WASHINGTON - A DETAILED Pentagon study confirms there was no direct link between late Iraqi leader Saddam Hussein and the Al-Qaeda network, debunking a claim President George W. Bush’s administration used to justify invading Iraq.
Coming five years after the start of the war in Iraq, the study of 600,000 official Iraqi documents and thousands of hours of interrogations of former Saddam Hussein colleagues ‘found no smoking gun (that is, direct connection) between Saddam’s Iraq and Al-Qaeda’, said the study, quoted in US media on Thursday.
The US administration appeared to bury the release of the study, making it available only at individual request and by mail - instead of posting it on the Internet or handing it out to reporters.
A Pentagon spokesman on Thursday said they did not know why the Joint Forces Command was not posting the report online, but denied that it was an attempt to limit its distribution.
‘We don’t have a reason to do so,’ said Pentagon press secretary Geoff Morrell.
Previous reports by the blue-ribbon Sept 11 commission and the Pentagon’s inspector-general last year reached the same conclusion that there were no ties between Saddam and Al-Qaeda, but none had access to as much information.
‘The Iraqi Perspective Project review of captured Iraqi documents uncovered strong evidence that links the regime of Saddam Hussein to regional and global terrorism,’ said a summary of the Pentagon study.
‘State terrorism became a routine tool of state power’ but ‘the predominant target of Iraqi state terror operations were Iraqi citizens’, the summary said.
Mr Bush, Vice-President Dick Cheney and top aides have insisted there were links between Saddam and Al-Qaeda, citing the alleged ties as a rationale for going to war in Iraq.
The study says Saddam Hussein’s regime did not have clear ties to Al-Qaeda, which was responsible for the Sept 11, 2001 attacks on the United States, but had associations with other terror groups including Palestinian militants.
WSJ: Fed Races to Rescue Bear Stearns In Bid to Steady Financial System
Storied Firm Sees Stock Plunge 47%; J.P. Morgan Steps In
By KATE KELLY, GREG IP and ROBIN SIDEL March 15, 2008
Credit turmoil spread to the heart of the U.S. financial system as Bear Stearns Cos., an 85-year-old institution that has survived the Depression and World War II, sought and received emergency funding backed by the federal government.
In an extraordinary move, the Federal Reserve and J.P. Morgan Chase & Co. stepped in to keep Bear afloat following a severe cash crunch.
The maneuver signaled that the Fed was trying to move aggressively to prevent Bear's crisis from spreading to the broader economy. But it seemed to do little to soothe fears. Bear's shares fell 47% to a nine-year low of $30 in New York Stock Exchange composite trading at 4 p.m. The Bear crisis, coming on the heels of this week's implosion of a publicly held affiliate of Carlyle Group, further rattled Wall Street. The Dow Jones Industrial Average fell nearly 195 points.
The lifeline gives Bear access to cash for an initial period of 28 days. J.P. Morgan will borrow the money from the Fed and relend it to Bear. Exact terms weren't disclosed, but the amount is limited only by how much collateral Bear can provide, Fed officials said.
The Fed, not J.P. Morgan, is bearing the risk of the loan. It is the first time since the Great Depression that the Fed has lent in this fashion to any entity other than a bank.
Some Wall Street executives said they thought Bear was likely to be sold, in whole or piecemeal, in a matter of days, to prevent it from going under. Bear, the fifth-largest investment bank, said it has retained investment bank Lazard to weigh alternatives. Those alternatives "can run the gamut," Bear Chief Executive Alan Schwartz said in a conference call.
Possible buyers, according to a person close to Bear, include J.P. Morgan and hedge fund Citadel Investment Group, which recently bought a big stake in online brokerage firm E*Trade Financial Corp. Private-equity firms also are expected to take a look at Bear, possibly including J.C. Flowers & Co.
Yesterday's developments were the latest in a series of blows to the financial system that began in August. Then, banks became so wary of lending to each other that money markets seized up and the world's central banks had to intervene. The trigger was a surge in delinquencies on U.S. subprime mortgages and the end to a spectacular rise in home prices.
But the turmoil has spread since to almost every corner of the credit markets. "The realization that mortgages might not be paid off led lenders to realize that other loans might not be paid off," said Douglas Elmendorft, a former Fed economist .
The pervasiveness of the financial problems and the risks to the economy became increasingly apparent at the beginning of the year. That led the Fed to cut short-term rates by 1.25 percentage points in 10 days, and the Bush White House and Democratic Congress -- usually unable to agree on anything -- to approve a large fiscal stimulus.
After initial relief, credit markets have taken a turn for the worse in recent weeks, breeding an every-man-for-himself attitude among Wall Street firms. With each firm intricately intertwined with others in a maze of loans, credit lines, derivatives and swaps, the Fed and Treasury agreed that letting Bear Stearns collapse quickly was a risk not worth taking, because the consequences were simply unknowable.
Morale among Bear's 14,000 employees, already flagging from days of speculation the firm was in trouble, sank Friday morning. As they learned of the emergency funding, some called their spouses, warning they could soon be out of a job, one employee said. Employees have been barred from trading the shares because of longstanding "lockups" weeks prior to the company's earnings announcements.
Shortly after 10:30 a.m., a recorded video message from CEO Mr. Schwartz was broadcast to employees. Hundreds gathered in the mortgage-securities trading area on the seventh floor of the firm's Madison Avenue headquarters in New York. Mr. Schwartz, CEO for only two months, said he was disappointed but employees should try not to lose heart.
Alan "Ace" Greenberg, the 80-year-old chairman of Bear's executive committee -- and the man credited with building the firm into a power during the 1980s and early 1990s -- tried to keep up appearances. A few minutes after noon, he left his trading-floor office and went upstairs to the 12th floor for his usual lunch in Bear's dining room. Asked early in the afternoon how his spirits were, he said, "I feel fine." He declined to answer further questions.
Bear's situation echoed in some ways that at British mortgage lender Northern Rock PLC, which in September became the target of the U.K.'s first bank run in more than a century, after the Bank of England stepped in with an emergency line of credit.
"At Northern Rock, it was depositors running. At Bear Stearns, it was counterparties" -- the parties a financial firm trades with -- said Tim Bond, a Barclays Capital strategist. In Northern Rock's case, the firm's problems only grew after it got a central-bank bailout, because of the effect on customers' confidence in the firm. Ultimately, the U.K. nationalized the lender.
Bear, although not one of the giants of Wall Street, long had a reputation as one of the most astute risk managers. It has a large mortgage business, but its mix of other businesses is less diverse than those of investment-banking rivals. That profile hurt Bear when the subprime-mortgage problems developed last spring. Two of Bear's mortgage-related hedge funds collapsed in July, costing investors more than $1 billion and worsening the credit crunch then developing.
Longtime CEO James Cayne, who was seen by some investors as too hands-off when the mortgage mess unfolded, stepped down in January, though he remained chairman. His successor, Mr. Schwartz, has been trying to rally Bear. But another downturn in the credit markets in the past couple of weeks fed nagging fears that Bear wasn't financially strong enough.
Word began to spread among fixed-income traders nine days ago that European banks had stopped trading with Bear. Some U.S. fixed-income and stock traders began doing the same on Monday, pulling their cash from Bear for fear it could get locked up if there was a bankruptcy.
That development put firms that still wanted to do business with Bear in a tough position: If Bear did fail, they would have to explain to their clients why they ignored the rumors. On Tuesday, a major asset-management company stopped trading with Bear.
On Thursday, an article in The Wall Street Journal reported that firms were growing cautious about their dealings with Bear. The exit by counterparties intensified. Bear executives spent most of this week fielding nervous calls and trying to put to rest rumors of banks being unwilling to trade with Bear and about Bear facing requests for more collateral on loans.
On Monday, Bear issued a statement in which Mr. Schwartz wrote that the firm's "balance sheet, liquidity and capital remain strong." On Wednesday, he ducked out of a Bear media conference in Palm Beach, Fla., for a CNBC interview in another effort to deflect speculation about Bear's situation.
But by Thursday afternoon, it was becoming clear within Bear that the firm couldn't withstand an accelerating retreat by worried customers -- in effect, a run on the bank. Securities firms that had been willing to accept collateral from Bear Stearns were insisting on cash instead. And the hedge funds that use Bear to borrow money and clear trades were withdrawing cash from their accounts. Around 4:30 p.m., Mr. Schwartz was convinced that Bear was facing a desperate situation.
He huddled with Chief Financial Officer Samuel Molinaro, Chief Risk Officer Michael Alix and Bear lawyers, debating what to do next, said people familiar with the discussions. The group convened a conference call with the board to discuss options. Mr. Cayne dialed in from Detroit, where he was playing in a bridge tournament, say people familiar with the matter.
Some time after 6 p.m., Mr. Schwartz called James Dimon, CEO of J.P. Morgan, the second-largest U.S. bank in stock-market value. J.P. Morgan's risk officers were familiar with Bear's collateral because J.P. Morgan was the clearing agent for its trades; thus, J.P. Morgan seemed to be in good position to lend Bear money, say people familiar with Mr. Schwartz's thinking. .
Mr. Dimon sprang into action. He got on the phone with Steve Black, co-head of J.P. Morgan's investment bank, on vacation in the Caribbean. The group had a number of conversations with Fed representatives, concluding that something needed to be done for Bear, in part because a failure of the firm could have wide consequences.
By 7:30 p.m. Thursday, when it became clear Bear had not managed to secure necessary financing or a strategic deal, Fed officials began to realize they might have to step in.
The Fed each day lends money to its 20 "primary dealers," including Bear, through its money-market "repo" operations, which provide funding for one to 28 days to influence the level of interest rates. But those operations don't permit the Fed to advance much money to Bear by itself, and the loans must be secured by the highest-quality collateral, which is now in short supply.
The Fed can lend directly through its "discount window," but ordinarily only to commercial banks. A 1932 provision of the Federal Reserve Act allows the Fed to lend to non-banks if at least five of its seven governors approve. That provision was last regularly used during the Great Depression. It is meant to underscore that the central bank should lend to nonbanks only in extreme circumstances.
"I would be very cautious about opening that window up" to investment banks, Fed Vice Chairman Donald Kohn told Congress on March 4. Commercial banks get the access because they are subject to extensive federal supervision.
On a conference call at 7:30 p.m. Thursday, officials from the Securities and Exchange Commission and Bear disclosed to the Fed that Bear had lost far more of its liquidity that day than it had realized. A team of examiners from the Fed spent the night at Bear.
At about 5 a.m. Friday, regulators including New York Fed Chief Timothy Geithner, Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and the Treasury under secretary domestic finance, Robert Steel, convened by conference call. At the end of the call at 7 a.m., the Fed had decided it would offer the loan. Mr. Paulson called and briefed President Bush, who was due to speak on the economy in New York. The Fed, with two governors' seats vacant and one governor overseas and unreachable, invoked a special legal clause to approve the loan with just four governors.
For Fed officials it was a difficult choice. They did not want to single Bear out for help and they realized their actions aggravated "moral hazard" -- the tendency of bailouts to encourage future risky behavior. But the alternative was potentially far worse. Bear risked defaulting on extensive "repo" loans, in which it pledges securities as collateral for overnight loans from money-market funds. If that happened, other securities dealers would see access to repo loans become more restrictive. The pledged securities behind those loans could be dumped in a fire sale, deepening the plunge in securities prices.
By 7 a.m. Friday, the New York Federal Reserve Bank had agreed that it would provide financing to Bear Stearns via J.P. Morgan Chase. J.P. Morgan Chase was used as a conduit because, as a commercial bank, it already has access to the Fed's discount window, is under the Fed's supervisory authority, is Bear's clearing bank and knows Bear well from a previous discussion of a possible strategic tie-up.
Thus, technically the Fed still hasn't lent directly to investment banks. But the central bank has explicitly assumed the risk of the loan. If Bear fails and the collateral it posts is insufficient to cover the loan, the Fed will sustain a loss. Officials say there is no preset maximum amount of the loan, other than how much collateral Bear is able to provide to meet the Fed's requirements.
At 9 a.m. Friday, Mr. Geithner; Mr. Paulson; Erik Sirri, head of market regulation at the SEC; and Messrs. Schwartz and Dimon held a conference call with representatives from Bank of New York Mellon and the Wall Street securities firms. Mr. Paulson said all had a stake in making the effort work.
The role of J.P. Morgan as Bear's savior is somewhat paradoxical, considering the recent tense relationship between the two firms. J.P. Morgan was one of several lenders that played a role in Bear's troubles last summer when J.P. Morgan demanded more collateral from one of Bear's struggling hedge funds. There was a heated conversation between Mr. Black, co-head of J.P. Morgan's investment bank, and Mr. Spector, then Bear's co-president, over Bear's reluctance to bail out the hedge fund. J.P. Morgan ultimately served Bear with a default notice on a loan to Bear.
Prosecutors in the U.S. Attorney's office for the Eastern District of New York, based in Brooklyn, are investigating whether the funds' managers misled investors in a way that constitutes fraud.
In addition to being a Bear creditor, J.P. Morgan is a regular trading partner with Bear and therefore could be on the hook for big losses if Bear fails.
Last fall, J.P. Morgan played a leading role in a Treasury-backed effort to thaw frozen credit markets by creating a "superfund" for certain off-balance-sheet investment vehicles that were struggling. Ultimately, the owners of those investment vehicles resolved the problems on their own.
The role of rescuer has long been part of J.P. Morgan's history. In what's known as the Panic of 1907, a semi-retired J. Pierpont Morgan helped stave off a national financial crisis when he helped to shore up a number of banks that had seen a run on their deposits. And when the New York Stock Exchange was close to running out of cash, the financier raised $25 million -- supposedly in 10 minutes -- that kept the exchange in business.
Some 80 years later, the bank played a similar role when it helped organize a government-backed bailout of Chicago's Continental Illinois, a bank sagging under a mountain of bad loans.
J.P. Morgan has been on the prowl for acquisitions. Although it is thought to be most interested in a large regional bank, Bear's assets could be too good, and too cheap, to turn down.
J.P. Morgan might also be interested in buying just Bear's prime brokerage business, a key Wall Street business -- used by hedge funds to borrow money and clear trades -- that J.P. Morgan doesn't now have. The Bear unit has a good reputation but has suffered from a loss of cash balances in recent months.
Rating agencies cut their credit ratings on Bear. Moody's rating is now three levels above junk; S&P's and Fitch's ratings are two above junk.
The immediate capital infusion isn't likely to restore enough confidence in Bear to stop the exodus. Robert Sloan, a managing partner of New York-based S3 Partners LLC, a financing specialist for hedge funds, said that two of them on Friday pulled whatever money of theirs still remained in Bear's prime-brokerage operation. "Once Bear started to come out with: 'Hey, this is why we're OK, this is why we're still liquid and you should keep your assets here,' they were basically telling you to move your business," Mr. Sloan said.
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LOS ANGELES (AFP) - - Thousands of protestors marched against the Iraq war in Los Angeles on Saturday as part of a global day of action that drew huge crowds in London and smaller protests elsewhere in Europe and Canada.
Police said about 2,000 people marched through Hollywood, while organizers put the figure at 10,000. They carried banners denouncing President George W. Bush and urged an end to the conflict in Iraq, where 155,000 US troops are deployed.
Earlier, thousands of people gathered in London and the Scottish city of Glasgow ahead of the fifth anniversary of the US-led invasion of Iraq on March 20, calling for the withdrawal of British troops from Iraq and Afghanistan.
Police in London said there were 10,000 on the streets but organizers the Stop the War Coalition put the crowds at between 30,000 to 40,000. In Glasgow police estimated between 1,000 to 1,500 protesters at the height of the march.
In Los Angeles, Vietnam war veteran Ron Kovic, whose book "Born on the Fourth of July" was turned into a film with Tom Cruise, joined the march down Hollywood Boulevard in his wheelchair.
Shot and paralyzed in Vietnam 40 years ago, he told AFP he felt "sorrow" and "anguish" for the Iraqi people and for the US men and women fighting there "who are suffering, who are losing their arms and legs, who are being killed."
"But I feel more than anything, when I see what's going on in Iraq I feel determined, determined to fight with everything within us to stop this madness," he added.
Meanwhile in London, veteran left-winger and former Labour Party lawmaker Tony Benn said Britain's involvement in Iraq, where the country has 4,100 troops, and Afghanistan, where it has 7,800, had caused "devastation."
The Green Party's member of the European Parliament, Caroline Lucas, called for former British prime minister Tony Blair and his successor Gordon Brown to be prosecuted for war crimes.
"They need to know you cannot bomb your way to peace," she said.
In Glasgow, protesters were joined by the mother of a British soldier who was killed in a roadside bomb attack in Iraq, as well as left-wing groups and trade unions.
The British Foreign Office described the protesters' claims as "simply not accurate," pointing to the "steady progress, particularly in terms of security" being made in Iraq and said the government had learnt from mistakes.
Elsewhere in Europe, around 500 people opposed to the US presence in Iraq marched through Stockholm city centre in freezing rain carrying banners with messages like "Yankees Go Home" and "Five years of war, one million dead."
"I'm here because I think it is extremely important to demonstrate against American policy in Iraq, especially now that the media is focusing less on the tragedy there," said Leif Staalhammer, a 67-year-old actor.
Around 600 people also demonstrated in Sweden's second largest city, Gothenburg, the TT news agency reported, while in Norway, police said some 200 people marched through the centre of Oslo to the parliament building.
In Denmark, around 100 people demonstrated peacefully against the Iraq war in the northern town of Aalborg, local police spokesman Ole Christensen told AFP.
Demonstrations also took place Saturday across Canada, including in Toronto, where 1,000 people protested against parliament's decision last week to extend Canada's 2,500-strong deployment to Afghanistan, local TV reported.
In Montreal, about 50 people demonstrated against both Canada's involvement in Afghanistan and the Iraq war, an AFP journalist said, while in Ottawa protestors gathered near the US embassy, according to the Canadian Peace Alliance.
Christine Jones, co-chairwoman of the peace alliance, said parliament's vote on Afghanistan was misguided, arguing: "Afghanistan is worse off because of the military occupation and Canadians are more opposed to the war than ever before."
6 comments:
March 15, 2008
Study finds no Saddam link to Al-Qaeda
WASHINGTON - A DETAILED Pentagon study confirms there was no direct link between late Iraqi leader Saddam Hussein and the Al-Qaeda network, debunking a claim President George W. Bush’s administration used to justify invading Iraq.
Coming five years after the start of the war in Iraq, the study of 600,000 official Iraqi documents and thousands of hours of interrogations of former Saddam Hussein colleagues ‘found no smoking gun (that is, direct connection) between Saddam’s Iraq and Al-Qaeda’, said the study, quoted in US media on Thursday.
The US administration appeared to bury the release of the study, making it available only at individual request and by mail - instead of posting it on the Internet or handing it out to reporters.
A Pentagon spokesman on Thursday said they did not know why the Joint Forces Command was not posting the report online, but denied that it was an attempt to limit its distribution.
‘We don’t have a reason to do so,’ said Pentagon press secretary Geoff Morrell.
Previous reports by the blue-ribbon Sept 11 commission and the Pentagon’s inspector-general last year reached the same conclusion that there were no ties between Saddam and Al-Qaeda, but none had access to as much information.
‘The Iraqi Perspective Project review of captured Iraqi documents uncovered strong evidence that links the regime of Saddam Hussein to regional and global terrorism,’ said a summary of the Pentagon study.
‘State terrorism became a routine tool of state power’ but ‘the predominant target of Iraqi state terror operations were Iraqi citizens’, the summary said.
Mr Bush, Vice-President Dick Cheney and top aides have insisted there were links between Saddam and Al-Qaeda, citing the alleged ties as a rationale for going to war in Iraq.
The study says Saddam Hussein’s regime did not have clear ties to Al-Qaeda, which was responsible for the Sept 11, 2001 attacks on the United States, but had associations with other terror groups including Palestinian militants.
AGENCE FRANCE-PRESSE
WSJ: Fed Races to Rescue Bear Stearns
In Bid to Steady Financial System
Storied Firm Sees
Stock Plunge 47%;
J.P. Morgan Steps In
By KATE KELLY, GREG IP and ROBIN SIDEL
March 15, 2008
Credit turmoil spread to the heart of the U.S. financial system as Bear Stearns Cos., an 85-year-old institution that has survived the Depression and World War II, sought and received emergency funding backed by the federal government.
In an extraordinary move, the Federal Reserve and J.P. Morgan Chase & Co. stepped in to keep Bear afloat following a severe cash crunch.
The maneuver signaled that the Fed was trying to move aggressively to prevent Bear's crisis from spreading to the broader economy. But it seemed to do little to soothe fears. Bear's shares fell 47% to a nine-year low of $30 in New York Stock Exchange composite trading at 4 p.m. The Bear crisis, coming on the heels of this week's implosion of a publicly held affiliate of Carlyle Group, further rattled Wall Street. The Dow Jones Industrial Average fell nearly 195 points.
The lifeline gives Bear access to cash for an initial period of 28 days. J.P. Morgan will borrow the money from the Fed and relend it to Bear. Exact terms weren't disclosed, but the amount is limited only by how much collateral Bear can provide, Fed officials said.
The Fed, not J.P. Morgan, is bearing the risk of the loan. It is the first time since the Great Depression that the Fed has lent in this fashion to any entity other than a bank.
Some Wall Street executives said they thought Bear was likely to be sold, in whole or piecemeal, in a matter of days, to prevent it from going under. Bear, the fifth-largest investment bank, said it has retained investment bank Lazard to weigh alternatives. Those alternatives "can run the gamut," Bear Chief Executive Alan Schwartz said in a conference call.
Possible buyers, according to a person close to Bear, include J.P. Morgan and hedge fund Citadel Investment Group, which recently bought a big stake in online brokerage firm E*Trade Financial Corp. Private-equity firms also are expected to take a look at Bear, possibly including J.C. Flowers & Co.
Yesterday's developments were the latest in a series of blows to the financial system that began in August. Then, banks became so wary of lending to each other that money markets seized up and the world's central banks had to intervene. The trigger was a surge in delinquencies on U.S. subprime mortgages and the end to a spectacular rise in home prices.
But the turmoil has spread since to almost every corner of the credit markets. "The realization that mortgages might not be paid off led lenders to realize that other loans might not be paid off," said Douglas Elmendorft, a former Fed economist .
The pervasiveness of the financial problems and the risks to the economy became increasingly apparent at the beginning of the year. That led the Fed to cut short-term rates by 1.25 percentage points in 10 days, and the Bush White House and Democratic Congress -- usually unable to agree on anything -- to approve a large fiscal stimulus.
After initial relief, credit markets have taken a turn for the worse in recent weeks, breeding an every-man-for-himself attitude among Wall Street firms. With each firm intricately intertwined with others in a maze of loans, credit lines, derivatives and swaps, the Fed and Treasury agreed that letting Bear Stearns collapse quickly was a risk not worth taking, because the consequences were simply unknowable.
Morale among Bear's 14,000 employees, already flagging from days of speculation the firm was in trouble, sank Friday morning. As they learned of the emergency funding, some called their spouses, warning they could soon be out of a job, one employee said. Employees have been barred from trading the shares because of longstanding "lockups" weeks prior to the company's earnings announcements.
Shortly after 10:30 a.m., a recorded video message from CEO Mr. Schwartz was broadcast to employees. Hundreds gathered in the mortgage-securities trading area on the seventh floor of the firm's Madison Avenue headquarters in New York. Mr. Schwartz, CEO for only two months, said he was disappointed but employees should try not to lose heart.
Alan "Ace" Greenberg, the 80-year-old chairman of Bear's executive committee -- and the man credited with building the firm into a power during the 1980s and early 1990s -- tried to keep up appearances. A few minutes after noon, he left his trading-floor office and went upstairs to the 12th floor for his usual lunch in Bear's dining room. Asked early in the afternoon how his spirits were, he said, "I feel fine." He declined to answer further questions.
Bear's situation echoed in some ways that at British mortgage lender Northern Rock PLC, which in September became the target of the U.K.'s first bank run in more than a century, after the Bank of England stepped in with an emergency line of credit.
"At Northern Rock, it was depositors running. At Bear Stearns, it was counterparties" -- the parties a financial firm trades with -- said Tim Bond, a Barclays Capital strategist. In Northern Rock's case, the firm's problems only grew after it got a central-bank bailout, because of the effect on customers' confidence in the firm. Ultimately, the U.K. nationalized the lender.
Bear, although not one of the giants of Wall Street, long had a reputation as one of the most astute risk managers. It has a large mortgage business, but its mix of other businesses is less diverse than those of investment-banking rivals. That profile hurt Bear when the subprime-mortgage problems developed last spring. Two of Bear's mortgage-related hedge funds collapsed in July, costing investors more than $1 billion and worsening the credit crunch then developing.
Longtime CEO James Cayne, who was seen by some investors as too hands-off when the mortgage mess unfolded, stepped down in January, though he remained chairman. His successor, Mr. Schwartz, has been trying to rally Bear. But another downturn in the credit markets in the past couple of weeks fed nagging fears that Bear wasn't financially strong enough.
Word began to spread among fixed-income traders nine days ago that European banks had stopped trading with Bear. Some U.S. fixed-income and stock traders began doing the same on Monday, pulling their cash from Bear for fear it could get locked up if there was a bankruptcy.
That development put firms that still wanted to do business with Bear in a tough position: If Bear did fail, they would have to explain to their clients why they ignored the rumors. On Tuesday, a major asset-management company stopped trading with Bear.
On Thursday, an article in The Wall Street Journal reported that firms were growing cautious about their dealings with Bear. The exit by counterparties intensified. Bear executives spent most of this week fielding nervous calls and trying to put to rest rumors of banks being unwilling to trade with Bear and about Bear facing requests for more collateral on loans.
On Monday, Bear issued a statement in which Mr. Schwartz wrote that the firm's "balance sheet, liquidity and capital remain strong." On Wednesday, he ducked out of a Bear media conference in Palm Beach, Fla., for a CNBC interview in another effort to deflect speculation about Bear's situation.
But by Thursday afternoon, it was becoming clear within Bear that the firm couldn't withstand an accelerating retreat by worried customers -- in effect, a run on the bank. Securities firms that had been willing to accept collateral from Bear Stearns were insisting on cash instead. And the hedge funds that use Bear to borrow money and clear trades were withdrawing cash from their accounts. Around 4:30 p.m., Mr. Schwartz was convinced that Bear was facing a desperate situation.
He huddled with Chief Financial Officer Samuel Molinaro, Chief Risk Officer Michael Alix and Bear lawyers, debating what to do next, said people familiar with the discussions. The group convened a conference call with the board to discuss options. Mr. Cayne dialed in from Detroit, where he was playing in a bridge tournament, say people familiar with the matter.
Some time after 6 p.m., Mr. Schwartz called James Dimon, CEO of J.P. Morgan, the second-largest U.S. bank in stock-market value. J.P. Morgan's risk officers were familiar with Bear's collateral because J.P. Morgan was the clearing agent for its trades; thus, J.P. Morgan seemed to be in good position to lend Bear money, say people familiar with Mr. Schwartz's thinking. .
Mr. Dimon sprang into action. He got on the phone with Steve Black, co-head of J.P. Morgan's investment bank, on vacation in the Caribbean. The group had a number of conversations with Fed representatives, concluding that something needed to be done for Bear, in part because a failure of the firm could have wide consequences.
By 7:30 p.m. Thursday, when it became clear Bear had not managed to secure necessary financing or a strategic deal, Fed officials began to realize they might have to step in.
The Fed each day lends money to its 20 "primary dealers," including Bear, through its money-market "repo" operations, which provide funding for one to 28 days to influence the level of interest rates. But those operations don't permit the Fed to advance much money to Bear by itself, and the loans must be secured by the highest-quality collateral, which is now in short supply.
The Fed can lend directly through its "discount window," but ordinarily only to commercial banks. A 1932 provision of the Federal Reserve Act allows the Fed to lend to non-banks if at least five of its seven governors approve. That provision was last regularly used during the Great Depression. It is meant to underscore that the central bank should lend to nonbanks only in extreme circumstances.
"I would be very cautious about opening that window up" to investment banks, Fed Vice Chairman Donald Kohn told Congress on March 4. Commercial banks get the access because they are subject to extensive federal supervision.
On a conference call at 7:30 p.m. Thursday, officials from the Securities and Exchange Commission and Bear disclosed to the Fed that Bear had lost far more of its liquidity that day than it had realized. A team of examiners from the Fed spent the night at Bear.
At about 5 a.m. Friday, regulators including New York Fed Chief Timothy Geithner, Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and the Treasury under secretary domestic finance, Robert Steel, convened by conference call. At the end of the call at 7 a.m., the Fed had decided it would offer the loan. Mr. Paulson called and briefed President Bush, who was due to speak on the economy in New York. The Fed, with two governors' seats vacant and one governor overseas and unreachable, invoked a special legal clause to approve the loan with just four governors.
For Fed officials it was a difficult choice. They did not want to single Bear out for help and they realized their actions aggravated "moral hazard" -- the tendency of bailouts to encourage future risky behavior. But the alternative was potentially far worse. Bear risked defaulting on extensive "repo" loans, in which it pledges securities as collateral for overnight loans from money-market funds. If that happened, other securities dealers would see access to repo loans become more restrictive. The pledged securities behind those loans could be dumped in a fire sale, deepening the plunge in securities prices.
By 7 a.m. Friday, the New York Federal Reserve Bank had agreed that it would provide financing to Bear Stearns via J.P. Morgan Chase. J.P. Morgan Chase was used as a conduit because, as a commercial bank, it already has access to the Fed's discount window, is under the Fed's supervisory authority, is Bear's clearing bank and knows Bear well from a previous discussion of a possible strategic tie-up.
Thus, technically the Fed still hasn't lent directly to investment banks. But the central bank has explicitly assumed the risk of the loan. If Bear fails and the collateral it posts is insufficient to cover the loan, the Fed will sustain a loss. Officials say there is no preset maximum amount of the loan, other than how much collateral Bear is able to provide to meet the Fed's requirements.
At 9 a.m. Friday, Mr. Geithner; Mr. Paulson; Erik Sirri, head of market regulation at the SEC; and Messrs. Schwartz and Dimon held a conference call with representatives from Bank of New York Mellon and the Wall Street securities firms. Mr. Paulson said all had a stake in making the effort work.
The role of J.P. Morgan as Bear's savior is somewhat paradoxical, considering the recent tense relationship between the two firms. J.P. Morgan was one of several lenders that played a role in Bear's troubles last summer when J.P. Morgan demanded more collateral from one of Bear's struggling hedge funds. There was a heated conversation between Mr. Black, co-head of J.P. Morgan's investment bank, and Mr. Spector, then Bear's co-president, over Bear's reluctance to bail out the hedge fund. J.P. Morgan ultimately served Bear with a default notice on a loan to Bear.
Prosecutors in the U.S. Attorney's office for the Eastern District of New York, based in Brooklyn, are investigating whether the funds' managers misled investors in a way that constitutes fraud.
In addition to being a Bear creditor, J.P. Morgan is a regular trading partner with Bear and therefore could be on the hook for big losses if Bear fails.
Last fall, J.P. Morgan played a leading role in a Treasury-backed effort to thaw frozen credit markets by creating a "superfund" for certain off-balance-sheet investment vehicles that were struggling. Ultimately, the owners of those investment vehicles resolved the problems on their own.
The role of rescuer has long been part of J.P. Morgan's history. In what's known as the Panic of 1907, a semi-retired J. Pierpont Morgan helped stave off a national financial crisis when he helped to shore up a number of banks that had seen a run on their deposits. And when the New York Stock Exchange was close to running out of cash, the financier raised $25 million -- supposedly in 10 minutes -- that kept the exchange in business.
Some 80 years later, the bank played a similar role when it helped organize a government-backed bailout of Chicago's Continental Illinois, a bank sagging under a mountain of bad loans.
J.P. Morgan has been on the prowl for acquisitions. Although it is thought to be most interested in a large regional bank, Bear's assets could be too good, and too cheap, to turn down.
J.P. Morgan might also be interested in buying just Bear's prime brokerage business, a key Wall Street business -- used by hedge funds to borrow money and clear trades -- that J.P. Morgan doesn't now have. The Bear unit has a good reputation but has suffered from a loss of cash balances in recent months.
Rating agencies cut their credit ratings on Bear. Moody's rating is now three levels above junk; S&P's and Fitch's ratings are two above junk.
The immediate capital infusion isn't likely to restore enough confidence in Bear to stop the exodus. Robert Sloan, a managing partner of New York-based S3 Partners LLC, a financing specialist for hedge funds, said that two of them on Friday pulled whatever money of theirs still remained in Bear's prime-brokerage operation. "Once Bear started to come out with: 'Hey, this is why we're OK, this is why we're still liquid and you should keep your assets here,' they were basically telling you to move your business," Mr. Sloan said.
WSJ: 贝尔斯登危机意味着投资良机
Brett Arends
2008/03/16
根据过去的经验，每次金融危机都会以一家大公司破产为标志，然后市场才会转暖。从周五的情况来看，这次市场转暖的标志将会是贝尔斯登。
这对你的投资有何影响呢？答案是：这可能意味着市场已经接近底部。
大公司的破产通常会引发恐慌性抛售，促使各方力量进行干预。通常来说，这就意味着崩盘的结束。
成功投资的原则很简单：低买高卖。难的是在别人都在卖的时候，你有胆量去买。
在道指14000点的时候，很多人都会建议你去买。而现在11900点了，反而没人建议你买股票。
和很多逆向思维的人一样，我通常会早别人一步指出市场的逆转。在过去几年中，我很早就指出一些资产估价过高，比如美国房产。不管是上升还是下降，市场价格的波动通常都会有很大的惯性。
目前，美国的大盘成长股的股价都非常便宜。购买这些股票，不会有太大风险。如果你购买EFT，（如Dow Jones Wilshire Large Cap Growth ETF SPD和Vanguard Mega Cap 300 Growth Fund ），你就可以把资金分布到微软和宝洁这样的高质量蓝筹成长股上了。
和往常一样，我对短期的趋势不做任何预测。下一周，华尔街可能会涨1000点，也可能会跌1000点。所以，你不要一下把所有钱都投进去。
至于目前的“衰退”说，你要记住，当所有的人都异常悲观的时候，市场的底部就到了。
美国20年代的大萧条不是因为1929年的金融恐慌造成的，而是由于一系列错误的政策，包括关税和紧缩银根。现任美联储主席贝南克曾经悉心研究过大萧条的历史，他知道该怎么做。
目前的情况越糟糕，美联储就会采取越强烈的措施来提供流动性。这也就意味着通货膨胀会加速。
长期来讲，持有股票的人总是会赚钱的，毕竟股票可以抵消通货膨胀的风险。最大的输家将是那些一头扎进国债的人。
Protesters across the world condemn Iraq war
Sunday, March 16, 2008
LOS ANGELES (AFP) - - Thousands of protestors marched against the Iraq war in Los Angeles on Saturday as part of a global day of action that drew huge crowds in London and smaller protests elsewhere in Europe and Canada.
Police said about 2,000 people marched through Hollywood, while organizers put the figure at 10,000. They carried banners denouncing President George W. Bush and urged an end to the conflict in Iraq, where 155,000 US troops are deployed.
Earlier, thousands of people gathered in London and the Scottish city of Glasgow ahead of the fifth anniversary of the US-led invasion of Iraq on March 20, calling for the withdrawal of British troops from Iraq and Afghanistan.
Police in London said there were 10,000 on the streets but organizers the Stop the War Coalition put the crowds at between 30,000 to 40,000. In Glasgow police estimated between 1,000 to 1,500 protesters at the height of the march.
In Los Angeles, Vietnam war veteran Ron Kovic, whose book "Born on the Fourth of July" was turned into a film with Tom Cruise, joined the march down Hollywood Boulevard in his wheelchair.
Shot and paralyzed in Vietnam 40 years ago, he told AFP he felt "sorrow" and "anguish" for the Iraqi people and for the US men and women fighting there "who are suffering, who are losing their arms and legs, who are being killed."
"But I feel more than anything, when I see what's going on in Iraq I feel determined, determined to fight with everything within us to stop this madness," he added.
Meanwhile in London, veteran left-winger and former Labour Party lawmaker Tony Benn said Britain's involvement in Iraq, where the country has 4,100 troops, and Afghanistan, where it has 7,800, had caused "devastation."
The Green Party's member of the European Parliament, Caroline Lucas, called for former British prime minister Tony Blair and his successor Gordon Brown to be prosecuted for war crimes.
"They need to know you cannot bomb your way to peace," she said.
In Glasgow, protesters were joined by the mother of a British soldier who was killed in a roadside bomb attack in Iraq, as well as left-wing groups and trade unions.
The British Foreign Office described the protesters' claims as "simply not accurate," pointing to the "steady progress, particularly in terms of security" being made in Iraq and said the government had learnt from mistakes.
Elsewhere in Europe, around 500 people opposed to the US presence in Iraq marched through Stockholm city centre in freezing rain carrying banners with messages like "Yankees Go Home" and "Five years of war, one million dead."
"I'm here because I think it is extremely important to demonstrate against American policy in Iraq, especially now that the media is focusing less on the tragedy there," said Leif Staalhammer, a 67-year-old actor.
Around 600 people also demonstrated in Sweden's second largest city, Gothenburg, the TT news agency reported, while in Norway, police said some 200 people marched through the centre of Oslo to the parliament building.
In Denmark, around 100 people demonstrated peacefully against the Iraq war in the northern town of Aalborg, local police spokesman Ole Christensen told AFP.
Demonstrations also took place Saturday across Canada, including in Toronto, where 1,000 people protested against parliament's decision last week to extend Canada's 2,500-strong deployment to Afghanistan, local TV reported.
In Montreal, about 50 people demonstrated against both Canada's involvement in Afghanistan and the Iraq war, an AFP journalist said, while in Ottawa protestors gathered near the US embassy, according to the Canadian Peace Alliance.
Christine Jones, co-chairwoman of the peace alliance, said parliament's vote on Afghanistan was misguided, arguing: "Afghanistan is worse off because of the military occupation and Canadians are more opposed to the war than ever before."
CIRCLE OF LIES - Bush & Iraq song parody from versusplus.com
A musical parody of the Elton John/Tim Rice song "Circle of Life." This parody is about the ongoing deceit of George Bush and his administration.
Posted Tuesday, April 15, 2008
All You Should Know For The Presidential Election 2008
Posted Thursday, April 17, 2008
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