U.S. debt is losing its appeal in China By Keith Bradsher Thursday, January 8, 2009
HONG KONG: China has bought more than $1 trillion in American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home - a shift that could pose some challenges to the U.S. government in the near future but eventually may even produce salutary effects on the world economy.
At first glance, the declining Chinese appetite for U.S. debt - apparent in a series of hints from Chinese policy makers over the past two weeks, with official statistics due for release in the next few days - comes at an inopportune time. On Tuesday, the U.S. president-elect, Barack Obama, said Americans should get used to the prospect of "trillion-dollar deficits for years to come" as he seeks to finance an $800 billion economic stimulus package.
Normally, China would be the most avid taker of the debt required to pay for those deficits, mainly short-term Treasury securities. In the past five years, China has spent as much as one-seventh of its entire economic output on the purchase of foreign debt - largely U.S. Treasury bonds and American mortgage-backed securities.
But now, Beijing is seeking to pay for its own $600 billion economic stimulus - just as tax revenue falls sharply as the Chinese economy slows. Regulators have ordered banks to lend more money to small and midsize enterprises, many of which are struggling with slower exports, and Chinese bankers say they are being instructed to lend more to local governments to allow them to build new roads and other projects as part of the stimulus program.
"All the key drivers of China's Treasury purchases are disappearing," said Ben Simpfendorfer, an economist in the Hong Kong office of the Royal Bank of Scotland. "There's a waning appetite for dollars and a waning appetite for Treasuries. And that complicates the outlook for interest rates."
Fitch Ratings, the credit rating agency, forecasts that China's foreign reserves will increase by $177 billion this year - a large number, but down sharply from an estimated $415 billion last year.
In the United States, China's voracious demand for American bonds has helped keep interest rates low for borrowers ranging from the government to home buyers. Reduced Chinese enthusiasm for buying those bonds takes away some of this dampening effect.
But with U.S. interest rates still at very low levels after recent cuts to stimulate the economy, it is quite cheap for the U.S. Treasury to raise capital now. And there seem to be no shortage of buyers for Treasury bonds and other debt instruments: Prices for U.S. debt have soared as yields have declined.
The long-term effects of this shift in capital flows - with China keeping more of its money home and the U.S. economy becoming less dependent on one lender - are unclear, but the phenomenon is something economists have said is long overdue.
What is clear is that the effect of the global downturn on China's finances has been drastic. As recently as 2007, tax revenue soared 32 percent, as factories across China ran flat out. But by November, government revenue had actually dropped 3 percent from a year earlier. That prompted Finance Minister Xie Xuren to warn Monday that 2009 would be "a difficult fiscal year."
A senior central bank official mentioned last month that China's $1.9 trillion in foreign exchange reserves had actually begun to shrink. The reserves - mainly bonds issued by the U.S. Treasury and by Fannie Mae and Freddie Mac, the mortgage finance companies - had been rising quickly ever since the Asian financial crisis in 1998.
The strength of the dollar against the euro in the fourth quarter of last year contributed to slower growth in China's foreign reserves, said Fan Gang, an academic adviser to China's central bank, at a conference in Beijing on Tuesday. The central bank keeps track of the total value of its reserves in dollars and a weaker euro means that euro-denominated assets in those reserves are worth less in dollars, decreasing the total value of the reserves.
But the pace of China's accumulation of reserves began slowing in the third quarter along with the slowing of the Chinese economy, and appears to reflect much broader shifts.
China manages its reserves with considerable secrecy, but economists believe about 70 percent is in dollar-denominated assets and most of the rest in euros. The country has bankrolled its huge reserves by effectively requiring its entire banking sector, which is state-controlled, to hand nearly one-fifth of its deposits over to the central bank. The central bank, in turn, has used the money to buy foreign bonds.
Now the central bank is rapidly reducing this requirement and pushing banks to lend more money instead.
At the same time, three new trends mean that fewer dollars are pouring into China - and as fewer dollars flow into China, the government has fewer dollars to buy American bonds and help finance the U.S. trade and budget deficits.
The first, little-noticed trend is that the monthly pace of foreign direct investment in China has fallen by more than a third since the summer. Multinational companies are hoarding their cash and cutting back on the construction of factories.
The second trend is that the combination of a housing bust and a two-thirds fall in the mainland Chinese stock markets over the past year has resulted in moves by many overseas investors - and even some Chinese - to get money quietly out of the country. They are doing so despite China's fairly stringent currency controls, prompting the director of the State Administration of Foreign Exchange, Hu Xiaolian, to warn in a statement Tuesday of "abnormal" capital flows across China's borders; she provided no statistics.
China's most porous border in terms of money flows is with Hong Kong, a semi-autonomous Chinese territory that has its own internationally convertible currency. So much Chinese money has poured into Hong Kong and been converted into Hong Kong dollars that the territory has had to issue billions of dollars' worth of extra currency in the past two months to meet the demand, shattering its previous records for such issuance.
A third trend that may further slow the flow of dollars into China is the reduction of its huge trade surpluses.
China's trade surplus set another record in November, at $40.1 billion. But because prices of Chinese imports like oil are starting to recover while demand remains weak for Chinese exports like consumer electronics, most economists expect China to run trade surpluses closer to $30 billion a month.
That would give China a sizable sum to invest abroad. But it would be considerably less than $50 billion a month that it poured into international financial markets - mainly U.S. bond markets - during the first half of 2008.
"The pace of foreign currency flows into China has to slow," and therefore the pace of China's reinvestment of that currency in foreign bonds will also slow, said Dariusz Kowalczyk, the chief investment officer at SJS Markets, a Hong Kong securities firm.
For a combination of financial and political reasons, the decline in China's purchases of dollar-denominated assets may be less steep than the overall decline in its purchases of foreign assets.
Many mainland Chinese companies are keeping more of their dollar revenues overseas instead of bringing them home and converting them into yuan for deposit in Chinese banks. In essence, they would not show up on the central bank's books. So, overall Chinese demand for dollars would not be falling as much as the government's demand for dollars, said Sherman Chan, an economist in the Sydney office of Moody's Economy.com.
Treasury data from Washington suggest the Chinese government might be allocating a higher proportion of its foreign currency to the dollar in recent weeks and less to the euro. The data also suggest China is buying more Treasuries and fewer bonds from Fannie Mae or Freddie Mac.
Figures from the U.S. Federal Reserve and the Treasury point to a sharp increase in Chinese holdings of Treasury bonds in October. China passed Japan in September as the largest overseas holder of Treasuries, and took a commanding lead in October, with $652.9 billion compared to $585.5 billion for Japan.
But specialists in international money flows caution against relying too heavily on these statistics. They mostly count bonds that the Chinese government has bought directly, and exclude purchases made through banks in London and Hong Kong; with the financial crisis weakening many banks, the Chinese government has a strong incentive to buy more of its bonds directly.
The overall pace of foreign reserve accumulation in China seems to have slowed so much that even if all the remaining purchases were U.S. Treasuries, the Chinese government's overall purchases of dollar-denominated assets will have fallen, economists said.
But China's leadership is likely to avoid any complete halt to purchases of Treasuries for fear of looking like it is torpedoing the chances for a U.S. economic recovery at a vulnerable time, said Paul Tang, the chief economist at the Bank of East Asia here.
"This is a political decision," he said. "This is not purely an investment decision."
MICHAEL J. KIRBY jumped through all the requisite hoops in an effort to be removed from the government security watch lists that flag thousands of travelers at airports each day.
He contacted his congressman and senators, sending notarized copies of his driver’s license, birth certificate and Social Security card. He petitioned the airlines he uses. He went online to the Department of Homeland Security’s much-publicized Traveler Redress Inquiry Program site, which bills itself as a one-stop “single point of contact” for travelers who have trouble boarding airplanes because of “watch list misidentification issues.”
Incidentally, whenever I see the word “issues” used as a euphemism for “problems,” I know I’m adrift in the sea of the invincibly obtuse. And sure enough, Mr. Kirby received a baffling reply.
“They sent me back a letter saying basically, you’re correct. You are who you say you are,” he said. He already knew that, but it was nice to receive government affirmation that he is a law-abiding citizen — and not the bad Michael Kirby who causes all of his namesakes to appear on terrorist watch lists. Mr. Kirby says he was nevertheless informed by Homeland Security that “you’re still subject to additional screening and clearance when you come to the airport.” In other words, tough luck, you’re still on the list.
Now, this might be amusing but — as Kip Hawley, the administrator of the Transportation Security Administration readily concedes — there is nothing funny about an unwieldy, badly managed security procedure that unnecessarily causes inconvenience and insult to a large number of innocent travelers.
In a recent interview, Mr. Hawley told me that he and others are struggling to bring order and common sense to the widely ridiculed watch lists, which comprise a no-fly list with the names of people who are known security threats and a much larger “selectee” list, which contains names from databanks maintained by the police, intelligence agencies and various other sources.
That secondary list — administered by the Federal Bureau of Investigation but enforced at the airport by airlines — is the chief source of complaints and derision because it contains many names that belong to young children, members of Congress, nuns, war heroes, various David Nelsons (including the one who is Ozzie and Harriet’s son) — and Michael Kirby.
Last month, the American Civil Liberties Union said that the watch lists now had a million names. The group said the system was “out of control” and “treats the rights of the innocent as an afterthought.”
Mr. Hawley insists that the watch lists contain far fewer names than the A.C.L.U. claims. But he acknowledges that the current system, in which the airlines have the responsibility for checking names against the lists, leads to “inconsistencies.” We’ll look more closely at the T.S.A.’s side of things in next week’s column.
Mr. Kirby says he isn’t holding his breath waiting for a sensible fix to the problem. “You can understand why I am a little bit dubious about T.S.A.,” he said. “Why can’t they find a way to simply delete the people they know should not be on the lists? How hard is that?”
Mr. Kirby, who lives near Philadelphia, flies about 150,000 miles a year in his job in pharmaceutical marketing. He says he has been on the watch lists for six years and has no idea why, or what the problematic Mr. Kirby has done wrong. He has been told by airline clerks that six other Michael Kirbys are also on the lists.
The routine at the airport is unvarying. “You can’t check in online, or print out your boarding pass in advance,” he said. “You have to wait in line at the ticket counter and show them your license and tell them you need to be cleared.”
The ticket agent then inspects his driver’s license and birth date, prints out the ticket marked as cleared and sends him on his way. At the checkpoint, those on the lists are subject to closer secondary screening.
The watch-list fandango adds 20 minutes or more to the time required to board a plane. “I fly every week, so the time starts to add up,” Mr. Kirby said.
By Spencer S. Hsu and Carrie Johnson Washington Post Saturday, August 16, 2008; Page A01
The Justice Department has proposed a new domestic spying measure that would make it easier for state and local police to collect intelligence about Americans, share the sensitive data with federal agencies and retain it for at least 10 years.
The proposed changes would revise the federal government's rules for police intelligence-gathering for the first time since 1993 and would apply to any of the nation's 18,000 state and local police agencies that receive roughly $1.6 billion each year in federal grants.
Quietly unveiled late last month, the proposal is part of a flurry of domestic intelligence changes issued and planned by the Bush administration in its waning months. They include a recent executive order that guides the reorganization of federal spy agencies and a pending Justice Department overhaul of FBI procedures for gathering intelligence and investigating terrorism cases within U.S. borders.
Taken together, critics in Congress and elsewhere say, the moves are intended to lock in policies for Bush's successor and to enshrine controversial post-Sept. 11 approaches that some say have fed the greatest expansion of executive authority since the Watergate era.
Supporters say the measures simply codify existing counterterrorism practices and policies that are endorsed by lawmakers and independent experts such as the 9/11 Commission. They say the measures preserve civil liberties and are subject to internal oversight.
White House spokesman Tony Fratto said the administration agrees that it needs to do everything possible to prevent unwarranted encroachments on civil liberties, adding that it succeeds the overwhelming majority of the time.
Bush homeland security adviser Kenneth L. Wainstein said, "This is a continuum that started back on 9/11 to reform law enforcement and the intelligence community to focus on the terrorism threat."
Under the Justice Department proposal for state and local police, published for public comment July 31, law enforcement agencies would be allowed to target groups as well as individuals, and to launch a criminal intelligence investigation based on the suspicion that a target is engaged in terrorism or providing material support to terrorists. They also could share results with a constellation of federal law enforcement and intelligence agencies, and others in many cases.
Criminal intelligence data starts with sources as basic as public records and the Internet, but also includes law enforcement databases, confidential and undercover sources, and active surveillance.
Jim McMahon, deputy executive director of the International Association of Chiefs of Police, said the proposed changes "catch up with reality" in that those who investigate crimes such as money laundering, drug trafficking and document fraud are best positioned to detect terrorists. He said the rule maintains the key requirement that police demonstrate a "reasonable suspicion" that a target is involved in a crime before collecting intelligence.
"It moves what the rules were from 1993 to the new world we live in, but it maintains civil liberties," McMahon said.
However, Michael German, policy counsel for the American Civil Liberties Union, said the proposed rule may be misunderstood as permitting police to collect intelligence even when no underlying crime is suspected, such as when a person gives money to a charity that independently gives money to a group later designated a terrorist organization.
The rule also would allow criminal intelligence assessments to be shared outside designated channels whenever doing so may avoid danger to life or property -- not only when such danger is "imminent," as is now required, German said.
On the day the police proposal was put forward, the White House announced it had updated Reagan-era operating guidelines for the U.S. intelligence community. The revised Executive Order 12333 established guidelines for overseas spying and called for better sharing of information with local law enforcement. It directed the CIA and other spy agencies to "provide specialized equipment, technical knowledge or assistance of expert personnel" to support state and local authorities.
And last week, Attorney General Michael B. Mukasey said that the Justice Department will release new guidelines within weeks to streamline and unify FBI investigations of criminal law enforcement matters and national security threats. The changes will clarify what tools agents can employ and whose approval they must obtain.
The recent moves continue a steady expansion of the intelligence role of U.S. law enforcement, breaking down a wall erected after congressional hearings in 1976 to rein in such activity.
The push to transform FBI and local police intelligence operations has triggered wider debate over who will be targeted, what will be done with the information collected and who will oversee such activities.
Many security analysts faulted U.S. authorities after the 2001 terrorist attacks, saying the FBI was not combating terrorist plots before they were carried out and needed to proactively use intelligence. In the years since, civil liberties groups and some members of Congress have criticized the administration for unilaterally expanding surveillance and moving too fast to share sensitive information without safeguards.
Critics say preemptive law enforcement in the absence of a crime can violate the Constitution and due process. They cite the administration's long-running warrantless-surveillance program, which was set up outside the courts, and the FBI's acknowledgment that it abused its intelligence-gathering privileges in hundreds of cases by using inadequately documented administrative orders to obtain telephone, e-mail, financial and other personal records of U.S. citizens without warrants.
Former Justice Department official Jamie S. Gorelick said the new FBI guidelines on their own do not raise alarms. But she cited the recent disclosure that undercover Maryland State Police agents spied on death penalty opponents and antiwar groups in 2005 and 2006 to emphasize that the policies would require close oversight.
"If properly implemented, this should assure the public that people are not being investigated by agencies who are not trained in how to protect constitutional rights," said the former deputy attorney general. "The FBI will need to be vigilant -- both in its policies and its practices -- to live up to that promise."
German, an FBI agent for 16 years, said easing established limits on intelligence-gathering would lead to abuses against peaceful political dissenters. In addition to the Maryland case, he pointed to reports in the past six years that undercover New York police officers infiltrated protest groups before the 2004 Republican National Convention; that California state agents eavesdropped on peace, animal rights and labor activists; and that Denver police spied on Amnesty International and others before being discovered.
"If police officers no longer see themselves as engaged in protecting their communities from criminals and instead as domestic intelligence agents working on behalf of the CIA, they will be encouraged to collect more information," German said. "It turns police officers into spies on behalf of the federal government."
Civil liberties groups also have warned that forthcoming Justice Department rules for the FBI may permit the use of terrorist profiles that could single out religious or ethnic groups such as Muslims or Arabs for investigation.
Mukasey said the changes will give the next president "some of the tools necessary to keep us safe" and will not alter Justice rules that prohibit investigations based on a person's race, religion or speech. He said the new guidelines will make it easier for the FBI to use informants, conduct physical and photographic surveillance, and share data in intelligence cases, on the grounds that doing so should be no harder than in investigations of ordinary crimes.
Rep. Bennie Thompson (D-Miss.), chairman of the House Homeland Security Committee, said that updating police intelligence rules is a move "in the right direction. However, the vagueness of the provisions giving broad access to criminal intelligence to undefined agencies . . . is very troubling."
Staff writers Joby Warrick and Ellen Nakashima contributed to this report.
ST. LOUIS - Debbie Halcomb unpacked boxes as she moved back into her flood-damaged home, but worried that her damp carpet harbors mold. She enjoys the normally tranquil setting of Winfield, a community about three miles from the Mississippi River. But she's had enough. She's hoping for a government buyout so she can move to higher ground.
"I don't know if I can take another flood," Halcomb said Wednesday.
After the Great Flood of 1993, thousands of properties in flood plains around the Midwest were bought out by the government. Now, weeks after the latest massive flood, buyouts are again being considered in at least five states — Missouri, Iowa, Wisconsin, Indiana and Illinois.
Residents in areas that qualify can choose to sell their properties to their city or county, with 75 percent of the costs paid by the Federal Emergency Management Agency.
Communities that use the FEMA dollars agree to demolish structures on the properties and not develop the land, except for recreational use such as parks.
More than a half-dozen Iowa communities are likely to consider buyouts, said Brett Voorhees, spokesman for Iowa Homeland Security and Emergency Management. The state won't know which communities will apply for funding until Sept. 12 when notices of interest are due.
Voorhees said it will be months before officials know how much money FEMA will provide. Typically, there's not enough for all buyouts.
"It's a very competitive process," he said.
Officials in Des Moines, Iowa, are moving ahead with a buyout plan for a neighborhood north of downtown called Birdland Park. They intend to request $1.2 million from FEMA to buy up to 20 homes damaged when the Des Moines River breached a levee in June.
In southeastern Iowa, 400 residents of Oakville are still considering their options. Last month, the Iowa River broke through a levee and inundated nearly every building.
Officials in Cedar Rapids, Iowa, have been telling residents it could be a year or more before they know how much will be available for buyouts. Officials have said that half of the estimated 4,000 homes that were damaged will have to be demolished.
In Wisconsin, applications for the buyout program have been sent to 18 communities and will be sent to another eight, said Roxanne K. Gray, state hazard mitigation officer.
"There's some areas where FEMA hasn't gotten in to do inspections yet," Gray said. "We know there are going to be a lot of properties that are uninhabitable."
Indiana's Department of Homeland Security said three communities — Columbus, Martinsville and Franklin — as well as six counties expressed interest in the buyout program.
Missouri's Emergency Management Agency said 20 new mitigation projects had been proposed, including eight possible buyout plans.
In Illinois, the number of possible buyouts remains as murky as the Mississippi itself. In Keithsburg, a northwest Illinois community of some 700, Mayor Jim Stewart said FEMA crews still were assessing damage to about 80 homes and 20 businesses.
FEMA officials said that after the 1993 flood nearly 12,000 properties were bought out in nine states. About 500 other structures were relocated or elevated.
The agency maintains that buyouts save money in the long run.
"The whole idea of mitigation is to break the cycle of disaster, rebuild and disaster, rebuild," said FEMA spokesman Butch Kinerney. "We want to make sure when we rebuild, we rebuild safer, smarter and stronger."
FEMA anticipates that this year's flood will generate more requests for buyouts than it can accommodate.
RENO, Nev. - A judge awarded more than $4.2 million to a late Nevada rancher's estate after finding that the U.S. Forest Service engaged in an unconstitutional "taking" of water rights out of hostility to the rancher, a property rights activist.
The decision by U.S. Court of Federal Claims Judge Loren A. Smith involved the Fifth Amendment clause against private property being taken for public use without just compensation.
The rancher, Wayne Hage, bought the sprawling Pine Creek Ranch in central Nevada in 1978.
In the early 1980s, the Forest Service began to notify him he was in violation of his federal grazing permit. In 1983, the Forest Service sent him 40 letters and agency officials made 70 visits to his ranch.
Smith, based in Washington D.C., said the cancellation of Hage's grazing permit because of overgrazing and trespassing did not violate the Fifth Amendment because a grazing permit is a license, not property.
However, Smith said, the taking occurred when the Forest Service made it impossible for Hage to maintain irrigation ditches, which deprived the ranch of water and made it unviable.
The government demanded that he maintain the ditches using nothing more than hand tools. As willows, pinion, juniper and other vegetation grew unchecked in the irrigation ditches, Hage had argued that his ranch lost water.
"The court finds the government's actions had a severe economic impact on plaintiffs and the governments' actions rose to the level of a taking," Smith wrote.
Hage first filed a claim seeking $28 million in 1991. In an interview in 2004, two years before his death, he told The Associated Press his case could dramatically impact states' rights and federal lands in the West.
"It's the first time in nearly a century that someone has effectively challenged the government over who owns the range rights and water rights out here on these federal lands," he told The Associated Press.
The judge noted that hand tools would not be effective over such vast expanse of land. The ditches brought water to the 7,000-acre ranch as well as the 700,000 acres of national forest land where Hage grazed his cattle.
Hage "offered ample evidence that the Forest Service had engaged in harassment toward (him), enough to suggest that the implementation of the hand tools requirement was based solely on hostility to plaintiffs," Smith said.
Hage was one of the leaders of the so-called "Sagebrush Rebellion" during the 1980s, a movement among Western landowners who believed the federal government had no jurisdiction over their property because the ranches predate the federal agencies that sought to regulate them.
The judge also ordered the government to pay back interest to Hage's family. A lawyer estimated the interest dating to 1991 would be an additional $4.4 million.
"It sends a pretty important message to the government that if you screw with a small ranching family and put them out of business, you have to pay big bucks," said Lyman "Ladd" Bedford, a San Francisco-based lawyer who argued the case since its beginning.
Ed Monnig, supervisor of the Humboldt-Toiyabe National Forest, said Tuesday there had been no decision made yet on whether to appeal.
"We're aware of Friday's court decision and our agency is now considering the implications of this ruling and carefully weighing options," Monnig said.
The Pine Creek Ranch is owned now by Hage's children. Calls to them were not returned.
China has secretly built a major underground nuclear submarine base that could threaten Asian countries and challenge American power in the region, it can be disclosed.
By Thomas Harding, Defence Correspondent The Telegraph June 5, 2008
Satellite imagery, passed to The Daily Telegraph, shows that a substantial harbour has been built which could house a score of nuclear ballistic missile submarines and a host of aircraft carriers.
In what will be a significant challenge to US Navy dominance and to countries ringing the South China Sea, one photograph shows China’s latest 094 nuclear submarine at the base just a few hundred miles from its neighbours.
Other images show numerous warships moored to long jettys and a network of underground tunnels at the Sanya base on the southern tip of Hainan island.
Of even greater concern to the Pentagon are massive tunnel entrances, estimated to be 60ft high, built into hillsides around the base. Sources fear they could lead to caverns capable of hiding up to 20 nuclear submarines from spy satellites.
The US Department of Defence has estimated that China will have five 094 nuclear submarines operational by 2010 with each capable of carrying 12 JL-2 nuclear missiles.
The images were obtained by Janes Intelligence Review after the periodical was given access to imagery from the commercial satellite company DigitalGlobe.
Analysts for the respected military magazine suggest that the base could be used for "expeditionary as well as defensive operations" and would allow the submarines to "break out to launch locations closer to the US".
It would now be "difficult to ignore" that China was building a major naval base where it could house its nuclear forces and increase it "strategic capability considerably further afield".
The development so close to the sea lanes vital to Asian economies "can only cause concern far beyond these straits".
Military analysts believe that China’s substantial build up of its forces is gaining pace put has remained hidden from the world in the build-up to the Olympics.
China has diverted much of its resources from the huge Peoples Liberation Army to the navy, air force and missile development.
An old Russian aircraft carrier, bought by Beijing for "leisure activities" has been picked over by naval architects who hope to "reverse engineer" the ship.
Within the next five to 10 years the People's Liberation Navy is expected to build up to six carriers which will also coincide with the Royal Navy’s construction of two major carriers.
The location of the base off Hainan will also give the submarines access to very deep water exceeding 5,000 metres within a few miles, making them even harder to detect.
Britain’s Trident submarines have to remain on the surface when they leave Faslane in north east Scotland and cannot dive to depth until outside the Irish Sea.
While it has been known that China might be developing an underground base at Sanya, the pictures provide the first proof of the base’s existence and the rapid progress made.
Two 950 metre piers and three smaller ones would be enough to accommodate two carrier strike groups or amphibious assault ships.
Christian Le Miere, editor for Jane's Intelligence Review, said the complex underlined Beijing’s plan “to assert tighter control over this region".
"This is a challenge to any hegemonic power, particularly the US which still remains dominant in the region."
So far China has offered no public explanation for its building at Sanya.
Officials at the nuclear-weapons laboratory, already struggling to calm concerns over security lapses, now have two more breaches to explain.
WEB EXCLUSIVE By John Barry Newsweek June 25, 2007 updated 11:03 a.m. ET July 5, 2007
What's going on at Los Alamos? The nation's premier nuclear-weapons laboratory appears plagued with continuing security problems. Barely 10 days after revelations of a leak of highly classified material over the Internet, NEWSWEEK has learned of two other security breaches.
In late May, a Los Alamos staffer took his lab laptop with him on vacation to Ireland. A senior nuclear official familiar with the inner workings of Los Alamos—who would not be named talking about internal matters—says the laptop's hard drive contained "government documents of a sensitive nature." The laptop was also fitted with an encryption card advanced enough that its export is government-controlled. In Ireland, the laptop was stolen from the vacationer's hotel room. It has not been recovered. This source adds that Los Alamos has started a frantic effort to inventory all its laptops, calling in most of them and substituting nonportable desktop models. (The source’s account was confirmed by a midlevel Los Alamos official who also requests anonymity owing to the sensitivity of the subject.)
Then, 10 days ago, a Los Alamos scientist fired off an e-mail to colleagues at the Nevada nuclear test site. The scientist works in Los Alamos's P Division, which does experimental physics related to weapons design, a lab source says. The material he e-mailed was "highly classified," the same source says. But he sent his e-mail over the open Internet, rather than through the secure defense network.
These incidents come as Los Alamos is still reeling from the revelation that, in January, half a dozen board members of the company that manages the lab circulated—over the Internet—an e-mail to each other containing the most highly classified information about the composition of America's nuclear arsenal. The two sources tell NEWSWEEK that the e-mail concerned what the weapons community calls "special nuclear materials," the other ingredients besides uranium or plutonium at the core of nuclear weapons. The sources confirm to NEWSWEEK that the breach was rated "category one," meaning it posed "the most serious threats to national security interests."
Los Alamos spokesman Jeff Berger referred questions about the January breach to the Department of Energy or its specialist agency, the National Nuclear Security Administration. Regarding the e-mail to the Nevada test site, Berger said: "The purported incident is under investigation; it would be inappropriate to comment." As for the laptop stolen in Ireland, Berger confirmed the event, but said "information contained on the computer was of sufficiently low sensitivity that, had the employee followed proper laboratory procedure, he would have been authorized to take it to Ireland." About the encryption card, Berger said: "Ireland is a country that wouldn't have posed any export problems." He confirmed that, in the wake of this incident, Los Alamos is "in the process of narrowly restricting the use of laptops for foreign travel," while also working "to strengthen our employees' awareness of their responsibilities for protecting government equipment and the proper laboratory procedures for off-site usage."
Bryan Wilkes, spokesman for the National Nuclear Security Administration, said that, in taking his laptop to Ireland, the employee "did violate lab policy"—though Wilkes confirmed that, had the employee asked, permission would have been granted. Wilkes declined to comment for the record on the Nevada e-mail. Regarding the circulation in January of highly classified weapons information over the Internet, Wilkes said that everything the department had to say on the matter could be found in a June 15 letter sent by Energy Secretary Samuel Bodman to Rep. John Dingell, chair of the House Energy & Commerce Committee, which oversees the nuclear weapons complex.
"I can affirm that an individual did in fact unintentionally transmit sensitive information through an unsecured e-mail system," Bodman wrote Dingell. But Bodman played down its significance: "While serious, the incident in question was the result of human error, not a failure of security systems. The Department makes every effort to minimize inadvertent human errors, but we recognize that such errors may occur from time. Therefore, we have a robust system in place to report and investigate potential violations. In my opinion this is a circumstance where those systems worked well."
Bodman's professed reassurance is unlikely to satisfy those people—many within the nuclear weapons community—who are concerned by what appears to be a pattern of security problems at Los Alamos stretching back some years. "Boys will be boys, seems to be Bodman's message," one very senior figure in the weapons community said sarcastically: "I doubt that will appease John Dingell." Dingell's staff was unable to respond by deadline to a request for comment. But Dingell has talked in the past of his concerns at what seems to be deeply rooted problems at Los Alamos. Appearing in January before one of Dingell's sub-committees, Thomas D'Agostino, deputy administrator for weapons programs at the NNSA, agreed that successive security breaches at Los Alamos pointed to a failure of what he called "the security culture" there.
D'Agostino promised tough action: "Make no doubt about this. If the current laboratory management is unable or unwilling to change the security culture at LANL, I will use every management tool available to me" to force action, he said in testimony.
*********** Editor's Note: Following publication of this story, Newsweek.com received a letter from Jeff Berger, communications director at the Los Alamos National Laboratory. The letter is reprinted below:
"Lax and lazy" better describes a current piece of Newsweek reporting rather than the sensationalized and inaccurate story of the same name about Los Alamos National Laboratory.
Contrary to Newsweek's assertion, the Laboratory has not experienced two more security breaches.
After a rigorous review, computer forensics experts at the Lab determined with a very high level of confidence that the laptop stolen from a hotel room in Ireland did not contain any classified materials or any personally identifiable information. Nor were any national security interests jeopardized.
As for e-mail, the Laboratory has a robust program to assure that when a message containing unauthorized information is sent in error, an effective program is employed promptly to protect that information and assure that its potential vulnerability is limited. Further, we take aggressive corrective actions to prevent recurrence.
Is Newsweek holding Los Alamos National Laboratory alone to a standard of security unprecedented in the federal government? The recent tendency to hold this Laboratory accountable for its employees being anything less than "perfect" is unrealistic. Los Alamos employees take security very seriously and have made great improvements in the past six months across all aspects of security, particularly in the area of cybersecurity. To discount these efforts is inaccurate and insulting.
Jeff Berger Communications Director Los Alamos National Laboratory
WASHINGTON (AP) - U.S. authorities are investigating whether Chinese officials secretly copied the contents of a government laptop computer during a visit to China by Commerce Secretary Carlos M. Gutierrez and used the information to try to hack into Commerce computers, officials and industry experts told The Associated Press.
Surreptitious copying is believed to have occurred when a laptop was left unattended during Gutierrez's trip to Beijing for trade talks in December, people familiar with the incident told the AP. These people spoke on condition of anonymity because the incident was under investigation.
Gutierrez told the AP on Thursday he could not discuss whether or how the laptop's contents might have been copied.
"Because there is an investigation going on, I would rather not comment on that," he said. "To the extent that there is an investigation going on, those are the things being looked at, those are the questions being asked. I don't think I should provide any speculative answers."
A Commerce Department spokesman, Rich Mills, said he could not confirm or deny such an incident in China. Asked whether the department has issued new rules for carrying computers overseas, Mills said: "The department is continuing to improve our security posture, and that includes providing updates, guidances and best practices to staff to maintain security."
It was not immediately clear what information on the laptop might have been compromised, but it would be highly unorthodox for any U.S. government official to carry classified data on a laptop overseas to China, especially one left unattended even briefly. Modern copying equipment can duplicate a laptop's storage drive in just minutes.
The report of the incident is the latest in a series of worrisome cyber security problems blamed on China and comes at a sensitive time, with looming trade issues between the countries and special attention on China over the upcoming summer Olympics. Gutierrez returned just weeks ago from another trip to Beijing, where he noted he had "traveled here more than to any other foreign city during my tenure as commerce secretary."
In the period after Gutierrez returned from China in December, the U.S. Computer Emergency Readiness Team - known as US-CERT, some of the government's leading computer forensic experts - rushed to the Commerce Department on at least three occasions to respond to serious attempts at data break-ins, officials told the AP.
"There's nothing to substantiate an actual compromise at this time," said Russ Knocke, spokesman for the Department of Homeland Security. Knocke said he was unable to find records of a DHS investigation. He said US-CERT workers have visited the Commerce Department eight times since December, but none of those visits related to laptops or the secretary's trip to China. He said the US-CERT organization works routinely with all U.S. agencies.
The FBI declined to comment.
It wasn't clear whether leaving the laptop unattended violated U.S. government rules. Some agencies, such as Homeland Security, routinely provide officials with sanitized laptops to carry on trips overseas and require them to leave in the U.S. their everyday laptops, which might contain sensitive information. Some former Commerce officials told the AP they were careful to keep electronic devices with them at all times during trips to China.
"We have rules in place," Gutierrez said. "We have procedures that people go through before they travel. So, there is a very significant process in place. Technology is obviously moving very quickly, and we have to move very quickly with it. But all of that is something that we are going through."
A senior U.S. intelligence official, Joel F. Brenner, recounted a separate story of an American financial executive who traveled to Beijing on business and said he had detected attempts to remotely implant monitoring software on his handheld "personal digital assistant" device - software that could have infected the executive's corporate network when he returned home. The executive "counted five beacons popped into his PDA between the time he got off his plane in Beijing and the time he got to his hotel room," Brenner, chief of the office of the National Counterintelligence Executive under the CIA, said during a speech in December.
Brenner recommended throwaway cellular phones for any business people traveling to China.
"The more serious danger is that your device will be corrupted with malicious software that takes only a second or two to download - and you will not know it - and that can be transferred to your home server when you collect your e-mail," he said.
The Pentagon, State Department and Commerce Department all have been victimized by widespread computer intrusions blamed on China since July 2006. Defense Secretary Robert Gates confirmed in September that parts of the Pentagon's unclassified e-mail system - used by Gates and hundreds of others - were disrupted in June 2007 due to a break-in.
The Commerce Department break-ins have been so serious that its Bureau of Industry and Security, which regulates exports of sensitive technology that might be used in weapons, effectively unplugged itself from the Internet.
Workers were instructed to use a few laptops placed around the office that are isolated from the department's network, even to search for public information using Google's Web search engine.
"We have discovered a number of very serious threats to the integrity of our systems and data," wrote then-Deputy Undersecretary of Commerce Mark Foulon to employees in an e-mail obtained by AP under the Freedom of Information Act. He said the department was not the government's only hacking victim, "but we have an obligation, which we must take seriously, to take all necessary measures to protect our systems and our data."
At the time, Foulon acknowledged that some of the protective measures "may create difficulties and even reduce productivity."
Fully one year after being unplugged from the Internet, some Commerce Department employees complained about the inconvenience. One worker offered to provide his own laptop so he could work at his desk, rather than use one of the office terminals 30 feet away. "How that endanger the network?" the employee wrote last summer. His request was denied by a security supervisor who complained that he, too, was struggling with the same Internet restrictions.
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Associated Press writers Jeannine Aversa and Eileen Sullivan contributed to this story from Washington.
Source: Global Research.ca, August 5, 2005, Title: “Halliburton Secretly Doing Business With Key Member of Iran’s Nuclear Team,” Author: Jason Leopold
Faculty Evaluator: Catherine Nelson Student Researchers: Kristine Medeiros and Pla Herr
According to journalist Jason Leopold, sources at former Cheney company Halliburton allege that, as recently as January of 2005, Halliburton sold key components for a nuclear reactor to an Iranian oil development company. Leopold says his Halliburton sources have intimate knowledge of the business dealings of both Halliburton and Oriental Oil Kish, one of Iran’s largest private oil companies.
Additionally, throughout 2004 and 2005, Halliburton worked closely with Cyrus Nasseri, the vice chairman of the board of directors of Iran-based Oriental Oil Kish, to develop oil projects in Iran. Nasseri is also a key member of Iran’s nuclear development team. Nasseri was interrogated by Iranian authorities in late July 2005 for allegedly providing Halliburton with Iran’s nuclear secrets. Iranian government officials charged Nasseri with accepting as much as $1 million in bribes from Halliburton for this information.
Oriental Oil Kish dealings with Halliburton first became public knowledge in January 2005 when the company announced that it had subcontracted parts of the South Pars gas-drilling project to Halliburton Products and Services, a subsidiary of Dallas-based Halliburton that is registered to the Cayman Islands. Following the announcement, Halliburton claimed that the South Pars gas field project in Tehran would be its last project in Iran. According to a BBC report, Halliburton, which took thirty to forty million dollars from its Iranian operations in 2003, “was winding down its work due to a poor business environment.”
However, Halliburton has a long history of doing business in Iran, starting as early as 1995, while Vice President Cheney was chief executive of the company. Leopold quotes a February 2001 report published in the Wall Street Journal, “Halliburton Products and Services Ltd., works behind an unmarked door on the ninth floor of a new north Tehran tower block. A brochure declares that the company was registered in 1975 in the Cayman Islands, is based in the Persian Gulf sheikdom of Dubai and is “non-American.” But like the sign over the receptionist’s head, the brochure bears the company’s name and red emblem, and offers services from Halliburton units around the world.” Moreover mail sent to the company’s offices in Tehran and the Cayman Islands is forwarded directly to its Dallas headquarters.
In an attempt to curtail Halliburton and other U.S. companies from engaging in business dealings with rogue nations such as Libya, Iran, and Syria, an amendment was approved in the Senate on July 26, 2005. The amendment, sponsored by Senator Susan Collins R-Maine, would penalize companies that continue to skirt U.S. law by setting up offshore subsidiaries as a way to legally conduct and avoid U.S. sanctions under the International Emergency Economic Powers Act (IEEPA).
A letter, drafted by trade groups representing corporate executives, vehemently objected to the amendment, saying it would lead to further hatred and perhaps incite terrorist attacks on the U.S. and “greatly strain relations with the United States primary trading partners.” The letter warned that, “Foreign governments view U.S. efforts to dictate their foreign and commercial policy as violations of sovereignty often leading them to adopt retaliatory measures more at odds with U.S. goals.”
Collins supports the legislation, stating, “It prevents U.S. corporations from creating a shell company somewhere else in order to do business with rogue, terror-sponsoring nations such as Syria and Iran. The bottom line is that if a U.S. company is evading sanctions to do business with one of these countries, they are helping to prop up countries that support terrorism—most often aimed against America. UPDATE BY JASON LEOPOLD
During a trip to the Middle East in March 1996, Vice President Dick Cheney told a group of mostly U.S. businessmen that Congress should ease sanctions in Iran and Libya to foster better relationships, a statement that, in hindsight, is completely hypocritical considering the Bush administration’s foreign policy.
“Let me make a generalized statement about a trend I see in the U.S. Congress that I find disturbing, that applies not only with respect to the Iranian situation but a number of others as well,” Cheney said. “I think we Americans sometimes make mistakes . . . There seems to be an assumption that somehow we know what’s best for everybody else and that we are going to use our economic clout to get everybody else to live the way we would like.”
Cheney was the chief executive of Halliburton Corporation at the time he uttered those words. It was Cheney who directed Halliburton toward aggressive business dealings with Iran—in violation of U.S. law—in the mid-1990s, which continued through 2005 and is the reason Iran has the capability to enrich weapons-grade uranium.
It was Halliburton’s secret sale of centrifuges to Iran that helped get the uranium enrichment program off the ground, according to a three-year investigation that includes interviews conducted with more than a dozen current and former Halliburton employees.
If the U.S. ends up engaged in a war with Iran in the future, Cheney and Halliburton will bear the brunt of the blame. But this shouldn’t come as a shock to anyone who has been following Halliburton’s business activities over the past decade. The company has a long, documented history of violating U.S. sanctions and conducting business with so-called rogue nations.
No, what’s disturbing about these facts is how little attention it has received from the mainstream media. But the public record speaks for itself, as do the thousands of pages of documents obtained by various federal agencies that show how Halliburton’s business dealings in Iran helped fund terrorist activities there—including the country’s nuclear enrichment program.
When I asked Wendy Hall, a spokeswoman for Halliburton, a couple of years ago if Halliburton would stop doing business with Iran because of concerns that the company helped fund terrorism she said, “No.” “We believe that decisions as to the nature of such governments and their actions are better made by governmental authorities and international entities such as the United Nations as opposed to individual persons or companies,” Hall said. “Putting politics aside, we and our affiliates operate in countries to the extent it is legally permissible, where our customers are active as they expect us to provide oilfield services support to their international operations. “We do not always agree with policies or actions of governments in every place that we do business and make no excuses for their behaviors. Due to the long-term nature of our business and the inevitability of political and social change, it is neither prudent nor appropriate for our company to establish our own country-by-country foreign policy.”
Halliburton first started doing business in Iran as early as 1995, while Vice President Cheney was chief executive of the company and in possible violation of U.S. sanctions.
An executive order signed by former President Bill Clinton in March 1995 prohibits “new investments (in Iran) by U.S. persons, including commitment of funds or other assets.” It also bars U.S. companies from performing services “that would benefit the Iranian oil industry” and provide Iran with the financial means to engage in terrorist activity.
When Bush and Cheney came into office in 2001, their administration decided it would not punish foreign oil and gas companies that invest in those countries. The sanctions imposed on countries like Iran and Libya before Bush became president were blasted by Cheney, who gave frequent speeches on the need for U.S. companies to compete with their foreign competitors, despite claims that those countries may have ties to terrorism.
“I think we’d be better off if we, in fact, backed off those sanctions (on Iran), didn’t try to impose secondary boycotts on companies . . . trying to do business over there . . . and instead started to rebuild those relationships,” Cheney said during a 1998 business trip to Sydney, Australia, according to Australia’s Illawarra Mercury newspaper.
Ex-US President Jimmy Carter has said Israel has at least 150 atomic weapons in its arsenal.
BBC News May 26, 2008
The Israelis have never confirmed they have nuclear weapons, but this has been widely assumed since a scientist leaked details in the 1980s.
Mr Carter made his comments on Israel's weapons at a press conference at the annual literary Hay Festival in Wales.
He also described Israeli treatment of Palestinians as "one of the greatest human rights crimes on earth".
Mr Carter gave the figure for the Israeli nuclear arsenal in response to a question on US policy on a possible nuclear-armed Iran, arguing that any country newly armed with atomic weapons faced overwhelming odds.
"The US has more than 12,000 nuclear weapons; the Soviet Union (sic) has about the same; Great Britain and France have several hundred, and Israel has 150 or more," he said.
"We have a phalanx of enormous capabilities, not only of weaponry but also of rockets to deliver every one of those missiles on a pinpoint accuracy target."
Most experts estimate that Israel has between 100 and 200 nuclear warheads, largely based on information leaked to the Sunday Times newspaper in the 1980s by Mordechai Vanunu, a former worker at the country's Dimona nuclear reactor.
The US, a key ally of Israel, has in general followed the country's policy of "nuclear ambiguity", neither confirming or denying the existence of its assumed arsenal.
However, Israeli Prime Minister Ehud Olmert included Israel among a list of nuclear states in comments in December 2006, a week after US Defence Secretary Robert Gates used a similar form of words during a Senate hearing.
Former Israeli military intelligence chief Aharon Zeevi-Farkash told Reuters news agency he considered Mr Carter's comments "irresponsible".
"The problem is that there are those who can use these statements when it comes to discussing the international effort to prevent Iran getting nuclear weapons," he said.
'Imprisonment'
During the press briefing, Mr Carter expressed his support for Israel as a country, but criticised its domestic and foreign policy.
"One of the greatest human rights crimes on earth is the starvation and imprisonment of 1.6m Palestinians," he said.
The former US president cited statistics which he said showed the nutritional intake of some Palestinian children was below that of children in Sub-Saharan Africa, as well as saying the European position on Israel could be best described as "supine".
Mr Carter, awarded a Nobel Peace Prize in 2002, brokered the 1979 Egypt-Israel peace treaty, the first between Israel and an Arab state.
In April he controversially held talks in the Syrian capital Damascus with Khaled Meshaal, leader of the militant Palestinian movement Hamas.
The former US president's Carter Center was unavailable for further comment.
By Bradley S. Klapper Associated Press May 27, 2008
The Red Cross warned Tuesday of a possible surge in "food-related violence" because of soaring prices that are increasing hunger around the world.
Most of the debate surrounding the global food crisis has focused on boosting aid to poorer countries, but there is also concern about the potential for violence as people become desperate for food, said Jakob Kellenberger, president of the International Committee of the Red Cross.
Kellenberger, whose agency serves as the guardian of the Geneva Conventions on the rules of war, said fallout from rising prices has already sparked violence, alluding to food riots that erupted in Haiti, Egypt and Somalia.
The Red Cross would have to shoulder a big responsibility for those affected by armed conflict, Kellenberger said. The group already delivers food to isolated or dangerous places where the United Nations' World Food Program can't operate, he said.
"You can imagine when you have countries where you have already an armed conflict, where you have already a high level of violence, and you have at the same time a lot of poor and extremely vulnerable people," Kellenberger told reporters.
It's not just a matter of higher prices, he said. "It becomes a question of survival, of just having access to food."
The Red Cross has already been forced to add more than $60 million worth of food assistance to its planned budget for 2008. It has revamped the budget six times this year — three times to provide greater food aid in Somalia, Sudan's Darfur region and Yemen.
In total, the group plans to spend just over $1 billion on its relief operations around the world in 2008 and an additional $156 million on administrative costs.
Kellenberger stressed that his concern about food violence was mainly about the "future risk," but he declined to say which parts of the world he considered possible trouble spots.
"If I had them in mind, it would not be extremely intelligent if I were to mention them," he said.
CHARLESTON, W.Va. - Unsuspecting property owners around the country are getting trampled in an old-fashioned land rush by natural gas companies and speculators trying to lock up long-ignored drilling rights quickly and cheaply.
Stories of fast-talking industry representatives using scare tactics to strong-arm people into signing lowball leases are popping up in rural areas and suburbs from New York to West Virginia to parts of Indiana and Texas. All sit atop largely untapped natural gas deposits made suddenly viable — and valuable — by soaring prices and improved drilling techniques.
West Virginia farmer and convenience store owner Brad Castle is still smarting from his experience.
Castle and his father thought they were getting a windfall when they signed a $5-an-acre lease with a small Michigan company and promise of 12.5 percent royalties for the gas rights to 800 acres they own near Rowlesburg in northern West Virginia. The process started when a landman — an industry term for a person who secures mineral rights — knocked on their door.
"They're very nice people, the ones that come around. You thought you could trust them," said Castle, who adds that he was warned to sign or drillers would siphon the gas beneath his property without paying him a dime.
His feelings of trust evaporated when rival companies started offering $350 an acre and royalties as high as 15 percent.
"They knew what they were doing when they come in, but we didn't," said Castle, who's hired a lawyer to look into breaking the lease. "There's got to be a law broke somewhere."
Retired dairy farmer Dewey Decker heard similar pitches when landmen started showing up in New York's Broome and Delaware counties.
"They were offering like $25, then $50," Decker said. "Quite a few people signed for $50."
But Decker held out and formed a pool with other landowners that has grown to more than 40,000 acres. The approach worked: Decker's group agreed to a five-year deal that pays $2,411 an acre and a 15 percent royalty.
So, too, did entrepreneur and writer Tom Rodgers and much of his suburban Arlington, Texas, neighborhood, which sits atop a gas-rich formation called Barnett shale. Rodgers remembers the landmen's spiel as almost exactly like oilman Daniel Plainview's sweet-talking sales pitch in the movie "There Will be Blood."
"That original speech that guy makes to the rural property owners, it hasn't changed much in 100 years," Rodgers said. And like Castle, Rodgers said landmen often warned that homeowners risked getting nothing if they didn't sign. "These landmen do lie. They do exaggerate."
Gas companies such as Chesapeake Energy Corp. make no bones about their desire to lock up leasing rights. The Oklahoma City-based natural gas giant calls its aggressive lease acquisition program the "land grab" in its latest annual report to the Securities and Exchange Commission.
Chesapeake takes pains to educate landowners about mineral and surface rights through open forums with state regulators and attorneys, spokesman Jim Gipson said. The company likewise expects contract landmen to provide the same information, he said.
"Many of the brokers that we employ are contractors," Gipson said. "We're not with them every day and we do hear occasionally of instances that are not up to our standards and when we do, we move very quickly to rectify that."
While Rodgers said Chesapeake was aggressive in its efforts to secure rights in his neighborhood, he said the company quickly clamped down when residents complained about dishonest tactics by independent landmen hired by the company.
West Virginia lawyer David McMahon said such aggressive tactics are showing up across West Virginia counties with substantial Marcellus shale, a 6,000-foot-deep rock formation believed to hold 50 trillion cubic feet of recoverable gas.
"Most everybody's getting a lowball dollar offer and lots of people are getting rushed," McMahon said.
As for the kind of half-truths Castle was told — landowners can be reimbursed for gas sucked from beneath their property — McMahon said that's not universal — and not true. "Some landmen are being fair, but sharp bargainers."
McMahon recently started a campaign to educate landowners about mineral leasing through the West Virginia Surface Owners' Rights Organization. Among other things, McMahon advises landowners to take their time and refuse to be rushed into signing leases. He also suggests rejecting standard leases in favor of documents containing protections against roads, potential pollutants such as saltwater injections, and use of depleted wells for gas storage.
Herschel McDivitt, director of Indiana's Division of Oil and Gas, offers similar advice. He hears from landowners often enough to suspect landmen are employing similar tactics as they try to secure rights to New Albany shale in the Illinois basin.
"There just aren't a lot of savvy landowners out there," McDivitt said of the calls he gets regularly. "Some of them are just, 'Hey, we just had some slick-talking guy who's just been pounding on us, but we don't understand.'"
Once the RFID systems provider completes the recently announced sale of its Xmark subsidiary, it plans to sell the rest of its assets.
By Mary Catherine O'Connor RFID Journal May 20, 2008
VeriChip Corp., a provider of RFID systems for health-care and asset-tracking applications, has hired investment banking firm Kaufman Bros. to assist in the sale of its VeriMed Health Link business, as well as the possible sale of the entire company.
Jay McKeage, VeriChip's VP of business development, believes Kaufman will "shop the VeriMed business around widely," and that if the VeriMed business sells, another buyer could purchase the remainder of the company, which would then be "a shell of a quoted company." The buyer could then operate as a public company, he says, or "buy it and stop filing with the SEC."
Last week, VeriChip announced a $45 million definitive stock purchase agreement with tool and security firm The Stanley Works for the sale of VeriChip's wholly owned Canadian subsidiary, Xmark, which sells RFID-based products and services designed to help track infants in hospitals, as well as other patients and physical assets. The deal is currently pending approval from VeriChip shareholders, and is expected to be completed by midyear.
Applied Digital Solutions (doing business as Digital Angel) owns 48.2 percent of VeriChip's stock, and has stated its intention to approve the Xmark deal. According to McKeage, the Xmark business has been "nicely profitable" to VeriChip, as well as for Digital Angel, and has generated cash flow that funds the other half of VeriChip's operations—VeriMed Health Link. "That [VeriMed] business has a substantial cash burn," he says, "so once Xmark is sold, [VeriMed] is not sustainable on its own."
According to McKeage, Stanley approached VeriChip with the cash offer to purchase Xmark. While the specifics of the negotiations between the two companies will not be revealed until the proxy statement is issued, McKeage notes that given that the Stanley offer was for a cash transaction and represented a substantial premium, VeriChip was obliged to its shareholders to take the offer. "We would have been courting exposure to turn this down," he says.
Digital Angel manufactures RFID tags that are implanted in pets and wildlife for tracking purposes, as well as GPS-based active transponders for search-and-rescue applications (see Personal Location Beacons Usage Grows). In 2004, the U.S. Food and Drug Administration (FDA) gave its approval for VeriChip's implantable tag to be used for human patient identification and medical records tracking. VeriChip utilizes the implantable tag as part of its VeriMed Health Link services, through which doctors administer the implants, which are encoded with a unique 16-digit code that is associated, via a secure database, with the carrier's medical records.
Some U.S. hospitals have the RFID interrogators required to access the tag data, as well as access to the database (more than 900 facilities in the United States have agreed to carry the readers). The system is designed to enable health-care workers to gain quick access to a patient's medical history, even in the event that person cannot communicate due to illness or some other reason. The implantable tags are also employed in an emergency management system known as VeriTrace, designed to help identify and track the remains of deceased individuals—particularly during large-scale disasters with hundreds or thousands of fatalities (see VeriChip's VeriTrace Platform Sees Sales Boost).
Last month, VeriChip rebranded its VeriMed system, renaming it Health Link, and launched a three-month advertising campaign to market its services directly to potential end users in southern Florida (see VeriChip Markets Its Implantable RFID Tags and Services Direct to Consumers). According to Scott Silverman, VeriChip's CEO and chairman, the initiative included a partnership with hearing care provider HearUSA, with a goal of signing up 1,000 new customers.
"Assuming we reach our goal of 1,000, we are prepared to expand," Silverman told RFID Journal in April, noting that HearUSA has locations throughout the country. "If, three months from now, nobody gets the chip, we will have to look at our business model."
Apparently, VeriChip's board of directors decided not to wait the three months to re-examine that model. At the closing of the Xmark transaction, Silverman will no longer serve as an officer or director of the company; instead, Joseph Grillo, Digital Angel's president and CEO, will replace him as a board member of the company, to become its chairman.
After VeriChip went public in February (see VeriChip Launches IPO), VeriTrace generated the first revenue for the company's implantable division. And in its financial report for the first quarter of 2008, the Delray Beach, Fla., firm indicated that its losses shrank. It lost $2.8 million, or 30 cents per share, on revenue of $8.6 million. In the prior-year quarter, it lost $3.3 million, or 47 cents a share, on revenue of $7.1 million. What's more, its gross profit was up by 5.4 percent.
VeriChip's implantable business, however, only generated $3,000 in revenue in the quarter ending March 31, 2008, during which the company saw a $1.9 million loss. According to a press statement released by Stanley, Xmark generates annual revenues in excess of $30 million, so without that revenue, VeriChip's implantable business would be unsustainable.
When the Xmark sale is complete, VeriChip plans to use the $45 million from Stanley to pay outstanding debt, then utilize $15 million of the remaining $21.4 million to pay shareholders a special dividend. If the firm sells the VeriMed business or the whole of VeriChip, it plans to propose a second, special dividend to its stockholders consisting of all remaining distributable cash then held by VeriChip.
Privacy advocates have long complained that VeriChip's implantable tag could put consumers' personal privacy at risk, proposing that the tags could be read without a carrier's knowledge. A news report released last fall, linking implanted RFID transponders to tumors in lab mice, caused additional public relations hurdles for the company (see VeriChip Defends the Safety of Implanted RFID Tags).
VeriChip has also been involved in research to develop an RFID-enabled sensor tag that could make it easier for diabetics to monitor blood-sugar levels (see VeriChip, Digital Angel Partner With Receptors LLC to Develop Glucose Sensor). While Digital Angel, along with Receptors LLC, are funding that research, McKeage says it would be up to the VeriMed buyer whether or not to continue such funding.
Xmark sells three types of branded RFID-based security products: infant security systems (under the Hugs and Halo brands), wander protection systems (under the RoamAlert brand) and hospital asset-tracking systems (under the Assetrac brand). Stanley has three main business divisions: construction tools, industrial tools and security (which comprises electrical and mechanical door locks). The Xmark products will be integrated into its security business.
Too late to save the planet, they say, so they focus on saving themselves
Associated Press May 24, 2008
BUSKIRK, N.Y. - A few years ago, Kathleen Breault was just another suburban grandma, driving countless hours every week, stopping for lunch at McDonald's, buying clothes at the mall, watching TV in the evenings.
That was before Breault heard an author talk about the bleak future of the world's oil supply. Now, she's preparing for the world as we know it to disappear.
Breault cut her driving time in half. She switched to a diet of locally grown foods near her upstate New York home and lost 70 pounds. She sliced up her credit cards, banished her television and swore off plane travel. She began relying on a wood-burning stove.
"I was panic-stricken," the 50-year-old recalled, her voice shaking. "Devastated. Depressed. Afraid. Vulnerable. Weak. Alone. Just terrible."
Convinced the planet's oil supply is dwindling and the world's economies are heading for a crash, some people around the country are moving onto homesteads, learning to live off their land, conserving fuel and, in some cases, stocking up on guns they expect to use to defend themselves and their supplies from desperate crowds of people who didn't prepare.
The exact number of people taking such steps is impossible to determine, but anecdotal evidence suggests that the movement has been gaining momentum in the last few years.
Saving themselves
These energy survivalists are not leading some sort of green revolution meant to save the planet. Many of them believe it is too late for that, seeing signs in soaring fuel and food prices and a faltering U.S. economy, and are largely focused on saving themselves.
Some are doing it quietly, giving few details of their preparations — afraid that revealing such information as the location of their supplies will endanger themselves and their loved ones. They envision a future in which the nation's cities will be filled with hungry, desperate refugees forced to go looking for food, shelter and water.
"There's going to be things that happen when people can't get things that they need for themselves and their families," said Lynn-Marie, who believes cities could see a rise in violence as early as 2012.
Lynn-Marie asked to be identified by her first name to protect her homestead in rural western Idaho. Many of these survivalists declined to speak to The Associated Press for similar reasons.
'Peak oil'
These survivalists believe in "peak oil," the idea that world oil production is set to hit a high point and then decline. Scientists who support the idea say the amount of oil produced in the world each year has already or will soon begin a downward slide, even amid increased demand. But many scientists say such a scenario will be avoided as other sources of energy come in to fill the void.
On the PeakOil.com Web site, where upward of 800 people gathered on recent evenings, believers engage in a debate about what kind of world awaits.
Some members argue there will be no financial crash, but a slow slide into harder times. Some believe the federal government will respond to the loss of energy security with a clampdown on personal freedoms. Others simply don't trust that the government can maintain basic services in the face of an energy crisis.
The powers that be, they've determined, will be largely powerless to stop what is to come.
Getting ready
Determined to guard themselves from potentially harsh times ahead, Lynn-Marie and her husband have already planted an orchard of about 40 trees and built a greenhouse on their 7 1/2 acres. They have built their own irrigation system. They've begun to raise chickens and pigs, and they've learned to slaughter them.
The couple have gotten rid of their TV and instead have been reading dusty old books published in their grandparents' era, books that explain the simpler lifestyle they are trying to revive. Lynn-Marie has been teaching herself how to make soap. Her husband, concerned about one day being unable to get medications, has been training to become an herbalist.
By 2012, they expect to power their property with solar panels, and produce their own meat, milk and vegetables. When things start to fall apart, they expect their children and grandchildren will come back home and help them work the land. She envisions a day when the family may have to decide whether to turn needy people away from their door.
"People will be unprepared," she said. "And we can imagine marauding hordes."
Prepared for insurrection
So can Peter Laskowski. Living in a woodsy area outside of Montpelier, Vt., the 57-year-old retiree has become the local constable and a deputy sheriff for his county, as well as an emergency medical technician.
"I decided there was nothing like getting the training myself to deal with insurrections, if that's a possibility," said the former executive recruiter.
Laskowski is taking steps similar to environmentalists: conserving fuel, consuming less, studying global warming, and relying on local produce and craftsmen. Laskowski is powering his home with solar panels and is raising fish, geese, ducks and sheep. He has planted apple and pear trees and is growing lettuce, spinach and corn.
Whenever possible, he uses his bicycle to get into town.
"I remember the oil crisis in '73; I remember waiting in line for gas," Laskowski said. "If there is a disruption in the oil supply it will be very quickly elevated into a disaster."
Breault said she hopes to someday band together with her neighbors to form a self-sufficient community. Women will always be having babies, she notes, and she imagines her skills as a midwife will always be in demand.
For now, she is readying for the more immediate work ahead: There's a root cellar to dig, fruit trees and vegetable plots to plant. She has put a bicycle on layaway, and soon she'll be able to bike to visit her grandkids even if there is no oil at the pump.
Whatever the shape of things yet to come, she said, she's done what she can to prepare.
The Duke of Edinburgh says global overpopulation is to blame for rapidly rising food prices.
In an interview for a documentary with Sir Trevor McDonald, he says: "The food prices are going up – everyone thinks it's to do with not enough food, but it's really that demand is too great, too many people."
The Duke adds: "It's a little embarrassing for everybody, no one quite knows how to handle it. Nobody wants their family life to be interfered with by the government."
He says that overpopulation is to blame for many of the problems afflicting millions of people around the world.
The comments will spark renewed debate about population growth and birth control, and refocus attention on the Duke as a figure of controversy.
Sir Trevor was granted unparalleled access over several months to the Duke, who, while playing a central role in Britain's monarchy since his marriage to the Queen more than 60 years ago, has remained something of an enigma.
The film paints an intimate portrait of the Duke and his dedication to conservation.
In it he condemns the present preoccupation with animal rights at the expense of "hard-hearted" decisions about the conservation of species.
The Duke: A Portrait of Prince Philip, is to be shown in two parts on ITV Sunday and Tuesday at 9pm.
If you have heard of Learfield Communications, it is probably from listening to college football and basketball games.
The Jefferson City, Missouri based Learfield is one of the nation’s largest broadcasters of college sports.
But it also produces news programming heard throughout the farm belt.
Learfield was started 35 years ago by Clyde Lear and Derry Brownfield.
Lear went on to be the chairman of the company. He bought out his friend and partner Brownfield in 1985.
Brownfield went on to do market news reports for the Learfield news division until 1997 or so, when he started broadcasting a daily call-in show called The Common Sense Coalition.
Derry Brownfield would broadcast The Common Sense Coalition from the studios of Learfield Communications.
Learfield would subsidize the program and allow Brownfield to use its studios and satellite hook-up.
Monsanto happens to be a big advertiser of the Learfield news division – to the tune of hundreds of thousands of dollars a year.
Brownfield happens to think that Monsanto is an evil corporation.
Therein lies the rub.
For weeks, Brownfield had been ripping Monsanto on air for its policies of enforcing its seed patents against farmers.
On the April 16 show, Brownfield’s topic was seed industry concentration in America.
His guests were Fred Stokes, president of the Organization for Competitive Markets, and Michael Stumo, general counsel of the group.
Stokes and Stumo were promoting a new project to study corporate concentration in the seed industry.
Monsanto is the dominant player in the global seed industry and has a reputation for playing rough.
On air, Brownfield quoted from a newly published Vanity Fair article titled “Monsanto’s Harvest of Fear” by Donald Barlett and James Steele.
“Monsanto relies on a shadowy army of private investigators and agents in the American heartland to strike fear into farm country,” Barlett and Steele write. “They fan out into fields and farm towns, where they secretly videotape and photograph farmers, store owners, and co-ops, infiltrate community meetings, and gather information from informants about farming activities. Farmers say that some Monsanto agents pretend to be surveyors. Others confront farmers on their land and try to pressure them to sign papers giving Monsanto access to their private records. Farmers call them the ‘seed police’ and use words such as ‘Gestapo’ and ‘Mafia’ to describe their tactics.”
After reading from the Vanity Fair article, Brownfield then begins to riff on the Mafia theme.
“Multinational corporations are doing everything possible to change agriculture – and not for the better,” Brownfield says on the show. “I know a little bit about this – not a lot, just a little bit – but Monsanto literally they have Mafia goons out, do they not? They show up on farmers’ property, they try and harass them, they say if you don’t sign this, we are going to take you to court. They have literally tried to destroy agriculture as we know it. They have a goon squad. Maybe that’s not what they like to be called. But if it was the Mafia, we would call them the goon squad.”
Calling Monsanto’s patent enforcers goons was apparently the straw that broke this camel’s back.
Brownfield’s stint at Learfield was about to end.
Last week, Brownfield was told that he could no longer broadcast out of the Learfield studios. His buddy, Clyde Lear, posted a blog on the Learfield web site saying that Brownfield’s last show will be in mid-May.
“The Common Sense Coalition grinds to a halt on our system,” Lear wrote.
“Most of his listeners loved him as did his affiliates,” Lear wrote about his buddy. “He didn't mind controversy or taking on giants like the Monsanto Corporation. He thought they were bad for farmers, too big for their britches and generally bad for America. Increasingly he's been saying so, without seeking balance, in my opinion.”
And then later, in response to listeners who were upset that Brownfield was being let go, Lear wrote:
“Some seem to think the reason Derry is leaving is because Monsanto threatened to stop advertising if we didn’t put a gag on him. If that were the only reason Derry was asked to leave, then I can see why they think we are selling out. We've parted ways because accusations being made about not only advertisers, but individuals, corporations, government, (fill in the blank) were based on fear and lies with absolutely no truth to back them up. I abhor radio talk shows like Rush Limbaugh...and Derry Brownfield where half-truths are articulated. I won't be a part of them. And, that's my right.”
But in an interview with Corporate Crime Reporter, Lear admits that the Monsanto issue is what drove his buddy Brownfield out.
“If the Monsanto issue had not come up, we would not be here today,” Lear said.
Lear said that the President of Learfield Communications, Roger Gardner, talked recently with John Raines, Monsanto’s director of public affairs.
“John Raines talked to Roger Gardner about the difficulties they felt Brownfield is giving them,” Lear said. “(Gardner) told me he talked to John Raines about the Vanity Fair article.”
“The pressure I got came from the president of the news division, Stan Koenigsfeld,” Lear said. “Stan is the guy that has responsibility for selling and maintaining the financial viability of our news division. Stan is a no nonsense guy. So, Stan comes in and says – why are we doing this? Why do we continue to do this? We give him all of these things and he spits in our face by lambasting our good advertisers, without giving them an opportunity for fair and balanced reporting. And it is not reporting – it’s just entertainment. Why do we continue to do this?”
Lear says that the complaints have been mounting over the past five years about Brownfield.
“And I’ve been saying to Stan, settle down, it will all be alright,” Lear said. “But I imagine Stan is getting a lot of pressure from his sales executives. We have three that call on Monsanto for different products. And I would assume that he is getting pressure from those sales executives. When those sales executives call on Monsanto, Monsanto is complaining to the sales executives. That is where the connection happens. But you would have to talk to them about the kind of leverage Monsanto is putting on them. They have never to my knowledge threatened to pull any advertising.”
Lear finally confronted Brownfield.
“I went to him and said – Derry, look, lay off of this,” Lear said. “Lay off of this Monsanto thing. I am getting a lot of complaints.”
Lear said he was the only one in the company who could approach Brownfield.
“I’m the only one who can talk to him,” Lear said. “No one else in the company will go to him. He is kind of persona non grata. He is one of the guys who helped start the company years ago. He was my partner for years until 1985 when I bought him out. He is a dear friend of mine. So, there is no one else – all of the rest of the guys are half my age. They won’t go to him. They are afraid of him. They just won’t go and talk to him.”
“They all came to me and said – go talk to Derry,” Lear said. “We’ve got to quit doing this. Plus, it came at a bad time. It came during the same week that the National Association of Farm Broadcasters national convention was being held in Kansas City. And at that convention, of course, Monsanto was omnipresent. They are there trying to woo farm broadcasters, because they want them to say nice things about them, right? So, here are all of the Monsanto people at this convention. And their advertising agencies – Osborne & Barr out of St. Louis – among others. They were all there. And it was embarrassing, because all of that week, Derry is lambasting Monsanto.”
“We have explained to Monsanto, in any way we can, that the Brownfield Network has nothing to do with Derry’s show,” Lear says. “This is a completely independent show that he puts on. Well, Monsanto says – he’s doing it from your studios, isn’t he? And we say yes, we give him space because of the history.”
“And they ask – how else do you help him? If he weren’t doing the show, would this problem disappear?”
“So my guys came to me and said – we’ve got to do something about this.”
“So, I went in to Derry and I sat down with him,” Lear said. “It was very good natured. I wasn’t angry. I wasn’t planning on doing anything. I said – let this Monsanto thing go for awhile. Just let it go.”
“He said – ‘Clyde – Monsanto is an evil empire,’” Lear recalled. “‘This is evil. He said – every farmer hates Monsanto. You know what they have done – and then he would lambast Monsanto and lay out this litany of stuff that they do. It included milk. Apparently there is a human growth hormone that they put in the milk. I don’t know a thing about it, but apparently they won a court case that prohibited milk retailers from putting on the milk carton the label – hormone free. I didn’t know anything about this, but Brownfield was complaining about how the liberal judges of America are siding with the evil empire. And Monsanto pays them off. All kinds of allegations which I’m sure are not true. But Derry believes them.”
“So, I said – will you let Monsanto be on the air? And he said – I’m not going to give them a forum. But then he changed his mind and said – yeah, bring them on. I'll let them on the show.”
Lear then went to hole up with his executives. And his execs told him – “It’s bigger than this now. We just don’t need to be associated with him.”
“So, I just walked back there and said to Derry – you say you are not going to lighten up. And he said no, I’m staying the course. And I said – not with us you are not. You are going to have to find some other way to distribute your program, and you are going to have to find some other office to do it out of.”
Given that he was willing put Monsanto on his show, why not keep him on?
“Maybe we should have,” Lear said.
Would you reconsider your decision?
“I don’t think so,” Lear says. “It is just not a business I want to be in anymore.”
Lear says he feels sad about parting with his old buddy, but he wants to help set up an internet radio studio for Derry out of Derry’s home office.
“We are helping him build a new facility in his home,” Lear says. “But we won’t have a connection to him. Then we can easily say to Monsanto – we don’t have a thing to do with Derry. We don’t have a thing to do with him. He’s not on our property. We can’t control him.”
Brownfield said he couldn’t comment on the situation until after May 30.
By Brett Arends Wall Street Journal April 21, 2008
I don't want to alarm anybody, but maybe it's time for Americans to start stockpiling food.
No, this is not a drill.
You've seen the TV footage of food riots in parts of the developing world. Yes, they're a long way away from the U.S. But most foodstuffs operate in a global market. When the cost of wheat soars in Asia, it will do the same here.
Reality: Food prices are already rising here much faster than the returns you are likely to get from keeping your money in a bank or money-market fund. And there are very good reasons to believe prices on the shelves are about to start rising a lot faster.
"Load up the pantry," says Manu Daftary, one of Wall Street's top investors and the manager of the Quaker Strategic Growth mutual fund. "I think prices are going higher. People are too complacent. They think it isn't going to happen here. But I don't know how the food companies can absorb higher costs." (Full disclosure: I am an investor in Quaker Strategic)
Stocking up on food may not replace your long-term investments, but it may make a sensible home for some of your shorter-term cash. Do the math. If you keep your standby cash in a money-market fund you'll be lucky to get a 2.5% interest rate. Even the best one-year certificate of deposit you can find is only going to pay you about 4.1%, according to Bankrate.com. And those yields are before tax.
Meanwhile the most recent government data shows food inflation for the average American household is now running at 4.5% a year.
And some prices are rising even more quickly. The latest data show cereal prices rising by more than 8% a year. Both flour and rice are up more than 13%. Milk, cheese, bananas and even peanut butter: They're all up by more than 10%. Eggs have rocketed up 30% in a year. Ground beef prices are up 4.8% and chicken by 5.4%.
These are trends that have been in place for some time.
And if you are hoping they will pass, here's the bad news: They may actually accelerate.
The reason? The prices of many underlying raw materials have risen much more quickly still. Wheat prices, for example, have roughly tripled in the past three years.
Sooner or later, the food companies are going to have to pass those costs on. Kraft saw its raw material costs soar by about $1.25 billion last year, squeezing profit margins. The company recently warned that higher prices are here to stay. Last month the chief executive of General Mills, Kendall Powell, made a similar point.
The main reason for rising prices, of course, is the surge in demand from China and India. Hundreds of millions of people are joining the middle class each year, and that means they want to eat more and better food.
A secondary reason has been the growing demand for ethanol as a fuel additive. That's soaking up some of the corn supply.
You can't easily stock up on perishables like eggs or milk. But other products will keep. Among them: Dried pasta, rice, cereals, and cans of everything from tuna fish to fruit and vegetables. The kicker: You should also save money by buying them in bulk.
If this seems a stretch, ponder this: The emerging bull market in agricultural products is following in the footsteps of oil. A few years ago, many Americans hoped $2 gas was a temporary spike. Now it's the rosy memory of a bygone age.
The good news is that it's easier to store Cap'n Crunch or cans of Starkist in your home than it is to store lots of gasoline. Safer, too.
Whether he was up to no good or simply desperate to play BrickBreaker, a Mexican press attaché was caught on camera by Secret Service pocketing several White House BlackBerries during a recent meeting in New Orleans, FOX News has learned.
Sources with knowledge of the incident said the official, Rafael Quintero Curiel, served as the lead press advance person for the Mexican Delegation and was responsible for handling logistics and guiding the Mexican media around at the conference. He took six or seven of the handheld devices from a table outside a special room in the hotel where the Mexican delegation was meeting with President Bush earlier this week.
Everyone entering the room was required to leave his or her cell phone, BlackBerry and other such devices on the table, a common practice when high-level meetings are held. American officials discovered their missing belongings when they were leaving the session.
It didn't take long before Secret Service officials reviewed videotape taken by a surveillance camera and found footage showing Quintero Curiel absconding with the BlackBerries.
Sources said Quintero Curiel made it all the way to the airport before Secret Service officers caught up with him. He initially denied taking the devices, but after agents showed him the DVD, Quintero Curiel said it was purely accidental, gave them back, claimed diplomatic immunity and left New Orleans with the Mexican delegation.
It is unclear what disciplinary measures, if any, await him in Mexico. White House spokeswoman Dana Perino refused to discuss the incident, telling FOX News, "We are aware of the situation, but as it's under investigation by law enforcement officials, we will decline to comment."
FOX News' James Rosen and Mike Emanuel contributed to this report.
Worried about rising prices worldwide, customers have been stocking up, prompting sales limits.
By Jerry Hirsch and Tiffany Hsu Los Angeles Times April 24, 2008
The global run on food that has led to shortages and riots in Egypt, Haiti and other nations has made its way to U.S. shores.
Concerned about rising prices and limited supplies of staples such as rice and flour, customers across the country have been cleaning out the shelves at big-box retailers, including Wal-Mart Stores Inc.'s Sam's Club and Costco Wholesale Corp. stores.
On Wednesday, Sam's Club said customers would no longer be allowed to purchase more than four bags of jasmine, basmati or long-grain white rice on each visit.
Sam's Club blamed the restriction on "supply and demand trends" and said it was working with suppliers "to ensure we are in stock."
The policy involves only bags weighing 20 pounds or more and does not affect smaller packages sold at the store or its sister Wal-Mart outlets.
This week, Costco said it had seen sales of flour, rice and some cooking oils leap. Some Costco stores already have held customers to just two bags of rice a day, but the chain doesn't plan to limit sales nationwide.
By midafternoon Wednesday, the Costco in Alhambra -- which had not placed limits on purchases -- said it had run out of rice.
Earlier in the day, Michael Yang, manager of Hawaiian barbecue restaurants in Pico Rivera and West Covina, had decided it was time to stock up. He bought 46 bags of medium-grain rice, 50 pounds each, at the Alhambra Costco and loaded them into his white van.
He paid $15.39 each, which he called a bargain compared with premium brands from Thailand that have recently nearly doubled in price to $40 for a 50-pound bag.
"The price of everything -- oil, sugar -- has been going up for months, and rice has been an issue for a few weeks already. Everyone else is doing the same thing I am because they use up their rice so fast," Yang said in Mandarin.
Prices for many foods, including beer, bread, coffee, pizza and rice, are rising rapidly as the nation contends with its worst bout of food inflation since 1990. The cost of groceries is climbing at an annual rate of about 5% this year.
Retail experts said there was little evidence of "panic" hoarding by the public. It appears that restaurants and smaller retailers have been buying up most of the stock on the expectation that prices will continue to rise.
Still, shoppers' actions have taken some stores by surprise.
"It is like a run on the bank. We don't think there is a shortage, it is just increased shopping by customers who think there is," said Richard Galanti, Costco's chief financial officer. For now, the retailer is allowing managers of stores with short supplies to set their own rules.
Other retailers report adequate supplies.
"Ralphs has plenty of rice. No shortages at any of our stores," said Terry O'Neil, spokesman for Ralphs Grocery Co.
When Heidi Diep visited the Costco in Alhambra last week seeking rice for her Chinese fast-food restaurant in Silver Lake, the store was out of stock. It had plenty of rice when Diep went back Wednesday, but, thanks to shoppers like Diep and Yang, ran out again.
"I picked up as much as I could," Diep said as she hauled a dozen 50-pound bags of Super Lucky Elephant rice and 10 bags of 25-pound long grain into her van and her sister's sedan.
The businesswoman said she was stockpiling the grain to avoid future price increases and a repeat of the week when it couldn't be found.
Internationally, shortages of basic commodities -- including rice, wheat and some oils -- have led to protests and riots in recent months, prompting concern about food security in many poor countries.
With the exception of rising prices, the U.S. has escaped the problems seen in other countries. Some brewers have complained of shortages of certain types of hops for making high-end beers, and bakers have scrambled to find some specialty flours.
If the shortages expand to other food products that can be easily stored, the U.S. economy may take a hit.
Runs on staples such as rice have consequences for the larger economy by adding to inflation and making it harder for the Federal Reserve to cut interest rates to ease problems in the financial and housing markets, said Milton Ezrati, an economist at investment firm Lord, Abbett & Co. in Jersey City, N.J.
The U.S. run on rice is mostly a consumer reaction to international headlines combined with domestic food inflation that turns into a self-fulfilling prophecy, Ezrati said.
The futures-market price of U.S.-grown long-grain rice -- the type that is in short supply worldwide -- has risen 73% this year to $24.82 for 100 pounds as other countries shut off exports.
More heavy purchasing of rice will just move American inventory from warehouses and store shelves into cupboards or the storerooms of restaurants, putting pressure on supplies and prices and "compounding the problem," Ezrati said.
Since the fall, large producers such as Vietnam, India and Egypt have banned or limited rice exports to keep a lid on domestic food prices. China, another major producer, has taxed rice exports.
But there is no dearth of rice in the United States. The Department of Agriculture projects U.S. rice supplies this year will be 8.3 million tons, nearly unchanged for the last seven years. Because Americans consume just 10% to 15% of what people in Asia's big rice-eating nations eat, there's plenty for domestic use, said Nathan Childs, a USDA market analyst. Rice consumption in the U.S. is so low that as much as half of the domestic crop is exported.
Most rice is eaten within 100 miles of where it is grown. Just 8% of world production actually trades internationally, Childs said. So these new export limits and taxes have had an outsize effect on prices, he said.
That's made for a rough time for Thomas Chan, manager of the ABC Cafe in Monterey Park. At least 70% of his customers order rice.
The cafe now purchases 100 large bags of rice each month as backup, Chan said. "Without a steady supply, what do we have to give to customers?"
Top retailer Wal-Mart's Sam's Club unit said Wednesday it is limiting the amount of rice individual shoppers could buy at one time, as rice prices hit new records around the world.
Sam's Club said it had temporarily placed limits of four 20-pound (nine-kilogram) bags a person for jasmine, basmati, and other long-grain white rice types.
"We currently have plenty of rice for Sam's Club Members," the company said in a statement.
"However, like our competitors, we're just taking the precautionary step of limiting sales of the very large 20 pound bags" of imported white rice, it said.
Sam's Club, a members-only bulk retailer chain owned by Wal-Mart, the world's largest retailer, said smaller-sized bags of rice were not affected by the restrictions; nor did they extend to Wal-Mart stores.
"This temporary cap is intended to ensure there is plenty of rice for all our members. No other items are affected."
Vitamins taken by around a third of the population do not extend life and may even cause premature death, according to a respected group of international scientists.
After reviewing 67 studies involving more than 230,000 men and women, the experts say there is no convincing evidence that taking supplements of the antioxidant vitamins A, C and E can make you healthier.
The alarming findings, published today, will shock Britons who spend £333million a year on supplements.
Forty per cent of women and 30 per cent of men take a vitamin pill each day.
The review involved trials on beta-carotene, vitamin A, vitamin C, vitamin E and selenium.
It says in-depth analysis of the different trials does not support the idea that vitamins extend lifespan.
'Even more, beta-carotene, vitamin A, and vitamin E seem to increase mortality,' says the review.
Vitamin A was linked to a 16 per cent increase in mortality, beta-carotene - the pigment found in carrots, tomatoes and broccoli which the body converts into vitamin A - to a 7 per cent increase and vitamin E to a 4 per cent increase. However, there was no significant detrimental effect caused by vitamin C.
'There was no evidence to support either healthy people using antioxidants to prevent disease or for sick people to take them to get better,' said the review.
It said more research was needed on vitamin C and selenium.
Antioxidants are used by the body as protection against free radicals, which are molecules produced during normal metabolism.
These can damage the body if they flourish in an uncontrolled way as a result of illness, overexposure to toxins or ageing.
It is thought antioxidants such as vitamin C confer health benefits by 'grabbing' or neutralising free radicals, and many people take them as health 'insurance'.
The theory behind using antioxidants is to combat oxidation - the chemical reaction that causes metals to rust - which in cells can damage DNA, thus raising the risk of cancer, other diseases and the changes associated with ageing.
Previous human and animal laboratory research suggested that boosting antioxidant levels in the body might extend life, but other studies produced neutral or even harmful results.
The review is published by the Cochrane Library, a publication of the Cochrane Collaboration, an international organisation which evaluates healthcare research.
Altogether 47 trials involving 180,938 people were classified as having a low risk of bias which showed 'antioxidant supplements significantly increased mortality'.
Goran Bjelakovic, who led the review at the Copenhagen University Hospital in Denmark, said: 'We could find no evidence to support taking antioxidant supplements to reduce the risk of dying earlier in healthy people or patients with various diseases.
'The findings of our review show that if anything, people in trial groups given the antioxidants beta-carotene, vitamin A, and vitamin E showed increased rates of mortality.
'There was no indication that vitamin C and selenium may have positive or negative effects. So, regarding these antioxidants, we need more data from randomised trials.
'The bottom line is that current evidence does not support the use of antioxidant supplements in the general healthy population or in patients with certain diseases.'
The review does not offer any biological explanation as to why supplements can cause harm, although it has been suggested that betacarotene, for example, might interfere with the body's use of fats.
There is no suggestion from the review that a healthy diet including plenty of vegetables and fruit - natural sources of antioxidants - is harmful.
The latest scare has infuriated many in the vitamins industry and nutritionists such as Patrick Holford who believe there is a campaign by the medical establishment to discredit their products and their role in optimising health.
Mr Holford said the review was 'a stitch-up' because all the studies were chosen strictly for reducing mortality, and not for the many advantages reported in other studies.
He said: 'The only way this review could produce the negative results was by finding reasons to exclude most of the positive studies, including all the positive ones on selenium.'
Although the authors claimed to be assessing antioxidant supplements for the prevention of mortality, they excluded all studies - 405 of them - which reported no deaths.
Mr Holford said: 'Antioxidants are not meant to be magic bullets and should not be expected to undo a lifetime of unhealthy habits.
'But when used properly, in combination with eating a healthy diet full of fruit and vegetables, getting plenty of exercise and not smoking, antioxidant supplements can play an important role in maintaining and promoting overall health.
'I take, and will continue to take an all-round antioxidant supplementing containing these nutrients as well as CoQ10, lipoic acid and resveratrol - the "red wine" factor - and also eat a diet high in fruit and vegetables.'
Pamela Mason, of the industry-backed Health Supplements Information Service, said: 'Antioxidant vitamins, like any other vitamins, were never intended for the prevention of chronic disease and mortality.
'They are intended for health maintenance on the basis of their various physiological roles in the body and in the case of antioxidant vitamins, this does, in appropriate amounts, include a protective antioxidant effect in the body's tissues.
'These vitamins are essential for health and many people in the UK do not have an adequate intake.
'A vitamin supplement taken in recommended amounts can be beneficial for health, especially for those people whose intakes are poor.'
Justices' Decision May Set Precedent In Interpreting the 2nd Amendment
By Robert Barnes Washington Post Sunday, March 16, 2008
Despite mountains of scholarly research, enough books to fill a library shelf and decades of political battles about gun control, the Supreme Court will have an opportunity this week that is almost unique for a modern court when it examines whether the District's handgun ban violates the Second Amendment.
The nine justices, none of whom has ever ruled directly on the amendment's meaning, will consider a part of the Bill of Rights that has existed without a definitive interpretation for more than 200 years.
"This may be one of the only cases in our lifetime when the Supreme Court is going to be interpreting the meaning of an important provision of the Constitution unencumbered by precedent,'' said Randy E. Barnett, a constitutional scholar at the Georgetown University Law Center. "And that's why there's so much discussion on the original meaning of the Second Amendment.''
The outcome could roil the 2008 political campaigns, send a national message about what kinds of gun control are constitutional and finally settle the question of whether the 27-word amendment, with its odd structure and antiquated punctuation, provides an individual right to gun ownership or simply pertains to militia service.
"The case has been structured so that they have to confront the threshold question," said Robert A. Levy, the wealthy libertarian lawyer who has spent five years and his own money to bring District of Columbia v. Heller to the Supreme Court. "I think they have to come to grips with that."
The stakes are obviously high for the District, which passed the nation's strictest gun-control law in 1976, just after residents were granted the authority to govern themselves. It virtually bans the private possession of handguns, and requires that rifles and shotguns in the home be kept unloaded and disassembled or outfitted with a trigger lock.
The law's challengers -- security guard Dick Anthony Heller is the named party in the suit -- say the measure has been an abysmal failure at cutting crime or stanching the city's homicide rate, and a success only in depriving the law-abiding of a ready weapon for protection. The District contends that banning handguns is a logical decision in an urban setting, where more guns would result in more killings.
The city's lawyers argue that the Second Amendment does not provide an individual right and that, even if it does, the amendment is not implicated by legislation that concerns only the District of Columbia.
The case could be a revealing test of the court headed by Chief Justice John G. Roberts Jr. Roberts came to the bench saying justices should decide cases as narrowly as possible, but last year he was part of a slim majority that made bold breaks with the court's jurisprudence in cases both recent and old, on issues such as school integration and abortion.
Clues to the justices' interpretations of the Second Amendment are scant and cryptic, and Roberts said during his 2005 confirmation hearings that the last time the court considered the issue -- in 1939 -- it "sidestepped" the fundamental questions.
That is part of the reason that the outcome -- not expected until near the end of the court's term in late June -- will be so intriguing, said Suzanna Sherry, a law professor at Vanderbilt University.
"It is very rare that the justices write on a clean slate," she said. "In some ways, it gives them great freedom."
Levy and lawyers Alan Gura and Clark Neily were able to persuade the U.S. Court of Appeals for the District of Columbia Circuit last year to do what no other federal appeals court had ever done: strike down a local gun-control ordinance on Second Amendment grounds.
The amendment says that "a well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed,'' and all but one of the circuits that had considered the issue previously had interpreted it as providing a gun-ownership right related only to military service.
But Senior Judge Laurence H. Silberman, a conservative icon, wrote for a 2 to 1 panel that the amendment provides an individual right just as other provisions of the Bill of Rights do. And because handguns fall under the definition of "arms," he wrote, the District may not ban them.
The Supreme Court's endorsement of an individual right would be a monumental change in federal jurisprudence, but perhaps not surprising. Even a small but growing group of liberal constitutional scholars -- "against my political instincts," in the words of Harvard law professor Laurence H. Tribe -- have endorsed the individual-right view.
But even fundamental rights are subject to government restrictions, and whether the justices are ready to decide on the reasonableness of the District's ban could be the crucial question of the case.
The city received an unlikely lifeline from the Bush administration, which told the court that the amendment provides an individual right but that the appeals court erred in deciding that the District's ban was automatically unconstitutional.
"If adopted by this court," Solicitor General Paul D. Clement wrote in the government's brief, "such an analysis could cast doubt on the constitutionality of existing federal legislation prohibiting the possession of certain firearms, including machineguns."
Clement said that the District's law may well be unconstitutional, but that the case should be returned to lower courts for "application of a proper standard of review" and to permit "Second Amendment doctrine to develop in an incremental and prudent fashion."
Gun rights supporters were furious about the government's position, and Vice President Cheney went so far as to join a friend-of-the-court brief that specifically rejects the administration's view. Levy said returning the case to lower courts would be a "death knell," and his team has urged the court to apply "strict scrutiny" to any government action that would restrict gun ownership.
Said Gura: "What we want to do is take prohibition off the table."
The case is complicated by the District's secondary argument that the Second Amendment is not implicated by legislation that applies only to the District of Columbia.
The challengers have received a broad array of political support, signs of the strength of the gun rights movement: More than 31 states and a majority of the House and Senate have signed friend-of-the-court briefs.
Among the presidential candidates, Republican Sen. John McCain signed on, while Democratic Sens. Barack Obama and Hillary Rodham Clinton did not. Both Democrats have looked for a middle ground, saying they believe the Second Amendment preserves an individual right, but one that is subject to government restrictions.
That position would seem popular. A Washington Post poll shows that 72 percent of the public believes the Constitution provides an individual right, but respondents were evenly split on whether it is more important to protect the rights of Americans to own guns or to control gun ownership.
Nearly 60 percent said they would support the kind of law in question.
But nationally, it is hard to find many laws as restrictive as the one in the District, partly because of the gun rights lobby's vigilance. More than 40 state constitutions have gun ownership guarantees. Maryland's is one of the few that does not.
As a result, it is difficult to know what gun-control legislation across the country would be at risk even if the Supreme Court upheld the D.C. Circuit's decision.
Levy said the next targets will be handgun laws in Chicago and New York City, although the court has never held that the Second Amendment is applicable to states. And one legal theory is that the provision is a restriction only against the federal government.
Both sides agree that the court's decision could send a powerful message beyond the District.
Tribe, whose support of the individual right is often cited by gun rights supporters, wrote an article in the Wall Street Journal recently that said the District's law could still be upheld and urged the court to decide the case narrowly.
But he acknowledged in an interview that the justices might "jump at the opportunity" to write broadly when they finally have a chance to put their mark "on a part of the Constitution that isn't already paved over with layer upon layer of judicial precedent."
Polling director Jon Cohen and researcher Madonna Lebling contributed to this report.
By Bert Hielema Belleville, Intelligencer February 29, 2008
And you thought that I had a gloomy outlook on the economy. Now the bad news pops up everywhere.
Harry Koza in the Globe and Mail quotes Bernard Connelly, the global strategist at Banque AIG in London, who claims that the likelihood of a Great Depression is growing by the day.
Martin Wolf, celebrated columnist of the U.K.-based Financial Times, cites Dr. Nouriel Roubini of the New York University's Stern School of Business, who, in 12 steps, outlines how the losses of the American financial system will grow to more than $1 trillion - that's one million times $1 million. That amount is equal to all the assets of all American banks.
Every day now, thousands of people all over the U.S. and Great Britain are walking away from their homes - simply mailing their house keys to the banks - as housing bailout plans fail.
With unemployment growing, the next phase will hit commercial real estate making the financial institutions the unwilling owners not only of quickly depreciating houses, but also of empty strip malls and even larger shopping centres.
The next domino to fall will be credit card defaults, and after that... who knows? There are so many exotic funds out there, with trillions of dollars in paper - or rather computer-screen money - all carrying assorted acronyms, and all about to disintegrate into nothingness. Over the next couple of years, scores of banks that have thrived on these devices, based on quickly disappearing equities, will fail.
The most frightening forecast so far comes from the Global Europe Anticipation Bulletin (GEAB), available for 200 euros - about $300 - for 16 issues annually. Its prediction is quite specific.
Where my warnings never spelled out an exact date, this think tank has it pegged precisely. Here are its very words:
"The end of the third quarter of 2008 (thus late September, a mere seven months from now) will be marked by a new tipping point in the unfolding of the global systemic crisis.
"At that time indeed, the cumulated impact of the various sequences of the crisis will reach its maximum strength and affect decisively the very heart of the systems concerned, on the front line of which (is) the United States, epicentre of the current crisis.
"In the United States, this new tipping point will translate into - get this - a collapse of the real economy, (the) final socio-economic stage of the serial bursting of the housing and financial bubbles and of the pursuance of the U.S. dollar fall. The collapse of U.S. real economy means the virtual freeze of the American economic machinery: private and public bankruptcies in large numbers, companies and public services closing down."
The report goes on to say that we are entering a period for which there is no historic precedent. Any comparisons with previous situations in our modern economy are invalid.
We are not experiencing a "remake" of the 1929 crisis nor a repetition of the 1970s oil crises or 1987 stock market crisis.
What we will have, instead, is truly a global momentous threat - a true turning point affecting the entire planet and questioning the very foundations of the international system upon which the world was organized in the last decades.
The report emphasizes that it is, first and foremost, in the United States where this historic happening is taking an unprecedented shape (the authors call it "Very Great U.S. Depression").
It continues to predict that, although this crucial event is global, it will be the beginning of an economic 'decoupling' between the U.S. and the rest of the world. However, non 'decoupled' economies will be dragged down the U.S. negative spiral.
Concerning stock markets, the GEAB anticipates that international stocks would plummet by 40 to 80 per cent depending where in the world they are located, all affected in the course of the year 2008 by the collapse of the real economy in the U.S. by the end of summer.
The European authors of this report - it appears simultaneously in French, German and English - state that they simply and without prejudice try to describe in advance the consequences of the ominous trends at play in this 21st-century world, and to share these with their readers, so that they can take the proper means to protect themselves from the most negative effects.
So there you have it. Three reports from three different sources, all well regarded, and all pointing to a disastrous fall-out from our monetary moves.
This and earlier columns can be seen at hielema.ca. Comments to hielema@allstream.net
By Neil Irwin Washington Post Staff Writer Friday, March 14, 2008
Retail sales plummeting. The dollar at a new low against other world currencies. A 60 percent jump in U.S. home foreclosures. A major investment fund going kaput.
This is what a reordering of the world economy looks like in real time.
Don't think of yesterday's economic news as discrete events. They are small pieces of a much bigger reversal in a series of imbalances that made Americans feel richer than they were and created unsustainable distortions in the world economy that are now righting themselves.
Americans are consuming less, and their houses and other assets are becoming less valuable. Painful as they may be, in the long run, both trends must happen to restore sustainable growth. But in the short run, they are wrenching changes that are probably causing a recession.
The weaker U.S. economy, combined with low interest rates due to Federal Reserve rate cuts, has made traders around the world less inclined to buy dollars. Thus, the value of a dollar fell below 100 yen yesterday for the first time since 1995, and slumped to a new low against the euro. Unpleasant as that is for people planning European vacations, it should help cushion the blow to the economy by making U.S. exporters more competitive.
On the way up, a worldwide boom of cheap credit fueled consumer spending, kept the U.S. economy strong and artificially boosted the prices of real estate and other assets. Now the reverse is happening. Lenders made too much money available, taking on too much risk for too-low interest rates. The pullback is reflected in yesterday's other big business news, the default of Carlyle Capital, a fund operated by District-based private-equity giant Carlyle Group.
The Carlyle fund had increased its returns by borrowing money from banks to buy securities backed by mortgages. When the value of those securities fell and lenders demanded more collateral, lenders took control of the fund and began dumping its assets into a market that was already swimming in such securities.
Simultaneously, the lessening availability of credit is causing consumers to spend less. That causes lenders to be more cautious, making the credit problems more severe. It is what leaders of the Federal Reserve call an "adverse feedback loop."
There was clear evidence yesterday that Americans are spending less. The Commerce Department reported that retail sales fell 0.6 percent in February, a sign that consumers are bringing their spending more in line with what they can afford after a decade of spending beyond their means. Auto dealers and restaurants took the biggest hits, as people delayed purchases of new cars and saved money by eating in.
This pullback by consumers and reduction in credit availability are behind the increase in home foreclosures that RealtyTrac announced yesterday. The 60 percent jump reflects the fact that U.S. assets are becoming less valuable, making consumers poorer. With home prices down 8.9 percent in the past year (according to the Case-Schiller index), the dollar lower and stock prices down, we aren't as rich as we thought we were.
"The distress we are seeing in the credit markets, the pullback in consumer spending, the retreat in the dollar -- these are really all part of the same story," said David A. Rosenberg, chief economist at Merrill Lynch. "We had a dramatic overextension of credit and consumption growth for a long time."
In economics textbooks, such a rejiggering of economic forces happens in a nice straight line. In practice, it happens haltingly, with world markets on edge, day after day. Days like yesterday, full of jangled nerves and creeping panic.
Washington policymakers are trying to keep this adjustment of the world economy as orderly as possible, trying to prevent the economic undertow from hurting too many Americans.
In a survey released yesterday by the Wall Street Journal, 71 percent of economists said they thought the economy was in recession.
The Bush administration and the Federal Reserve stress that they're not trying to prevent fundamental adjustments. Home prices need to come in line with fundamentals, as do spending and savings rates. Credit needs to become available at prices commensurate with risk.
"It's by no means all bad that the U.S. is slowing down," said Adam S. Posen, a senior fellow at the Peterson Institute for International Economics. "Because at some point we've got to repay all the debt we have accumulated."
So policymakers have adopted strategies that don't stand in the way of that repricing. For example, this week the Fed agreed to let Wall Street firms obtain up to $200 billion worth of ultra-safe Treasury bonds in exchange for spurned mortgage debt, an effort to bring stability to that market. But it has refused to buy those mortgage assets outright, which would prop up their price.
The Bush administration has supported various proposals to make it easier for people to refinance into government-insured mortgages and has enacted a stimulus program to bolster consumer spending in the second half of the year by sending tax-rebate checks to 130 million Americans. But it has vehemently resisted proposals through which the government would buy mortgage debt.
"I've never seen a government be able to circumvent the business cycle in a capitalist economy, but at the same time, the government is going to pull out all the stops to minimize the instability," Rosenberg said. "The grim reality is that recessions are a part of life. It's like surgery. You don't feel good as you get out of the operating room, but inevitably there's a healing process and things get better."
ORLANDO, Fla. (AP) - PGA tour golfer Tripp Isenhour is charged in Orlando with killing a protected migratory hawk with a golf shot.
It occurred in December when Isenhour was filming a video segment for the television show "Shoot Like A Pro."
Prosecutors say a red-shouldered hawk was making noise, forcing a video crew to film another take. The hawk moved closer, and the golfer hit several balls at it.
A witness says the bird fell to the ground, bleeding from both nostrils.
The 39-year-old golfer, whose real name is John Henry Isenhour III, is charged with cruelty to animals and killing a migratory bird.
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MICHAEL J. KIRBY jumped through all the requisite hoops in an effort to be removed from the government security watch lists that flag thousands of travelers at airports each day.
Satellite imagery, passed to The Daily Telegraph, shows that a substantial harbour has been built which could house a score of nuclear ballistic missile submarines and a host of aircraft carriers.
