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400 Richest Americans Got Richer This Year, As Most Americans’ Net Worth Tanked: Forbes

September 23, 2010

The richest Americans got even richer this year, according to the new Forbes 400 list, even as the country’s total net worth tanked during the second quarter. The top 400, all of whom are worth at least $1 billion, saw their combined wealth increase 8 percent this year, to the dizzying total of $1.37 trillion, according to analysis from CNN . Meanwhile, according to data released last week by the Federal Reserve, the net worth of American households and non-profits in the second quarter of this year plunged 2.8 percent, or $1.52 trillion, from the previous quarter, to settle at $53.5 trillion. This means the 400 richest people in America account for about 2.6 percent of the nation’s private wealth. Topping the list — again — is Bill Gates , at $54 billion, up from $50 billion last year. In second is Warren Buffett, the so-called Oracle of Omaha who Thursday said it’s “common sense” that “we’re still in a recession,” with $45 billion. Members of the Walton family (of Walmart fame) snagged spots four, seven, eight and nine. New York mayor Michael Bloomberg, with $18 billion, came in 10th. Investor George Soros, who last week called the nation’s economy “blah,” came in 14th with $14.2 billion. Charles and David Koch, the manufacturing and energy titans and Tea Party movement bankrollers, profiled by Jane Mayer in The New Yorker last month, tied for fifth place with $21.5 billion apiece. Facebook founder Mark Zuckerberg, in 35th place with $6.9 billion, is no longer the youngest billionaire on the list — his colleagues at Facebook, Dustin Moskovitz (in 290th with $1.4 billion) and Eduardo Saverin (in 356th with $1.15 billion) have joined him. Moskovitz is eight days younger than Zuckerberg. Both are 26. In a video interview with Forbes , Buffett said he is “sort of wired for capital allocation” and that he loves his profession so much that “I would be doing what I do now, and I would have done it in the past, if the payoff had been in seashells or shark’s teeth or anything else.” Buffett was having a conversation with rapper Jay-Z, who didn’t make the billionaires list, and who offered insights into his own rise to glory: “We were into a lot of street things,” he said. “It just so happened I had a talent to make music.”

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Paul Otellini, Intel CEO: The Stimulus Didn’t Work (VIDEO)

September 14, 2010

Intel CEO Paul Otellini doesn’t buy into the idea that the White House is anti-business, but he does believe the administration “just doesn’t get it” when it comes to creating jobs. Otellini, in an exclusive interview with CNN Money at the Intel Developers Forum in San Francisco on Tuesday, said the U.S. should not only forgo spending the second half of Obama’s $787 billion stimulus package, but completely axe Obama’s newly proposed $350 billion economic recovery plan. “The decisions so far have not resulted in either job growth or increased confidence. When what you’re doing isn’t working, you rethink it and I think we need to rethink some plans,” Otellini told CNN Money . “Swimming pools in Mississippi are not going to create lasting jobs,” he added. Companies can’t invest because they don’t know what their health care, energy or tax costs will be in the coming years, Otellini said. Otellini insisted the U.S. business world needs more certainty, but most of all, he said, the administration needs to take the first major step in attracting foreign investment and increasing the flow of capital back into the United States by reducing corporate taxes. “To attract a global-scale set of investments, you need to have globally competitive infrastructure — and tax rates,” argued Otellini. In short, Otellini said America faces a cost problem. “As a global businessman, particularly if you’re not based in the U.S., why would you come here?” Otellini said. Watch the interview with Intel’s CEO Paul Otellini below:

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Obama To Push For Research And Development Tax Credits

September 5, 2010

WASHINGTON — Seeking ways to spur economic growth ahead of the November elections, President Barack Obama will ask Congress to increase and permanently extend research and development tax credits for businesses, a White House official said Sunday. Obama will outline the $100 billion proposal during a speech on the economy Wednesday in Cleveland, the official said. The announcement is expected to be the first in a series of new measures Obama will propose this fall as the administration looks to jump-start an economy that the president himself has said isn’t growing fast enough. In addition to making the research credits permanent, Obama will also ask Congress to extend one of the credit options available to businesses from 14 to 17 percent, according to the official, who spoke on the condition of anonymity because the proposal has not been formally announced. Obama has proposed making the research and development tax credit permanent before, as part of the budget he submitted to Congress earlier this year. “That’s where U.S. competitiveness lies in high-technology industries,” Laura Tyson, a member of Obama’s Economic Recovery Advisory Board, said Sunday on “Face the Nation” on CBS. “I don’t think this is something that has … as immediate a job impact as, say, movement on the current tax credits for the unemployed or extending a payroll tax holiday of some sort. But I think it’s very important in terms of job creation over the longer term,” Tyson said. While the idea is popular in Congress, coming up with offsetting tax increases or spending cuts has been a stumbling block. Obama will ask lawmakers to close corporate tax breaks for multinational corporations and oil and gas companies. Congress has previously passed research tax credits on a temporary basis. The credits expired last year and a proposal for renewal is pending in the Senate. While research credits generally have bipartisan support, Washington’s contentious political atmosphere means the White House isn’t taking anything for granted. Officials have watched other proposals they deem necessary to economic growth, including a bill to extend credit and cut taxes for small businesses, languish on Capitol Hill. The proposal for research and development tax credits was first reported by The New York Times. Amid an uptick in the jobless rate to 9.6 percent, the president promised to announce a series of new measures on the economy. The package could include infrastructure bonds for municipalities and extensions for other tax breaks for businesses and individuals that expired at the end of 2009. The administration is also considering extending a law passed in March that exempts companies that hire unemployed workers from paying Social Security taxes on those workers through December. Sen. Chuck Schumer, D-N.Y., has proposed extending the exemption an additional six months. Obama is continuing to prod the Senate to pass the small business bill that calls for about $12 billion in tax breaks and a $30 billion fund to help unfreeze lending. Republicans have likened the bill to the unpopular bailout of the financial industry. And the president wants to make permanent the portion of George W. Bush’s tax cuts affecting the middle class. The House has already passed many of the provisions, but they have stalled in the Senate because Republicans and Democrats cannot agree on how to pay for them. AFL-CIO President Richard Trumka argued for job investment as a way of putting money in the pockets of middle-class Americans and others who need it. “We do need more credit for small- and mid-sized businesses so that they can start creating jobs,” Trumka said Sunday on CNN’s “State of the Union.” “All of that will help, but it may not be enough. Even the holiday on taxes may not be enough, the research and development tax credit may not be enough. We need to create demand.” ___ Associated Press writer Stephen Ohlemacher contributed to this report.

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Lindsey Graham Gets It Wrong On The Stimulus: Blames Legislation For U.S. Job Losses

September 5, 2010

A top issue on the Sunday morning talk shows was the Obama administration’s record on jobs, with Republicans hitting the stimulus and calling for an extension of the Bush tax cuts. To make, his case, however, Sen. Lindsey Graham (R-S.C.) completely distorted the effects of the stimulus, calling it a “disaster” and trying to tie it to millions of U.S. jobs lost. On NBC’s “Meet the Press,” Graham called for extending the Bush tax cuts, saying the U.S. taxes and spends too much. To make his claim, he said that the country has lost 2.5 million jobs since the stimulus passed. GREGORY: Republicans are so concerned about the deficit and overall spending picture in Washington, as Republican leaders say they are. When you talk about extending the Bush tax cuts, yes, it’s existing tax policy, but is there a responsibility for Republicans to say if you want to extend all of the cuts that somehow you have to pay for what the impact will be going forward beyond the expiration date on the Treasury? GRAHAM: Only if you believe that America taxes too little; I think America taxes too much, and we certainly spend too much. I would extend the tax cuts to create private sector jobs. If you increase taxes now at any level, it is going to make it harder to create jobs, and we’ve lost 2.5 million jobs since the stimulus package passed. We’re at 9.6 [percent] unemployment. So I don’t think we don’t tax too little; I think we spend too much. WATCH: While it’s true that there have still been jobs lost this past year , it’s not because of the stimulus. Graham’s faulting of the stimulus on America’s job situation goes against an Aug. 24 report by the nonpartisan Congressional Budget Office . From the report: On that basis, CBO estimates that ARRA’s policies had the following effects in the second quarter of calendar year 2010: – They raised real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.5 percent, – Lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points, – Increased the number of people employed by between 1.4 million and 3.3 million, and – Increased the number of full-time-equivalent jobs by 2.0 million to 4.8 million compared with what would have occurred otherwise (see Table 1). In other words, the stimulus put 3.3 million Americans to work. Similarly, on July 27, economists Alan Binder and Mark Zandi released a study showing that without a strong federal response — “Wall Street bailout, the bank stress tests, the emergency lending and asset purchases by the Federal Reserve, and the Obama administration’s fiscal stimulus program ” — the U.S. would probably have lost 16.6 million jobs — about “twice as many as were actually lost.” Additionally, the unemployment rate would have peaked at 16.5 percent. As David Lynch of USA Today recent wrote, “Eighteen months later, the consensus among economists is that the stimulus worked in staving off a rerun of the 1930s .” Obama’s presidential campaign manager, David Plouffe, also sharply defended the stimulus on NBC’s “Meet the Press” today, saying, “By the way, the Recovery Act that Republicans are attacking — if they had their way, we wouldn’t have done anything like that. We probably would have unemployment rate if Republican ideas and policies had been in place that drove us into this economic climate in the first place, we’d be sit here with unemployment almost double what it is with no positive growth, no glimmers that were coming out of this.” Zandi, who served as an economic adviser to McCain’s 2008 presidential campaign, said on CBS’s “Face the Nation” that the effects of Bush’s tax cuts on small businesses was being overblown. “On the margin some small business people won’t hire as aggressively, but that is an overdone argument,” said Zandi, adding that the main reason they’re not hiring is a “lack of confidence.” Economist Laura Tyson, who is a member of the president’s Economic Recovery Advisory Board, agreed, saying the tax cuts are “not the major reason they’re not hiring.” Zandi also advised against raising taxes on high-income households, saying they are ” very, very fragile .” On CNN’s “State of the Union,” National Small Business Association President Todd McCracken argued against letting the Bush tax cuts expire for businesses making more than $250,000, saying that although it’s a “minority of small companies,” they are “the more successful ones who are most likely to be growing jobs and the ones that we want to continue to be successful and we don’t want to put disincentives in place for them to do it.” AFL-CIO President Richard Trumka took issue with McCracken’s characterization, saying, “They’re not created by the 3 percent. They’re created — the vast majority are created by the other 97 percent. So it’s not fair to say most jobs are created by that top 3 percent, because they are not.” UPDATE: Economist Robert Shapiro looked at Bureau of Labor Statistics data and concluded : From December 2007 to July 2009 – the last year of the Bush second term and the first six months of the Obama presidency, before his policies could affect the economy – private sector employment crashed from 115,574,000 jobs to 107,778,000 jobs. Employment continued to fall, however, for the next six months, reaching a low of 107,107,000 jobs in December of 2009. So, out of 8,467,000 private sector jobs lost in this dismal cycle, 7,796,000 of those jobs or 92 percent were lost on the Republicans’ watch or under the sway of their policies. Some 671,000 additional jobs were lost as the stimulus and other moves by the administration kicked in, but 630,000 jobs then came back in the following six months. The tally, to date: Mr. Obama can be held accountable for the net loss of 41,000 jobs (671,000 – 630,000), while the Republicans should be held responsible for the net losses of 7,796,000 jobs. ************************* What’s happening in your district? The Huffington Post wants to know about all the campaign ads, debates, town halls, mailings, shenanigans, and other interesting campaign news happening by you. E-mail us any tips, videos, audio files, and photos to election@huffingtonpost.com .

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Robert Reich: Greenspan, Rubin, and Herbert Hoover

August 8, 2010

Herbert Hoover’s disciples are making noises even as America moves closer towards a double dip recession Fed Chair Alan Greenspan tells the New York Times all the Bush tax cuts should expire as scheduled, even those that benefit the middle class and not the rich. His reason: the nation’s looming deficit requires it. On Sunday, former Treasury Secretary Robert Rubin, appearing on CNN, says any further effort to stimulate the economy would be “counter productive,” and that policy makers instead should craft a deficit-reduction plan. Greenspan is only partly wrong. The Bush tax cuts should expire for the top 2 percent of filers (those earning over $250,000) because they save rather than spend a large portion of their incomes, and we need all the spending we can get. The cuts should be extended for everyone else because they’ll spend them. The top 2 percent now receive almost a quarter of total national income, which is one reason why the middle class doesn’t have the purchasing power to lift the economy on its own. The best way to give them even more purchasing power would be to give the middle class a larger tax cut — say, a payroll tax holiday on the first $20,000 of income. Rubin is entirely wrong. As Friday’s jobs report shows, the gap between total private spending (consumers plus business plus net exports), on the one side, and the nation’s capacity to produce goods and services at or near full employment, on the other, is still a chasm. So government needs to do more spending now, in the short term, in order to get people back to work and the economy back on track. In 1999, both Greenspan and Rubin urged Congress to repeal the Glass-Steagall Act that had safely separated commercial from investment banking. In 2000 they argued against allowing the Commodity Futures Trading Corporation to regulate derivatives. Until recently, Rubin ran the executive committee at Citigroup, whose excesses required a massive taxpayer bailout. In 2001 Greenspan supported the Bush tax cuts that blew a gigantic hole in the federal deficit and mostly benefited the wealthy. In 2002 he lowered interest rates to near zero but refused to oversee how banks were using their almost-free borrowings. Both Greenspan and Rubin are deficit hawks. So was Herbert Hoover and so was Hoover’s Treasury Secretary Andrew Mellon. And look what Hoover and Mellon got us into. When we least need him, Hoover is being exhumed. This post originally appeared at RobertReich.org .

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Bob Burnett: Is America on a Losing Track?

July 23, 2010

Returning from an extended vacation in Europe, it’s been impossible to ignore the dark cloud of pessimism hanging over the United States. Americans are depressed about the economy, the BP/Gulf oil spill, and the war in Afghanistan. A majority of voters feel the US is on the wrong track . Is it? And has that perception made President Obama’s job impossible? On June 28th, CNN interviewed former President Bill Clinton who commented about the American mood: “The American people hire you [the President] to win for them… Until people feel better about their own lives, they’re not going to feel good about their president.” At the moment, many Americans feel like losers. It’s helpful to remember that Obama and his supporters came into this situation with open eyes. On November 5, 2008, the ONION headline was Black Man Given Nation’s Worst Job : the new president “will have to spend four to eight years cleaning up the messes other people left behind.” Barack Obama inherited a broken economy, crumbling US infrastructure, ill-conceived military campaigns in Afghanistan and Iraq, and a Federal bureaucracy that had been gutted by Republicans — a condition that produced the BP/Gulf oil disaster. Nonetheless, Barack Obama has been in the job for eighteen months. While most Americans acknowledge that America’s problems originated in the Bush Administration, they look to Obama to fix them and to lift their spirits. Clearly, the economy is shattered. Noting persistent high unemployment, the number of mortgage foreclosures, and the unwillingness of banks to lend and businesses to spend, many observers feel the recession will stretch on for years. They anticipate the Obama Administration will be powerless to change this circumstance and that will affect Democratic prospects in the mid-term elections. The situation with the US economy parallels public perception of the BP/Gulf oil disaster. In April, Americans wanted Obama to provide a quick fix. When he appeared powerless to stem the flow of oil into the Gulf, his approval ratings fell. Now voters want a quick fix for the economy, but Obama can’t provide that. Both the BP/Gulf oil disaster and the recession were the results of systemic failures. The proximate cause of the BP/Gulf oil spill was a methane explosion on April 20th. Investigation has indicated the explosion was the fault of the platform operators (under BP supervision), facilitated by lax oversight by the US Department of Interior’s Minerals Management Service. The proximate cause of the global financial crisis and the ensuing recession was the bankruptcy of Lehman Brothers on September 14, 2008. Investigation has revealed this bankruptcy, and the collapse of similar firms, was the product of wild Wall Street speculation (the housing bubble, sub-prime mortgages, and mortgage-backed securities) and lax oversight by the Federal Reserve and US Treasury Department. While most Americans understand what happened in each crisis, they have difficulty accepting the length of time it will take to fix these problems. It took ninety days before BP managed to stop the flow of oil from the broken well and it will take years to repair the environmental damage. It took six months before the stock market recovered from the 2008 financial panic and it will take years to climb out of the hole caused by the collapse of the era of easy money. In both crises there was an underlying cancer having deeper roots than might be suspected giving the primary failure. The BP/Gulf oil debacle was the consequence of America’s addiction to fossil fuel and our childlike faith in technology — the belief that if it’s possible to drill a deep well then it must be safe. The current recession has a simpler and far more disturbing genesis: the failure of American capitalism. While the Obama Administration appears to recognize America’s addiction to fossil fuel, as well as our naïve faith that technology will solve all our problems, it’s not clear they are prepared to brand contemporary capitalism as a failure. That’s not surprising; it’s similar to asking a public official to declare there is no Santa Claus. It flies in the face of a cherished myth. For many Americans it is unthinkable that the unfettered marketplace will not solve all our problems or that contemporary capitalism has broken its promise to provide a good life for all. But that’s what has happened. Over the past thirty years, the American economic system has been tilted in favor of the rich and, in the process, democracy morphed into plutocracy. As a consequence, the consumer economy — which presupposes a reasonable distribution of wealth and income — had to be held together by smoke and mirrors; most American went deeply into debt so they could maintain their standard of living. Now the diabolical charade has ended, but it’s left a legacy of pessimism and distrust. The economy is fractured. Repair requires fundamental structural changes — such as breaking up the big banks — and a massive redistribution of income. But that’s not going to happen soon. Americans know they have cancer but they are nowhere near agreement on the course of treatment. In the meantime, the US will go down a losing track. And Barack Obama’s job, if not impossible, will be very, very difficult.

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Alan W. Silberberg: Coming Wave of Gov 2.0 Mergers

July 13, 2010

The Coming Wave of Gov 2.0 Mergers, Takeovers and Buyouts is almost upon us. This will mark the second major part of the Government 2.0 revolution: The Gov 2.0 finance and deal side. Why is this going to happen? * Economies of Scale. * Normal Market Progression * Recent hot media presence, such as CNN, Business Week, NPR, etc. * Nascent but growing market with no financial or deal makers of note yet. The Government 2.0 space is growing. There are lots and lots of small companies chasing their piece of the pie. There are lots of large companies also chasing their piece or trying to make sure their old pie stays the pie. This phenomena will only increase, as the stakes get higher, and the bar for entry also gets higher. Now money matters. It will matter even more as revenue models are fully formed and the real business of Government 2.0 takes off. There has only been one Gov 2.0 Merger to date of note, GovLoop and GovDelivery . This model is an early one – two information companies coming together. But there will also be “click and brick” mergers – where a defense contractor acquires an app company or vice-versa- an app company acquires a hard line manufacturing company with broad Gov contracts to get access to those contract vehicles. Why Silberberg Innovations ? Silberberg Innovations has positioned itself to be the early Merger and Acquisition specialist in the Government 2.0 Space. With deep industry contacts; practical knowledge of the technology, the trends and the business environment, it is an exciting step for us. While innovating through early Gov 2.0 platform experimentation and culture change discussions, it became apparent there is a vibrant and growing industry getting ready to take it’s place in our society. While speaking at and producing our own Gov20 events like Gov20LA , it also became clear that this is an industry hungry for fusing business and government – leading towards tremendous market opportunities to be had.

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FTC Urges States To Rein In Frivolous Debt-Collection Lawsuits Overwhelming Courts

July 12, 2010

Throughout the financial crisis and deepening recession, debt collectors have been harassing Americans, often under false pretenses, in order to scare up a quick buck. Frivolous debt-collection lawsuits have now become so pernicious and prevalent that they’re drowning the court system , leading the Federal Trade Commission to call Monday for new state legislation that would staunch the rising tide of baseless debt claims. Given the current balance of power in debt-collection cases, it’s easy to scare people. As The New York Times outlines , some firms with a skeleton crew of lawyers now routinely file tens of thousands of debt-collection lawsuits a year via a largely automated process. These suits are generally filed merely on the basis of Social Security number, address and date of birth, but this can be enough to freeze the defendants’ bank accounts — default judgment are common given that defendants’ address information is often outdated or erroneous, and so the complaint doesn’t reach them until after their court date — and they can then be more easily pressured into paying something, anything, to make the problem go away. Lawsuits are sometimes filed against the wrong people, critics say. Other times, they say, the amount owed is incorrect or includes questionable fees and interest that has been added to the balance. In addition, it is not always clear if the debt buyer filing suit legally owns the debt, since debt portfolios are often sold several times. Often, they don’t own the debt — they or someone along the line has just made it up, as McClatchy outlined in a report last week. This is to some extent a consequence of the outsourcing of credit card debt, now routinely sold for pennies on the dollar to third-party debt-collection companies who specialize in hounding people, rightly or not , for whatever they can pay. More and more often, they seem to resort to forms of bullying that prompt their targets to speak out, and the FTC took notice. The FTC recorded 67,550 complaints of harassment by debt collectors in 2009, a whopping 50-percent spike over the prior year, and they’re on track to jump another 13 percent in 2010, according to CNN Money . In its report Monday, the FTC deems the current system of debt-collection litigation and arbitration “broken.” In fact, the commissioners named the report itself “Repairing A Broken System.” Based on nationwide “discussions” resembling town hall meetings and the Commission’s own experience, the FTC report calls on states to require more detailed claims from debt collectors, limit the freezing of alleged debtors’ bank accounts, and encourage more defendants to show up and defend themselves, among other reforms largely focused on procedural transparency. The FTC has said previously that complaints regarding “third-party and creditor debt collection” ranked second only to identity theft last year.

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David Isenberg: KBR Gives Uncle Sam the One Finger Salute

July 3, 2010

Le’s take a brief look at the world of rent a generals. Specifically, Lt. Gen. Sanchez. (USA-Ret.). Gen. Sanchez had a distinguished Army career and honorably served his country. He was the highest-ranking Hispanic in the United States Army when he retired on November 1, 2006. Those who can remember past yesterday will recall that he served as the V Corps commander of coalition forces in Iraq from June 2003 to June 2004. While his time as commander was not without controversies ( hostile relations with Paul Bremer, torture scandal at Abu Ghraib, development of the Iraq insurgency) I assume he did the best he could. For most retired officers that would have been enough. But evidently not for Gen. Sanchez. Evidently he felt the need to continue the fight; only now against U.S. civilians and injured veterans. In February it was reported that the U.S. Army wass trying to stop him from continuing to be an expert for KBR in a lawsuit against it over civilian truck driver deaths and injuries. Sanchez is being paid $650 an hour and has reviewed documents and written a report that support’s KBR’s contention it should not be held legally responsible for the deaths of six civilian truck drivers and the injuries of others in a 2004 ambush in Iraq. The suing drivers and family members contend that KBR should have stopped the convoys when it was warned that attacks would increase on April 9, 2004, the first anniversary of the day allies in the U.S.-led invasion of Iraq reached Baghdad. KBR argues that the military approved sending the convoys out and several laws protect KBR from responsibility in a wartime situation. The Army contracts with KBR to provide transportation, food services and other logistical support. In his report for KBR on the 2004 ambush, Sanchez writes that KBR leadership was getting “emotional, hyperbolic, CNN-filtered, open source information, not intelligence” that was warning that the convoys could be ambushed. Sanchez says no battlefield leader could have known the convoy would be attacked. KBR leadership did stop convoys the day after six civilians were killed and 14 injured in the truck convoy ambush. But KBR is also fighting law suits regarding the burn pits it operated in Iraq as I have written about here and here . To see KBR’s last update to the allegations click here . KBR apparently thinks Gen. Sanchez has useful advice to offer here, even though I don’t recall the general having expertise in chemistry or toxicology. Nevertheless KBR, to emulate Paddy” Chayefsky’s famed movie Network, is mad as hell and is not going to take it anymore. The evidence is contained in Exhibit 40, filed back on Feb. 23. I have put the most pertinet parts in boldface. It is important to remember that KBR is in this position now because of the conduct of the United States. First, as the Army’s own AR 15-6 Report clearly admits, but for the Army’s failures in its own processes and procedures on April 9, 2004, the attack, injuries, and deaths associated with the Fisher case would never even have occurred. Second, but for the United States’ refusal to support KBR’s effort in the Fifth Circuit Court of Appeals to uphold the District Court’s 2006 total dismissal of the lawsuits passed on the Political Question Doctrine, there is every reason to believe the Fifth Circuit would have sustained the dismissal. Instead, KBR (and indeed the United States itself in any future Political Question Doctrine dispute) is saddled with a very troublesome Fifth Circuit standard.’ Accordingly, KBR must be able to present the live trial expert testimony of Lieutenant General Sanchez, and to do so in precisely the form and content in which his report was submitted to the Court. This need was exacerbated by Judge Miller’s blatant disregard of the four military declarations submitted in his denial of KBR’s Political Question Doctrine motion, making the General’s live trial testimony possibly the only evidence that will sway Judge Miller. Further, his testimony, including his statement reiterating the AR 15-6 Report’s admission of Army fault, will provide precisely the type of evidence needed to prove on appeal that these cases should have been dismissed on the basis of the Political Question Doctrine – that is, among other things, the failure to do so caused Army officers to present public criticism of each other at trial! As we made clear in our original December 4, 2009 request, as a result of his senior military leadership position in Iraq during the relevant time period, Lieutenant General Sanchez has unique relevant expertise that is not available from any other source. As reflected in his report, the General will testify from that expertise about the circumstances in Iraq in April 2004, the Army’s prosecution of the war, KBR’s logistics support mission, and the actual events up to and on April 8 and 9, 2004 upon which these lawsuits are based. This expert testimony is crucial to KBR’s ability to defend itself on key issues such as state of mind, causation, and various affirmative defenses. Lastly, as you know, throughout the five years of these lawsuits, KBR has carefully refrained from pointing its finger at the United States as the culpable entity. One result of KBR’s restraint in this regard has been that plaintiffs in these cases have gained a huge advantage in the public airing of these lawsuits. Plaintiffs have co-opted the Houston media and other press into presenting only the damning evidence plaintiffs allege prove that KBR intended to injure and kill its own employees for profit. As trial looms, KBR can no longer sit silent, and instead intends to aggressively make its case to the public, hopefully to prevent the entire jury pool from being ‘ We also urge the United States to support KBR in the litigation of these defenses in any appeal that KBR files in these cases. prejudiced against the company. Towards this end, KBR intends to release Lieutenant General Sanchez’s expert report and deposition testimony to the press as part of this campaign. KBR greatly appreciates the support the Army has provided the company in these (and other) lawsuits. But given the untenable posture of the cases and enormous exposure faced by KBR, we cannot overstate the need for the Army to approve this request for reconsideration, We trust that you will give this matter your full, serious, and immediate attention. For those who remember Mario Puzo, KBR seems to be channeling the GodFather, and is making a Army thinly veiled offer it can’t refuse. It will be interesting to see who blinks.

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Obama May Get Political Boost by Pushing BP to Set Up $20 Billion Aid Fund

June 17, 2010

By Nicholas Johnston and Hans Nichols June 17 (Bloomberg) — President Barack Obama scored a political victory by pressuring BP Plc to commit $20 billion for damages from an environmental disaster that’s weighing on his presidency as the company struggles to contain thousands of barrels of oil flowing into the Gulf of Mexico each day. BP’s agreement yesterday to establish the compensation fund, and the London-based oil company’s decision to temporarily suspend dividends as Gulf residents and businesses begin filing claims, gave Obama an opportunity to look like he was directing events instead of reacting to them, said Allan Lichtman , a political history professor at American University in Washington. “Obama has been behind the curve on the oil spill since its onset,” Lichtman said. “Finally, he may be catching up.” Even some critics who praised Obama for getting BP’s commitment to multibillion-dollar damage payments say the president’s longer-term outlook depends on how soon BP controls the oil spill and how much crude tars Gulf beaches and marshes. “You have to give the president credit where credit is due,” Florida Republican Senator George Lemieux said on CNN, lauding the BP escrow account. “He did a good job on that. Now what we have to do is really focus on keeping the oil from coming ashore in the first place.” BP Chairman Carl-Henric Svanberg , summoned to the White House for meetings yesterday that included a private 25-minute Oval Office session with Obama, apologized for the biggest oil spill in U.S. history and promised the company would take responsibility. Words ‘Not Enough’ “We made it clear to the president that words are not enough,” Svanberg said. “We understand that we will and we should be judged by our actions.” BP shares rose after Obama announced the escrow accord. The company’s American depositary receipts were up 45 cents to $31.85 in New York trading, after earlier touching $33. The shares are down 47 percent since April 20 in what Fadel Gheit , a New York-based analyst at Oppenheimer & Co., called “panic selling.” Gheit upgraded BP to “outperform” from “market perform” on May 27. BP ’s $750 million of 1.55 percent notes due 2011 rose 2.25 cents to 94.5 cents on the dollar, after tumbling as low as 87.9 cents, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The cost of protecting against default for one year rose 355 basis points to 997.25 basis points, after climbing to as high as 1,075, CMA DataVision prices show. ‘Calming Effect’ BP’s Chief Financial Officer Byron Grote said yesterday in a conference call with investors and analysts that the company’s actions on the dividend and escrow account likely “will create a calming effect” on debt holders. Obama faces a challenge calming a public distressed by daily reports about the continuing environmental crisis, said Charlie Cook , publisher of the independent Cook Political Report in Washington. A USA Today/Gallup Poll released June 15 showed 71 percent of adults polled said Obama hasn’t been tough enough on BP. “This is a long slog for the president,” Cook said. White House officials “just have to grit their teeth, try their best and tough it out,” he said. “There is no single thing they can say or do to fix this horrible problem, both the spill and the ensuing political problems.” BP’s Obligations After a four-hour White House meeting between administration officials and BP executives, Obama said the escrow fund “will provide substantial assurance” that claims will be paid. “The people of the Gulf have my commitment that BP will meet its obligations to them,” Obama said. Obama’s top energy and climate adviser, Carol Browner , said the fund was a “White House-driven agreement” that doesn’t cap BP’s liability and won’t prevent individuals and businesses from suing the company. It will be administered by lawyer Kenneth Feinberg , 64, who has overseen executive pay at companies that received federal bailouts and administered the compensation fund for victims of the Sept. 11 terrorist attacks. Obama has traveled to the Gulf four times since the spill started. After returning from Mississippi, Alabama and Florida on June 15, he said BP would be held responsible for “recklessness” in the Gulf. BP has spent about $1.6 billion on containing and cleaning up the spill so far. The company’s spending for cleanup and liabilities may reach $40 billion, Standard Chartered Plc estimated last week. The government has increased its estimate of the oil leak to 35,000 to 60,000 barrels a day. Exxon Valdez Based on the low end of the estimate, BP well may have leaked 1.99 million barrels so far, exceeding 262,000 barrels spilled by the Exxon Valdez in 1989, according to statistics from the American Petroleum Institute. The accident prompted Obama to declare a six-month moratorium on deepwater offshore oil drilling and, under the agreement reached yesterday, BP will contribute $100 million to a fund for oil workers who lost jobs because of the action. Obama said he’s confident the company will be able to pay claims. “BP is a strong and viable company, and it is in all of our interests that it remain so,” he said. To contact the reporters on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net ; Hans Nichols in Washington at hnichols2@bloomberg.net .

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Double-Dip Recession Coming? Second Downturn Could Be Getting More Likely (POLL)

June 15, 2010

When Fed chief Ben Bernanke said last week that the economic recovery “won’t feel terrific,” he may have been on to something. Whether we’re technically in a recession, these days it can be awfully hard for many Americans to see any semblance of a silver lining in the economy. That may be because there’s still a significant risk of America falling into a second recession. According to the Wall Street Journal , the latest round of economic news has raised concerns among the Federal Reserve’s board of governors that the chance of a double-dip recession is increasing . “…fiscal woes in Europe, stock-market declines at home and stubbornly high U.S. unemployment have alerted some officials to risks that the economy could lose momentum and that inflation, already running below the Fed’s informal target of 1.5% to 2%, could fall further, raising a risk of price deflation.” As the WSJ notes , there’s very little hope among the Fed’s leaders that the unemployment situation will change any time soon: “I would be surprised if the national unemployment rate were to fall below 9% before the end of 2010 or below 8% by the end of 2011,” Narayana Kocherlakota, Minneapolis Fed president, said Friday. MarketWatch’s chief economist Irwin Kellner is even more grim about the chances that our economy will suffer another prolonged downturn. May saw the first monthly decline in retail sales since last Fall, Kellner notes: Since retail sales make up over half of all consumer spending, it is safe to say that at least one-third of the gross domestic product is now falling. It is also not a stretch to conclude that the rest of consumer spending, which is services, is soft as well. Add to this the ongoing weakness in housing sales and new home construction, the slowing in exports as the dollar rises in world financial markets and the sharp cutbacks by states and local government, and most of the economy — except for inventories — appears to have stopped growing and may well be contracting. In plain English, double-dip is back on the table. CNN Money spoke to a handful of market insiders, all of whom agreed that the chances of a double-dip were rising. The experts put the chances of a double-dip recession between 20 and 30 percent. What do you think?

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Laura Day: The Business of Intuition

June 14, 2010

Today’s market requires that you use all of our skills to compete. It is an exciting challenge and one that creates a need to discover parts of yourself that in easier times, you overlooked. In the long run, this will allow you to enrich all areas of your life. Intuition and the acquisition of wealth have a lot in common. There are many ways to arrive at each, and every individual has their own unique gift in doing so. In fact, it is the homogenization of the path that often impedes an effective strategy. As with intuition, the acquisition of wealth is mystified, when in fact, it’s based on realistic evaluation, data, self knowledge (whether yours or your company), adaptability and foresight. Both adaptability and foresight are the gifts of intuition. Where the budget dollar is spent on market research, it might be better spent on using the human resources you already have to acquire an accurate evaluation of your product or skills and a precognitive sense of the market in the future. This is especially valuable in your international market where the tools to evaluate a given “value” have not proven especially accurate. When you don’t have time for research or even an educated guess, intuition — that flash of accurate knowing — is your most reliable resource, especially if you train it. Usually, your intuition functions in emergencies, it’s the right decision you made in a split second, with little or no information that saved you. However, you don’t need to wait for an emergency to use it. In fact, the appropriate use of intuition will make you proactive enough that problems are solved before they occur. Scientific experiments demonstrating the ability of the human mind to both send and perceive information at a distance date back over fifty years, yet intuition has been cloistered in the realm of mysticism and scientific institutions. Where it really belongs is in the day-to-day structure of our life and its various endeavors. In How to Rule the World from Your Couch , I train your brain to get accurate, appropriate, actionable information in an efficient way, a way you have used inefficiently in the past. Intuition is not a strange skill acquired due to a vegetarian diet or a near-death experience. Intuition is the first capacity our brain had as babies and small children to survive in the absence of experience or reason. It can be redirected very easily to both gather and send information that will give you the edge in any market as well as helping you to find the niche where you and your company organically excel. How to Use Your Intuition to Create a Future “Market Map” Know your goals. Question your goals. People have a tendency to get stuck in a personal or corporate identity that calcifies and becomes vulnerable to market changes. If you cultivate a willingness to adapt and reinvent yourself, you will thrive. That said, if you don’t know your target it’s hard to hit it. So, know your goals. Forget out-of-the-box thinking and brainstorming. The reference point for each of these activities is something isn’t working. Throw away the box and allow perception to wander and document where your attention goes without editing. Odd as this may seem, write down a question, such as “how will our market change in the next year?” Ask your entire company (or all your friends) to write one page that will take place over a twelve month period. Tell them not to worry about the story or the writing, but to allow their attention to wander anywhere without editing anything. DO NOT TELL THEM THE QUESTION! Simply tell them you have an idea and this will help you fill in the blanks. Ask them to do it with a timeline. It sounds strange and uncomfortable at first, and it is. But, what you yield will amaze you when you apply it to the question you wrote and use a bit of interpretation to apply the data. Once you have your intuitive data, look at the other information you have available and come up with a plan. Nothing is the entire answer. Laura Day is the New York Times best selling author of PRACTICAL INTUITION and HOW TO RULE THE WORLD FROM YOUR COUCH. Newsweek named her the “$10,000-a-month psychic” and The Independent called her “The Psychic of Wall Street”. Laura has been featured on Oprah, CNN, Good Morning America, ABC News and other national and international media. Laura teaches mainstream professions how to integrate intuition into their process to create greater success. Laura teaches and lectures all over the world. HOW TO RULE THE WORLD FROM YOUR COUCH is her textbook on using intuition effectively. www.howtoruletheworldfromyourcouch.com

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David Isenberg: A Blackwater by Any Other Name Is Still a Blackwater

June 9, 2010

Yesterday’s news, announced initially in a report from the Associated Press, that Xe Services, formerly known as Blackwater, is being put up for sale tempts me to modify the old cliché, when the going gets tough, the tough sell out. Of course, I don’t really believe that. In fact, it would be grossly unfair. There is a lot to be said about Blackwater and yes, much of it is unflattering, and a fair amount of that is true. But it is also true that over the years that much of what has been said and written about Blackwater and other private security contractors is grossly inaccurate, biased, misleading, and legally libelous, i.e. jackbooted thugs, mercenaries, Christian crusaders, et cetera. Someday, a dispassionate and objective reporter or academic will sift through the mountains of paperwork that are doubtlessly stored in various government archives and give us a real history of how Blackwater operated, what contracts it had, who it worked for, what its people did right and wrong. To date we don’t have this; only hysterical screeds masquerading as investigative reporting. At this point a lot of questions remain unanswered. It’s not clear if all of Blackwater’s branches are up for sale or just its security and training business. One of the most lucrative parts, Presidential Airways, was sold earlier this year for $200 million. Also unknown is what will happen to Blackwater’s contracts for the CIA and the Joint Special Operations Command. Jeremy Scahill of The Nation writes that, “Prince has shifted some of Blackwater’s clandestine work to companies he does not own but which are run by former Blackwater executives or allies. Among these are Blackbird Technologies, which now employs former Blackwater executive J. Cofer Black (former head of the CIA’s Counterterrorism Center) and Constellation Consulting, which is run by former Blackwater executive Enrique “Ric” Prado, a veteran of the CIA’s paramilitary division, the Special Operations Group.” And it unclear whether Blackwater will seek to sell its remaining parts as a package or a la carte. Another interesting question is who might buy Blackwater? CNN reports that: With most of Xe’s revenue dependent upon a few large public entities that are subject to public pressure, its future contracts and revenues can easily be threatened, notes Aswath Damodaran, a professor of finance at NYU’s Stern School of Business. “If I ran a public company, I would not touch Blackwater with a ten-foot pole,” he said. “The danger to my other businesses from contamination would be way too high. One exception would be a large strategic buyer that is engaged in similar high-risk fields and that could find value in subsuming Xe Services into its ranks. For instance, DynCorp (DCP), which had over $3 billion in revenue in 2009 and just reported more than $1 billion in quarterly revenue, is an active competitor in Xe Services’ main business areas. Buying Xe Services would further increase DynCorp’s manpower and give the company access to additional contracts, such as the lucrative DOD narcotics intervention contract, for which it was not pre-qualified. … The Carlyle Group, which owns several defense contractors, including United Defense Industries, could be a buyer. But Cerberus [see below for more on Cerberus], with $23 billion under management, seems to fit the bill especially nicely. Since it plans to take control of DynCorp, and already runs IAP Worldwide, which provides logistical support for the Pentagon, Cerberus will have a deep bench of capable management at its disposal. What can we learn from the news? For starters, like it or not, dealing with the media is a critical part of your work. Companies that don’t answer questions quickly and fully allow critics to get away with making all sorts of wild charges which are endlessly repeated in the echo chamber known as the Internet. Admittedly, this is not always the fault of the companies. Many contracts stipulate that queries about a company’s work can only be answered by the client, which is often the U.S. government, and it is not anxious to answer questions. Still, the no comment policy only hurts companies and they need to be far more active in engaging with the media. As an example of why this is important consider, as MarketWatch reported that two years ago, Cerberus Capital Management turned down a chance to invest in the company when it was still called Blackwater. Though no reason was given, it was speculated that the reclusive private-equity firm shied away from the unwanted attention that would have come with such a purchase. Given that Cerberus is now in the process of acquiring DynCorp International, another private military and security contractor, it couldn’t have been the prospect of acquiring such a firm in and of itself that bothered Cerberus. Rather it was Blackwater’s reputation. A corollary to this is that rebranding doesn’t work. As we all know Blackwater changed its name in the aftermath of the September 2007 incident in which Blackwater contractors killed 17 Iraqi civilians at Nisoor Square in Baghdad during a firefight. By that time, rightly or wrongly, Blackwater was widely viewed as a sort of corporate pig. The name change was seen as putting lipstick on a swine. It did not help. Xe Services was still seen as Blackwater. Another lesson is that companies really need to have a business model from the very beginning. It was always a bit unclear what was Erik Prince’s [Blackwater's founder] real motivation was. Yes, to be sure, it was to make money. But he had scads of money to begin with. Many thought that he simply thought it was a cool thing to do. That may be fine for an Internet startup but when you are talking about a company involved in military issues, as in periodically killing people and destroying things, you need to be as serious as a heart attack. Finally, Blackwater/Xe Services or whatever it is called in the future is unlikely to be filing for Chapter 7 relief. It simply is too important to the U.S. government and holds too many contracts worth a lot of money. That alone guarantees someone will be buying it, even if the government has to provide an incentive.

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U.S. Ramps Up Coastal Protection as BP’s Oil May Linger in Gulf for Months

June 7, 2010

By Simon Lomax and Aaron Clark June 7 (Bloomberg) — Oil from BP Plc ’s ruptured well will linger in the Gulf of Mexico until at least the fall and the U.S. is seeking more equipment to help prevent the crude coming ashore, Coast Guard Admiral Thad Allen said. Skimming equipment to corral oil on the surface is being sent to the Gulf from all over the U.S. to keep the crude as much as 50 miles (80 kilometers) off the coasts of Florida, Alabama, Mississippi and Louisiana, Allen said. “This is a siege across the entire Gulf,” Allen, in charge of the government response to the leak, said yesterday on CBS’s “Face the Nation” broadcast. “There will be oil out there for months. This will be well into the fall.” BP said it captured 10,500 barrels of oil from the leak on June 5, up from 6,077 barrels the previous day. The flow from the seabed leak 5,000 feet (1,524 meters) below the surface is estimated by government scientists at 12,000 to 19,000 barrels a day. The leak began April 20 when the Deepwater Horizon rig owned by Transocean Ltd. and leased by BP exploded and sank two days later, killing 11 workers and unleashing the biggest oil spill in U.S. history. Allen said the company was “taking every step possible” to plug the well, yet he joined Florida Governor Charlie Crist in faulting BP for slow response to compensate businesses and workers for losses. “We want these claims to be responded to much more quickly,” Crist said on CNN’s “State of the Union” broadcast. “These people need help. And we have to be there to try to make them as whole as we can during this very difficult process.” Lawyer Task Force Florida formed a task force of lawyers to handle claims for additional compensation from businesses including restaurants, hotels, oyster fishermen and companies that depend on the Gulf, Crist said. BP reported that 37,193 claims have been submitted and $48.4 million has been distributed, according to a statement on the Deepwater Horizon Response website. About half of the claims have been paid and the other half are being processed, Mark Proegler, a spokesman for BP said in a telephone interview. No claims have been denied to date, according to the statement. BP’s spending on claims through June may top $84 million Darryl Willis, vice president of resources at BP America, said June 5 on a conference call. Skimming Armada The U.S. is gathering the oil on the surface using skimmers to remove the oil-and-water mix. Near the shore, booms are being used to block oil from reaching beaches, Allen said. A skimming armada has been deployed and “What we’re trying to do is fight this thing offshore,” Allen said on ABC’s “This Week” broadcast. “This is a war. It’s an insidious war, because it’s attacking four states.” Efforts to contain the spill are being hindered by winds and current, which can accelerate the movement of the slick on the surface, making it more difficult to attack, he said. “It’s not a monolithic, huge spill,” Allen said. “It’s disaggregated itself into hundreds, maybe thousands of smaller pieces of oil. So we’re trying to fight it on a lot of different fronts.” The oil could suffocate fish and other marine life, damage shorelines along the Gulf, sweeping around to Florida’s Atlantic Coast, according to marine scientists. Atlantic Coast The National Center for Atmospheric Research said June 3 that oil from the spill may reach Florida’s Atlantic Coast within weeks and then move as far north as Cape Hatteras, North Carolina. Oil that washed ashore on beaches in Florida’s northwest Panhandle region was quickly cleared, and crews are removing tar balls that are left on the sand, Crist said yesterday. Mississippi Governor Haley Barbour said state beaches remained free of tar balls or other deposits although tourists may think the coast from Florida to Texas is “ankle-deep in oil.” “Our tourist season has been hurt by the misperception of what’s going on down here,” Barbour said on the “Fox News Sunday” broadcast. Barbour said President Barack Obama’s six-month moratorium on offshore drilling imposed last month will delay production in the Gulf, which represents 30 percent of U.S. oil and natural gas production, and increase imports. Lost Production “The loss of production that we’re going to suffer will make us even more dependent on the Middle East, on Venezuela, on people that aren’t our friends,” Barbour, a Republican, said on the “Fox News Sunday” broadcast. Barbour endorsed the call by Louisiana Governor Bobby Jindal to resume offshore drilling in the Gulf. The moratorium will shut 33 deepwater rigs in the Gulf of Mexico costing as many as 6,000 jobs this month and 20,000 by the end of next year, Jindal said in a letter to Obama on June 2. As focus remained on BP’s offshore explosion and oil leak, an onshore natural gas well had a “blowout” last week about 122 miles northeast of Pittsburgh, which helped drive natural gas prices to a 14-week high on concern tighter restrictions on offshore drilling will spread onshore. “A lot of people are starting to worry about the Gulf production of gas,” said Carl Larry , president of Oil Outlooks & Opinions LLC in Houston. “The more we cut back on Gulf production, the more we rely on shale production.” To contact the reporter on this story: Simon Lomax in Washington at slomax@bloomberg.net

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U.S. Ramps Up Coast Protection as BP Oil May Linger for Months

June 7, 2010

By Simon Lomax and Aaron Clark June 7 (Bloomberg) — Oil from BP Plc ’s ruptured well will linger in the Gulf of Mexico until at least the fall and the U.S. is seeking more equipment to help prevent the crude coming ashore, Coast Guard Admiral Thad Allen said. Skimming equipment to corral oil on the surface is being sent to the Gulf from all over the U.S. to keep the crude as much as 50 miles (80 kilometers) off the coasts of Florida, Alabama, Mississippi and Louisiana, Allen said. “This is a siege across the entire Gulf,” Allen, in charge of the government response to the leak, said yesterday on CBS’s “Face the Nation” broadcast. “There will be oil out there for months. This will be well into the fall.” BP said it captured 10,500 barrels of oil from the leak on June 5, up from 6,077 barrels the previous day. The flow from the seabed leak 5,000 feet (1,524 meters) below the surface is estimated by government scientists at 12,000 to 19,000 barrels a day. The leak began April 20 when the Deepwater Horizon rig owned by Transocean Ltd. and leased by BP exploded and sank two days later, killing 11 workers and unleashing the biggest oil spill in U.S. history. Allen said the company was “taking every step possible” to plug the well, yet he joined Florida Governor Charlie Crist in faulting BP for slow response to compensate businesses and workers for losses. “We want these claims to be responded to much more quickly,” Crist said on CNN’s “State of the Union” broadcast. “These people need help. And we have to be there to try to make them as whole as we can during this very difficult process.” Lawyer Task Force Florida formed a task force of lawyers to handle claims for additional compensation from businesses including restaurants, hotels, oyster fishermen and companies that depend on the Gulf, Crist said. BP reported that 37,193 claims have been submitted and $48.4 million has been distributed, according to a statement on the Deepwater Horizon Response website. About half of the claims have been paid and the other half are being processed, Mark Proegler, a spokesman for BP said in a telephone interview. No claims have been denied to date, according to the statement. BP’s spending on claims through June may top $84 million Darryl Willis, vice president of resources at BP America, said June 5 on a conference call. Skimming Armada The U.S. is gathering the oil on the surface using skimmers to remove the oil-and-water mix. Near the shore, booms are being used to block oil from reaching beaches, Allen said. A skimming armada has been deployed and “What we’re trying to do is fight this thing offshore,” Allen said on ABC’s “This Week” broadcast. “This is a war. It’s an insidious war, because it’s attacking four states.” Efforts to contain the spill are being hindered by winds and current, which can accelerate the movement of the slick on the surface, making it more difficult to attack, he said. “It’s not a monolithic, huge spill,” Allen said. “It’s disaggregated itself into hundreds, maybe thousands of smaller pieces of oil. So we’re trying to fight it on a lot of different fronts.” The oil could suffocate fish and other marine life, damage shorelines along the Gulf, sweeping around to Florida’s Atlantic Coast, according to marine scientists. Atlantic Coast The National Center for Atmospheric Research said June 3 that oil from the spill may reach Florida’s Atlantic Coast within weeks and then move as far north as Cape Hatteras, North Carolina. Oil that washed ashore on beaches in Florida’s northwest Panhandle region was quickly cleared, and crews are removing tar balls that are left on the sand, Crist said yesterday. Mississippi Governor Haley Barbour said state beaches remained free of tar balls or other deposits although tourists may think the coast from Florida to Texas is “ankle-deep in oil.” “Our tourist season has been hurt by the misperception of what’s going on down here,” Barbour said on the “Fox News Sunday” broadcast. Barbour said President Barack Obama’s six-month moratorium on offshore drilling imposed last month will delay production in the Gulf, which represents 30 percent of U.S. oil and natural gas production, and increase imports. Lost Production “The loss of production that we’re going to suffer will make us even more dependent on the Middle East, on Venezuela, on people that aren’t our friends,” Barbour, a Republican, said on the “Fox News Sunday” broadcast. Barbour endorsed the call by Louisiana Governor Bobby Jindal to resume offshore drilling in the Gulf. The moratorium will shut 33 deepwater rigs in the Gulf of Mexico costing as many as 6,000 jobs this month and 20,000 by the end of next year, Jindal said in a letter to Obama on June 2. As focus remained on BP’s offshore explosion and oil leak, an onshore natural gas well had a “blowout” last week about 122 miles northeast of Pittsburgh, which helped drive natural gas prices to a 14-week high on concern tighter restrictions on offshore drilling will spread onshore. “A lot of people are starting to worry about the Gulf production of gas,” said Carl Larry , president of Oil Outlooks & Opinions LLC in Houston. “The more we cut back on Gulf production, the more we rely on shale production.” To contact the reporter on this story: Simon Lomax in Washington at slomax@bloomberg.net

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BP&rsquos Cap Is Recovering Gulf Oil, May Get 90% of Leak

June 4, 2010

By Jim Polson June 4 (Bloomberg) — BP Plc said its effort to divert oil leaking from its Gulf of Mexico well to a ship on the surface is working, with a goal of capturing more than 90 percent of the spill. Recovery of oil aboard the drillship began about midnight and may have reached a rate of 1,000 barrels a day, based on a BP estimate, U.S. Coast Guard Admiral Thad Allen said today during a conference call with reporters. Government scientists had estimated the well was leaking 12,000 to 19,000 barrels of oil a day, a figure that may have increased as much as 20 percent after London-based BP yesterday cut away a kinked riser pipe to install the cap. “I’d like to see us capture 90-plus percent of this flow,” Doug Suttles , BP’s chief operating officer for exploration and production, said on CBS’s “Early Show.” “That’s possible with this design. We have to work through the next 24 to 48 hours to optimize that.” The well began leaking after the Deepwater Horizon rig exploded on April 20 and sank two days later, resulting in the deaths of 11 workers. Four valves on the cap BP installed yesterday are venting oil and the continued flow isn’t an indication the effort has failed, Suttles said on CNN. Engineers expect today to close the valves, designed to prevent clogging, he said. ‘It’s Progress’ “It’s progress, that’s for sure,” Robert Bea, a University of California Berkeley engineering professor, said of the oil recovery. “Given that we are now in the hurricane season, and there is high likelihood of seeing tropical storms and hurricanes in the very near future, there should be continuing concern if this system can survive such conditions,” he said. Oil was seen pouring around the cap when it was installed last night because the pipe connecting the cap to the drillship was filled with nitrogen gas to prevent clogging, Allen said. “It’s almost like this: If you were to put your finger over the top of a straw and put it into a glass of water and then slowly lift your finger off every once in a while so that the straw would fill up with water,” Allen said. “They’re trying to fill that pipe with nothing but product that’s coming from the reservoir.” The biggest oil spill in U.S. history has soiled at least 140 miles (225 kilometers) of coastline, halted new exploratory drilling in the Gulf and shut down a third of its fishing areas. The leak is 40 miles off Louisiana’s coast under about 5,000 feet (1,524 meters) of water. Separate Slicks President Barack Obama returns to the Louisiana coast today to assess the latest efforts to counter the spill. Oil from the spill has split into separate slicks that threaten beaches and marshland from Grand Isle, Louisiana, to Pensacola, Florida, as winds shift northeastward, Allen said. “The scope of this thing is expanding to the point that it is rather unprecedented,” Allen said. “We will continue to press for resources.” Florida Governor Charlie Crist asked BP America President Lamar McKay for $50 million in a letter yesterday. The state has already exhausted $25 million provided by the company last month to protect coastline and organize cleanups, Crist wrote. BP Chief Executive Officer Tony Hayward told investors today on a conference call the spill has the “first call” on the company’s funds and financial consequences of the spill will be “severe.” “My number one priority is to steer BP through this crisis, and that is exactly what I intend to do,” he said. Hayward said he has received “extraordinary support” from the board. BP rose as much as 4.7 percent today. The stock gained 1.1 pence to 433.35 pence at 4:35 p.m. in London. The shares have fallen 34 percent since the rig exploded. To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net

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`Drill, Baby, Drill’ May Haunt Republicans Seeking to Taint Obama on Spill

June 3, 2010

By Patrick O’Connor June 4 (Bloomberg) — Republicans’ embrace of offshore oil drilling and their skepticism of “big” government may hamper the party’s efforts to gain politically from President Barack Obama ’s handling of the disaster in the Gulf of Mexico. Mississippi Governor Haley Barbour , who heads the Republican Governors Association, has said the BP Plc oil spill that followed the April 20 explosion of a deepwater rig is no reason for the U.S. to abandon offshore oil and gas exploration. As oil washes ashore in Gulf Coast states, Louisiana Governor Bobby Jindal , also a Republican, sent a letter to Obama this week expressing “grave concerns” with the president’s decision to suspend activity at 33 deepwater rigs. “They’re kind of stuck because they’re the party of ’Drill, Baby, Drill,’” said David Lanoue , head of the political science department of the University of Alabama, referring to a Republican slogan during the 2008 presidential campaign. “If you’re an ambitious Republican governor, where do you go with this?” Jindal, a critic of the administration’s spill response and a possible 2012 presidential candidate, has stressed his belief in limited government. In a nationally televised response to an Obama speech to Congress on Feb. 24, 2009, Jindal said “the strength of America is not found in government.” Hurricane Katrina Noting that some then sought a government rescue “from the economic storms raging all around us,” he said “those of us who lived through Hurricane Katrina — we have our doubts.” Jindal, 38, refused about $98 million in unemployment aid that was part of Obama’s 2009 economic stimulus measure. In the current crisis, he has prodded federal officials to construct 128 miles of sand walls in the Gulf to stem the flow of oil seeping into wetlands. He won a concession this week when the government told him BP will pay for that construction. The first segment is expected to cost $45 million, Jindal said. Polls show Americans have grown frustrated with Obama as BP and its partners fail to stem the oil gushing into the Gulf. A CBS News survey released May 25 showed more Americans disapprove of Obama’s handling of the disaster than approve it. Some Republicans have said the spill will become Obama’s Hurricane Katrina, an enduring stigma that damages his presidency as much as the federal response to the 2005 Gulf Coast storm hurt then-President George W. Bush . Heightened Scrutiny As criticism mounted, Obama increased government scrutiny of BP and the other companies involved in the spill. The Justice Department announced plans this week to begin criminal and civil investigations. Obama, who made two inspection trips to the Gulf Coast last month, will again visit the region today. Barbour, Jindal and other Republicans are maintaining their support for offshore oil drilling for economic and ideological reasons. In his letter to Obama, Jindal said state officials estimate the administration’s suspension order for the 33 rigs will cause the loss of 3,000 to 6,000 Louisiana jobs in the next two to three weeks and as many as 20,000 if the moratorium persists. ‘Terrible Catastrophe’ Barbour, another possible 2012 presidential contender, said in a May 3 interview on CNN that the leak could become “a terrible catastrophe” if BP and the federal government couldn’t stop the flow. Still, he said, that was no reason to abandon offshore drilling in the Gulf that produces 30 percent of domestic oil and gas. “We’ve had a terrible accident,” said Barbour, 62. “We need to get to the bottom of it, but we don’t need to shut it down.” Republicans run a risk of looking too sympathetic to the oil industry, Lanoue said. “The public has decided that the villain here is BP,” he said. Republicans “don’t want to look like they’re carrying water for BP.” In Congress, Democrats have focused much of their attention on the spill’s financial consequences, pushing legislation to lift the $75 million ceiling on economic damages that companies must bear for such incidents. A measure to raise the cap to $10 billion was blocked May 14 by a Republican, Senator Lisa Murkowski of Alaska, who said she was concerned that such a limit would force smaller petroleum refiners out of the market. Republican Senators Jeff Sessions of Alabama and David Vitter of Louisiana are proposing tying a new cap to a company’s profits, a move they say would shield firms from going bankrupt. Crist, Rubio In Florida, where oil threatens state beaches, a Republican’s embrace of an activist federal agenda drove him from the party. Governor Charlie Crist , peppered with criticism in his bid for the Republican U.S. Senate nomination stemming from his support for Obama’s stimulus plan, decided in April to run for the office as an independent. Marco Rubio , the Republican Senate candidate who helped push Crist from the party, is acknowledging the federal government may need to take over the spill clean-up. “Priority number one has got to be focus on preventing this from getting worse,” Rubio told a Jacksonville audience on May 25, according to the Florida Times-Union. “If that means the federal government has to step in and take over than that’s what needs to happen.” To contact the reporter for this story: Patrick O’Connor in Washington at poconnor14@bloomberg.net

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BP to Remove Damaged Pipe in Strategy Shift Following `Top Kill’ Failure

June 1, 2010

By Jim Polson June 1 (Bloomberg) — BP Plc will begin removing damaged pipe from its leaking well off Louisiana this morning, preparing an effort to route most of the oil to a ship on the surface by the weekend, Managing Director Robert Dudley said. The odds of success for installing the oil-capturing device are better than the 60 percent to 70 percent chances the company gave for the “top kill” attempt that failed May 29, Dudley said on NBC’s “Today” show. Cutting the pipe may temporarily increase the flow of oil into the Gulf of Mexico, Dudley said. BP, based in London, fell the most in 18 years in London trading today after top kill failed to plug the worst oil spill in U.S. history. The company is trying to reduce the amount of oil gushing into the Gulf, estimated by government scientists last week at 12,000 barrels to 19,000 barrels a day, while it drills two relief wells to permanently stop the leak. “This is a lower-risk activity than what we were doing with the top kill,” Dudley said of the cap. “We’ve gone down this path because the risks are lower. The engineering, while not simple, is certainly simpler than what we were trying with the top kill.” President Barack Obama will meet today with the co-chairs of his oil-spill commission and then give a statement, according to a schedule provided by the administration. BP fell 75.15 pence, or 15 percent, to 419.65 pence at 1:23 p.m. in London, the biggest drop since 1992. The company has fallen 36 percent since the Deepwater Horizon drilling rig exploded on April 20, resulting in the deaths of 11 workers. Video of the pipe-cutting operation will be shown on BP’s oil-spill website , Dudley said. The company must cut the pipe before installing its so-called lower-marine riser package cap. Hurricanes BP plans “in a couple of weeks” to reverse the system of pipes and hoses that injected mud into the well for top kill, achieving another route to storage on the surface, he said. Engineers also are working on a free-standing riser pipe to be installed later this month that would allow tankers to take on oil, Dudley said. That equipment would include a quick- disconnect coupling so tankers could depart ahead of a hurricane, Dudley said on CNN today. Hurricane season starts in the Gulf today. Winds from the southwest are predicted this week, which would push oil from the well to a wider area of the U.S. coast, the National Oceanic and Atmospheric Administration said in a May 31 statement on its website. Mississippi, Alabama “Results indicate that oil may move north to threaten the barrier islands off Mississippi and Alabama later in the forecast period,” the agency said. As of yesterday, the Unified Area Command in Robert, Louisiana, reported oil along 100 miles (161 kilometers) of Louisiana coastline. BP has spent $990 million on the spill response, according to a statement today. The company said it restarted drilling May 30 on the second of two relief wells to permanently stop the leak. The relief wells are estimated to be ready in August. BP needs the equivalent of a lottery win to succeed with its first attempt with a relief well, David Rensink, president- elect of the American Association of Petroleum Geologists, said in an interview. The relief well aims to intercept the damaged hole at an angle thousands of feet below the seabed and permanently close it with heavy mud and cement. The method is the surest way for BP to end the largest oil spill in U.S. history, yet initial failure is “almost a certainty,” Rensink said. “What you’re doing is trying to intersect a well bore that is probably roughly a foot across with another well that is about a foot across,” he said. “It’s a hit-or-miss sort of thing. Ultimately the relief well will work. It’s just a matter of time, of continuing to poke at it until you intersect it.” To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net .

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U.S. Telling BP `What to Do’ as Company Seeks to Contain Majority of Oil

May 30, 2010

By Steve Geimann and Carol Wolf May 30 (Bloomberg) — BP Plc said it will seek to contain a majority of oil gushing from its Gulf of Mexico well with a new tactic to plug the leak as a White House adviser said the U.S. is now telling the company “what to do.” The company encountered “too much flow” and the “top kill” using 30,000 barrels of mud was abandoned in favor of placing a cap over the well, Managing Director Robert Dudley said today on CNN’s “State of the Union” program. “We believe we will get a majority of the oil and gas,” Dudley said. U.S. engineers, led by Energy Secretary Steven Chu , yesterday told BP of “grave concerns” about drilling mud, and the company halted the process, White House energy and climate adviser Carol Browner said on CBS’s “Face the Nation” broadcast. “At the end of the day, the government tells BP what to do,” Browner said on NBC’s “Meet the Press.” BP had put the chances of the top kill succeeding at 60 percent to 70 percent. The company made three attempts before giving up last night. “We failed to wrestle this beast to the ground,” Dudley said on “Fox News Sunday.” Containment has “no certainty” of success, he said on Fox. “The percentages are better” than forcing mud into the well, he said. Chu met BP engineers yesterday and told them “it was too dangerous” to continue forcing mud into the well, Browner said on CBS’s “Face the Nation” broadcast. After the scientists met and “we told them of our very, very grave concerns,” the company abandoned the process, Browner said. 4 to 7 Days BP didn’t provide an estimate of when the flow might be stopped with the new method. Installing the cap should take about four to seven days, and after that the company will begin installing a new blowout preventer, a series of valves designed to cut off the flow from the well, Doug Suttles , chief operating officer of BP America Inc., said yesterday. BP’s failure using drilling mud was “enormously frustrating and really maddening” while the federal response to protect the coast is failing, Senator David Vitter , a Louisiana Republican, said on CNN. The federal government needs to accelerate delivery of containment booms and start emergency dredging of barrier islands to block oil from reaching coastal marshes, Vitter said. A plan proposed by state and local officials two weeks ago has been approved by the Army Corps of Engineers, though only for about 2 percent of the plan, Vitter said. “That’s really the federal response to oversee and lead that effort to protect the coast and the marsh,” he said. “It has been a failure so far.” Louisiana Sand Booms Louisiana Governor Bobby Jindal , who with Vitter met President Barack Obama on May 28, said the U.S. should require BP to pay the costs to build 40 miles of sand boom protecting his state’s wetlands from oil. “The federal government shouldn’t be making excuses for BP,” said Jindal on ABC’s “This Week” broadcast. “This is their spill, their oil. They’re the responsible party. Make them responsible.” Representative Edward Markey , a Massachusetts Democrat, today endorsed a suggestion by House Speaker Nancy Pelosi made on Bloomberg Television’s “Political Capital With Al Hunt” to lift the financial liability limit for oil companies such as BP. “I do not believe that large energy companies should be able to escape having unlimited liability for the catastrophes which they create,” Markey said on CBS. “If the oil industry wants to drill in ultra-deep waters, we need ultra-safe technologies as well.” Lower-Marine Riser In the Gulf, BP has started deploying a containment device known as a lower-marine riser package cap. The cap will attach to the top of the well’s existing blowout preventer and will then funnel oil and gas into a pipe that extends to a ship on the surface, Suttles said. After the attachment of the lower-marine riser package cap, BP plans to install the new blowout preventer on top of the existing one, Suttles said. BP will then try to use the valves on the new blowout preventer to stop the flow. “We’re still looking at a month before we get this thing killed,” Les Ply, a retired mud engineering consultant for the oil industry, said yesterday in a telephone interview. “I think we’re looking at a week to 10 days to get this riser and cap in place.” The new method, if successful, would stop the leak long enough for a so-called relief well to be drilled nearby and provide a permanent seal. ‘Enormous Mistakes’ BP has made “enormous mistakes and probably cut corners,” leading up to the April 20 explosion on the Deepwater Horizon drilling platform, Vitter said. “There were some horrible things that went wrong and it seems like horrible decisions that led to the initial event,” he said. Dudley, in response to a question on “Fox News Sunday” about cutting corners, said “I don’t believe they did” and that the company used well and drilling designs adopted by other companies. “What’s happened out in the Gulf today is something that is an industry issue to understand this failsafe use of equipment,” Dudley said. “It’s going to have implications for the drilling industry not in the U.S. only, but all around the world. Everyone’s going to step back and learn from this.” To contact the reporter on this story: Steve Geimann in Washington at sgeimann@bloomberg.net

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Sabotage Suspected After Indian Train Collision Kills at Least 35 People

May 28, 2010

By Jay Shankar and Subramaniam Sharma May 28 (Bloomberg) — A goods train rammed into derailed coaches of a passenger express in eastern India, killing at least 35 people in the country’s worst rail disaster in four years, as officials suspected Maoist rebels had sabotaged tracks. The Gyaneshwari Express headed for the financial capital of Mumbai was struck by a cargo train in West Bengal ’s Jhargram district, 155 kilometers (96 miles) southwest of Kolkata, at 1:30 a.m. local time, the state’s Home Secretary Samar Ghosh said in a phone interview. Over 100 injured passengers have been taken to local hospitals, Praveen Kumar, a local deputy inspector general of police, said. “It is a case of sabotage,” Vivek Sahai, a member of the Railway Board, told reporters in New Delhi. The impact of the goods train caused most of the fatalities, he said. Police at the scene of the accident blamed Maoist guerrillas for the derailment, Railway Minister Mamata Banerjee told reporters. The leftwing rebels operate in 11 of India’s 28 states and have killed more than 7,500 people since 1998. They have stepped up attacks in recent weeks, blowing up a passenger bus in mineral-rich Chhattisgarh state earlier this month, killing 31 police personnel and civilians. Initially inspired by Maoist ideology, the guerrillas have pressed a campaign of violence against the government, police and landowners in a class war that seeks to install communist rule. Tracks ‘Cut’ Federal Home Secretary G.K. Pillai said in a phone interview it was too early to say what caused the accident. “We don’t want to blame the Maoists till we have definite evidence,” he said. “There is a cut on the railway track and several compartments were derailed. At least four to five of them are badly damaged,” Ghosh said, adding many passengers are still trapped inside the compartments. The crash is the worst in India since 2006, according to the India Today magazine, when about 40 people died in West Bengal. Press Trust of India said that as many as 65 people may have been killed today, reports that could not be immediately confirmed. Indian Prime Minister Manmohan Singh , who has described the Maoists as the single biggest challenge to the country’s internal security, said he was grieved to learn about the crash, according to an emailed statement from his office. Asia’s Oldest Network India’s 63,000-kilometer railway network, Asia’s oldest, is frequently hit by fatal accidents. At least 10 people were killed after passenger trains collided in north India in dense fog in January. More than 20 people died in a similar accident in October. The rail network carries about 15 million people each day on 11,000 passenger trains, and 1.4 million tons of freight. “The death toll may rise. Most of the injured have been evacuated by road or helicopter” to nearby Kharagpur town, Pillai said of today’s crash. Television channel CNN-IBN showed police officers carrying the injured from the wreckage of the passenger train. India banned the Maoists or Naxalites and more than a dozen “front organizations” in June last year. The radical movement takes its name from a 1967 peasant uprising in a village called Naxalbari in West Bengal. Banerjee announced compensation of 500,000 rupees ($10,900) for the families of those killed in today’s collision, and 100,000 rupees for the injured. To contact the reporter on this story: Ruth David in Mumbai at rdavid9@bloomberg.net

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BP `Top Kill’ Operation Temporarily Stops Oil Flow, U.S. Coast Guard Says

May 27, 2010

By Jim Polson May 27 (Bloomberg) — BP Plc made progress toward plugging a leaking well that’s been spewing oil into the Gulf of Mexico for more than a month by temporarily stopping the flow, U.S. Coast Guard Commandant Thad Allen said. “They’ve had some success overnight,” Allen said today in an interview on WWL radio in New Orleans. “Everybody is cautiously optimistic but there’s no reason to declare victory yet.” The company began pumping mud-like drilling fluid into the well at 2 p.m. New York time yesterday in a procedure known as top kill. Robert Dudley , managing director for London-based BP, said on NBC’s “Today” show this morning it would require another 24 hours before the company can “be sure of success.” The effort is aimed at tamping down the gusher of oil and natural gas and then sealing the well with cement. It has halted the flow of oil and gas and BP now must drop the pressure in the well to zero for the cement seal, Allen said. BP jumped as much as 6.6 percent in London trading after the Los Angeles Times quoted Allen as saying that the top kill had succeeded. The Coast Guard issued a “technical clarification” saying the temporary halt in flow doesn’t mean the effort was successful. Success of top kill would bring to an end a leak that has poured millions of gallons of oil into the Gulf and soiled at least 70 miles (113 kilometers) of coast. BP rose 28.9 pence, or 5.9 percent, to 520.9 pence at 3:06 p.m. in London trading. BP may rise to 550 pence or higher should the company confirm top kill success, Jason Kenney , a London-based analyst for ING Commercial Banking, wrote today in a note to clients. ING rates the shares at “buy.” Lessening Cost “Any early cessation of the leak would only lessen the likely final cost of this episode for BP,” Kenney wrote. The well began leaking after an April 20 explosion and fire on the Deepwater Horizon drilling rig. BP leased the rig from Geneva-based Transocean Ltd. , the largest deepwater driller. “A whole series of failures,” preceded the blowout, BP Chief Executive Tony Hayward said yesterday on CNN. “It will be Friday night or Saturday at the earliest before we know definitively that the well has been killed,” Robert MacKenzie , a Houston-based analyst for FBR Capital Markets, wrote today in a note to clients. “They are in the process of mixing more mud or perhaps even a junk shot to pump before they switch to cement to seal the well.” BP has said a “junk shot” injection of rubber scraps, may be used as needed to seal leaks in the well piping so that enough pressure can be exerted on the column of oil and gas. Obama Response President Barack Obama will announce today the extension of a moratorium that began after oil started to spill from BP’s well, a White House aide said. The president will also cancel a proposal to drill for oil off of the coast of Virginia and planned drilling by Royal Dutch Shell Plc of exploratory wells in the Arctic off Alaska. Obama will discuss the drilling delays at 12:45 p.m. local time today at the White House. The shift is the result of a 30- day safety review on offshore drilling the president ordered from Interior Secretary Ken Salazar , according to the aide, who spoke on condition of anonymity in advance of the official announcement. Chances of Success BP will need to monitor the well and conduct pressure tests to determine if the oil flow has been stopped, Doug Suttles , chief operating officer for exploration and production, said yesterday at a press conference in Robert, Louisiana. “We are taking great care to make sure we complete this job successfully.” Hayward put the chances of the plan working at 60 percent to 70 percent three days ago. The oil slick and areas that appear to have oil on the surface cover about 29,000 square miles, said John Amos, president of Shepherdstown, West Virginia-based SkyTruth, a non- profit organization that uses satellite imagery to measure the spill. That’s an area almost as large as South Carolina. About 100 miles of Louisiana coastline including marshes and beaches have been affected, Coast Guard Rear Admiral Mary Landry said at yesterday’s press conference in Robert. BP said May 22 that 5,000 barrels a day was the best estimate for the rate that oil is pouring from the well, a figure challenged by some independent scientists. The U.S. Geological Survey said today the flow rate was 12,000 barrels to 19,000 barrels a day. The amount of oil being spilled will help determine BP’s liability for the leak. BP’s Costs The spill has cost BP a total of $760 million, or about $22 million a day, the company said May 24. Average daily profit last year was $45 million a day, according to data compiled by Bloomberg . The federal government has spent more than $100 million responding to the spill and will be reimbursed by BP, Landry of the Coast Guard said. BP said yesterday in an e-mailed statement it has paid more than $36 million in damage claims and will appoint an independent mediator to review and assist claims. BP has said the well can be permanently sealed only by one of two relief wells it’s drilling, which won’t be complete before August. BP will clean up “every drop” of oil, Hayward said May 24. Other Alternatives If the top of the well can’t be plugged, the company plans to replace the damaged riser pipe at the well. That requires cutting away a kink in the existing pipe, at least temporarily increasing the size of the leak, BP Senior Vice President Kent Wells said May 25. Crews would then attach a rubber-sealed cap to the top of the blowout preventer, a series of valves designed to cut off flow from the well. That effort would attempt to divert more oil to the surface than BP has been able to manage with a small pipe inserted in the broken riser on May 16, according to Wells. The top kill “procedure has not been carried out in 5,000- feet (1,524-meter) water depth before and BP has stressed its success cannot be assured,” Andrew Whittock , an analyst in London at Oriel Securities Ltd., said in a note yesterday. “Many commentators believe the chance of success is less than 50 percent.” To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net

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BP Says `Top Kill’ Bid to Plug Leaking Gulf Oil Well `Proceeding to Plan’

May 26, 2010

By Jim Polson May 27 (Bloomberg) — BP Plc moved into the second day of work on its latest attempt to plug a leaking well that has been spewing oil into the Gulf of Mexico for more than a month. BP began pumping mud-like drilling fluid into the well at 2 p.m. New York time yesterday, according to a statement. The effort is aimed at tamping down the gusher of oil and natural gas and then sealing the well with cement. Success would bring to an end a leak that has poured millions of gallons of oil into the Gulf and soiled at least 70 miles (113 kilometers) of coast. The so-called top kill process will require at least another 24 hours, BP Chief Executive Officer Tony Hayward said yesterday. He put the chances of success at 60 percent to 70 percent three days ago. “So far, we are proceeding to plan,” Hayward said in an e- mailed transcript of remarks he made at the spill crisis center in Houston. “There’s a great team of people doing extraordinary things to plug this leak as quickly as we can.” The well, about 40 miles off Louisiana’s coast, began leaking after an April 20 explosion and fire on the Deepwater Horizon drilling rig. BP, based in London, leased the rig from Geneva-based Transocean Ltd. , the largest deepwater driller. BP will need to monitor the well and conduct pressure tests to determine if the oil flow has been stopped, Doug Suttles , BP’s chief operating officer for exploration and production, said yesterday at a press conference in Robert, Louisiana. “We are taking great care to make sure we complete this job successfully.” ‘No Guarantees’ The oil slick and areas that appear to have oil on the surface cover about 29,000 square miles, said John Amos, president of Shepherdstown, West Virginia-based SkyTruth, a non- profit organization that uses satellite imagery to measure the spill. That’s an area almost as large as South Carolina. “If it’s successful — and there are no guarantees — it should greatly reduce or eliminate the flow of oil now streaming into the Gulf from the seafloor,” President Barack Obama said yesterday in Fremont, California. “And if it’s not, there are other approaches that may be viable.” BP is “in the position of a surgeon about to operate on one of your loved ones,” Gene Grabowski , chairman of the crisis and litigation practice at Levick Strategic Communications, a public relations firm in Washington, said yesterday in an interview. ‘Level of Anxiety’ “Once they cap the well, a level of anxiety will still be there, but it will go down precipitously,” he said. “The healing can proceed and they can start talking about what they’re doing to clean up the environment and what the road ahead looks like.” About 100 miles of Louisiana coastline including marshes and beaches have been affected, U.S. Coast Guard Rear Admiral Mary Landry said at yesterday’s press conference in Robert. “I don’t want to express optimism until I know for sure that we have secured the well and that the leak has stopped,” Landry said. BP said May 22 that 5,000 barrels a day was the best estimate for the rate that oil is pouring from the well, a figure challenged by some independent scientists. Yesterday, U.S. Representative Edward Markey said an internal BP document from April 27 showed the leak may be as large as 14,266 barrels a day. The amount of oil being spilled will help determine BP’s liability for the leak. ‘Warning Signs’ Government hearings into the disaster continued in Washington and Louisiana yesterday. Several “warning signs” were missed before the rig explosion, which resulted in the death of 11 workers and triggered the spill, two congressmen said May 25. Information provided to congressional investigators by BP indicated a “fundamental mistake” because operators failed to address a “very large abnormality” in pressure tests of the well, according to the memo by Democratic Representatives Henry Waxman of California and Bart Stupak of Michigan. “A whole series of failures” preceded the disaster and investigations are “far from complete,” Hayward said on CNN yesterday. BP and Transocean managers aboard the Deepwater Horizon disagreed on how to proceed with the well about 11 hours before the blowout, Douglas Brown, the vessel’s chief mechanic, testified yesterday at a federal hearing in Kenner, Louisiana. Cost to BP BP prevailed while the Transocean official “reluctantly” agreed to proceed, Brown said at the hearing, conducted by the U.S. Coast Guard and the Minerals Management Service to determine the cause of the disaster. The spill has cost BP a total of $760 million, or about $22 million a day, the company said May 24. Average daily profit last year was $45 million a day, according to data compiled by Bloomberg . The federal government has spent more than $100 million responding to the spill and will be reimbursed by BP, Landry of the Coast Guard said. BP said yesterday in an e-mailed statement it has paid more than $36 million in damage claims and will appoint an independent mediator to review and assist claims. Federal officials on May 25 expanded fisheries closures to encompass about 22 percent of the Gulf, or 54,096 square miles, idling commercial and recreational fishing boats. Obama Visit Obama plans to visit the region tomorrow and outline new safety measures for offshore drilling. After receiving an initial report today on the cause of the explosion, Obama will respond with new permit procedures for oil exploration and tougher inspections to ensure safety and environmental rules are being followed, according to an administration official who asked not to be identified before the announcement. BP has said the well can be permanently sealed only by one of two relief wells it’s drilling, which won’t be complete before August. BP will clean up “every drop” of oil, Hayward said May 24. If the top of the well can’t be plugged, the company plans to replace the damaged riser pipe at the well. That requires cutting away a kink in the existing pipe, at least temporarily increasing the size of the leak, BP Senior Vice President Kent Wells said May 25. Crews would then attach a rubber-sealed cap to the top of the blowout preventer, a series of valves designed to cut off flow from the well. That effort would attempt to divert more oil to the surface than BP has been able to manage with a small pipe inserted in the broken riser on May 16, according to Wells. BP rose 6.8 pence, or 1.4 percent, to 492 pence in London yesterday. The shares have dropped 25 percent since the rig exploded. The top kill “procedure has not been carried out in 5,000- feet (1,524-meter) water depth before and BP has stressed its success cannot be assured,” Andrew Whittock , an analyst in London at Oriel Securities Ltd., said in a note yesterday. “Many commentators believe the chance of success is less than 50 percent.” To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net

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`Top Kill’ Operations Start in Attempt to Plug BP’s Leaking Gulf Oil Well

May 26, 2010

By Jim Polson May 26 (Bloomberg) — BP Plc began its most ambitious attempt to plug a more than monthlong leak from an oil well in the Gulf of Mexico. BP is aiming to tamp down the gusher of oil and natural gas with mud-like drilling fluid, then seal the well with cement. Success would bring to an end a leak that has poured millions of gallons of oil into the Gulf and soiled at least 70 miles (113 kilometers) of coastline. The so-called top kill process might take two days to complete, Chief Executive Officer Tony Hayward said this morning on NBC’s “Today” show. Hayward put the chances of success at 60 percent to 70 percent two days ago. The well, about 40 miles off Louisiana’s coast, began leaking after an April 20 explosion and fire on the Deepwater Horizon drilling rig. BP, based in London, leased the rig from Geneva-based Transocean Ltd., the largest deepwater driller. BP is “in the position of a surgeon about to operate on one of your loved ones,” Gene Grabowski , chairman of the crisis and litigation practice at Levick Strategic Communications, a public relations firm in Washington, said today in an interview. “Once they cap the well, a level of anxiety will still be there but it will go down precipitously,” he said. “The healing can proceed and they can start talking about what they’re doing to clean up the environment and what the road ahead looks like.” ‘Warning Signs’ Several “warning signs” were missed before the rig explosion, which resulted in the death of 11 workers and triggered the spill, two congressmen said yesterday. Information provided to congressional investigators by BP indicated a “fundamental mistake” because operators failed to address a “very large abnormality” in pressure tests of the well, according to the memo by Democratic Representatives Henry Waxman of California and Bart Stupak of Michigan. “A whole series of failures” preceded the disaster and investigations are “far from complete,” Hayward said on CNN today. The spill has cost BP $760 million, or about $22 million a day, the company said May 24. Average daily profit last year was $45 million a day, according to company reports compiled by Bloomberg. Federal officials yesterday expanded fisheries closures to encompass about 22 percent of the Gulf of Mexico, or 54,096 square miles, idling commercial and recreational fishing boats. President Barack Obama plans to visit the region on May 28 and outline new safety measures for offshore drilling. Relief Wells After receiving an initial report tomorrow on the cause of the explosion, Obama will respond with new permitting procedures for oil exploration and tougher inspections to ensure safety and environmental rules are being followed, according to an administration official who asked not to be identified before the announcement. BP has said the well can be permanently sealed only by one of two relief wells it’s drilling, which won’t be complete before August. BP will clean up “every drop” of oil, Hayward said May 24. If the top of the well can’t be plugged, the company plans to replace the damaged riser pipe at the well. That requires cutting away a kink in the existing pipe, at least temporarily increasing the size of the leak, BP Senior Vice President Kent Wells said yesterday. Crews would then attach a rubber-sealed cap to the top of the blowout preventer, a series of valves designed to cut off flow from the well. That effort would divert more oil to the surface than BP has been able to manage with a small pipe inserted in the broken riser on May 16, according to Wells. BP rose 6.8 pence, or 1.4 percent, to 492 pence at 4:35 p.m. in London. The shares have dropped 25 percent since the rig exploded. To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net

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BP’s `Top Kill’ Effort to Cap Spill Should Have Begun by Now, Salazar Says

May 26, 2010

May 26 (Bloomberg) — BP Plc should have begun by now its latest attempt to plug a leaking oil well in the Gulf of Mexico, Interior Secretary Ken Salazar said. Earlier today, Chief Executive Officer Tony Hayward said the final approval was his for the procedure, which involves pumping liquids into the well then sealing it with cement. The work might take two days to implement should he approve it, Hayward said on NBC’s “Today Show.” Success could stop the oil flow before relief wells can achieve a permanent plug in August, or even later. U.S. Coast Guard Rear Admiral Mary Landry approved the maneuver today, according to a press release. The top kill effort follows a report by Congressional investigators that BP missed several “warning signs” from the well before before a rig explosion last month that killed 11 workers and triggered the spill. Hayward said on CNN today a “whole series of failures” preceded the disaster and investigations are “far from complete.” President Barack Obama plans to outline new safety measures for offshore drilling tomorrow. “They’re in the position of a surgeon about to operate on one of your loved ones,” Gene Grabowski , chair of the crisis and litigation practice at Levick Strategic Communications in Washington, said today in an interview. “Once they cap the well, a level of anxiety will still be there but it will go down precipitously. The healing can proceed and they can start talking about what they’re doing to clean up the environment and what the road ahead looks like.” Oil has polluted about 70 miles (113 kilometers) of Louisiana coastline, Bobby Jindal , the state’s governor, said earlier this week. Federal officials yesterday expanded fisheries closures to encompass about 22 percent of the Gulf of Mexico, or 54,096 square miles, idling commercial and recreational fishing boats. The spill has cost BP $760 million, or about $22 million a day, the company said May 24. Average daily profit last year was $45 million a day, according to company reports compiled by Bloomberg. For Related News and Information: Today’s top energy news: ETOP BP peer product comparison: BP/ LN PPC BP income statement chart: BP/ LN FA IS CHART BP risk profile: BP/ LN RSKC

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BP Plans Plug Attempt as Gulf Oil Leak Costs Rise

May 24, 2010

By Eduard Gismatullin and Jim Polson May 24 (Bloomberg) — BP Plc will try in two days to plug an oil leak off Louisiana’s coast by pumping heavy drilling fluids into the damaged well, as cleanup costs of the monthlong spill accelerate. BP expects to attempt the “top kill” operation on the morning of May 26, Doug Suttles , chief operating officer for exploration and production, said today in an interview on CNN. It is the second time BP has delayed the measure, and Suttles said he rated its chances of working at “six or seven” on a scale in which 10 was certain success. The disaster has cost BP about $760 million, or $22 million a day, compared with an initial estimate of $6 million a day, the London-based oil company said in a statement. BP’s net income in 2009 was $16.6 billion, or $45.4 million a day, according to data compiled by Bloomberg. The shares fell to a 10-month low. “The longer it takes, more costs are going to be incurred,” Greg Smith , managing director of research firm Fat Prophets in London, said in a telephone interview today. The final bill, which may not be known for more than six months and depends on litigation, may be as much as $10 billion, he said. BP fell 13.7 pence, or 2.7 percent, to 493 pence at 4:35 p.m. in London. The stock is down 25 percent since an April 20 explosion aboard the Deepwater Horizon drilling rig that killed 11 workers. $500 Million BP pledged as much as $500 million over 10 years to research the environmental impacts of the spill, including the effects of chemical dispersants used to break up the oil. Louisiana State University will get an initial grant to assemble data that will be compared with later research, the company said. U.S. government officials stepped up pressure on BP in the face of criticism that they’ve been too lax in their oversight of the company’s response. Oil has washed ashore along more than 65 miles (105 kilometers) of coast lining the Gulf of Mexico, according to Louisiana Governor Bobby Jindal . Interior Secretary Ken Salazar yesterday threatened to “push them out of the way” if BP doesn’t do enough to halt the leak. Salazar is scheduled to visit Louisiana and fly over the oil slick today, along with Homeland Security Secretary Janet Napolitano and a group of U.S. senators. Environmental Protection Agency Administrator Lisa Jackson went to the region yesterday. Top Kill The top kill method requires liquids twice the density of water be pumped into the well using a Helix Energy Solutions Group Inc. rig, Suttles said last week. “Most of the equipment is on site and preparations continue for this operation, with a view to deployment in a few days,” BP said today. It will be followed by cement to seal the well about 5,000 feet (1,524 meters) underwater. The company said last week it expected to begin the process as early as May 23, and then delayed that to May 25. “Frustration is growing all around, with Louisiana authorities blaming both BP and the federal government for dragging their feet, while the feds are expressing increasing anger towards BP for missing various deadlines to get the leak plugged,” Edward Meir , a senior analyst at MF Global Inc., wrote in a report. BP has been diverting some of the spill for about a week, using a pipe to a drillship on the surface. The average recovery rate was 1,885 barrels of oil a day and 9 million cubic feet per day of natural gas from May 17 to May 24, David Nicholas, a BP spokesman, said today. In the past 24 hours, oil was recovered at a rate of 1,120 barrels a day. Flow Rate “The collection rate continues to vary, primarily due to the flow parameters and physical characteristics within the riser,” BP said in its statement today. A team of government and academic scientists may report this week how much oil is leaking from the well, after independent scientists told Congress the crude was coming out at more than 10 times the 5,000-barrel-a-day estimate BP and the government has given since April 28. Suttles said today that if the top kill doesn’t work they will try another containment device to divert the oil to the ship. The company also is preparing a “junk shot” to clog the opening of the leak. BP is drilling two relief wells to shut the leaking well permanently. The wells will be ready in August. To contact the reporters on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net ; Jim Polson in New York at jpolson@bloomberg.net

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BP Prepares to Plug Gulf of Mexico Leak as Spill Cost Reaches $760 Million

May 24, 2010

By Eduard Gismatullin and Jim Polson May 24 (Bloomberg) — BP Plc will try in two days to plug an oil leak off Louisiana’s coast by pumping heavy drilling fluids into the damaged well, as cleanup costs of the monthlong spill accelerate. BP expects to attempt the “top kill” operation on the morning of May 26, Doug Suttles , chief operating officer for exploration and production, said today in an interview on CNN. It is the second time BP has delayed the measure, and Suttles said he rated its chances of working at “six or seven” on a scale in which 10 was certain success. The disaster has cost BP about $760 million, or $22 million a day, compared with an initial estimate of $6 million a day, the London-based oil company said in a statement. BP’s net income in 2009 was $16.6 billion, or $45.4 million a day, according to data compiled by Bloomberg. The shares fell to a 10-month low. “The longer it takes, more costs are going to be incurred,” Greg Smith , managing director of research firm Fat Prophets in London, said in a telephone interview today. The final bill, which may not be known for more than six months and depends on litigation, may be as much as $10 billion, he said. BP fell 13.7 pence, or 2.7 percent, to 493 pence at 4:35 p.m. in London. The stock is down 25 percent since an April 20 explosion aboard the Deepwater Horizon drilling rig that killed 11 workers. $500 Million BP pledged as much as $500 million over 10 years to research the environmental impacts of the spill, including the effects of chemical dispersants used to break up the oil. Louisiana State University will get an initial grant to assemble data that will be compared with later research, the company said. U.S. government officials stepped up pressure on BP in the face of criticism that they’ve been too lax in their oversight of the company’s response. Oil has washed ashore along more than 65 miles (105 kilometers) of coast lining the Gulf of Mexico, according to Louisiana Governor Bobby Jindal . Interior Secretary Ken Salazar yesterday threatened to “push them out of the way” if BP doesn’t do enough to halt the leak. Salazar is scheduled to visit Louisiana and fly over the oil slick today, along with Homeland Security Secretary Janet Napolitano and a group of U.S. senators. Environmental Protection Agency Administrator Lisa Jackson went to the region yesterday. Top Kill The top kill method requires liquids twice the density of water be pumped into the well using a Helix Energy Solutions Group Inc. rig, Suttles said last week. “Most of the equipment is on site and preparations continue for this operation, with a view to deployment in a few days,” BP said today. It will be followed by cement to seal the well about 5,000 feet (1,524 meters) underwater. The company said last week it expected to begin the process as early as May 23, and then delayed that to May 25. “Frustration is growing all around, with Louisiana authorities blaming both BP and the federal government for dragging their feet, while the feds are expressing increasing anger towards BP for missing various deadlines to get the leak plugged,” Edward Meir , a senior analyst at MF Global Inc., wrote in a report. BP has been diverting some of the spill for about a week, using a pipe to a drillship on the surface. The average recovery rate was 1,885 barrels of oil a day and 9 million cubic feet per day of natural gas from May 17 to May 24, David Nicholas, a BP spokesman, said today. In the past 24 hours, oil was recovered at a rate of 1,120 barrels a day. Flow Rate “The collection rate continues to vary, primarily due to the flow parameters and physical characteristics within the riser,” BP said in its statement today. A team of government and academic scientists may report this week how much oil is leaking from the well, after independent scientists told Congress the crude was coming out at more than 10 times the 5,000-barrel-a-day estimate BP and the government has given since April 28. Suttles said today that if the top kill doesn’t work they will try another containment device to divert the oil to the ship. The company also is preparing a “junk shot” to clog the opening of the leak. BP is drilling two relief wells to shut the leaking well permanently. The wells will be ready in August. To contact the reporters on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net ; Jim Polson in New York at jpolson@bloomberg.net

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Cockpit Flight Recorder Found in Air India Crash That Killed 158 People

May 23, 2010

By Vipin Nair and Rakteem Katakey May 23 (Bloomberg) — Accident investigators continue to search for flight data and voice recorders from the wreckage of an Air India Express Boeing Co. aircraft that crashed yesterday, killing 158 passengers and crew. “Officials from the Directorate General of Civil Aviation are searching for the black box,” Harpreet Singh, Air India’s emergency response coordinator for the disaster in southern Karnataka state, told reporters today, referring to India’s aviation regulator. Until it’s “found and formal studies are done, we can’t conclude anything,” Singh said in Mumbai. Flight IX-812 from Dubai to Mangalore slammed through a boundary wall and slid down a hill before bursting into flames at about 6:05 a.m. yesterday in India’s first fatal crash of a passenger aircraft in a decade. Flames and thick smoke billowed from the forested area. All the bodies of the dead have been removed from the wreckage of the Boeing 737-800, Singh said. Of those, 87 have been identified. There were eight survivors. The accident was the worst in India in 14 years, according to the Aviation Safety Network website. Houston, Texas-based disaster management company Kenyon International Emergency Services has been asked to assist in the rescue operation, Air India’s Singh said. The airline will also conduct an internal inquiry. Busy Skies Since India’s last major air disaster in 2000, its skies have seen the arrival of Kingfisher Airlines Ltd ., SpiceJet Ltd ., IndiGo, GoAirlines (India) Pvt. and Paramount Airways Ltd., as the world’s second fastest expanding major economy after China saw demand surge. India will be the fastest-growing air travel market for the next 10 years, Airbus SAS, the world’s biggest planemaker, predicts. The country’s carriers will add $138 billion of new aircraft over two decades, the company forecasts. National Aviation Co. of India Ltd, Air India’s owner, is seeking to raise as much as $1.15 billion to refinance loans that funded the purchase of 21 Airbus planes. Civil Aviation Minister Praful Patel said in March that India needs to more than quadruple the number of airports from the current 90 to meet the increased traffic. “India’s safety record has been as good as it gets,” said Kapil Kaul , chief executive officer of the Indian unit of the Centre for Asia Pacific Aviation . Mangalore’s “tabletop” runway “has challenges and the experience of the pilot is critical,” he said. Boeing Team Boeing is sending a team to provide technical assistance to the investigation at the invitation of Indian authorities, the Chicago-based manufacturer said in a statement yesterday. Air India said the crashed 737 was about 2 1/2 years old. Firefighters had to cross a railway and battle through trees to reach the wreckage, the CNN-IBN television channel reported yesterday. It showed a rescue worker carrying the foam-covered body of young child up a mud bank away from the crash. At least 50 victims were from the state of Kerala, Press Trust of India reported. Kerala relies on remittances from people working in the Middle East for a quarter of its economy. Both pilots were experienced and had flown into Mangalore together on May 17, Air India’s director for personnel, Anup Srivastava , told reporters in Mumbai yesterday. The civil aviation ministry said in a statement the plane had landed “slightly beyond” the runway’s “touchdown” zone at a time when visibility was about six kilometers (four miles). 1996 Crash Yesterday’s crash was the worst in India since a Saudi Arabian Airlines flight collided with a Kazakhstan Airlines jet in November, 1996, killing all 349 on board. In the South Asian country’s last major air disaster, a Boeing 737-200 crashed into a residential area while approaching Patna airport in the eastern Bihar in July 2000. For loss-making national carrier Air India the accident “comes at a time when it is struggling,” analyst Kaul said. “This is going to be demotivating. While the incident may not affect their plans to raise capital, “they are going to be much more in focus for the wrong reasons,” he said. International air travel has rebounded from last year’s slump as the global economy expanded. Indian airlines carried 16.82 million passengers between January and April this year, 22 percent more than a year earlier, according to the Civil Aviation Ministry. To contact the reporters on this story: Vipin Nair in Mumbai at vnair12@bloomberg.net ; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net .

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Air India Boeing Crashes Carrying 166 in First Fatal Accident in a Decade

May 22, 2010

By Vipin Nair and Rakteem Katakey May 22 (Bloomberg) — An Air India Express plane overshot the runway and burst into flames while landing in heavy rain in southern India, killing all but three of the at least 166 people aboard in the country’s first fatal commercial air crash in a decade. “We have been able to confirm three survivors,” said Prabhakar Sharma, additional deputy commissioner of Mangalore district in southern Karnataka state. The plane “is almost completely burnt,” he said. There was little chance of more people being found alive, state home minister V.S. Acharya said by phone. Television channels including CNN-IBN and NDTV 24×7 showed flames and thick smoke billowing from a forested area at the end of the runway. Broadcasters said the plane crashed through a boundary wall and fell into a ravine. Firefighters had to cross a railway line and battle through trees to reach the wreckage, according to the reports. There were 137 adults, 23 children and six crew aboard the low-cost flight IX-812 when it crashed this morning, Sharma said. The survivors have been taken to a hospital 20 kilometers (12 miles) from the crash site, he said. Acharya put the total number of passengers and crew at 169. CNN-IBN showed a rescue worker carrying the foam-covered body of young girl up a mud bank away from the crash. It was not immediately clear if she was one of the survivors. ‘Grievous Loss’ Prime Minister Manmohan Singh expressed condolences over the “grievous loss of life” in a statement, announcing compensation for those killed. Singh postponed celebrations to mark the first anniversary of his re-election. The Boeing Co. 737-800 plane flying from Dubai to Mangalore crashed at 6:30 a.m. local time, Air India spokesman Swaminathan said by telephone. The crash may be the worst in India in 14 years, according to the Aviation Safety Network website. There was heavy rain and fog at the time of the crash, Sharma said. Civil aviation officials are on their way to Mangalore from the Karnataka capital city of Bangalore, he said. Boeing is sending a team to provide technical assistance to the investigation at the invitation of Indian authorities, the Chicago-based aircraft manufacturer said in a statement. Air India said in statement it was deploying “all its resources” to assist the families of passengers. India will be the fastest-growing air travel market for the next 10 years, Airbus SAS, the world’s biggest planemaker, predicts. Over the next 20 years, Indian carriers will need 1,030 new aircraft worth $138 billion, it forecasts. Bihar Crash In the South Asian country’s last major air disaster, a Boeing 737-200 crashed into a residential area while approaching Patna airport in the eastern state of Bihar in July 2000. The Alliance Air aircraft, which carried 52 passengers and six crew, nose-dived into a house one kilometer short of the airport, killing 45 passengers, all crew members and two people on the ground. Air India had debt of 152 billion rupees ($3.3 billion) as of June, according to the government. It may post a loss of 54 billion rupees for the fiscal year ended March 31, compared with a loss of 55.5 billion rupees a year earlier, according to Civil Aviation Minister Praful Patel . International air travel has rebounded from last year’s slump as the global economy expanded. Indian airlines carried 16.82 million passengers between January and April this year, 22 percent more than a year earlier, according to the Civil Aviation Ministry. Like state-controlled Chinese carriers and Japan Airlines Ltd., Air India has sought government aid as it flies unprofitable routes and faces growing competition from carriers including Singapore Airlines Ltd. To contact the reporters on this story: Vipin Nair in Mumbai at vnair12@bloomberg.net ; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net .

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Air India Plane Crashes on Landing in Mangalore; 166 People Feared Dead

May 21, 2010

By Vipin Nair and Rakteem Katakey May 22 (Bloomberg) — An Air India plane overshot the runway while landing in the southern Indian city of Mangalore and burst into flames, killing as many as 166 people in India’s first fatal commercial aircraft crash in a decade. “Our present information is that all 166 people on board the plane are feared dead,” said Prabhat Sharma, the deputy commissioner of Mangalore district in southern Karnataka state. The plane “is almost completely burnt,” he said. There were 137 adults, 23 children and six crew on board, he said by telephone. The Boeing Co . 737-800 plane flying from Dubai to Mangalore crashed at 6:30 a.m. local time, Air India spokesman Swaminathan said by telephone. If all 166 people on board died, the crash would be the worst in India in 14 years, according to the Aviation Safety Network website. The Home Minister of Karnataka state, V.S. Acharya, said six or seven people may have survived. CNN-IBN television showed flames and thick smoke billowing from a forested area at the end of the runway. The channel said the plane crashed through a boundary wall and fell into a ravine. Firefighters had to cross a railway line and battle through trees to reach the wreckage, the channel said. Air India had debt of 152 billion rupees ($3.3 billion) as of June, according to the government. It may post a loss of 54 billion rupees in the fiscal year ended in March compared with a loss of 55.5 billion rupees last year, according to Civil Aviation Minister Praful Patel . Travel Rebounds Indian and international air travel has rebounded from last year’s slump because of an economic pick-up. Domestic Indian travel jumped 23 percent in January to 4.1 million passengers, according to the Civil Aviation Ministry. Worldwide international airline passenger traffic rose 6.4 percent that month, to the International Air Transport Association. India will be the fastest-growing air travel market for the next 10 years, Airbus SAS, the world’s biggest planemaker, said in a statement today. Over the next 20 years, Indian carriers will need 1,030 new aircraft worth $138 billion, it said. To contact the reporter on this story: Vipin Nair in Mumbai at vnair12@bloomberg.net

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CBS Chief Moonves Says Replacing Older Shows With `Rookies’ Will Cut Costs

May 21, 2010

By Sarah Rabil and Andy Fixmer May 21 (Bloomberg) — CBS Corp. Chief Executive Officer Leslie Moonves said the broadcast network’s television production costs will drop with the cancellation of older, more expensive series such as “Cold Case.” “Our budgets for production will be lower in this coming season than they were this past season,” Moonves said today in an interview with Bloomberg Television in New York. “That happens when you cancel some of the aging shows that cost more and replace them with rookies that cost a bit less.” CBS, the most-watched U.S. broadcast network, presented advertisers with its new fall schedule this week, which has five new shows, including “$#*! My Dad Says,” starring William Shatner , and a remake of “Hawaii Five-O.” CBS also canceled “Numb3rs” and “New Adventures of Old Christine.” Moonves, 60, said advertising commitments for the next season are running ahead of a year ago. “What a difference a year makes. We’ve seen the trend, obviously the last six months, where advertising has come back big time,” Moonves said. “We’re going to do very well.” Cash, Debt As the advertising market improves, Moonves said CBS is considering options for returning cash to shareholders. He ruled out big acquisitions and said the company recently paid down debt and is resolving pension issues. CBS ended the first quarter with $872.7 million in cash and equivalents and $6.53 billion in long-term debt. “Number one, we want to see how much cash we have, we want to see if the economy continues like it is, if it’s robust,” Moonves said. “We want to see exactly where we are toward the end of the year, and we’ll make a decision.” CBS, based in New York, rose 44 cents to $14.32 at 4 p.m. in New York Stock Exchange composite trading. The shares have doubled in the past 12 months. Moonves said CBS News and Time Warner Inc.’s CNN have talked about partnerships and said there are reasons for the companies to work together. “I do not see it happening in the near future,” Moonves said. “Part of that has to do with the culture of the two organizations.” To contact the reporters on this story: Sarah Rabil in New York at srabil@bloomberg.net ; Andy Fixmer in Los Angeles at afixmer@bloomberg.net .

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Yuan Forwards Weaken as China May Delay Appreciation on Europe Debt Crisis

May 17, 2010

By Patricia Lui May 17 (Bloomberg) — Yuan forwards dropped the most in a week on speculation China will delay appreciation of its currency as Europe’s debt crisis threatens to damp global demand. Non-deliverable contracts on the currency fell for the first time in four days even as Singapore and France joined the U.S. in calling for an end to the yuan’s 22-month peg against the dollar. Benchmark stock indexes fell across Asia and most of the region’s emerging-market currencies weakened. “China has room to appreciate its currency,” said Dong Tao , a Hong Kong-based economist at Credit Suisse Group AG. “But at the same time, China is also concerned about the chaos in Europe. This may result in some delay to the process of allowing a yuan appreciation.” The yuan’s 12-month non-deliverable forwards fell 0.5 percent to 6.6988 per dollar as of 11:04 a.m. in Hong Kong, reflecting bets the currency will advance 1.9 percent from the spot rate of 6.8281, according to data compiled by Bloomberg. The contracts last week strengthened 0.6 percent, the most this year, amid speculation the second U.S.-China Strategic and Economic Dialogue in Beijing on May 24-25 will act as a catalyst for the peg to be relaxed. “It is in China’s interest that they move to let their exchange rate start to gradually reflect market forces,” U.S. Treasury Secretary Timothy F. Geithner said in an interview on Bloomberg Television on May 15. “I’m confident they’re going to do that.” Global Pressure A revaluation of the yuan would improve economic conditions in China, finance ministers from France and Singapore said in separate interviews with CNN over the weekend. Christine Lagarde of France it is in China’s “own self-interest to re- appreciate.” Singapore’s Tharman Shanmugaratnam said it would be “sensible” to gradually appreciate the yuan to contain inflation and raise the standard of living in China. “What Geithner or Singapore says about the yuan doesn’t matter to China,” Tao of Credit Suisse said. “The last thing policy makers in China will want is to be perceived by the domestic audience as being pressured to strengthen the currency, which could hurt local exporters.” Geithner, who last month delayed a report that may have branded China a currency manipulator, will attend the dialogue in Beijing. Premier Wen Jiabao has pegged the exchange rate against the dollar at about 6.83 since July 2008 to help exporters cope with a global recession. The U.S. and European economies have since returned to growth, and China’s exports rose 30.5 percent from a year earlier in April, a fifth straight gain. Inflation Risk “We look for 3 to 5 percent appreciation in the yuan by year-end, all to take place in the second half of the year,” Credit Suisse’s Tao said. China will allow its currency to strengthen by June 30 to curb inflation, while avoiding a one-time jump in value that might hurt exports, a Bloomberg survey of analysts last month showed. Consumer prices rose 2.8 percent in April, the most in 18 months, and property values climbed at a record pace, the government reported on May 11. Inter-bank money-market rates rose after the government failed to draw enough bids at a May 14 treasury bill sale for the second time in a month on speculation banks, having had their reserve ratios raised three times this year, were favoring the higher returns offered by longer-dated securities. The seven-day repurchase rate, which measures interbank funding availability, rose nine basis points to a two-month high of 1.79 percent in Beijing, according to prices by China Interbank Trade system. The finance ministry on May 14 sold 17.4 billion yuan ($2.5 billion) of the 20 billion yuan of 273-day securities on offer at an average yield of 1.72 percent, compared with 1.54 percent at the previous sale, according to data compiled by Bloomberg. For Related News and Information: Top currency news: TOP FRX News on China’s currency: TNI CHINA FRX BN Stories on China economy: TNI CHINA ECO BN

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Larry Summers Defends Record On Derivatives During Clinton Administration

May 16, 2010

Last month, Bill Clinton told ABC News that his former Treasury Secretaries, Robert Rubin and Larry Summers, gave him wrong advice on derivatives, and that he was wrong to take it. Though Clinton quickly walked back the remark , it continues to reverberate around Washington. Today, on CNN, Fareed Zakaria asked Summers about Clinton’s comment and whether he’d changed his mind about derivatives. Summers responded by saying that, like Keynes, “when conditions change, I change my views,” and he defended his record during the Clinton administration: Credit default swaps were in their infancy in the 1990s. There was no large market in them, and yet we see how much damage they did. It’s a very different kind of need that’s been pointed out and why we’ve worked so hard to strengthen derivatives regulation. To take just one example, we’ve seen what damage can be done by leveraging. In the 90s, as secretary of the Treasury, I warned about the dangers of the leverage associated with Fannie Mae and Freddie Mac. Those dangers have become more pervasive over the last 10 years. So I think there has always been a case, and one I have always tried to make, for regulation, but that case has certainly gotten stronger, given what has happened.

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Thailand Death Toll Rises to 30 as Abhisit Promises to Disperse Protesters

May 16, 2010

By Daniel Ten Kate and Supunnabul Suwannakij May 16 (Bloomberg) — Battles between Thai troops and protesters escalated in downtown Bangkok as Prime Minister Abhisit Vejjajiva vowed to disperse his opponents from the city’s business district. At least 30 people have been killed and more than 221 injured since the army moved to seal off an area as large as New York’s Central Park four days ago. Explosions and gunfire rang out at the protest site as the military declared two “live-fire zones” in which “terrorists” could be shot on sight. “We cannot retreat,” Abhisit said in a nationally televised address last night. “The best way to stop the loss of lives is to end the protest.” Thai authorities are seeking to choke off food and water to end an occupation of the city center that has spurred the country’s worst political violence in 18 years, claiming at least 54 lives. Demonstrators failed to disperse after Abhisit offered to cut his term short, prompting the military action. “Please stay,” protest leader Weng Tojirakarn told supporters from the main stage today. “If there are fewer people, that will be a chance for us to be dispersed.” Civil society groups plan to enter the main protest site to escort women, children and other unarmed people from the area, army spokesman Sansern Kaewkamnerd told reporters. The government will provide them housing, food, water and transportation, spokesman Panitan Wattanayagorn said by phone. “It will be very clear to the rest of the country that the people remaining in the area are determined to stay,” he said. Emergency Decree Extended The government rejected protester pleas for the United Nations to intervene, with Panitan saying “we can deal with this situation ourselves.” The government extended an emergency decree to five provinces in the poor northeast, where many in the protest area reside. Twenty-two of the country’s 76 provinces are now in a state of emergency. A plan to impose a curfew in parts of Bangkok was withdrawn because security forces can still control the situation, said Aksara Kerdpol, the army’s assistant chief of staff. The city’s 435 schools will close, Education Minister Chinnaworn Boonyakiat said. Thailand’s stock exchange will open tomorrow and has prepared a backup computer system to facilitate trading, President Patareeya Benjapolchai said by phone. “If political unrest persists, foreign investors may continue selling, reducing their risk,” she said. Thailand’s SET Index has risen 4.7 percent this year, compared with a 0.4 percent decline for the MSCI Asia-Pacific Index , as investors speculated the violence will have little long-term effect on the country’s economy. Thai stocks are the third-cheapest in Asia after South Korea and Pakistan, according to data compiled by Bloomberg. Snipers, Burning Tires Thick black smoke rose from several locations amid the capital’s high-rise buildings today. One fire burned near a minimart affiliated with U.K.-based retailer Tesco Plc after demonstrators torched a barricade, Channel 7 reported. Army snipers fired rifles in one part of the city, video from CNN showed. Soldiers shot at a group of protesters, one armed with a slingshot, as they huddled behind a stack of tires, according to Nick Nostitz, a photographer on the scene. “We were met with armed men hiding among the ranks of the protesters, making it inevitable for injuries and deaths,” army spokesman Sansern said yesterday. Protesters fired M-79 grenades and guns at soldiers, who returned fire and detained 40 armed combatants, he said. ‘Return to Dialogue’ United Nations Secretary-General Ban Ki-moon yesterday urged Thailand’s government and protesters to “urgently return to dialogue” to find a peaceful resolution. Thailand’s foreign ministry has regularly updated the UN and other organizations, spokesman Thani Thongphakdi said by phone. Fugitive former Thai leader Thaksin Shinawatra , whom many of the red-shirted protesters support, called on Abhisit to restart talks. The government blames Thaksin for scuttling peace efforts last week. Thai protesters may ask head of state King Bhumibol Adulyadej for help to reduce losses, INN News agency reported, citing demonstration leader Jatuporn Prompan . Trash littered parts of the protest zone near the Four Seasons Hotel and elevated train line where many demonstrators from poor rural areas have set up makeshift shelters. Food supplies are running low, Petcharin Udompad, who heads the main kitchen, said by phone. Food, Water Shortages “We’re facing food and water shortages as people can’t get in to bring us fresh supplies,” she said. “It may last until this evening. We had some people going out to get food and water but they got shot.” The 5,000 demonstrators remaining at the protest site today are mostly rural people who camp there permanently, government spokesman Panitan said. Bangkok residents who normally join the demonstration at night have tried to set up stages in other parts of the city without much success, he said. Black-shirted guards walked around the protest site with fireworks and slingshots behind barricades of rubber tires, bamboo and razor wire. A charred-out bus blocked one part of a road next to Lumpini Park, the site of many blasts. The death toll from clashes over the past three days rose to 29, according to the Bangkok Emergency Medical Service. A further 221 people were injured, it said. One other protester died on May 12. Abhisit withdrew an offer to hold a Nov. 14 election when protesters failed to disperse by a May 12 deadline. The group attached new conditions to his offer, including criminal charges against Deputy Prime Minister Suthep Thaugsuban . Pro-Thaksin parties have won the past four elections on a platform of improved health care and cheap loans. Abhisit took power in a December 2008 parliamentary vote after a court disbanded the pro-Thaksin ruling party for election fraud in the first nationwide vote since he was ousted in a 2006 coup. To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net

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Thai Street Battles Kill 25; Premier Declares Curfew, Vows to End Protests

May 16, 2010

By Daniel Ten Kate and Supunnabul Suwannakij May 16 (Bloomberg) — Battles between Thai troops and protesters escalated in downtown Bangkok as Prime Minister Abhisit Vejjajiva declared a curfew after vowing to disperse his opponents from the city’s business district. At least 25 people have been killed and more than 187 injured since the army moved to seal off an area as large as New York’s Central Park four days ago. Explosions and gunfire rang out at the protest site as the military declared two “live-fire zones” in which “terrorists” could be shot on sight. “We cannot retreat,” Abhisit said in a nationally televised address last night. “The best way to stop the loss of lives is to end the protest.” Thai authorities are seeking to choke off food and water to end an occupation of the city center that has spurred the country’s worst political violence in 18 years, claiming at least 54 lives. Demonstrators failed to disperse after Abhisit offered to cut his term short, prompting the military action. “Please stay,” protest leader Weng Tojirakarn told supporters from the main stage today. “If there are fewer people, that will be a chance for us to be dispersed.” Civil society groups plan to enter the main protest site to escort women, children and other unarmed people from the area, army spokesman Sansern Kaewkamnerd told reporters. The government will provide them housing, food, water and transportation, spokesman Panitan Wattanayagorn said by phone. “It will be very clear to the rest of the country that the people remaining in the area are determined to stay,” he said. Schools to Close The city’s 435 schools will close, Education Minister Chinnaworn Boonyakiat said. Thailand’s stock exchange will open tomorrow and has prepared a backup computer system to facilitate trading, President Patareeya Benjapolchai said by phone. “If political unrest persists, foreign investors may continue selling, reducing their risk,” she said. Thailand’s SET Index has risen 4.7 percent this year, compared with a 0.4 percent decline for the MSCI Asia-Pacific Index , as investors speculated the violence will have little long-term effect on the country’s economy. Thai stocks are the third-cheapest in Asia after South Korea and Pakistan, according to data compiled by Bloomberg. Thick black smoke rose from several locations amid the capital’s high-rise buildings today. One fire burned near a minimart affiliated with U.K.-based retailer Tesco Plc after demonstrators torched a barricade, Channel 7 reported. Army snipers fired rifles in one part of the city, video from CNN showed. Soldiers shot at a group of protesters, one armed with a slingshot, as they huddled behind a stack of tires, according to Nick Nostitz, a photographer on the scene. Protesters, Soldiers “We were met with armed men hiding among the ranks of the protesters, making it inevitable for injuries and deaths,” army spokesman Sansern said yesterday. Protesters fired M-79 grenades and guns at soldiers, who returned fire and detained 40 armed combatants, he said. United Nations Secretary-General Ban Ki-moon yesterday urged Thailand’s government and protesters to “urgently return to dialogue” to find a peaceful resolution. Thailand’s foreign ministry has regularly updated the U.N. and other organizations, spokesman Thani Thongphakdi said by phone. Fugitive former Thai leader Thaksin Shinawatra , whom many of the red-shirted protesters support, called on Abhisit to restart talks. The government blames Thaksin for scuttling peace efforts last week. Thai protesters may ask head of state King Bhumibol Adulyadej for help to reduce losses, INN News agency reported, citing demonstration leader Jatuporn Prompan . Protest Zone Trash littered parts of the protest zone near the Four Seasons Hotel and elevated train line where many demonstrators from poor rural areas have set up makeshift shelters. Food supplies are running low, Petcharin Udompad, who heads the main kitchen, said by phone. “We’re facing food and water shortages as people can’t get in to bring us fresh supplies,” she said. “It may last until this evening. We had some people going out to get food and water but they got shot.” The 5,000 demonstrators remaining at the protest site today are mostly rural people who camp there permanently, government spokesman Panitan said. Bangkok residents who normally join the demonstration at night have tried to set up stages in other parts of the city without much success, he said. Black-shirted guards walked around the protest site with fireworks and slingshots behind barricades of rubber tires, bamboo and razor wire. A charred-out bus blocked one part of a road next to Lumpini Park, the site of many blasts. Death Toll The death toll from clashes over the past three days rose to 24 as of 8 a.m., according to a statement on the website of Bangkok’s Emergency Medical Service. Another 200 people were injured, it said. One other protester died on May 12. Abhisit withdrew an offer to hold a Nov. 14 election when protesters failed to disperse by a May 12 deadline. The group attached new conditions to his offer, including criminal charges against Deputy Prime Minister Suthep Thaugsuban . Pro-Thaksin parties have won the past four elections on a platform of improved health care and cheap loans. Abhisit took power in a December 2008 parliamentary vote after a court disbanded the pro-Thaksin ruling party for election fraud in the first nationwide vote since he was ousted in a 2006 coup. To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net

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Thai Battles Intensify as Abhisit Vows to Disperse Protesters; 24 Killed

May 15, 2010

By Daniel Ten Kate and Supunnabul Suwannakij May 15 (Bloomberg) — Battles between Thai troops and protesters escalated in a third day of violence in downtown Bangkok as Prime Minister Abhisit Vejjajiva vowed to disperse his opponents from the city’s business district. At least 23 people have been killed and more than 170 injured since the military moved to seal off a business district as large as New York’s Central Park three days ago. Loud explosions and gunfire rang out throughout the protest site and black smoke rose above high-rise buildings. “We cannot retreat,” Abhisit said in a nationally televised address, the first since the clashes began. “The best way to stop the loss of lives is to end the protest.” Thai authorities are seeking to choke off food and water to end an occupation of the city center that has spurred the country’s worst political violence in 18 years, claiming at least 52 lives. Demonstrators failed to disperse after Abhisit offered to cut his term short, prompting the military action. “Bangkok has become a war zone,” Nattawut Saikuar, one of about two-dozen protest leaders, said today. “Withdraw troops first and then we will start talking.” Several dead bodies were lying on a sidewalk in one of six flashpoints in central Bangkok, pictures showed . The government declared two “live bullet zones” where soldiers can shoot anyone they suspect of creating violence. “We were met with armed men hiding among the ranks of the protesters, making it inevitable for injuries and deaths,” army spokesman Sansern Kaewkamnerd told reporters. Protesters fired M-79 grenades and guns at soldiers, who returned fire and detained 40 armed combatants, he said. Homemade Rockets Protesters ducked bullets as they set vehicles ablaze and launched homemade rockets to defend the area, television footage showed. Thousands of protesters began gathering in areas outside the main protest site to confront soldiers, reports said. United Nations Secretary-General Ban Ki-moon today urged Thailand’s government and protesters to “urgently return to dialogue” to find a peaceful resolution. Former Thai leader Thaksin Shinawatra , whom many of the red-shirted protesters support, called on Abhisit to restart talks. The movement’s chiefs are divided “about 50-50” on whether to continue the demonstrations, leader Kokaew Pikulthong said in an interview yesterday. About 6,000 demonstrators remain at the protest site, government spokesman Panitan Wattanayagorn said today. Middle- aged women and children listened to speeches around the main protest stage near luxury malls and high-rise buildings that are home to offices of companies such as Ogilvy & Mather and New York-based Philip Morris International Inc . “We’ll hide in the malls to save ourselves,” protest leader Kwanchai Sarakam said today. “You’ll have to build them again.” ‘Will Stay to the End’ Thailand’s SET Index has risen 4.7 percent this year, compared with a 0.4 percent decline for the MSCI Asia-Pacific Index , as investors speculated the violence will have little long-term effect on the country’s economy. Thai stocks trade at 11 times estimated 2010 earnings, the third-cheapest in Asia after South Korea and Pakistan, according to data compiled by Bloomberg. Black-shirted guards walked around the protest site with fireworks and slingshots behind barricades of rubber tires, bamboo and razor wire. A charred-out bus blocked one part of a road next to Lumpini Park, the site of many blasts. “We are just rural people who think the country’s political system is not fair,” said Pong Kalong, sitting next to a group from a village in northeast Thailand. “I am scared but I will stay to the end.” Journalists Injured Nelson Rand, a correspondent with France 24 television network, was shot yesterday next to Lumpini Park, images on CNN showed . Elsewhere, protesters tending to wounded victims ran away as gunshots rang out, the footage showed. The government is “ready and willing to defend its operations in a court of law,” spokesman Panitan said. Abhisit withdrew an offer to hold a Nov. 14 election when protesters failed to disperse by a May 12 deadline. The group attached new conditions to his offer, including criminal charges against Deputy Prime Minister Suthep Thaugsuban . Pro-Thaksin parties have won the past four elections on a platform of improved health care and cheap loans. Abhisit took power in a December 2008 parliamentary vote after a court disbanded the pro-Thaksin ruling party for election fraud in the first ballot since he was ousted in a 2006 coup. To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net

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Greece May Take Legal Steps Against U.S. Banks for Crisis, Papandreou Says

May 15, 2010

By Timothy R. Homan May 15 (Bloomberg) — Greece is considering taking legal action against U.S. investment banks that might have contributed to the country’s debt crisis, Prime Minister George Papandreou said. “I wouldn’t rule out that this may be a recourse,” Papandreou said, in response to questions about the role of U.S. banks in the crisis, in an interview on CNN’s “Fareed Zakaria GPS.” The program is scheduled to air tomorrow and was taped on May 13. U.S. stocks fell and the euro slumped on concern that Europe wouldn’t be able to contain the debt crisis stemming from Greece. The Standard & Poor’s 500 Index declined 1.9 percent yesterday, while the euro fell below $1.24 for the first time since November 2008. Papandreou said the decision on whether to go after U.S. banks will be made after a Greek parliamentary investigation into the cause of the crisis. “Greece will look into the past and see how things went,” Papandreou said. “There are similar investigations going on in other countries and in the United States. This is where I think, yes, the financial sector, I hear the words fraud and lack of transparency. So yes, yes, there is great responsibility here.” To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Greece May Take Legal Steps Against U.S. Banks for Crisis, Papandreou Says

May 15, 2010

By Timothy R. Homan May 15 (Bloomberg) — Greece is considering taking legal action against U.S. investment banks that might have contributed to the country’s debt crisis, Prime Minister George Papandreou said. “I wouldn’t rule out that this may be a recourse,” Papandreou said, in response to questions about the role of U.S. banks in the crisis, in an interview on CNN’s “Fareed Zakaria GPS.” The program is scheduled to air tomorrow and was taped on May 13. U.S. stocks fell and the euro slumped on concern that Europe wouldn’t be able to contain the debt crisis stemming from Greece. The Standard & Poor’s 500 Index declined 1.9 percent yesterday, while the euro fell below $1.24 for the first time since November 2008. Papandreou said the decision on whether to go after U.S. banks will be made after a Greek parliamentary investigation into the cause of the crisis. “Greece will look into the past and see how things went,” Papandreou said. “There are similar investigations going on in other countries and in the United States. This is where I think, yes, the financial sector, I hear the words fraud and lack of transparency. So yes, yes, there is great responsibility here.” To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Thai Battles Intensify as Abhisit Vows to Disperse Protesters; 23 Killed

May 15, 2010

By Daniel Ten Kate and Supunnabul Suwannakij May 15 (Bloomberg) — Battles between Thai troops and protesters escalated in a third day of violence in downtown Bangkok as Prime Minister Abhisit Vejjajiva vowed to disperse his opponents from the city’s business district. At least 23 people have been killed and more than 170 injured since the military moved to seal off a business district as large as New York’s Central Park three days ago. Loud explosions and gunfire rang out throughout the protest site and black smoke rose above high-rise buildings. “We cannot retreat,” Abhisit said in a nationally televised address, the first since the clashes began. “The best way to stop the loss of lives is to end the protest.” Thai authorities are seeking to choke off food and water to end an occupation of the city center that has spurred the country’s worst political violence in 18 years, claiming at least 52 lives. Demonstrators failed to disperse after Abhisit offered to cut his term short, prompting the military action. “Bangkok has become a war zone,” Nattawut Saikuar, one of about two-dozen protest leaders, said today. “Withdraw troops first and then we will start talking.” Several dead bodies were lying on a sidewalk in one of six flashpoints in central Bangkok, pictures showed . The government declared two “live bullet zones” where soldiers can shoot anyone they suspect of creating violence. “We were met with armed men hiding among the ranks of the protesters, making it inevitable for injuries and deaths,” army spokesman Sansern Kaewkamnerd told reporters. Protesters fired M-79 grenades and guns at soldiers, who returned fire and detained 40 armed combatants, he said. Homemade Rockets Protesters ducked bullets as they set vehicles ablaze and launched homemade rockets to defend the area, television footage showed. Thousands of protesters began gathering in areas outside the main protest site to confront soldiers, reports said. United Nations Secretary-General Ban Ki-moon today urged Thailand’s government and protesters to “urgently return to dialogue” to find a peaceful resolution. Former Thai leader Thaksin Shinawatra , whom many of the red-shirted protesters support, called on Abhisit to restart talks. The movement’s chiefs are divided “about 50-50” on whether to continue the demonstrations, leader Kokaew Pikulthong said in an interview yesterday. About 6,000 demonstrators remain at the protest site, government spokesman Panitan Wattanayagorn said today. Middle- aged women and children listened to speeches around the main protest stage near luxury malls and high-rise buildings that are home to offices of companies such as Ogilvy & Mather and New York-based Philip Morris International Inc . “We’ll hide in the malls to save ourselves,” protest leader Kwanchai Sarakam said today. “You’ll have to build them again.” ‘Will Stay to the End’ Thailand’s SET Index has risen 4.7 percent this year, compared with a 0.4 percent decline for the MSCI Asia-Pacific Index , as investors speculated the violence will have little long-term effect on the country’s economy. Thai stocks trade at 11 times estimated 2010 earnings, the third-cheapest in Asia after South Korea and Pakistan, according to data compiled by Bloomberg. Black-shirted guards walked around the protest site with fireworks and slingshots behind barricades of rubber tires, bamboo and razor wire. A charred-out bus blocked one part of a road next to Lumpini Park, the site of many blasts. “We are just rural people who think the country’s political system is not fair,” said Pong Kalong, sitting next to a group from a village in northeast Thailand. “I am scared but I will stay to the end.” Journalists Injured Nelson Rand, a correspondent with France 24 television network, was shot yesterday next to Lumpini Park, images on CNN showed . Elsewhere, protesters tending to wounded victims ran away as gunshots rang out, the footage showed. The government is “ready and willing to defend its operations in a court of law,” spokesman Panitan said. Abhisit withdrew an offer to hold a Nov. 14 election when protesters failed to disperse by a May 12 deadline. The group attached new conditions to his offer, including criminal charges against Deputy Prime Minister Suthep Thaugsuban . Pro-Thaksin parties have won the past four elections on a platform of improved health care and cheap loans. Abhisit took power in a December 2008 parliamentary vote after a court disbanded the pro-Thaksin ruling party for election fraud in the first ballot since he was ousted in a 2006 coup. To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net

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American Citizen From Pakistan Faces Charges Over Times Square Bomb Plot

May 4, 2010

By Henry Goldman and Mark Tannenbaum May 4 (Bloomberg) — A U.S. citizen of Pakistani origins is due in a New York court today to face charges over the attempted car bombing in Times Square on May 1. Faisal Shahzad will appear in Manhattan federal court on “formal charges,” the U.S. attorney’s office for the southern district of New York said in an e-mailed statement, without being more specific. Agents from the Department of Homeland Security arrested Shahzad at New York’s John F. Kennedy International Airport last night as he was attempting to board a flight to Dubai, U.S. Attorney General Eric Holder said at an early morning news conference in Washington. The announcement came less than three days after a botched bombing attempt that led police to evacuate parts of Times Square. “This investigation is ongoing, as are our attempts to gather useful intelligence, and we continue to pursue a number of leads,” Holder said. “But it’s clear that the intent behind this terrorist act was to kill Americans.” Shahzad had recently returned from a five-month trip to Pakistan, where he had a wife, the Associated Press reported citing unidentified law enforcement officials. Pakistan’s Dawn television reported today that the suspect had family links in the port city of Karachi, and visited it last year. Homeland Security Secretary Janet Napolitano , in an interview on NBC TV, said it’s “premature to rule in or out” links to international terrorism. Investigators have no evidence that Pakistani Taliban sympathizers were responsible for the attempt, although a group describing itself as such took credit for it, Police Commissioner Raymond Kelly said. Passengers Removed Dubai-based Emirates Airlines said in an e-mailed statement today that U.S. authorities removed three passengers from a New York to Dubai flight last night and carried out “full security procedures” including the screening of the plane, passengers and baggage. Agents from the Federal Bureau of Investigation and New York City police detectives arrested Shahzad for “allegedly driving a car bomb into Times Square on the evening of May 1,” the Department of Justice said in a statement today. The 1993 Nissan Pathfinder was sold for cash about three weeks ago at a Connecticut shopping mall in a sale arranged through the Craigslist website, CNN reported, citing an unidentified person in law enforcement with knowledge of the investigation. Investigators interviewed the former owner of the bomb- carrying sport-utility vehicle, New York City Mayor Michael Bloomberg said. The person was tracked through the car’s vehicle identification number, which was stripped from the dashboard, Police Commissioner Raymond Kelly said. The number is also typically stamped on parts such as the engine block. ‘Intended to Terrorize’ The attempted bombing “was intended to terrorize,” Robert Gibbs , the White House press secretary, said yesterday. Gibbs said today that President Barack Obama was notified about Shahzad’s arrest at around midnight. The intended detonator, Kelly said, was a can filled with consumer-grade fireworks. The car also held two containers of gasoline and three propane tanks, wired with two clocks, the commissioner said. A man described as about 40 years old was seen on a neighborhood surveillance camera as he hurried through Shubert Alley , a pedestrian walkway between West 44th and West 45th Streets, steps from where the explosive-laden car was parked on May 1, he said. The man can be seen on the video removing a dark shirt, revealing a red T-shirt underneath, Kelly said. He placed the outer shirt in a bag and walked from the scene “in a furtive manner,” the commissioner said. Safe as Ever Police also collected images of the vehicle as it traveled along West 45th Street before being left at a curb near several Broadway theaters, the mayor said. “This city is as safe as it’s ever been,” Bloomberg said. “Is it perfectly safe? No, but we always will have events, we’ve had 11 or so in the last eight years, and every time we have responded appropriately. We keep changing our procedures, we keep studying what happens overseas, and we so far have done the right thing.” The police presence has been increased in the Times Square area. Bloomberg urged tourists and New Yorkers to continue visiting the area and “enjoy a Broadway show.” The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP. To contact the reporters on this story: Henry Goldman in New York City Hall at hgoldman@bloomberg.net ; Mark Tannenbaum at mtannen@bloomberg.net .

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American Citizen From Pakistan Faces Charges Over Times Square Bomb Plot

May 4, 2010

By Henry Goldman and Mark Tannenbaum May 4 (Bloomberg) — A U.S. citizen of Pakistani origins is due in a New York court today to face charges over the attempted car bombing in Times Square on May 1. Faisal Shahzad will appear in Manhattan federal court on “formal charges,” the U.S. attorney’s office for the southern district of New York said in an e-mailed statement, without being more specific. Agents from the Department of Homeland Security arrested Shahzad at New York’s John F. Kennedy International Airport last night as he was attempting to board a flight to Dubai, U.S. Attorney General Eric Holder said at an early morning news conference in Washington. The announcement came less than three days after a botched bombing attempt that led police to evacuate parts of Times Square. “This investigation is ongoing, as are our attempts to gather useful intelligence, and we continue to pursue a number of leads,” Holder said. “But it’s clear that the intent behind this terrorist act was to kill Americans.” Shahzad had recently returned from a five-month trip to Pakistan, where he had a wife, the Associated Press reported citing unidentified law enforcement officials. Pakistan’s Dawn television reported today that the suspect had family links in the port city of Karachi, and visited it last year. Homeland Security Secretary Janet Napolitano , in an interview on NBC TV, said it’s “premature to rule in or out” links to international terrorism. Investigators have no evidence that Pakistani Taliban sympathizers were responsible for the attempt, although a group describing itself as such took credit for it, Police Commissioner Raymond Kelly said. Passengers Removed Dubai-based Emirates Airlines said in an e-mailed statement today that U.S. authorities removed three passengers from a New York to Dubai flight last night and carried out “full security procedures” including the screening of the plane, passengers and baggage. Agents from the Federal Bureau of Investigation and New York City police detectives arrested Shahzad for “allegedly driving a car bomb into Times Square on the evening of May 1,” the Department of Justice said in a statement today. The 1993 Nissan Pathfinder was sold for cash about three weeks ago at a Connecticut shopping mall in a sale arranged through the Craigslist website, CNN reported, citing an unidentified person in law enforcement with knowledge of the investigation. Investigators interviewed the former owner of the bomb- carrying sport-utility vehicle, New York City Mayor Michael Bloomberg said. The person was tracked through the car’s vehicle identification number, which was stripped from the dashboard, Police Commissioner Raymond Kelly said. The number is also typically stamped on parts such as the engine block. ‘Intended to Terrorize’ The attempted bombing “was intended to terrorize,” Robert Gibbs , the White House press secretary, said yesterday. Gibbs said today that President Barack Obama was notified about Shahzad’s arrest at around midnight. The intended detonator, Kelly said, was a can filled with consumer-grade fireworks. The car also held two containers of gasoline and three propane tanks, wired with two clocks, the commissioner said. A man described as about 40 years old was seen on a neighborhood surveillance camera as he hurried through Shubert Alley , a pedestrian walkway between West 44th and West 45th Streets, steps from where the explosive-laden car was parked on May 1, he said. The man can be seen on the video removing a dark shirt, revealing a red T-shirt underneath, Kelly said. He placed the outer shirt in a bag and walked from the scene “in a furtive manner,” the commissioner said. Safe as Ever Police also collected images of the vehicle as it traveled along West 45th Street before being left at a curb near several Broadway theaters, the mayor said. “This city is as safe as it’s ever been,” Bloomberg said. “Is it perfectly safe? No, but we always will have events, we’ve had 11 or so in the last eight years, and every time we have responded appropriately. We keep changing our procedures, we keep studying what happens overseas, and we so far have done the right thing.” The police presence has been increased in the Times Square area. Bloomberg urged tourists and New Yorkers to continue visiting the area and “enjoy a Broadway show.” The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP. To contact the reporters on this story: Henry Goldman in New York City Hall at hgoldman@bloomberg.net ; Mark Tannenbaum at mtannen@bloomberg.net .

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U.S. Citizen of Pakistani Origin Arrested in Times Square Bomb Plot Probe

May 4, 2010

By Henry Goldman and Mark Tannenbaum May 4 (Bloomberg) — U.S. law enforcement authorities said they arrested a naturalized American citizen from Pakistan in connection with the attempted car bombing in Times Square this past weekend. Agents from the Department of Homeland Security arrested Faisal Shahzad at New York’s John F. Kennedy International Airport as he was attempting to board a flight to Dubai, U.S. Attorney General Eric Holder said at an early morning news conference in Washington. The announcement came less than three days after a botched bombing attempt that led police to evacuate parts of Times Square. “This investigation is ongoing, as are our attempts to gather useful intelligence, and we continue to pursue a number of leads,” Holder said. “But it’s clear that the intent behind this terrorist act was to kill Americans.” Agents from the Federal Bureau of Investigation and New York City police detectives arrested Shahzad for “allegedly driving a car bomb into Times Square on the evening of May 1,” the Department of Justice said in a statement early today. The 1993 Nissan Pathfinder was sold for cash about three weeks ago at a Connecticut shopping mall in a sale arranged through the Craigslist website, CNN reported, citing an unidentified person in law enforcement with knowledge of the investigation. Vehicle ID Investigators interviewed the former owner of the bomb- carrying sport-utility vehicle, New York City Mayor Michael Bloomberg said. The person was tracked through the car’s vehicle identification number, which was stripped from the dashboard, Police Commissioner Raymond Kelly said. The number is also typically stamped on parts such as the engine block. The attempted bombing “was intended to terrorize, and I would say that whomever did that would be categorized as a terrorist,” Robert Gibbs , the White House press secretary said yesterday. The intended detonator, Kelly said, was a can filled with consumer-grade fireworks. The car also held two containers of gasoline and three propane tanks, wired with two clocks, the commissioner said. A man described as about 40 years old was seen on a neighborhood surveillance camera as he hurried through Shubert Alley , a pedestrian walkway between West 44th and West 45th Streets, steps from where the explosive-laden car was parked May 1, he said. ‘Furtive Manner’ The man can be seen on the video removing a dark shirt, revealing a red T-shirt underneath, Kelly said. He placed the outer shirt in a bag and walked from the scene “in a furtive manner,” the commissioner said. Police also collected images of the vehicle as it traveled along West 45th Street before being left at a curb near several Broadway theaters, the mayor said. Investigators have “no evidence” that a group of Pakistani Taliban sympathizers were responsible for the attempt, although a self-described group took credit for it, Kelly said. He noted authorities have ruled out the group’s involvement in other attempted and successful attacks around the world after receiving similar messages in the past. Homeland Security Secretary Janet Napolitano , in an interview on NBC TV, said it’s “premature to rule in or out” that the bombing attempt is linked to international terrorism. “This city is as safe as it’s ever been,” Bloomberg said. “Is it perfectly safe? No, but we always will have events, we’ve had 11 or so in the last eight years, and every time we have responded appropriately. We keep changing our procedures, we keep studying what happens overseas, and we so far have done the right thing. And you can never guarantee 100 percent.” The police presence has been increased in the Times Square area. Bloomberg urged tourists and New Yorkers to continue visiting the area and “enjoy a Broadway show.” The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP. To contact the reporters on this story: Henry Goldman in New York City Hall at hgoldman@bloomberg.net ; Mark Tannenbaum at mtannen@bloomberg.net .

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Thai Soldier’s Death in Clash With Protesters Raises Tensions in Bangkok

April 28, 2010

By Daniel Ten Kate and Supunnabul Suwannakij April 29 (Bloomberg) — Thai security forces stopped anti- government protesters from rallying north of the capital in clashes that killed one soldier, raising tensions in a seven- week standoff that has paralyzed Bangkok’s commercial center. One soldier was shot dead and another injured in the skirmish, police official Worapong Chiewprecha said in a televised briefing last night. Seventeen protesters were also wounded after authorities opened fire to prevent a convoy of about 5,000 people from traveling to a fresh-food market north of Bangkok, he said. The incident may add pressure on Prime Minister Abhisit Vejjajiva to scatter demonstrators who have disrupted businesses and irked residents by occupying a business district since April 3. The country’s worst political violence in 18 years has now killed 27 people this month. “The situation has been aggravated to the point where the government has to do something, either disperse them or negotiate,” said Somjai Phagaphasvivat , a lecturer at Bangkok’s Thammasat University. “The protesters are on the defensive and they know the cost of resistance is getting higher every day.” Thailand’s SET index fell 1.6 percent as overseas investors posted their biggest net selling in five months, making it Asia’s second-worst performer in April after the benchmark in Shanghai. Thai stocks have risen 2 percent for the year compared with a 4.1 percent gain for the MSCI Asia Pacific Index . Bag of Grenades Security forces arrested 14 protesters and found a bag with 62 M-79 grenades left by another demonstrator who escaped, Anon Jarayapan, an air force commander, said in a televised broadcast. The clash showed the government’s aim “to control any law-breaking,” spokesman Panitan Wattanayagorn told reporters. A grenade attack last week on an elevated train line station next to the protest site left one person dead, and 25 died in an army crackdown on April 10. The government and protesters blame each other for the casualties. Soldiers carrying rifles were stationed yesterday on Silom and Sukhumvit roads, Bangkok business arteries that connect with the cordoned-off protest site. Water cannon trucks and riot police are also positioned in the area. Protest leader Nattawut Saikuar said fellow troops shot the soldier who died yesterday, citing reports from CNN and BBC. Three demonstrators were wounded with real bullets, he said. Live Rounds The army is investigating the cause of the soldier’s death, spokesman Sansern Kaewkamnerd told reporters. Troops used fake bullets and live rounds, he said. “Soldiers and policemen have flesh and blood,” he said. “When protesters use weapons against them, they have to protect themselves.” The protesters mostly back fugitive ex-leader Thaksin Shinawatra , who was ousted in a 2006 coup. They say Abhisit’s rule is illegitimate because his party finished second in the last election and took power in a parliamentary vote after a court disbanded the ruling pro-Thaksin party for election fraud. The demonstrators, concerned about a military offensive after yesterday’s clashes, poured gasoline over one of the barricades of bamboo sticks and tires erected around their protest site, an area roughly the size of New York’s Central Park. Protesters manning the makeshift walls aimed slingshots at people taking photographs. Abhisit has asserted the right to complete his term, which expires at the end of next year. He has called for political talks that include all parties and said the government will fight “terrorists” who hide among the demonstrators. Thaksin has seen parties linked to him win the past four elections on heavy support from rural northern areas. Abhisit’s Democrat party hasn’t won a nationwide vote since 1992. To contact the reporters on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net

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George Voinovich May SUPPORT Wall Street Reform Vote

April 27, 2010

Sen. George Voinovich may switch his vote and help Democrats advance their Wall Street reform bill tomorrow, the Ohio Republican told CNN on Tuesday . The American people “want us to get something done,” Sen. George Voinovich, R-Ohio, said in explaining why he would eventually join Democrats in insisting that the bill be debated on the floor. Voinovich, who is not seeking re-election in November, would not say exactly how long he would wait before switching his vote but said, “I have an idea of how much time it takes to cut a deal.” He also said he expects “a whole bunch” of other Republicans to make the same decision. As the HuffPost Hill newsletter reported on Tuesday (click HERE to subscribe), another Senate vote on bank reform is expected tomorrow, possibly as early as 10AM ET. Sen. Bob Corker (R-Tenn.) was unusually pessimistic about a bipartisan deal after Tuesday’s vote. “I’m basically pretty skeptical there’s going to be a bipartisan deal,” he said. “It feels to me like the goal posts continue to move. … I’m fairly skeptical that progress is being made.” Click here for more updates from Tuesday, including the Republicans’ alternative financial reform proposal.

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Treasury May Begin Selling Citigroup Shares Today

April 26, 2010

By Rebecca Christie and Bradley Keoun April 26 (Bloomberg) — The U.S. Treasury Department may start selling its 7.7 billion Citigroup Inc. shares as soon as today, in the biggest step since December to wean the bailed-out bank off government support. The Treasury has initially granted underwriter Morgan Stanley authorization to sell 1.5 billion of the shares, New York-based Citigroup said today in a registration statement filed with securities regulators. The filing allows Treasury to begin selling immediately, said two people with knowledge of the matter, who declined to be identified because they weren’t authorized to comment beyond the public statements. Citigroup had to get a $45 billion bailout in late 2008 when it almost collapsed. Chief Executive Vikram Pandit has taken steps to end the bank’s use of government support, while President Barack Obama says he wants to recoup “every single dime” of taxpayer money from the $700 billion Troubled Asset Relief Program used to provide bailout funds. “We’re putting TARP out of its misery,” Treasury Secretary Timothy F. Geithner said in an interview with CNN television aired yesterday. “This is going to cost us much less in fiscal terms than even the S&L crisis,” he said, referring to the collapse of savings and loan banks in the 1980s and 1990s. The bank’s shares fell 25 cents, or 5.1 percent, to $4.61 as of 4 p.m. in New York Stock Exchange composite trading . Based on that price, the Treasury’s overall stake has a value of about $36 billion, for a paper profit of $11 billion. The government got the shares by converting $25 billion of bailout money into common stock at $3.25 each. Pre-Arranged Plan The Treasury will sell its common shares in the market “in an orderly fashion under a pre-arranged written trading plan,” the department said in a statement . The government devised the plan earlier this year to help insulate officials from politically driven claims they mistimed the market and got too little profit from the sales, people familiar with the matter said at the time. Citigroup spokesman Stephen Cohen declined to comment. The Treasury stake is the government’s biggest remaining investment in Citigroup, after the bank repaid $20 billion of the bailout funds in December. The government still owns about $5 billion of Citigroup’s trust preferred securities, a class of junior debt. The Treasury didn’t release further details about the timing of the sale of common shares. Morgan Stanley According to the filing, Citigroup must pay Morgan Stanley’s fees for underwriting the Treasury’s offering. Morgan Stanley was chosen in March after the government interviewed several investment banks, including Citigroup. Morgan Stanley, the sixth-largest U.S. bank by assets, will get 0.3 cents for each share sold on electronic trading systems and 1.75 cents for shares sold through other means, according to the filing. That works out to total fees of $23 million to $135 million. The New York-based firm will also get a one-time administration fee of $500,000. The Citigroup shares will be sold gradually over the course of 2010, the agency said March 29 in a statement. Citigroup will provide quarterly updates on the number of shares sold by the Treasury through Morgan Stanley, and the amount of fees paid by the bank to Morgan Stanley, according to the filing. Because of the “doctrine of sovereign immunity,” the Treasury is immune from claims under securities-law violations that apply to most other traders and investors, according to the filing. Pandit’s View Pandit said on April 20 at the bank’s annual shareholder meeting that he felt “a whole lot better” than he did a year ago and maintained that the bank is “positioned for growth.” The Treasury’s trust preferred securities in Citigroup, and warrants to buy additional common shares, will be sold separately, the department said. Citigroup’s associate general counsel, Michael Tarpley, is the bank’s main legal adviser on the Treasury sale, according to the filing. The law firm Simpson Thacher & Bartlett LLP is advising Treasury, while Cleary Gottlieb Steen & Hamilton LLP and Davis Polk & Wardwell LLP are advising Morgan Stanley. To contact the reporter on this story: Rebecca Christie in Washington at rchristie4@bloomberg.net ; Bradley Keoun in New York at bkeoun@bloomberg.net .

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Senators Seek to Salvage Climate-Change Measure in Feud Over Immigration

April 26, 2010

By Kim Chipman April 26 (Bloomberg) — The fate of climate-change legislation is being weighed at the Capitol today by senators seeking to salvage a proposal aimed at fighting global warming and remaking the U.S. energy economy. The measure sponsored by Senators Lindsey Graham , John Kerry and Joseph Lieberman was to be made public today until Republican Graham pulled out to protest that the Obama administration and Senate Democratic leaders may act first to overhaul immigration laws. The three senators will meet today to discuss how to proceed, according to Lieberman spokesman Marshall Wittmann . “Any and all reports of the demise of energy legislation are greatly exaggerated,” Wittmann said in an e-mailed statement. “Not only is this bill very much alive but the senators are aggressively moving forward to remove any obstacles to getting it passed this year.” The dispute over the climate-change measure’s timing in Congress concerns how many politically divisive issues lawmakers are able or willing to tackle in coming months, as their attention turns increasingly to the November midterm elections. The overhaul of the U.S. health-care system dominated the first year of President Barack Obama ’s administration, and the Senate is now debating financial regulatory legislation. Graham of South Carolina has been working for more than six months with Kerry, a Massachusetts Democrat, and Lieberman, a Connecticut independent, on a compromise bill to cap greenhouse- gas pollution and develop new energy resources. ‘Cynical Ploy’ Senate Democratic leaders and Obama want to put immigration ahead of energy legislation as part of a “cynical ploy” to win votes for Democrats in the November elections, Graham said in an April 24 letter to groups including business leaders and environmentalists. “I deeply regret that election-year politics will impede, if not derail, our efforts to make our nation energy- independent,” Graham said. The senators plan to send their bill to the Environmental Protection Agency today for analysis, according to Wittmann. Senate Majority Leader Harry Reid has said an EPA study will be completed before the measure is brought before the Senate. “Since it will take EPA about five weeks they ought to get started,” said Joseph Romm , a senior fellow at the Center for American Progress, a public-policy group in Washington that advises Democrats. Obama had told his Economic Advisory Board on April 17, “The financial regulatory reform will take several more weeks and then we’ll probably be transitioning next to look at on what can be done on the energy front.” Immigration Overhaul The president pressed anew last week for an overhaul of U.S. immigration policy, and Democratic congressional leaders said that legislation may advance this year if Reid can gain enough support. Calls to revamp federal immigration law grew as Arizona enacted a law last week requiring police to determine the immigration status of anyone an officer suspects is in the country without proper documentation. Inaction in Washington will lead to “misguided” efforts such as the Arizona measure, Obama said April 23. White House economic adviser Lawrence Summers said yesterday that both immigration and climate-change should be acted on, sidestepping the question of which issue Congress should take up next. “They are both important,” Summers said on the CBS program “Face the Nation.” “There is no either-or between energy and immigration reform.” Up to Reid Summers said it’s up to Reid, “for whatever reasons he has,” to set the Senate’s legislative calendar. Reid, a Nevada Democrat facing re-election in November, said immigration and energy legislation are “equally vital” to the nation’s economic and national security and have been “ignored too long.” “Energy could be next if it’s ready,” he said in an April 24 statement. “I have also said we will try to pass comprehensive immigration reform.” The last try at revamping the law to create a guest worker program and provide a path to citizenship for some of those living in the U.S. illegally was in 2007. That was blocked amid opposition from Republicans and some Democrats. Graham, along with Democratic Senator Charles Schumer of New York, has worked to come up with a framework for legislation that can win bipartisan support. Not the ‘Right Time’ Senate Republican Leader Mitch McConnell said Congress shouldn’t try to overhaul immigration laws this year. “I just don’t think this is the right time,” McConnell of Kentucky said yesterday on “ Fox News Sunday .” Senator Saxby Chambliss , a Georgia Republican, said the Senate shouldn’t consider either climate change or immigration legislation. “I’m not sure how we can justify bringing either one of them up right now,” Chambliss said yesterday on CNN’s “State of the Union” program. Instead, the chamber should focus on spending bills, he said. Kerry, Graham and Lieberman had planned to unveil today a scaled-back version of “cap-and-trade” legislation passed by the House last year. The House measure would limit carbon emissions throughout the economy, establishing an emissions- trading market in pollution allowances. Critics such as billionaire investor Warren Buffett said that would amount to a burdensome energy tax on consumers. Utility Carbon-Trading The senators’ compromise would initially provide carbon trading solely for utilities, with manufacturers added later. Oil companies would get free allowances that would expire by a certain date. The measure also would provide for expanded offshore oil and gas drilling and incentives for nuclear power and “clean-coal” technology. Their proposed legislation already had won support from utilities such as Exelon Corp. , and people close to the matter said last week that oil companies including ConocoPhillips were prepared to sign on. The senators’ compromise, which would start taking effect in 2013, would require a 17 percent reduction in U.S. carbon emissions by 2020 and an 80 percent cut by 2050, according to people familiar with the legislation. To contact the reporter on this story: Kim Chipman in Washington at kchipman@bloomberg.net

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Treasury Plans Citigroup Stock Sale in Biggest Step to Exit U.S. Bailout

April 26, 2010

By Rebecca Christie April 26 (Bloomberg) — The U.S. Treasury Department plans to sell “up to” 1.5 billion shares of Citigroup Inc. in the government’s biggest step yet to exit the 27 percent ownership of the bank it rescued during the financial crisis. The Treasury will give its agent, Morgan Stanley , “discretionary authority” to sell the amount, and expects to give clearance to sell additional shares thereafter, the department said in an e-mailed statement today. “Treasury will begin selling its common shares in the market in an orderly fashion under a pre-arranged written trading plan.” The deal is part of a goal announced last month of selling about 7.7 billion shares the government received as part of New York-based Citigroup’s participation in the $700 billion Troubled Asset Relief Program. President Barack Obama is aiming to recoup “every single dime” of taxpayer money from the TARP fund after popular opposition to the Wall Street bailout. “We’re putting TARP out of its misery,” Treasury Secretary Timothy F. Geithner said in an interview with CNN television aired yesterday. “This is going to cost us much less in fiscal terms than even the S&L crisis,” he said, referring to the collapse of savings and loan banks in the 1980s and 1990s. Geithner said the government is withdrawing from the financial industry after forcing lenders to “recapitalize with private money.” SEC Filing Citigroup has filed a prospectus supplement on the sale with the Securities and Exchange Commission, the Treasury said in today’s statement. The department received the shares last year in exchange for $25 billion in preferred stock, at a price of $3.25 per common share. Citigroup closed at $4.86 on the New York Stock Exchange on April 23. Citigroup Chief Executive Officer Vikram Pandit said on April 20 at the bank’s annual shareholder meeting that he felt “a whole lot better” than he did a year ago and maintained that the bank is “positioned for growth.” The 1.5 billion share sale will be done under “certain parameters,” the Treasury said. The offering will be made only by means of a prospectus, and the government required Morgan Stanley to provide “opportunities for participation by small broker-dealers, including minority or women-owned broker dealers,” the statement said. The sale doesn’t cover the Treasury’s holdings of Citigroup trust preferred securities or warrants for its common stock, which will be disposed of separately, the department said. The Treasury said copies of the prospectus supplement and accompanying prospectus relating to the offering may be obtained by emailing prospectus@morganstanley.com , by calling toll-free in the United States 1-866-718-1649 and from the following address: Morgan Stanley & Co. Incorporated, Attn: Prospectus Department, 180 Varick Street, New York, NY 10014. Small and minority-owned dealers interested in participating in the offering may contact Morgan Stanley at ustdisposition@morganstanley.com by 5:00 p.m. New York time on April 27 for further information, the Treasury said. To contact the reporter on this story: Rebecca Christie in Washington at rchristie4@bloomberg.net

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How To Fix CNN

April 1, 2010

The future of CNN, never exactly bright the past couple of years, suddenly looked dire this week when ratings came out showing a 40 percent decline in prime time viewers since 2009. … So is it time for a radical re-thinking of “the most trusted name in news,” the network of Larry King, Anderson Cooper, Campbell Brown and Wolf Blitzer? We asked a dozen or so prominent media watchers, former industry executives and CNN personalities for their recommendations.

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China to Join UN Talks on Tougher Sanctions to Constrain Iran, Rice Says

April 1, 2010

By Bill Varner April 1 (Bloomberg) — China will join talks in New York with the U.S., Britain, France, Germany and Russia on drafting tougher sanctions intended to dissuade Iran from developing nuclear weapons, the U.S. ambassador to the United Nations said. The ambassadors of the six nations have been given responsibility for crafting a final sanctions resolution, U.S. envoy, Susan Rice , said on CNN yesterday. Talks stalled for months because China resisted the adoption of a fourth round of UN sanctions, saying more time was needed to negotiate an agreement with Iran. Saeed Jalili , Iran’s top nuclear negotiator, is in Beijing today to meet with State Councillor Dai Bingguo and Foreign Minister Yang Jiechi . “China has agreed to sit down and begin serious negotiations here in New York,” Rice said. “This is progress, but the negotiations have yet to begin in earnest. We have shared our thoughts” on what elements should be in a tough Security Council resolution. Winning China’s approval for sanctions is crucial because the country wields veto power over UN measures with its permanent seat on the Security Council. China, with the fastest- growing major economy, is one of Iran’s biggest crude-oil customers. When asked in Beijing whether China would take part in the negotiations, Foreign Ministry spokesman Qin Gang would only say that representatives of the five permanent members of the Security Council plus Germany had a conference call yesterday to discuss Iran. ‘Constructive Role’ “China will continue to play a constructive role in the proper resolution of this issue,” Qin said today. Qin also announced that China’s President Hu Jintao will travel to Washington next week to attend a summit aimed at preventing the spread of nuclear materials. The U.S. offered a proposal earlier this month to tighten restrictions on dealings with Iran’s banking, shipping and insurance industries. The plan also targets the Iranian Revolutionary Guard Corps that U.S. Secretary of State Hillary Clinton said has largely taken control of the country. President Barack Obama “has committed us to building adequate and sufficient and strong pressure on Iran to make clear to Iran that it faces a choice,” Rice said. It can either give up its nuclear weapons program and rejoin the community of nations or face increased isolation and intensified pressure, she said. At the UN in New York, Clinton told reporters the six nations have formed a “unified consultative group for more than a year” and that the group “continues to be unified.” The U.S. and its European allies, which have been trying to persuade Iran to scale back its nuclear program and embrace wider economic and political ties, offered at an October meeting in Geneva to enrich uranium Iran needs for a reactor that makes medical isotopes. The Iranian government has never formally replied to the proposal, which the U.S. has portrayed as a confidence-building measure. Iran insists its enrichment program is intended only for civilian energy projects and rejects UN demands that it restrain nuclear work. To contact the reporter on this story: William Varner in New York at wvarner@bloomberg.net

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China to Join New UN Talks on Drafting Tougher Iran Sanctions, Rice Says

March 31, 2010

By Bill Varner April 1 (Bloomberg) — China will join talks in New York with the U.S., Britain, France, Germany and Russia on drafting tougher sanctions intended to dissuade Iran from developing nuclear weapons, the U.S. ambassador to the United Nations said. The ambassadors of the six nations have been given responsibility for crafting a final sanctions resolution, U.S. envoy, Susan Rice , said on CNN yesterday. Talks stalled for months because China resisted adoption of a fourth round of UN sanctions, saying more time was needed to negotiate an agreement with Iran. “China has agreed to sit down and begin serious negotiations here in New York,” Rice said. “This is progress, but the negotiations have yet to begin in earnest. We have shared our thoughts” on what elements should be in a tough Security Council resolution. Winning China’s approval for sanctions is crucial because the country wields veto power over UN measures with its permanent seat on the Security Council. China, with the fastest- growing major economy, is one of Iran’s biggest crude-oil customers. China will “join hands with other parties to make efforts toward a peaceful and proper resolution of the issue,” Foreign Ministry spokesman Qin Gang said two days ago in Beijing when asked whether the government would back sanctions. “China opposes Iran having nuclear weapons and concurrently we believe that Iran as a sovereign state has the right to the peaceful use of nuclear energy.” U.S. Proposal The U.S. offered a proposal earlier this month to tighten restrictions on dealings with Iran’s banking, shipping and insurance industries. The plan also targets the Iranian Revolutionary Guard Corps that U.S. Secretary of State Hillary Clinton said has largely taken control of the country. President Barack Obama “has committed us to building adequate and sufficient and strong pressure on Iran to make clear to Iran that it faces a choice,” Rice said. It can either give up its nuclear weapons program and rejoin the community of nations or face increased isolation and intensified pressure, she said. At the UN in New York, Clinton told reporters the six nations have formed a “unified consultative group for more than a year” and that the group “continues to be unified.” The U.S. and its European allies, which have been trying to persuade Iran to scale back its nuclear program and embrace wider economic and political ties, offered at an October meeting in Geneva to enrich uranium Iran needs for a reactor that makes medical isotopes. The Iranian government has never formally replied to the proposal, which the U.S. has portrayed as a confidence-building measure. Iran insists its enrichment program is intended only for civilian energy projects and rejects UN demands that it restrain nuclear work. To contact the reporter on this story: William Varner in New York at wvarner@bloomberg.net

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Democrats Have Ample Support to Pass Health Overhaul in House, Leaders Say

March 21, 2010

By Nicole Gaouette and Sandrine Rastello March 21 (Bloomberg) — House Democratic leaders say they will pass the most far-reaching health legislation in four decades today, with ample support from their party and an agreement on abortion close. House Democrats have more than enough votes to pass health- care overhaul legislation, House Majority Leader Steny Hoyer , a Maryland Democrat, said on NBC’s “Meet the Press.” “We think 216 plus votes when we call the roll,” Hoyer said. Republicans said Democrats don’t have the votes and vowed to use “any means at our disposal to oppose this government takeover,” said Indiana Representative Mike Pence on CNN’s “State of the Union” program. “Stay tuned. It’s going to be an interesting day.” The legislation will restructure an industry that makes up 18 percent of the economy, a step that President Barack Obama Barack Obama urged lawmakers to take in a visit to Capitol Hill yesterday. Republican lawmakers universally oppose the legislation, arguing that Democrats are underestimating the cost and pushing though changes that polls show Americans don’t like. House Minority Whip Eric Cantor , speaking on ABC’s “This Week,” said no Republicans will vote for the legislation. “The people of this country don’t like this bill” and are scared of it, he said. Making History “We’re going to make history today,” Representative John Larson , the House Democratic Caucus chairman, said on the ABC program. “Barack Obama will pass health-care reform, demonstrating whose side we’re on,” the Connecticut Democrat said. Objections by anti-abortion Democrats led by Representative Bart Stupak of Michigan will soon be cleared, a Democratic official familiar with the matter said. Obama is set to sign an executive order stating that federal funds cannot be used for abortion. The order reaffirms current law. “They are close to reaching an agreement, but they are not there yet,” Michelle Begnoche, Stupak’s spokeswoman said in an e-mailed statement. “The congressman hopes they will be able to get an agreement this morning and health care wrapped up today. But right now he is still a no vote.” House Minority Leader John Boehner promised a Republican “effort to repeal the bill” on NBC’s “Meet the Press” and insisted Democrats do not have the votes. “We’ll do the very best we can to keep this bill from passing,” Senate Minority Leader Mitch McConnell said on CBS’ “Face the Nation.” Prepared for Challenges Illinois Senator Richard Durbin , a member of the Democratic leadership, said his party was prepared for challenges and any amendments Republicans might file. “I certainly think we’re ready to tackle that if that’s what they want to do,” Durbin said on CBS. “We’re ready to deal with honest amendments. There will come a time when the American people say enough, this is about politics.” House Democrats are confident enough of support that they have abandoned plans to bypass a direct up-or-down ballot on the legislation and simply “deem” it approved. Republicans had accused them of trying to duck a difficult vote. Hoyer said “we determined we could do this, and it was a better process.” The House will vote on both the Senate bill and compromise legislation called a reconciliation bill that amends parts of the Senate measure that House Democrats don’t like. If the House approves the Senate bill, the overhaul becomes law after it’s signed by Obama, who canceled a trip to Asia to be present. The compromise package goes back to the Senate, where Majority Leader Harry Reid said yesterday he had the “commitment of a significant majority” of Democrats to approve it. Switching Sides Leading up to today’s House vote, at least seven Democrats who voted “no” on a House version of the bill in November have switched sides to support the measure, and a number of undecided lawmakers have come out in favor of it. At least three others have switched to oppose the measure. The president urged the members to back the legislation, which he called “the toughest insurance reforms in history,” during a visit to the U.S. Capitol yesterday. He said many Americans are living a “quiet crisis” because of health-care concerns. “Now, we’re on the threshold of doing something about it,” said Obama, who has made the issue the centerpiece of his domestic legislative agenda. “Is this the single most important step that we have taken on health care since Medicare ? Absolutely,” Obama said of the 10-year, $940 billion measure. Complex Process On CNN, Utah Republican Senator Orrin Hatch said he didn’t think the Senate would pass the reconciliation bill that House lawmakers have written. If Senators make changes to the reconciliation bill, it would have to go back to the House for passage. That could potentially complicate passage as House Democrats would have to muster support all over again to pass a bill altered by the Senate. It’s not going to be “a one-time deal,” Hatch said. California’s Democratic Senator Dianne Feinstein disagreed and said Senate debate will start Tuesday and continue for several days. “I believe there are at least 51 votes there,” Feinstein told CNN. The vote “comes down to whose side are you on?” said Larson. “Are you siding with the insurance industry or are you siding on behalf of the people who have been waiting decades for this passage?” Asked about the loss of Democratic seats in the November elections, Larson said there’s always a chance of losing members in mid-term elections. “It isn’t about how many members are going to lose their seats,” he said. “It’s about this moment, it’s about the truth.” To contact the reporter on this story: Sandrine Rastello in Washington at srastello@bloomberg.net Nicole Gaouette in Washington at ngaouette@bloomberg.net

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