the World Trade Center and the Pentagon. "If U.S.
security authorities had engaged their Saudi counterparts in a
serious and credible manner, in my opinion, we would have avoided
what happened."
Prince Bandar's accusations that the U.S. Government could
have stopped 9/11, had they pursued leads provided by Saudi
intelligence, were met with skepticism by some U.S. intelligence
officials consulted by {EIR}. They pointed to {EIR}'s own June
29, 2007 revalations, drawn from the 9/11 Commission Report and
other sources, that then-Saudi Ambassador Bandar had funneled
more than $50,000, through two Saudi intelligence operatives, to
some of the 9/11 hijackers. One source emphasized that the
Bandar payments were so controvercial that a 28-page segment of
the 9/11 Commission report, dealing with this incident, was
classified and blocked, to this day, from publication. But
Prince Bandar's charges of U.S. failures, leading to the 9/11
attacks, could signal a rift between the Saudi prince and his
"war party" ally Dick Cheney, that could set back the Vice
President's schemes to build up a Sunni versus Shi'ite
confrontation in the Persian Gulf--a scheme he launched with his
Nov. 2006 trip to Riyad, arranged by Prince Bandar personally.
Whether legitimate or not, Prince Bandar's extraordinary
claims mirrored comments made by King Abdullah on Oct. 29, in an
interview with the BBC on the eve of his state visit to London.
King Abdullah claimed that British authorities also failed to
listen to Saudi intelligence warnings about terror plots in
England; and the July 7, 2005 London subway bombings, which
killed 52 people, could have been prevented, if British
authorities had acted on specific warning passed from Riyad in
advance of the attacks.
U.S. intelligence sources, canvassed by {EIR} following the
Bandar and Abdullah statements, reported that the Saudis had been
devastated by the public revalation that 15 of the 19 9/11
hijackers had been Saudi nationals, and that they were now
launching a public relations offensive to get beyond the stigma.
But, the sources observed, the effort to shift the blame for the
9/11 attacks carried considerable risks--for all parties
concerned, including the Vice President, who has counted on the
Saudis to back up his war plans against Iran.
Prince Bandar's blunt allegations raised some dramatic
questions, which echo charges made by Lyndon LaRouche, most
recently, during his Oct. 10, 2007 international webcast from
Washington, D.C. In his opening remarks, LaRouche had declared:
"I shall say, that I do know, beyond doubt, that 9/11 was an
inside job. It was an inside job on behalf of what the
Bush-Cheney Administration represents." Later, LaRouche added,
"I know more than I'm saying: With complicity of certain people
in Saudi Arabia, with the British Empire, which shares power with
Saudi Arabia, through the BAE, a job was done on the United
States on 9/11. And we've been living under the heat of that,
ever since. That I stand by. Other facts will come out at a
suitable time."
With Prince Bandar's stunning charges that U.S. officials
failed to cooperate with the Saudis, who were tracking the 911
hijackers "with precision," a question must be posed to Vice
President Dick Cheney and others inside the Bush White House:
Did the Saudis, in fact, provide the Bush-Cheney
Administration with "actionable intelligence" on a pending Al
Qaeda attack on America? By July 2001, both the FBI and the CIA
were circulating warnings about an Al Qaeda terrorist action. On
July 10, 2001, then-CIA Director George Tenet and Cofer Black,
the Agency's counterterrorism director, had met with National
Security Advisor Condoleezza Rice, Attorney General John Ashcroft
and Secretary of Defense Donald Rumsfeld, to sound the alarms
about an imminent Al Qaeda attack, but they were given "the
brushoff"--by Rice in particular.
This led up to the now infamous Aug. 6, 2001 Presidential
Daily Briefing, with a section titled "Bin Laden Determined to
Strike Inside US," which again warned of imminent Al Qaeda
terrorist attacks on U.S. soil, based on a pattern of U.S. and
foreign-generated intelligence.
Despite all of the FBI and CIA warnings, and the new claims
by Prince Bandar that Saudi Arabia had also been warning about
pending Al Qaeda attacks on the U.S.A., the Bush-Cheney White
House did absolutely nothing to act on the warnings.
Who bears the greatest burden of responsibility within the
U.S. Government for 9/11, whether or not the Bandar allegations
pan out? At the time of the 9/11 attacks, Vice President Cheney
was the counter-terrorism czar at the White House, a title
bestowed on him by President Bush on May 17, 2001--at the very
moment that the Bush White House was shelving the findings of the
Hart-Rudman "U.S. Commission on National Security," which
conducted a two-and-a-half year study of America's vulnerability
to terrorist attack, and had demanded a major overhaul of U.S.
domestic security planning and structures.
The Bandar accusations, on the heels of the LaRouche Oct. 10
webcast, are now certain to push the 9/11 matter back onto the
front-burner, which is particularly bad news for Vice President
Cheney, who LaRouche has already branded the "Hermann Goering" of
the Bush Administration.

The BAE Scandal: Back With a Vengeance

With much pomp and circumstance, Saudi King Abdullah paid a
state visit to Great Britain during the last week of October, in
what was billed as the "Two Kingdoms" celebration. Over 500
people accompanied the King--including Prince Bandar, Saudi
Defense Minister Prince Sultan (Bandar's father), Foreign
Minister Prince Saud al-Faisal, and Interior Minister Prince
Naif.
The visit once again placed a large public spotlight on the
scandal surrounding the longstanding "Al Yamamah" arms-for-oil
deal between Britain's premier arms manufacturer, BAE Systems,
and the Saudis. Vince Cable, the acting leader of the Liberal
Democratic Party, boycotted the entire British-Saudi cerimony, in
protest over the British government's coverup of the BAE scandal,
and over Saudi human rights violations.
As one of his last official acts as prime minister, Tony
Blair had ordered the Serious Fraud Office to shut down its
investigation into the "Al Yamamah" deal--including the reported
$2 billion in kickbacks paid to Prince Bandar, the architect of
the entire arms-for-oil scheme, since the mid-1980s. Just before
packing his bags and leaving 10 Downing Street, Blair had signed
a new BAE arms deal with the Saudis, worth an estimated $20
billion.
As {EIR} exclusively revealed earlier this year, the real
BAE "Al Yamamah" scandal centered around a $100 billion offshore
covert action fund, which was administered by the British, with
Saudi complicity and American participation, utilizing the spot
market sales of the Saudi oil, paid to BAE for the weapons and
support systems. These clandestine funds, according to Prince
Bandar's semi-authorized biography, went to a wide range of
secret war schemes, including the bankrolling of the Afghani
mujahideen, who battled the Soviet Red Army in Afghanistan
throughout the 1980s; the arming of Chad with Soviet-made
weapons, to repel a Libyan invasion in the late 1980s; and U.S.
arms sales to Saudi Arabia, bypassing U.S. Congressional
oversight. Some of the BAE slush funds went to Prince
Bandar--and may have even been part of the money that went to
some of the 9/11 hijackers, through Saudi intelligence operative
Osama Basnan.
According to one U.S. intelligence source, the resurfacing
of the BAE "Al Yamamah" scandal during the Royal visit to Britain
could lead to new frictions between Riyad and London. In an
interview with BBC during the Royal visit, Prince Faisal, the
Saudi Foreign Minister, answered a question about the BAE
scandal, saying that the focus of any investigation should be on
the party that did the bribing, not on the recipients--ie. blame
BAE for any funny money passed to Prince Bandar.
The BAE scandal remains a subject of serious investigation
by the U.S. Department of Justice. So far, according to official
sources, the probe is centered around possible BAE violations of
the Foreign Corrupt Practices Act--for making the $2 billion in
payoffs to Prince Bandar, via Saudi bank accounts at Riggs Bank
in Washington, D.C. If the DOJ investigation were to be
expanded, to include money laundering, the finances of the Saudi
embassy, during Prince Bandar's more than two decades as
ambassador, could be opened to scrutiny. And that is something
that Dick Cheney, the Republican National Committee, and a whole
lot of others, do not wish to see happen.

NEWS SUMMARY

LAROUCHE

Springfield, Ill. {Journal-Register} covers Mark Fairchild's
return to Illinois to push LaRouche's HPBA, Illinois Legislature
HR 761, through the State Legislature. (See slug)

ECONOMY AND FINANCE

"What do you think about a freeze on foreclosures," two
Congressmen asked the U.S. Treasury witness at Rep. Barney
Frank's hearing. (See slug)

Merrill Lynch is on the mat for carrying out inappropriate
transactions on a gloomy day. (See slug)

New York Attorney General Andrew Cuomo is subpoenaing
records of mortgage companies, and has filed a major suit for
appraisal fraud. (See slug)

Rangel Bill to Tax Hedge Fund and Private Equity managers
passes Ways and Means Committee. Financier lobby howls. (See
slug)

Fear is back says credit analyst at Deutsche Bank. (See
slug)

Prick the Bubble says Belgian Economist. (See slug)

SCIENCE AND TECHNOLOGY

China's Spacecraft is Now on Its Way to the Moon. (See slug)

TVA Submits Application to Build Two New Nuclear Plants.
(See slug)

The European Union has invited Brazil to Join the
International Thermonuclear Experimental Reactor (ITER) program.
(See slug)

UNITED STATES

Twenty-nine Senators, led by Jim Webb (D-Va.), send letter
to Bush warning him that Senate did not authorize hime to attack
Iran. (See slug)

Retired Air Force Gen. Joseph Ralston, who resigned as
Bush's special envoy to the Kurds, blasted the U.S. for not
"doing anything" to help Turkey against Kurdish terrorism. (See
slug)

Rep. Dennis Kucinich (D-Ohio) announced that he will move to
force a vote on Nov. 6 on his resolution calling for the
impeachment of Cheney. (See slug)

Two Turncoat Judiciary Committee Democrats Will Support
Mukasey for Attorney General. (See slug)

CBS' 60 Minutes Identifies Cheney's Curveball. (See slug)

WESTERN EUROPE

Jacques Cheminade: Shields and Swords for the Republic. (See
slug)

Who Is Afraid of the Munich Maglev? (See slug)

Danish press covers Gillesberg election campaign poster.
(See slug)

Tremonti brings anti-globalization show to leftist quarters.
(See slug)

{Financial Times} features Breakup of Nations. (See slug)

Italian anti-derivatives initiative sabotaged by EU
guidelines. (See slug)

RUSSIA

Lugovoy Accuses M-16 in Litvinenko Case. (See slug)

SOUTHWEST ASIA

Palestinian President Abu Mazen Met With Hamas Officials in
Ramallah. (See slug)

Condi Rice is expecting a harried time at the two-day
Istanbul talks on future Iraq. (See slug)

United States, Britian find opposition at the London talks
designed to slap further sanctions on Iran. (See slug)

British deploy fleet during possible attack on Iran. (See
slug)

Rapid deterioration of Pakistan's security may have thwarted
the Iran war party for a while. (See slug)

Japan's Defense Ministry ordered home its naval ships from
the Indian Ocean on Nov. 1, ending for now a six-year mission in
support of the war in Afghanistan that raised the nation's
military presence overseas but has recently drawn increasing
criticism domestically.

India's West Bengal state was paralyzed on Oct. 31 by a
strike called by the opposition politicians to protest over the
deaths of villagers opposed to the setting up of a Chinese-style
industrial park, owned entirely by private entrepreneurs.

LEADING DEVELOPMENTS

Kucincich To Introduce Privileged Resolution To Force Vote on
Cheney Impeachment Nov. 6

Nov. 2 (LPAC)--In a press release issued today Congressman Dennis
Kucinich (D-Ohio) announced that he will be offering a privileged
resolution on the House floor next week, most likely on Nov. 6,
that will bring articles of impeachment against Vice President
Dick Cheney. "The momentum is building for impeachment. Millions
of citizens across the nation are demanding Congress rein in the
Vice President's abuse of power. Despite this groundswell of
opposition to the unconstitutinal conduct of office, Vice
President Cheney continues to violate the U.S. Constitution by
insisting the power of the Executive Branch is supreme. The
Congress must hold the Vice President accountable. The American
people need to let Members of Congress known how they feel about
this. The Vice President continues to use his office to advocate
for a continued occupation of Iraq and prod our nation into a
belligerent stance against Iran. If the Vice President is
successful, his actions will ensure decades of disastrous
consequences.
Kucinich's press release reports that the privileged
resolution has priority status for consideration on the House
floor. Once introduced, the resolution has to be brought to the
floor within two legislative days, although the House could act
on it immediately. Kucinich is expected to bring it to the House
floor on Tuesday, November 6. H. Res. 333, Articles of
Impeachment against the Vice President, sponsored by Kucinich,
has 21 cosponsors.
Lyndon LaRouche has previously said that Kucinich's
privileged resolution is something that "could be supported."
(wfw)

Sen. Jim Webb and 29 Other Senators Warn Against Attack on Iran;
Gov. Bill Richardson: Stop the Insanity: No War With Iran

Nov. 2 (LPAC)--Sen. Jim Webb (D-Va.) sent a letter yesterday to
President Bush which was signed by 29 other Senators--including
Sen. Hillary Clinton (D-N.Y.), stressing that the Administration
does not have the legal authority to attack Iran without
Congressional approval.
At the same time, Democratic Presidential Candidate Bill
Richardson, Governor of New Mexico, issued an statement entitled
"Stop the Insanity: No War With Iran." Richardson dennounces the
"saber-rattling" against Iran by the Bush-Cheney Administration,
as a "tried and true method of laying the groundwork for another
war--a war that would be a disaster for the Middle East, for the
United States and for the world."
The following is the full text of the Senators' letter:
"Dear President Bush:
"We are writing to express serious concerns with the
provocative statements and actions stemming from your
administration with respect to possible U.S. military action in
Iran. These comments are counterproductive and undermine efforts
to resolve tensions with Iran through diplomacy.
"We wish to emphasize that no congressional authority exists
for unilateral military action against Iran. This includes the
Senate vote on September 26, 2007 on an amendment to the FY 2008
National Defense Authorization Act. This amendment, expressing
the sense of the Senate on Iran, and the recent designation of
the Quds Force of the Iranian Revolutionary Guard as a Specially
Designated Global Terrorist, should in no way be interpreted as a
predicate for the use of military force in Iran.
"We stand ready to work with your administration to address
the challenges presented by Iran in a manner that safeguards our
security interests and promotes a regional diplomatic solution,
but we wish to emphasize that offensive military action should
not be taken against Iran without the express consent of
Congress.
"Signed by: Akaka, Baucus, Boxer, Brown, Byrd, Cantwell,
Carper, Casey, Clinton, Dodd, Dorgan, Durbin, Feinstein, Harkin,
Johnson, Kerry, Klobuchar, Kohl, Leahy, McCaskill, Mikulski,
Murray, Reed, Rockefeller, Sanders, Stabenow, Tester, Webb,
Whitehouse, Wyden."

CBS's 60 Minutes Identifies Cheney's "Curveball"

Nov. 2 (LPAC)--CBS said Thursday that it has identified the man
named "Curveball" whose false story that Iraq had developed
mobile biological weapons was used to bolster Cheney's intent to
invade Iraq. The 60 Minutes program due to be broadcast on Sunday
reports that the man is an Iraqi defector named Rafid Ahmed Alwan
who arrived at a German refugee center in 1999. The program
reports that Alwan lied about being a chemical engineer in charge
of a facility making mobile biological weapons in order to
bolster his case for asylum in Germany. He was able to provide
credible descriptions of the Djerf al-Nadaf plant in Iraq,
because he had actually worked there, but not as head of a
biological weapons program. In fact, the program did not exist at
all. After the U.S. invastion of Iraq, weapons inspectors
examined the Djerf al-Nadaf plant and found absolutely no
evidence of biological agents.
Nonetheless, summaries of the lies Cheney's "Curveball" told
to German intelligence in debriefings were sent to the CIA. The
information was then passed on to then secretary of State Colin
Powell, who used the false information when he addressed the
United Nations in a major speech justifying military action
against Iraq.
CBS says it has obtained a copy of a letter from the head of
German intelligence to former CIA chief George Tenet saying tht
Alwan appeared to be believable, but that there was no evidence
to verify his accounts. A spokesman for Tenet said he had never
seen the letter. The 60 Minutes program quotes CIA officials
including former Central Group Chief Margaret Henoch as saying
she doubted Alwan's authenticity all along. Alwan is now believed
to be living freely in Germany. "It was a guy trying to get his
green card essentially, in Germany, and playing the system for
what it was worth," the program quotes former CIA senior official
Tyler Drumheller as saying. (wfw)

LaRouche Homeowners and Bank Protection Act introduced into
Illinois Legislature

Nov. 2 (LPAC)--The introduction of the Lyndon LaRouche-inspired
Homeowners and Bank Protection Act into the Illinois Legislature
is reported extensively in the newspaper serving the capital, the
Springfield, Illinois {Journal-Register} today.
The article covers the press conference held by Mark
Fairchild, a LaRouche associate who defeated a former Democratic
Congressman in 1986 to win the Democratic nomination for
Lieutenant Governor of Illinois.
Rep. Charles Jefferson (D-Rockford) is the lead sponsor of
the resolution, HR 761. Jefferson told the {Journal-Register}
that he got the idea from Missouri Democratic State
Representative Juanita Walton. Jefferson acknowledged that he is
aware of the LaRouche connection. He told the paper, "I think
it's a good resolution overall. I think we're suffering through
people losing their homes and mortgages and banks going under for
whatever reason."
The {Journal-Register} recounts Fairchild's upset victory in
1986, including how the media reported right up to the election
that former Congressman George Sangmeister was unopposed for the
Democratic nomination for Lieutenant Governor, but then had to
admit at 4:00 a.m. election night that Fairchild had won. And,
later, how former U.S. Sen. Adlai Stevension had, quoting
Fairchild, "tragically committed an act of political suicide" by
forming a third party rather than running as a Democrat with
Fairchild, and thereby thrown the election to a Republican
Governor for the first time in decades in Illinois.
Fairchild is also quoted on LaRouche's promotion of a
high-speed railroad to connect Russia and the United States"
which would be a "3,700 mile-long railroad, including a tunnel
under the Bering Strait." Of LaRouche's frameup in 1988,
Fairchild says, "That was a very dark episode in American
history. Lyndon LaRouche was thrown into prison in an outrageous
kangaroo court, held as an innocent man and a political
prisoner." [agg]

"What do you think about a freeze on foreclosures?"
Representatives Ask Treasury Undersecretary at Financial Hearing

Nov. 2 (LPAC)--Two members of Congress asked U.S. Treasury Under
Secretary Robert Steel for his view on a freeze on all
foreclosures in the United States, at today's hearing of the full
House Financial Services Committee, entitled "Progress in
Administration and Other Efforts to Coordinate and Enhance
Mortgage Foreclosure Prevention."
Rep. Al Green (D-Tex.), asked the first witness, U.S.
Treasury Under Secretary for Domestic Finance, Robert K. Steel,
"Some people are urging that we should freeze foreclosures now.
Mr. Steele, I want your view of this--freezing all foreclosures.
What is your professional opinion of this option--freezing
foreclosures?" Steel's reply was gobbledygook; he stated at one
point, "The idea of a freeze doesn't seem to be the right way....
We should 'put a thumb on the scale' for people who need it."
Only yesterday, new figures revealed a doubling of the
number of foreclosures on American homeowners from the second to
the third quarter.
Rep. Gwen Moore (D-Wis.) went next, and repeated Green's
question, although in a less direct way. Steel repeated his reply
to Representative Green.
The hearing had begun with an explosion by Chairman Barney
Frank (D-Mass.) at Brian Montgomery, the Assistant Secretary for
Housing of the U.S. Department of Housing and Urban Development.
The topic of the hearing was apparently too hot to handle, not
only for the chair; only five Democrats of the Committee's 70
members showed up, and two only briefly. While the subject of the
shouting match between the Chair and Montgomery of HUD was rather
technical, Frank's subtext was quite clear: You're not getting
anything done on refinancings. An exasperated Frank repeatedly
said during the panel and opening of the next one, "We want to
hear some numbers."
On Oct. 30, Rep. John Conyers (D-Mich.) read a key section
of LaRouche's Homeowners and Bank Protection Act into the record
at a hearing of a subcomittee of the Judiciary Committee, and
asked the opinon of the witness, Moody's Mark Zandi.
These instances, and Rep. Barney Frank's extreme irritation,
show the pressure that the U.S. Congress is coming under from
grassroots demands that it take the action American statesman
Lyndon LaRouche has proposed on runaway foreclosures. [agg/pbg]

ECONOMY AND FINANCE

Merrill Lynch Put On the Mat, But Not Lynched

Nov. 2 (LPAC)--Merril Lynch, the world's largest brokerage firm,
was staggered when, on Nov. 1, their financial shares reached the
lowest level in two years after Deutsche Bank AG said write-downs
for subprime losses for the bank may rise to $10 billion. Also on
the mat is the Citigroup, the largest U.S. bank, whose shares
declined to a four-year low.
The draw-down had an immediate effect as well in the
European market, where analysts at CIBC World Markets downgraded
Citigroup and Bank of America, the two biggest U.S. banks, on
worries about a credit squeeze. CIBC said Citigroup needed to
raise $30 billion in capital over the near-term.
But what got Merrill Lynch's goat, is the news put out by
the {Wall Street Journal} that, in order to prevent further
sliding down of its shares, the Wall Street brokerage giant may
have struck a deal with hedge funds. In one deal, a hedge fund
bought $1 billion in commercial papers issued by a
Merrill-related entity containing mortgages, a person close to
the exchange told the {Wall Street Journal}. In exchange, the
hedge fund had the right to sell back the commercial paper to
Merrill itself after one year for a guaranteed minimum return.
While Securities and Exchange Commission spokesman John
Nestor declined to comment, and the Merrill spokespersons stayed
away from answering telephones, Merrill, stung by the leak,
issued a press release saying: We have no reason to believe that
any such inappropriate transactions occurred." Tsk, tsk. [RMA]

Andrew Cuomo Starts Criminal Probes on Mortgage Industry

Nov. 2 (LPAC)--New York Attorney General Andrew Cuomo, in a case
filed in Manhattan, accused a subsidiary of the First American
Corporation of inflating home appraisals, thereby defrauding
homeowners and the investors who bought securities backed by
loans that were underwitten with the appraisals it conducted.
Cuomo argues that the company inflated the value of homes under
pressure from Washington Mutual, its biggest customer. Cuomo, a
former Secretary of the Department of Housing and Urban
Development (HUD) under President Bill Clinton, said: "This is
the opening chapter of the story, and we have some other points
that we are going to make in the coming weeks. We just don't
bring individual cases. We try to find cases that point to a
systemic flaw inthe industry." Washington Mutual denied the
chares, but suspended its relationship with the First American
subsidiary, eAppraiseIT.
Major New York newspapers described this as the "highest
profile" government action brought against companies involved in
the mortgage industry, and the {Wall Street Journal} notes that
other state officials, such as Ohio's Attorney General Marc Dann,
had also sued mortgage lenders for pressuring appraisers to up
the value of homes on the market.
Washington Mutual, a Seattle-based bank, generated $83.57
billion in home loans in the first three Quarters of 2007.
The {Wall Street Journal} says that Cuomo's action could
"embolden" Congress to pass a bill introduced by Rep. Paul
Kanjorski (D-Pa.) to impose tougher regulations, and tougher
penalties on lenders who have promoted fraud in appraisals, which
stick homeowners with inflated property, which cannot be sold,
and and which carries huge mortgage obligations for decades.
(wfw,mjs)

Rep. Charles Rangel vs. the Private Equity Group

NOV. 2 (LPAC)--The House Ways and Means Committee, chaired by
Rep. Charles B. Rangel (D-N.Y.) approved yesterday, House
Resolution 3996, The Temporary Tax Relief Act of 2007, a $76
billion measure to stave off the growth of the alternative
minimum tax (AMT) that applies to anyone making over $75,000 a
year, and has not been adjusted for inflation since its passage
in 1969. The AMT would devastate 23 million middle class
wage-earners next year, Rangel maintains.
In addition, H.R. 3996 deals with investment funds managers.
A press release from the Committee says, "Under the
Committee-passed legislation, they [fund managers] will no longer
receive a lower capital gains rate of 15% for what is essentially
a management fee or payment for services. Partners and managers
would continue to receive a lower rate of taxation on returns
derived from money they have {personally invested}. (Emphasis
added). Rangel's Committee press also notes that the Committee
reviewed existing tax codes and "found no evidence to conclude
that these partners or fund managers should receive preferential
treatment for the same services provided by other corporate
professionals doing the same jobs."
In other words, their fees would be treated as taxable
income, a move which produced shreiking from the hedge fund
lobbies, such as the Private Equity Council, and its water-boy in
the House of Representatives, Rep. Eric Cantor (R-Va.). Cantor
attacked Rangel for destroying future jobs with this tax, and the
Private Equity Council, created by The Carlyle Group and other
private financiers, said they will continue to block the measure
from being passed in Congress.
This is the beginning of a fight on the overall updating of
the U.S. tax code. A month ago, Rangel unveiled a far broader
measure which he called "the mother of all tax reforms," a
blueprint to cut and simplify the taxes of the poor and middle
class and eliminate the AMT, which was designed in the 1960s to
prevent millionaires from using loopholes to avoid all tax
liability. The Rangel plan would cut taxes for about 91 million
families and provide a tax reduction to virtually every family
with an annual income below half a million dollars. (drr)

Prick the Bubble, Says Belgian Economist

Nov. 2 (LPAC)--Paul de Grauwe, an economics teacher at the
University of Louvain, Belgium, writes a commentary today in the
London {Financial Times} entitled "Central Banks Should Prick
Asset Bubbles." Although Professor De Grauwe does not really say
how this should be done, or what should replace the current
system, his identification of central banks' responsibility in
creating the bubble is entirely correct. By allowing banks to set
up uncontrolled short-term borrowers and long-term lenders, i.e.
hedge-fund operations, "the central bank was implicitly extending
its liquidity insurance to institutions outside the regulatory
framework," De Grauwe writes. Alan Greenspan's "argument that a
bubble can never be recognised {ex ante} is a very weak one. One
had to be blind not to see the bubble in the U.S. housing market,
or the internet bubble. This is the case for most asset bubbles
in history." It is also not true that, once a bubble is
discovered, it is difficult to stop it. "It is not inherently
more difficult to stop asset bubbles than it is to stop
inflation. Central banks have been highly successful at stopping
inflation." [ccc]

"Fear Is Back"

Nov. 2 (LPAC)--"Fear is back," said a credit analyst at Deutsche
Bank as reported in the London {Financial Times} today. The
analyst characterized thus the panic situation in the financial
system, despite the new Fed rate cut and the unprecedented
injection of $41 billion into the U.S. banking system. This was
the biggest one-day cash infusion since September 2001.
Panic is spreading as more sections of the mortgage bubble
burst, unveiling larger bank losses and paralyzing further the
interbanking lending system. Now is the turn of mortgage
insurers, so-called "monoline debt" owners, who are going bust.
Three of these, Radian, MBIA, and Ambac, saw their stocks plunge
yesterday after the first posted a quarterly loss and the latter
two were rumored to suffer such losses. Strangely enough, such
monoline insurers still have top-notch credit ratings; however, a
"domino effect" is feared the moment they are downgraded. [ccc]

SCIENCE AND TECHNOLOGY

European Commission Invites Brazil To Join International Fusion
Project

Nov. 2 (LPAC)--During a visit to Brazil the last week in October,
European Commissioner for Science and Research, Janez Potocnik,
suggested that Brazil join the seven-member International
Thermonuclear Experimental Reactor, or ITER, program. ITER,
originally proposed by Russian Academician E.P. Velikhov in 1985,
will be a tokamak fusion reactor, designed to produce net energy,
as a critical demonstration for a commercial fusion reactor.
"Nuclear fusion is certainly one area where Brazil and the
ITER members can cooperate more intensively," a spokesman for the
Commissioner said on Oct. 29 from Brussels. Initially, this might
take the form of a bilateral agreement with the EU, but Brazil
could later join as a full member.
ITER started out as a joint project of the United States,
Soviet Union, Europe, and Japan. Currently, South Korea, India,
and China are also members. Each participant pays 10% of the
cost. The experimental reactor is being built in Cadarache,
France. [mgf]

TVA Submits Application to Build Tow New Nuclear Plants

Nov. 2 (LPAC)--Franklin Roosevelt's Tennessee Valley Authority
(TVA) joined with the NuStart consortium on Oct. 30, in
submitting an application to build and operate two new nuclear
power plants at its Bellefonte site in northern Alabama. The
design chosen for both plants is the Westinghouse AP1000, a
generation 3-plus improved conventional reactor. This will be the
first review by the Nuclear Regulatory Commission of an AP1000
application, using a new, streamlined licensing process.
Unlike many other electric utilities that are preparing new
nuclear plant license applications, the TVA is still a
Federally-regulated authority, with an AAA, Federally-backed
credit rating, and a long history of commitment to nuclear
energy. Last Spring, the TVA brought back on line Unit 1 at its
Browns Ferry site, which had been shuttered since the mid-1980s.
This past Summer, the Board voted to spend $2 billion-plus to
complete a unit at its Watts Bar site, which had been mothballed,
unfinished, for two decades. In five years, when that plant comes
on line, it will be the first new nuclear power plant in the
United States since the TVA's Watts Bar Unit 1 came online in
1996. [mgf]

China's Lunar Spacecraft Is on Its Way to the Moon

Nov. 2 (LPAC)--Following three burns of its onboard engine during
its orbit of the Earth over the past week, which raised it to
higher orbits, a final orbital transfer engine burn early
Thursday morning (evening, Oct. 31, in China) sped up China's
Chang'e spacecraft enough to send it on its way to the Moon. On
Nov. 5, after a 114-hour journey, the probe will reach its
destination. Zhu Mincai, head of the Beijing Aerospace Control
Center, explained that the transfer to a translunar trajectory is
"a success-or-failure point," as the craft has enough fuel to do
this precise maneuver only once. The next challenge will be the
engine burns needed to slow Chang'e down, to get "captured" into
an orbit around the Moon.
As the Chinese have stressed, they could not carry out this
effort without the participation of the European Space Agency's
ESTRACK deep space ground stations. China does not have enough
widely dispersed ground- or ship-based stations to be able to
keep in contact with the spacecraft 24/7. ESA reported today that
this morning, China's mission control reported that commands to
its spacecraft, transmitted from the Maspalomas, Spain tracking
station, had been successfully received by Chang'e. An hour
later, the ESA station in French Guiana received telemetry from
the spacecraft, and transmitted commands to it. This cooperation,
in as sensitive an operation as control and communication of a
deep-space craft, is indicative of the willingness of both
parties to share these critical responsibilities.
Chang'e will be intensely studying the Moon for a year,
joining Japan's Selene spacecraft, which is already there, and
missions from India and the United States, which launch next
year. [mgf]

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