(CNN) -- Vitamin D and calcium have long been touted as the best nutrients for strong bones, muscles and teeth. Recent studies have shown that vitamin D could be used to fight cancer, heart ailments, autoimmune diseases, even diabetes.
But too much vitamin D can damage the kidneys and the heart. So what's the right balance?
After reviewing nearly 1,000 published studies on vitamin D and calcium, the Institute of Medicine on Tuesday recommended that most Americans and Canadians up to age 70, who are not pregnant, need no more than 600 international units (IUs) of vitamin D per day to maintain good health. People over age 70 may need as much as 800 IUs.
Vitamin D controls genes for cancer, autoimmune disease
A three-ounce serving of canned tuna contains about 200 IUs, the standard unit for vitamin D and many other nutrients.
The Institute of Medicine, an independent nonprofit agency, serves as an adviser to the U.S. government to improve health.
The agency's calcium recommendations vary based on age and pregnancy, and range from 700 to 1,300 milligrams per day. One cup of whole milk, for instance, contains around 300 milligrams of calcium.
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"When making these recommendations, we took into account the study data, looking at national surveys of blood levels," said Catharine Ross, professor of nutritional sciences, Penn State University, University Park, and chairman of the committee that set the recommendations.
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"The blood levels indicate how much vitamin D you have in your blood, based on the amount of sunlight you are exposed to, how much vitamin D and calcium you have in your diet, and what type of supplements you are taking."
The committee surprisingly found the majority of Americans and Canadians are getting enough vitamin D and calcium. Some adolescent girls may not get quite enough calcium, and some elderly may fall short of the necessary amounts of calcium and vitamin D. These individuals should increase their intake of foods containing these nutrients.
Sunlight is the best source of vitamin D, but not everyone receives the same exposure. According to the intitute, the new guidelines for vitamin D cover the needs of individuals who get little sun.
The minimum recommended amount of daily sunlight depends on your skin pigmentation. White people should get not less than 5 minutes without sunscreen. People of color should get 15 to 20 minutes. There is no recommended maximum.
Nutritionists recommend getting the rest of your vitamin D and calcium through foods, such as oily fish (salmon, tuna), milk, mushrooms, egg yolks and fortified cereal.
Daily supplements are also helpful, but experts advise people to pay attention to how much they're taking. Because people are becoming more aware of their diets and more individuals are taking supplements, the chance is higher that people may consume too much of these nutrients. Getting too much vitamin D can be dangerous and has been associated with kidney stones as well as damage to the kidneys and the heart.
"No one can overdose from sun exposure because of the way the body processes it. And too much of these nutrients in your diet is highly unlikely," noted Ross. "People can take too many supplements. That's why we made these recommendations."
Ross also noted that while the report found most of the data confirmed that calcium and vitamin D do play a huge role in skeletal growth and keeping up good bone health, they could not find strong evidence that vitamin D protected the body against cancer, heart disease, autoimmune diseases and diabetes.
Lack of vitamin D linked to whites' stroke death
"While we found these studies point to the need for further investigation on the role of vitamin D and these illnesses, " said Ross, "we found conflicting and actually mixed results in these studies on the effects of vitamin D on these conditions."
Katherine Tallmadge, spokesperson for the American Dietetic Association supports the call for more research.
"In its most recent recommendation, the [Institute of Medicine] has established the level they believe will protect bones," Tallmadge said. "More studies need to be conducted to validate if we need to recommend higher levels of vitamin D supplementation or higher levels in the blood for protection of other diseases which have recently come to light."
For now, Ross said she believes the guidelines are the best way for people to get the most out of vitamin D and calcium without causing problems.
"We scrutinized the evidence, looking for indications of beneficial effects at all levels of intake," Ross said. "Amounts higher than those specified in this report are not necessary to maintain bone
Tuesday, November 30, 2010
Nov. 30, 2010, 12:51 a.m. EST Google near deal to buy Groupon for $6 bln: report
TOKYO (MarketWatch) -- Google Inc. /quotes/comstock/15*!goog/quotes/nls/goog (GOOG 576.20, -5.91, -1.02%) is near a deal to acquire closely held online discounter Groupon Inc. for as much as $6 billion, the New York Times reported on its website late Monday, citing people with direct knowledge of the matter. A deal in the $5 billion to $6 billion range would be the largest acquisition ever for Google, and could be struck as soon as this week, the report said. But the unidentified people said the talks still could fall apart.
Monday, November 29, 2010
Simon Black Advocates Leaving America As The "Most Effective" Way To Fight The Battle With "The Mob-Installed Government Beast"
And now for some very provocative, "out of the box" views: Simon Black, better known as Sovereign Man, presents some disturbing thoughts which are sure to get the broader spirits elevated. Instead of continuing to fight what some see as a losing ideological battle with a government which no longer even remotely represents the broader population's interests, Black says simply to walk away: "When you think about it, what we call a 'country' is nothing more than a large concentration of people who share common values. Over time, those values adjust and evolve. Today, cultures in many countries value things like fake security, subordination, and ignorance over freedom, independence, and awareness. When it appears more and more each day that those common values diverge from your own, all that's left of a country are irrelevant, invisible lines on a map. I don't find these worth fighting for...The government beast in your home country feeds on debt and taxes, and the best way to win is for bright, productive people to move away with their ideas, labor, and assets. This effectively starves the beast and accelerates its collapse. Then, when the smoke clears, you can move back and help rebuild a free society." Perhaps Black is right and this is the best, and possibly only, non-violent way to fight the political-financial plutocracy?
Nuclear scientist killed in Tehran was Iran's top Stuxnet expert
Exclusive from debkafile's intelligence sources:
Prof. Majid Shahriari, who died when his car was attacked in North Tehran Monday, Nov. 29, headed the team Iran established for combating the Stuxnet virus rampaging through its nuclear and military networks. His wife was injured. The scientist's death deals a major blow to Iran's herculean efforts to purge its nuclear and military control systems of the destructive worm since it went on the offensive six months ago. Only this month, Stuxnet shut down nuclear enrichment at Natanz for six days from Nov. 16-22 and curtailed an important air defense exercise.
Prof. Shahriari was the Iranian nuclear program's top expert on computer codes and cyber war. .
Another Iranian nuclear scientist, Prof. Feredoun Abbassi-Davani, and his wife survived a second coordinated attack with serious injuries. He is Dean of Students, a key political post at the university ..
Ali Salehi, Director of Iran's Nuclear Energy Commission, reacted bitterly that there is a limit to Iran's patience and whoever committed the murder is playing with fire. Tehran held US intelligence and the Israeli Mossad for responsible for the scientist's death.
Tehran's official account of the attacks is only half-correct, are sources report. There were indeed two motorcycle teams of two riders each who shadowed the scientists' vehicles on their way to their laboratories and offices at Beheshti Basij Forces University in North Teheran early Monday. It was initially reported that the motorcyclists sped past them, attached explosives to the targeted Peugeots and were gone before they exploded.
However, the first photos of the scientists' vehicles showed them to be riddled with bullet holes rather than explosive damage, meaning they were hit by drive-by shooters.
It is important to note that the attacks took place in the most secure district of Tehran, where the top-secret labs serving Iran's nuclear facilities are located. They must therefore have been set up after exhaustive and detailed surveillance.
debkafile reported earlier: The attacks occurred at 7.45 a.m. Iranian time, less than 12 hours after the WikiLeaks organization uncovered US diplomatic cables attesting to a proposal by Mossad director Meir Dagan to overthrow the Islamic regime as one of the ways of terminating its nuclear program. He proposed enlisting oppressed Iranian minority groups for the task, like the Baluchis and their liberation movement, Jundallah.
Our intelligence sources note that this was the fifth attack in two years on Iranian nuclear scientists in Tehran. None of the perpetrators were ever apprehended. Some sources suggest that the latest double hit may have been the work of Jundallah, which recently began targeting nuclear scientists serving the hated regime and which two months ago reported abducting a scientist employed at the Isfahan nuclear facility.
Tehran played down that incident claiming the kidnapped man was a driver. But last week he appeared on the Saudi TV station Al Arabiya and described his nuclear work.
Prof. Majid Shahriari, who died when his car was attacked in North Tehran Monday, Nov. 29, headed the team Iran established for combating the Stuxnet virus rampaging through its nuclear and military networks. His wife was injured. The scientist's death deals a major blow to Iran's herculean efforts to purge its nuclear and military control systems of the destructive worm since it went on the offensive six months ago. Only this month, Stuxnet shut down nuclear enrichment at Natanz for six days from Nov. 16-22 and curtailed an important air defense exercise.
Prof. Shahriari was the Iranian nuclear program's top expert on computer codes and cyber war. .
Another Iranian nuclear scientist, Prof. Feredoun Abbassi-Davani, and his wife survived a second coordinated attack with serious injuries. He is Dean of Students, a key political post at the university ..
Ali Salehi, Director of Iran's Nuclear Energy Commission, reacted bitterly that there is a limit to Iran's patience and whoever committed the murder is playing with fire. Tehran held US intelligence and the Israeli Mossad for responsible for the scientist's death.
Tehran's official account of the attacks is only half-correct, are sources report. There were indeed two motorcycle teams of two riders each who shadowed the scientists' vehicles on their way to their laboratories and offices at Beheshti Basij Forces University in North Teheran early Monday. It was initially reported that the motorcyclists sped past them, attached explosives to the targeted Peugeots and were gone before they exploded.
However, the first photos of the scientists' vehicles showed them to be riddled with bullet holes rather than explosive damage, meaning they were hit by drive-by shooters.
It is important to note that the attacks took place in the most secure district of Tehran, where the top-secret labs serving Iran's nuclear facilities are located. They must therefore have been set up after exhaustive and detailed surveillance.
debkafile reported earlier: The attacks occurred at 7.45 a.m. Iranian time, less than 12 hours after the WikiLeaks organization uncovered US diplomatic cables attesting to a proposal by Mossad director Meir Dagan to overthrow the Islamic regime as one of the ways of terminating its nuclear program. He proposed enlisting oppressed Iranian minority groups for the task, like the Baluchis and their liberation movement, Jundallah.
Our intelligence sources note that this was the fifth attack in two years on Iranian nuclear scientists in Tehran. None of the perpetrators were ever apprehended. Some sources suggest that the latest double hit may have been the work of Jundallah, which recently began targeting nuclear scientists serving the hated regime and which two months ago reported abducting a scientist employed at the Isfahan nuclear facility.
Tehran played down that incident claiming the kidnapped man was a driver. But last week he appeared on the Saudi TV station Al Arabiya and described his nuclear work.
Sunday, November 28, 2010
Doctors say Medicare cuts force painful decision about elderly patients
Want an appointment with kidney specialist Adam Weinstein of Easton, Md.? If you're a senior covered by Medicare, the wait is eight weeks.
How about a checkup from geriatric specialist Michael Trahos? Expect to see him every six months: The Alexandria-based doctor has been limiting most of his Medicare patients to twice yearly rather than the quarterly checkups he considers ideal for the elderly. Still, at least he'll see you. Top-ranked primary care doctor Linda Yau is one of three physicians with the District's Foxhall Internists group who recently announced they will no longer be accepting Medicare patients.
"It's not easy. But you realize you either do this or you don't stay in business," she said.
Doctors across the country describe similar decisions, complaining that they've been forced to shift away from Medicare toward higher-paying, privately insured or self-paying patients in response to years of penny-pinching by Congress.
And that's not even taking into account a long-postponed rate-setting method that is on track to slash Medicare's payment rates to doctors by 23 percent Dec. 1. Known as the Sustainable Growth Rate and adopted by Congress in 1997, it was intended to keep Medicare spending on doctors in line with the economy's overall growth rate. But after the SGR formula led to a 4.8 percent cut in doctors' pay rates in 2002, Congress has chosen to put off the ever steeper cuts called for by the formula ever since.
This month, the Senate passed its fourth stopgap fix this year - a one-month postponement that expires Jan. 1. The House is likely to follow suit when it reconvenes next week, and physicians have already been running print ads, passing out fliers to patients and flooding Capitol Hill with phone calls to convince Congress to suspend the 25 percent rate cut that the SGR method will require next year.
Such temporary reprieves have increased the potential pain down the road, compounding not only the eventual cut but the cost of doing away with it for good, now estimated in the tens of billions.
The lobbying blitz by doctors also comes amid concern in Washington that Medicare spending is spiraling up so fast the nation can't afford to boost it further by significantly raising doctors' pay. And government analysts and independent experts suggest that although doctors could not absorb a 25 percent fee cut, the claim that they have been inadequately compensated by Medicare until now is wildly exaggerated.
Among the top points of contention is the complaint by doctors that Medicare's payment rate has not kept pace with the growing cost of running a medical practice. As measured by the government's Medicare Economic Index, those expenses rose 18 percent from 2000 to 2008. During the same period, Medicare's physician fees rose 5 percent.
"Physicians are having to make really gut-wrenching decisions about whether they can afford to see as many Medicare patients," said Cecil Wilson, president of the American Medical Association.
But statistics also suggest many doctors have more than made up for the erosion in the value of their Medicare fees by dramatically increasing the volume of services they provide - performing not just a greater number of tests and procedures, but also more complex versions that allow them to charge Medicare more money.
From 2000 to 2008, the volume of services per Medicare patient rose 42 percent. Some of this was because of the increasing availability of sophisticated treatments that undoubtedly save lives. Some was because of doctors practicing "defensive medicine" - ordering every conceivable test to shield themselves from malpractice lawsuits down the line.
"Then you have doctors who order an MRI for an unremarkable headache or at the first sign of back pain," said Robert Berenson, a Commissioner of the Medicare Payment Advisory Commission, an independent congressional agency. "It's pretty well documented that it doesn't help patients to have those scans done in these cases. But if you have the machine in your office ... why not?"
Whatever the cause, the explosion in the volume of services provided helps explain why Medicare's total payments to doctors per patient rose 51 percent from 2000 to 2008.
A review of physicians' incomes suggests that specialists - who have more opportunities to increase the volume of the services they offer than primary-care doctors - reaped most of the benefit.
On average, primary-care doctors make about $190,000 a year, kidney specialists $300,000, and radiologists close to $500,000, figures that reflect the income doctors receive from both Medicare and non-Medicare patients. The disparity has prompted concern that Medicare is contributing to a growing shortage of primary doctors.
Still, even if primary-care doctors had to rely exclusively on Medicare's lower payment rates their incomes would only drop about 9 percent, according to a recent study co-authored by Berenson, who is also a fellow at the non-partisan Urban Institute.
"The argument that doctors literally can't afford to feed their kids [if they take Medicare's rates] is absurd," said Berenson. "It's just that doctors have gotten used to a certain income and lifestyle."
Regardless of their motivation, if doctors skew their patient base away from Medicare too drastically seniors' access to medical care could be limited.
Is that happening? Again, opinions vary. Based on its studies as well as those done by others others, the Medicare Payment Advisory Commission has concluded the share of affected seniors has been small, and perhaps most significantly, lower than the share of privately insured patients ages 50 to 64 who also report access problems.
But the American Medical Association cites a recent online survey that it commissioned in which nearly one-third of primary-care doctors said they are currently restricting the number of Medicare patients in their practice.
For Michael Trahos, the geriatric specialist in Alexandria, that has meant spacing out routine visits by his Medicare patients such that their share of his weekly appointments has dropped from about half to less than one-third. Trahos said that if a Medicare patient has a serious condition, he will see the person more frequently. But Trahos said it makes him uneasy to push even apparently healthy elderly patients back to twice yearly visits.
"Is it the proper thing to do? Probably not," he said. "These are patients who should be scheduled for proper maintenance every three months."
Adam Weinstein, the kidney specialist in Easton, has taken to supplementing his three-doctor practice by doing medical IT consulting several hours a week. But although the pay is far greater than what he would receive seeing Medicare patients, who make up 70 percent of his practice, the side work means he has less time to serve them. Not only must Weinstein make them wait longer for an appointment, he said, he can no longer afford to answer their phone calls.
"It has definitely made my patients feel more distant from me, and I don't know how to deal with that," Weinstein said.
Financial concerns also prompted Weinstein's group to turn down a request from Chester River Hospital Center in Chestertown, Md., an hour's drive north, to do daily consultations with their mainly elderly patients.
That was disheartening news for the doctor who is currently consulting at Chester River. At 69, David Knutson is semi-retired and said he is satisfied with the payments he has been getting from Medicare. But Knutson grew animated as he spoke of all the ways he would use his time if he could find another doctor to take over coming into the hospital six days a week.
"Gardening, sailing, fishing, hunting, going to the opera," he said. "I'm almost 70. If I'm ever going to do all these things that I've been talking about I better start."
Linda Yao, of the District's Foxhall Internists, has opted for the most extreme response - pulling out of Medicare. The group prides itself on keeping the number of scheduled visits low so that patients who need a last-minute appointment can be accommodated the same day. They also offer half-hour office visits, instead of the 15 minutes on which Medicare reimbursements are predicated. It makes for a white-glove experience for patients, but high overhead for doctors.
After 11 years of serving a patient base of whom as many as half were covered by Medicare, Yao concluded the numbers were no longer adding up. As of April, seniors with Medicare must pay their entire bill out of pocket or through supplemental insurance. So far, only 100 of her approximately 1,750 Medicare patients have elected to stay on.
Could doctors see more Medicare patients if they accepted lower incomes?
Perhaps, said Yao, 42.
But, "the whole system would need to change. ... I graduated medical school $100,000 in debt. I worked 110 hours a week during my residency for $30,000 a year and sacrificed all through my 20s. And even now, you're still seeing people all day, with meetings and paperwork at night, on top of the emotional side of worrying when the patients you care for aren't doing well. This is life-and-death stuff. And I feel like that should be compensated."
How about a checkup from geriatric specialist Michael Trahos? Expect to see him every six months: The Alexandria-based doctor has been limiting most of his Medicare patients to twice yearly rather than the quarterly checkups he considers ideal for the elderly. Still, at least he'll see you. Top-ranked primary care doctor Linda Yau is one of three physicians with the District's Foxhall Internists group who recently announced they will no longer be accepting Medicare patients.
"It's not easy. But you realize you either do this or you don't stay in business," she said.
Doctors across the country describe similar decisions, complaining that they've been forced to shift away from Medicare toward higher-paying, privately insured or self-paying patients in response to years of penny-pinching by Congress.
And that's not even taking into account a long-postponed rate-setting method that is on track to slash Medicare's payment rates to doctors by 23 percent Dec. 1. Known as the Sustainable Growth Rate and adopted by Congress in 1997, it was intended to keep Medicare spending on doctors in line with the economy's overall growth rate. But after the SGR formula led to a 4.8 percent cut in doctors' pay rates in 2002, Congress has chosen to put off the ever steeper cuts called for by the formula ever since.
This month, the Senate passed its fourth stopgap fix this year - a one-month postponement that expires Jan. 1. The House is likely to follow suit when it reconvenes next week, and physicians have already been running print ads, passing out fliers to patients and flooding Capitol Hill with phone calls to convince Congress to suspend the 25 percent rate cut that the SGR method will require next year.
Such temporary reprieves have increased the potential pain down the road, compounding not only the eventual cut but the cost of doing away with it for good, now estimated in the tens of billions.
The lobbying blitz by doctors also comes amid concern in Washington that Medicare spending is spiraling up so fast the nation can't afford to boost it further by significantly raising doctors' pay. And government analysts and independent experts suggest that although doctors could not absorb a 25 percent fee cut, the claim that they have been inadequately compensated by Medicare until now is wildly exaggerated.
Among the top points of contention is the complaint by doctors that Medicare's payment rate has not kept pace with the growing cost of running a medical practice. As measured by the government's Medicare Economic Index, those expenses rose 18 percent from 2000 to 2008. During the same period, Medicare's physician fees rose 5 percent.
"Physicians are having to make really gut-wrenching decisions about whether they can afford to see as many Medicare patients," said Cecil Wilson, president of the American Medical Association.
But statistics also suggest many doctors have more than made up for the erosion in the value of their Medicare fees by dramatically increasing the volume of services they provide - performing not just a greater number of tests and procedures, but also more complex versions that allow them to charge Medicare more money.
From 2000 to 2008, the volume of services per Medicare patient rose 42 percent. Some of this was because of the increasing availability of sophisticated treatments that undoubtedly save lives. Some was because of doctors practicing "defensive medicine" - ordering every conceivable test to shield themselves from malpractice lawsuits down the line.
"Then you have doctors who order an MRI for an unremarkable headache or at the first sign of back pain," said Robert Berenson, a Commissioner of the Medicare Payment Advisory Commission, an independent congressional agency. "It's pretty well documented that it doesn't help patients to have those scans done in these cases. But if you have the machine in your office ... why not?"
Whatever the cause, the explosion in the volume of services provided helps explain why Medicare's total payments to doctors per patient rose 51 percent from 2000 to 2008.
A review of physicians' incomes suggests that specialists - who have more opportunities to increase the volume of the services they offer than primary-care doctors - reaped most of the benefit.
On average, primary-care doctors make about $190,000 a year, kidney specialists $300,000, and radiologists close to $500,000, figures that reflect the income doctors receive from both Medicare and non-Medicare patients. The disparity has prompted concern that Medicare is contributing to a growing shortage of primary doctors.
Still, even if primary-care doctors had to rely exclusively on Medicare's lower payment rates their incomes would only drop about 9 percent, according to a recent study co-authored by Berenson, who is also a fellow at the non-partisan Urban Institute.
"The argument that doctors literally can't afford to feed their kids [if they take Medicare's rates] is absurd," said Berenson. "It's just that doctors have gotten used to a certain income and lifestyle."
Regardless of their motivation, if doctors skew their patient base away from Medicare too drastically seniors' access to medical care could be limited.
Is that happening? Again, opinions vary. Based on its studies as well as those done by others others, the Medicare Payment Advisory Commission has concluded the share of affected seniors has been small, and perhaps most significantly, lower than the share of privately insured patients ages 50 to 64 who also report access problems.
But the American Medical Association cites a recent online survey that it commissioned in which nearly one-third of primary-care doctors said they are currently restricting the number of Medicare patients in their practice.
For Michael Trahos, the geriatric specialist in Alexandria, that has meant spacing out routine visits by his Medicare patients such that their share of his weekly appointments has dropped from about half to less than one-third. Trahos said that if a Medicare patient has a serious condition, he will see the person more frequently. But Trahos said it makes him uneasy to push even apparently healthy elderly patients back to twice yearly visits.
"Is it the proper thing to do? Probably not," he said. "These are patients who should be scheduled for proper maintenance every three months."
Adam Weinstein, the kidney specialist in Easton, has taken to supplementing his three-doctor practice by doing medical IT consulting several hours a week. But although the pay is far greater than what he would receive seeing Medicare patients, who make up 70 percent of his practice, the side work means he has less time to serve them. Not only must Weinstein make them wait longer for an appointment, he said, he can no longer afford to answer their phone calls.
"It has definitely made my patients feel more distant from me, and I don't know how to deal with that," Weinstein said.
Financial concerns also prompted Weinstein's group to turn down a request from Chester River Hospital Center in Chestertown, Md., an hour's drive north, to do daily consultations with their mainly elderly patients.
That was disheartening news for the doctor who is currently consulting at Chester River. At 69, David Knutson is semi-retired and said he is satisfied with the payments he has been getting from Medicare. But Knutson grew animated as he spoke of all the ways he would use his time if he could find another doctor to take over coming into the hospital six days a week.
"Gardening, sailing, fishing, hunting, going to the opera," he said. "I'm almost 70. If I'm ever going to do all these things that I've been talking about I better start."
Linda Yao, of the District's Foxhall Internists, has opted for the most extreme response - pulling out of Medicare. The group prides itself on keeping the number of scheduled visits low so that patients who need a last-minute appointment can be accommodated the same day. They also offer half-hour office visits, instead of the 15 minutes on which Medicare reimbursements are predicated. It makes for a white-glove experience for patients, but high overhead for doctors.
After 11 years of serving a patient base of whom as many as half were covered by Medicare, Yao concluded the numbers were no longer adding up. As of April, seniors with Medicare must pay their entire bill out of pocket or through supplemental insurance. So far, only 100 of her approximately 1,750 Medicare patients have elected to stay on.
Could doctors see more Medicare patients if they accepted lower incomes?
Perhaps, said Yao, 42.
But, "the whole system would need to change. ... I graduated medical school $100,000 in debt. I worked 110 hours a week during my residency for $30,000 a year and sacrificed all through my 20s. And even now, you're still seeing people all day, with meetings and paperwork at night, on top of the emotional side of worrying when the patients you care for aren't doing well. This is life-and-death stuff. And I feel like that should be compensated."
Thursday, November 25, 2010
Rio de Janeiro shaken by fresh gang violence
Police and gang members have clashed in the Brazilian city of Rio de Janeiro for a fourth day, despite further raids by security forces.
At least 15 people were reported killed on Wednesday as police sought to quell the wave of gang violence.
Heavily armed men continued to stop cars and buses, rob passengers and set vehicles alight, police said.
Officials say drug traffickers are fighting back against police operations aimed at pacifying city slums.
"There are groups of criminals who have been installed here for 20, 30 years, and they might not want to give up," said Rio state public safety director Jose Beltrame.
"But we're not giving up either. If they keep this up, we will redouble our efforts. Anyone who gets in our path will be run over."
Military police said 15 suspected gang members had died in shootouts with officers on Wednesday. Since the weekend, more than 20 people have died in clashes.
One of the victims was a 14-year-old girl hit by a stray bullet in the area of Penha, the Brazilian newspaper O Globo reported.
Two policemen were wounded in the clashes, officials said.
The Brazilian G1 news website said bombs, grenades and guns had been seized in police raids.
World Cup fears
Gang-related violence has plagued Rio for decades, but most has been contained within the city's slums, known as favelas.
Continue reading the main story
At the scene
Bill Wilson BBC News, Rio de Janeiro
At first glance it seems to be life as normal on the famous beaches of Copacabana and Ipanema.
But at some of the top hotels, sightseeing trips to the favelas are no longer available. Taxi drivers have seemed noticeably tenser in the past 24 hours.
Since being in Rio I have witnessed prostitution and petty thefts on Copacabana beach.
But on Tuesday night things took on a totally different aspect, with armoured vehicles and camouflaged police out in force.
Drugs gangs have been evicted from many of the favelas and police stations have been established. The gangs are now showing the law enforcers that they have not gone away.
Now some of the recent attacks have spilled into wealthier areas closer to the beach.
"The scary part is that now it is getting close to us," said Olga Silveira, shopping in the wealthy Ipanema neighbourhood.
"Before, the violence was always far away. The criminals have discovered the power they have and they want to show it."
Rubem Fernandes, from Viva Rio, a group trying to address issues of violence, told the BBC that the situation was attracting outside attention because of the way the gangs were targeting vehicles.
"The pattern is one to provoke images of burning cars and buses, images which are very powerful on TV, and which can provoke a sense of fear," he said.
Correspondents say the latest wave of violence has raised further doubts about Rio's ability to safely host the 2014 Fifa football World Cup and 2016 Olympic Games.
The latest clashes began on Saturday night when armed men began blocking some of the main roads leading out of Rio, robbing motorists and setting vehicles on fire.
Police said officers had been deployed in 28 slum districts.
More than 1,000 officers were removed from desk jobs to join the operation and 300 extra motorcycle police were on patrol, they said.
Rio's favelas have for years been controlled by heavily armed drug trafficking gangs.
The city's pacification programme is aimed at improving security and the rule of law in Rio in the run-up to the World Cup and Olympics.
At least 15 people were reported killed on Wednesday as police sought to quell the wave of gang violence.
Heavily armed men continued to stop cars and buses, rob passengers and set vehicles alight, police said.
Officials say drug traffickers are fighting back against police operations aimed at pacifying city slums.
"There are groups of criminals who have been installed here for 20, 30 years, and they might not want to give up," said Rio state public safety director Jose Beltrame.
"But we're not giving up either. If they keep this up, we will redouble our efforts. Anyone who gets in our path will be run over."
Military police said 15 suspected gang members had died in shootouts with officers on Wednesday. Since the weekend, more than 20 people have died in clashes.
One of the victims was a 14-year-old girl hit by a stray bullet in the area of Penha, the Brazilian newspaper O Globo reported.
Two policemen were wounded in the clashes, officials said.
The Brazilian G1 news website said bombs, grenades and guns had been seized in police raids.
World Cup fears
Gang-related violence has plagued Rio for decades, but most has been contained within the city's slums, known as favelas.
Continue reading the main story
At the scene
Bill Wilson BBC News, Rio de Janeiro
At first glance it seems to be life as normal on the famous beaches of Copacabana and Ipanema.
But at some of the top hotels, sightseeing trips to the favelas are no longer available. Taxi drivers have seemed noticeably tenser in the past 24 hours.
Since being in Rio I have witnessed prostitution and petty thefts on Copacabana beach.
But on Tuesday night things took on a totally different aspect, with armoured vehicles and camouflaged police out in force.
Drugs gangs have been evicted from many of the favelas and police stations have been established. The gangs are now showing the law enforcers that they have not gone away.
Now some of the recent attacks have spilled into wealthier areas closer to the beach.
"The scary part is that now it is getting close to us," said Olga Silveira, shopping in the wealthy Ipanema neighbourhood.
"Before, the violence was always far away. The criminals have discovered the power they have and they want to show it."
Rubem Fernandes, from Viva Rio, a group trying to address issues of violence, told the BBC that the situation was attracting outside attention because of the way the gangs were targeting vehicles.
"The pattern is one to provoke images of burning cars and buses, images which are very powerful on TV, and which can provoke a sense of fear," he said.
Correspondents say the latest wave of violence has raised further doubts about Rio's ability to safely host the 2014 Fifa football World Cup and 2016 Olympic Games.
The latest clashes began on Saturday night when armed men began blocking some of the main roads leading out of Rio, robbing motorists and setting vehicles on fire.
Police said officers had been deployed in 28 slum districts.
More than 1,000 officers were removed from desk jobs to join the operation and 300 extra motorcycle police were on patrol, they said.
Rio's favelas have for years been controlled by heavily armed drug trafficking gangs.
The city's pacification programme is aimed at improving security and the rule of law in Rio in the run-up to the World Cup and Olympics.
Brits declare war on Stuxnet. Americans say: Use it on North Korea
The Stuxnet virus which has crippled Iran's nuclear program has suddenly become the object of a British MI6 Secret Service campaign to convince the British and American public that it is the enemy of the West and sold on the black market to terrorists, debkafile's intelligence sources report. Thursday morning, Nov. 25, Sky TV news led with a story claiming Stuxnet could attack any physical target dependent on computers. An unnamed Information Technology expert was quoted as saying enigmatically: "We have hard evidence that the virus is in the hands of bad guys – we can't say any more than that but these people are highly motivated and highly skilled with a lot of money behind them."
No one in the broadcast identified the "bad guys," disclosed where they operated or when they sold the virus to terrorists. Neither were their targets specified, even by a row of computer and cyber-terrorism experts who appeared later on British television, all emphasizing how dangerous the virus was.
Our intelligence sources note that none of the British reporters and experts found it necessary to mention that wherever Stuxnet was discovered outside Iran, such as India, China and Indonesia, it was dormant. Computer experts in those countries recommended leaving it in place as it was harmless for computer programs and did not interfere with their operations. The fact is that the only place Stuxnet is alive and harmful is Iran – a fact ignored in the British reports.
Indeed, for the first time in the six months since Stuxnet partially disabled Iran's nuclear reactor at Bushehr, Iran has found its first Western sympathizer, one who is willing to help defeat the malignant virus.
debkafile's sources note that the British campaign against Stuxnet was launched two days after Yukiya Amano, Director of the International Atomic Energy Agency, the IAEA, reported that Iran had briefly shut down its uranium enrichment plant in Natanz, apparently because of a Stuxnet assault on thousands of centrifuges. According to our Iranian sources, the plant had to be closed for six days, from November 16-22.
Our sources also reported that the virus raided Iranian military computer systems, forcing the cancellation of parts of its large-scale air defense drill in the second week of November. Some of the systems used in the exercise started emitting wildly inaccurate data.
The Hate Stuxnet campaign London launched Thursday carried three messages to Tehran:
1. We were not complicit in the malworm's invasion of your systems.
2. We share your view that Stuxnet is very dangerous and must be fought and are prepared to cooperate in a joint program to destroy it.
3. Britain will not line up behind the United States' position in the nuclear talks to be resumed on Dec. 5 between Iran and the Six Powers (the five Permanent UN Security Council members + Germany). It will take a different position.
In the United States, meanwhile, debkafile's Washington sources report that Stuxnet's reappearance against Iran's nuclear program is hailed. A number of American IT experts and journals specializing in cyber war have maintained of late that if the malworm is so successful against Iran, why not use it to disable North Korea's nuclear program, especially the 2,000 centrifuges revealed on Nov. 20 to be operating at a new enrichment facility?
The popular American publication WIRED carried a headline on Monday, November 22, asking, "Could Stuxnet Mess With North Korea's New Uranium Plant?" The article noted that some of the equipment North Korea was using for uranium enrichment was identical to Iranian apparatus and therefore perfect targets for the use of Stuxnet by American cyber experts.
Wednesday, November 24, 2010
Clinton and Obama Pulled 'Bait and Switch' on Netanyahu
As Israel waits for a letter clarifying America's guarantees in exchange for a proposed building ban for Jewish residents of Judea and Samaria, a diplomatic source has come forward saying that no such letter is on its way. United States Secretary of State Hillary Clinton misled Prime Minister Binyamin Netanyahu, and contrary to reports, the U.S. does not guarantee an end to the freeze, the source said.
The source, a senior diplomat with inside knowledge of Netanyahu's recent meetings in Washington, said Clinton made commitments when talking to Netanyahu, but later slipped out of them by claiming that she had not been speaking on behalf of U.S. President Obama – who, she said in the end, did not give his approval.
When Netanyahu called the State Department to clarify America's position, officials expressed surprise at his surprise, the source continued. While Clinton made promises, Netanyahu knew from the beginning that Obama has the final word, they allegedly said.
Clinton had told Netanyahu that the proposed construction freeze would last for three months, and that it would end regardless of whether or not there was progress in talks between Israel and the Palestinian Authority. After that, she said, America would not push for a third building freeze.
However, according to the diplomat, U.S. leaders have since said that the building ban for Jews in Judea and Samaria would only end if Israel and the PA reached an agreement on the borders of a proposed PA state.
Several other American promises have been called into question as well. While it was initially reported that Israel would receive F-35 fighter jets in exchange for the freeze, Israeli ministers later clarified that the jets are part of a separate package, and that Israel will pay for them in full. It was also suggested that the construction ban would not apply to Jews living in Jerusalem; however, U.S. officials later stated that it would apply to all Jews living east of the 1949 armistice line, including those in Israel's capital city.
If America does not openly declare that a second construction freeze would end in three months with or without a deal with the PA, Netanyahu is unlikely to get the cabinet's support for the new construction ban. Ministers in Shas and within Netanyahu's own Likud party have already stated that they would vote against the proposal without a U.S. promise.
Netanyahu previously made the unprecedented step of unconditionally freezing construction for Jews in Judea and Samaria for 10 months, in an attempt to bring the PA to the negotiating table. PA leaders reluctantly agreed to talk just as the 10-month freeze reached its conclusion, but left the talks again when the freeze ended.
(IsraelNationalNews.com)
Stuxnet knocks Natanz out for a week, hits Iran's air defense exercise
Stuxnet
Stuxnet still marching
Despite Iranian claims in October that their nuclear systems were cleansed of the Stuxnet virus, debkafile's intelligence and Iranian sources confirm that the invasive malworm is still making trouble. It shut down uranium enrichment at Natanz for a week from Nov. 16 to 22 over breakdowns caused by mysterious power fluctuations in the operation of the centrifuge machines enriching uranium at Natanz.
The shutdown was reported by the director of the International Atomic Energy Agency Yukiya Amano to the IAEA board in Vienna on Tuesday, Nov. 23.
Rapid changes in the spinning speed of the thousands of centrifuges enriching uranium to weapons-grade can cause them to blow apart suddenly without the monitors detecting any malfunction. The Iranian operators first tried replacing the P1 and P2 centrifuges used at Natanz with the more advanced IR1 type, but got the same effect. They finally decided to shut the plant down until computer security experts purged it of the malworm.
But then, when work was resumed Monday, about 5,000 of the 8,000 machines were found to be out of commission and the remaining 2,500-3,000 partially on the blink.
Tuesday, Ali Akbar Salehi, Director of Iran's Nuclear Energy Commission tried to put a good face on the disaster. "Fortunately the nuclear Stuxnet virus has faced a dead end," he said. However, the IAEA report and Western intelligence confirm that the virus has gathered itself for a fresh onslaught on Iran's vital facilities.
According to an exclusive report reaching debkafile, Stuxnet is also in the process of raiding Iran's military systems, sowing damage and disorder in its wake.
On Nov. 17, in the middle of a massive air defense exercise, Iranian military sources reported six foreign aircraft had intruded the airspace over the practice sites and were put to flight by Iranian fighters. The next day, a different set of military sources claimed a misunderstanding; there had been no intrusions. Iranian fighters had simulated an enemy raid which too had been repulsed.
debkafile's military sources disclose there was no "misunderstanding." The foreign intruders had shown up on the exercise's radar screens, but when the fighter jets scrambled to intercept them, they found empty sky, meaning the radar instruments had lied.
The military command accordingly decided to give up on using the exercise as a stage for unveiling new and highly sophisticated weaponry, including a homemade radar system, for fear that they too may have been infected by the ubiquitous Stuxnet worm.
Stuxnet still marching
Despite Iranian claims in October that their nuclear systems were cleansed of the Stuxnet virus, debkafile's intelligence and Iranian sources confirm that the invasive malworm is still making trouble. It shut down uranium enrichment at Natanz for a week from Nov. 16 to 22 over breakdowns caused by mysterious power fluctuations in the operation of the centrifuge machines enriching uranium at Natanz.
The shutdown was reported by the director of the International Atomic Energy Agency Yukiya Amano to the IAEA board in Vienna on Tuesday, Nov. 23.
Rapid changes in the spinning speed of the thousands of centrifuges enriching uranium to weapons-grade can cause them to blow apart suddenly without the monitors detecting any malfunction. The Iranian operators first tried replacing the P1 and P2 centrifuges used at Natanz with the more advanced IR1 type, but got the same effect. They finally decided to shut the plant down until computer security experts purged it of the malworm.
But then, when work was resumed Monday, about 5,000 of the 8,000 machines were found to be out of commission and the remaining 2,500-3,000 partially on the blink.
Tuesday, Ali Akbar Salehi, Director of Iran's Nuclear Energy Commission tried to put a good face on the disaster. "Fortunately the nuclear Stuxnet virus has faced a dead end," he said. However, the IAEA report and Western intelligence confirm that the virus has gathered itself for a fresh onslaught on Iran's vital facilities.
According to an exclusive report reaching debkafile, Stuxnet is also in the process of raiding Iran's military systems, sowing damage and disorder in its wake.
On Nov. 17, in the middle of a massive air defense exercise, Iranian military sources reported six foreign aircraft had intruded the airspace over the practice sites and were put to flight by Iranian fighters. The next day, a different set of military sources claimed a misunderstanding; there had been no intrusions. Iranian fighters had simulated an enemy raid which too had been repulsed.
debkafile's military sources disclose there was no "misunderstanding." The foreign intruders had shown up on the exercise's radar screens, but when the fighter jets scrambled to intercept them, they found empty sky, meaning the radar instruments had lied.
The military command accordingly decided to give up on using the exercise as a stage for unveiling new and highly sophisticated weaponry, including a homemade radar system, for fear that they too may have been infected by the ubiquitous Stuxnet worm.
Monday, November 22, 2010
In Entitlement America,
Tonight's stunning financial piece de resistance comes from Wyatt Emerich of The Cleveland Current. In what is sure to inspire some serious ire among all those who once believed Ronald Reagan that it was the USSR that was the "Evil Empire", Emmerich analyzes disposable income and economic benefits among several key income classes and comes to the stunning (and verifiable) conclusion that "a one-parent family of three making $14,500 a year (minimum wage) has more disposable income than a family making $60,000 a year." And that excludes benefits from Supplemental Security Income disability checks. America is now a country which punishes those middle-class people who not only try to work hard, but avoid scamming the system. Not surprisingly, it is not only the richest and most audacious thieves that prosper - it is also the penny scammers at the very bottom of the economic ladder that rip off the middle class each and every day, courtesy of the world's most generous entitlement system. Perhaps if Reagan were alive today, he would wish to modify the object of his once legendary remark.
Stunning? Just do it yourself.
Almost all welfare programs have Web sites where you can call up "benefits calculators." Just plug in your income and family size and, presto, your benefits are automatically calculated.
The chart is quite revealing. A one-parent family of three making $14,500 a year (minimu wage) has more disposable income than a amily making $60,000 a year.
And if that wasn't enough, here is one that will blow your mind:
If the family provider works only one week a month at minimum wage, he or she makes 92 percent as much as a provider grossing $60,000 a year.
Ever wonder why Obama was so focused on health reform? It is so those who have no interest or ability in working, make as much as representatives of America's once exalted, and now merely endangered, middle class.
First of all, working one week a month, saves big-time on child care. But the real big-ticket item is Medicaid, which has minimal deductibles and copays. By working only one week a month at a minimum wage job, a provider is able to get total medical coverage for next to nothing.
Compare this to the family provider making $60,000 a year. A typical Mississippi family coverage would cost around $12,000, adding deductibles and copays adds an additional $4,500 or so to the bill. That's a huge hit.
There is a reason why a full time worker may not be too excited to learn there is little to show for doing the "right thing."
The full-time $60,000-a-year job is going to be much more demanding than woring one week a month at minimu wage. Presumably, the low-income parent will have more energy to attend to the various stresses of managing a household.
It gets even scarier if one assumes a little dishonesty is throwin in the equation.
If the one-week-a-month worker maintains an unreported cash-only job on the side, the deal gets better than a regular $60,000-a-year job. In this scenario, you maintain a reportable, payroll deductible, low-income job for federal tax purposes. This allows you to easily establish your qualification for all these welfare programs. Then your black-market job gives you additional cash without interfering with your benefits. Some economists estimate there is one trillion in unreported income each year in the United States.
This really got me thinking. Just how much money could I get if I set out to deliberately scam the system? I soon realized that getting a low-paying minimum wage job would set the stage for far more welfare benefits than you could earn in a real job, if you were weilling to cheat. Even if you dodn't cheat, you could do almost as well working one week a month at minimum wage than busting a gut at a $60,000-a-year job.
Now where it gets plainly out of control is if one throws in Supplemental Security Income.
SSI pays $8,088 per year for each "disabled" family member. A person can be deemed "disabled" if thy are totally lacking in the cultural and educational skills needed to be employable in the workforce.
If you add $24,262 a year for three disability checks, the lowest paid welfare family would now have far more take-home income than the $60,000-a-year family.
Best of all: being on welfare does not judge you if you are stupid enough not to take drugs all day, every day to make some sense out of this Mephistophelian tragicomedy known as living in the USA:
Most private workplaces require drug testing, but there is no drug testing to get welfare checks.
Alas, on America's way to to communist welfare, it has long since surpassed such bastions of capitalism as China:
The welfare system in communist China is far stringier. Those people have to work to eat.
We have been writing for over a year, how the very top of America's social order steals from the middle class each and every day. Now we finally know that the very bottom of the entitlement food chain also makes out like a bandit compared to that idiot American who actually works and pays their taxes. One can only also hope that in addition to seeing their disposable income be eaten away by a kleptocratic entitlement state, that the disappearing middle class is also selling off its weaponry. Because if it isn't, and if it finally decides it has had enough, the outcome will not be surprising at all: it will be the same old that has occurred in virtually every revolution in the history of the world to date.
From Emmerich:
You can do as well working one week a month at minimum wage as you can working $60,000-a-year, full-time, high-stress job.
My chart tells the story. It is pretty much self-explanatory.
Stunning? Just do it yourself.
Almost all welfare programs have Web sites where you can call up "benefits calculators." Just plug in your income and family size and, presto, your benefits are automatically calculated.
The chart is quite revealing. A one-parent family of three making $14,500 a year (minimu wage) has more disposable income than a amily making $60,000 a year.
And if that wasn't enough, here is one that will blow your mind:
If the family provider works only one week a month at minimum wage, he or she makes 92 percent as much as a provider grossing $60,000 a year.
Ever wonder why Obama was so focused on health reform? It is so those who have no interest or ability in working, make as much as representatives of America's once exalted, and now merely endangered, middle class.
First of all, working one week a month, saves big-time on child care. But the real big-ticket item is Medicaid, which has minimal deductibles and copays. By working only one week a month at a minimum wage job, a provider is able to get total medical coverage for next to nothing.
Compare this to the family provider making $60,000 a year. A typical Mississippi family coverage would cost around $12,000, adding deductibles and copays adds an additional $4,500 or so to the bill. That's a huge hit.
There is a reason why a full time worker may not be too excited to learn there is little to show for doing the "right thing."
The full-time $60,000-a-year job is going to be much more demanding than woring one week a month at minimu wage. Presumably, the low-income parent will have more energy to attend to the various stresses of managing a household.
It gets even scarier if one assumes a little dishonesty is throwin in the equation.
If the one-week-a-month worker maintains an unreported cash-only job on the side, the deal gets better than a regular $60,000-a-year job. In this scenario, you maintain a reportable, payroll deductible, low-income job for federal tax purposes. This allows you to easily establish your qualification for all these welfare programs. Then your black-market job gives you additional cash without interfering with your benefits. Some economists estimate there is one trillion in unreported income each year in the United States.
This really got me thinking. Just how much money could I get if I set out to deliberately scam the system? I soon realized that getting a low-paying minimum wage job would set the stage for far more welfare benefits than you could earn in a real job, if you were weilling to cheat. Even if you dodn't cheat, you could do almost as well working one week a month at minimum wage than busting a gut at a $60,000-a-year job.
Now where it gets plainly out of control is if one throws in Supplemental Security Income.
SSI pays $8,088 per year for each "disabled" family member. A person can be deemed "disabled" if thy are totally lacking in the cultural and educational skills needed to be employable in the workforce.
If you add $24,262 a year for three disability checks, the lowest paid welfare family would now have far more take-home income than the $60,000-a-year family.
Best of all: being on welfare does not judge you if you are stupid enough not to take drugs all day, every day to make some sense out of this Mephistophelian tragicomedy known as living in the USA:
Most private workplaces require drug testing, but there is no drug testing to get welfare checks.
Alas, on America's way to to communist welfare, it has long since surpassed such bastions of capitalism as China:
The welfare system in communist China is far stringier. Those people have to work to eat.
We have been writing for over a year, how the very top of America's social order steals from the middle class each and every day. Now we finally know that the very bottom of the entitlement food chain also makes out like a bandit compared to that idiot American who actually works and pays their taxes. One can only also hope that in addition to seeing their disposable income be eaten away by a kleptocratic entitlement state, that the disappearing middle class is also selling off its weaponry. Because if it isn't, and if it finally decides it has had enough, the outcome will not be surprising at all: it will be the same old that has occurred in virtually every revolution in the history of the world to date.
From Emmerich:
You can do as well working one week a month at minimum wage as you can working $60,000-a-year, full-time, high-stress job.
My chart tells the story. It is pretty much self-explanatory.
New Syrian, Hizballah's guided missiles defy Israel's aerial supremacy
ntelligence chief Maj. Gen. Amos Yadlin took his leave from the Israel cabinet Sunday, Nov. 21, with a stern warning: "Tel Aviv will be a front line in the next conflict," he said.
debkafile's military sources report: Syria and Hizballah now possess thousands of surface missiles from Iran with enhanced ranges of up to 300 kilometers and they are being outfitted by Iranian engineers with guidance systems. The new guided Fateh-110, M-600 and Scud D missiles hardware can pinpoint any part of Israel within a 10-meter radius in defiance of Israel's aerial and anti-missile capabilities, say Israeli and Western missile experts. Hizballah and Syria have been furnished by Iran with the means for fighting a new, far more comprehensive war.
All of Syria's chemical Scud C and D warheads have been converted into guided missiles, and so have the 1,000 Scud Ds kept in Syrian bases near the Lebanese border ready to push across to Hizballah in a military confrontation with Israel, which Hassan Nasrallah said ten days ago he would welcome.
During the three-week war of 2006, Hizballah launched 500 rockets a day - relying on sheer, terrifying numbers against populated areas, mostly in the North - to bring Israeli armed forces low.
A dozen a day of the guided, long-range weapons would do far more damage, say our military sources. Iran's allies would likely go for Greater Tel Aviv in order to sow demoralization in the most densely populated part of Israel and devastate its industrial and financial centers.
Earlier this month, Israel's Chief of Staff Lt. Gen. Gaby Ashkenazi, said it was possible that in the next war, large segments of the population would have to be evacuated from their homes.
Former head of the Israel Mission Defense Organization Uzi Rubin said recently: "The enemy has achieved aerial supremacy without even having aircraft." Iran's fully-guided Fateh-110 rocket would enable Hizballah and Syria to strike critical Israeli facilities with dozens rather than hundreds of rockets, he said.
Hizballah and Syria have 1,500 warheads that could strike the Tel Aviv area. "This is a revolution," said the missile expert.
debkafile's military sources note that Rubin did not mention Israel's missile and rocket defense systems, the Arrow, Iron Dome and David's Sling, as able to thwart the new Syrian and Hizballah guided weapons – for good reason. Those systems are not up to intercepting heavy hails of thousands of incoming missiles. Even if only scores reached their targets, the damage would be tremendous.
As for aerial strikes against launching sites, Hizballah has dismantled its missile bases and scattered the warheads widely apart in underground bunkers and natural caverns, from which they can be launched.
debkafile's military sources report: Syria and Hizballah now possess thousands of surface missiles from Iran with enhanced ranges of up to 300 kilometers and they are being outfitted by Iranian engineers with guidance systems. The new guided Fateh-110, M-600 and Scud D missiles hardware can pinpoint any part of Israel within a 10-meter radius in defiance of Israel's aerial and anti-missile capabilities, say Israeli and Western missile experts. Hizballah and Syria have been furnished by Iran with the means for fighting a new, far more comprehensive war.
All of Syria's chemical Scud C and D warheads have been converted into guided missiles, and so have the 1,000 Scud Ds kept in Syrian bases near the Lebanese border ready to push across to Hizballah in a military confrontation with Israel, which Hassan Nasrallah said ten days ago he would welcome.
During the three-week war of 2006, Hizballah launched 500 rockets a day - relying on sheer, terrifying numbers against populated areas, mostly in the North - to bring Israeli armed forces low.
A dozen a day of the guided, long-range weapons would do far more damage, say our military sources. Iran's allies would likely go for Greater Tel Aviv in order to sow demoralization in the most densely populated part of Israel and devastate its industrial and financial centers.
Earlier this month, Israel's Chief of Staff Lt. Gen. Gaby Ashkenazi, said it was possible that in the next war, large segments of the population would have to be evacuated from their homes.
Former head of the Israel Mission Defense Organization Uzi Rubin said recently: "The enemy has achieved aerial supremacy without even having aircraft." Iran's fully-guided Fateh-110 rocket would enable Hizballah and Syria to strike critical Israeli facilities with dozens rather than hundreds of rockets, he said.
Hizballah and Syria have 1,500 warheads that could strike the Tel Aviv area. "This is a revolution," said the missile expert.
debkafile's military sources note that Rubin did not mention Israel's missile and rocket defense systems, the Arrow, Iron Dome and David's Sling, as able to thwart the new Syrian and Hizballah guided weapons – for good reason. Those systems are not up to intercepting heavy hails of thousands of incoming missiles. Even if only scores reached their targets, the damage would be tremendous.
As for aerial strikes against launching sites, Hizballah has dismantled its missile bases and scattered the warheads widely apart in underground bunkers and natural caverns, from which they can be launched.
Sunday, November 21, 2010
Outrageous! Iowa’s Lame Duck Guv Slams State With $200 Million Union Deal
owa’s outgoing Democrat Governor Chet Culver gave his union buddies at AFSCME a true ’sweetheart deal’ on Friday—a two-year contract worth $200 million taken from Iowa’s taxpayers.
The funny thing is, Culver didn’t even bother to negotiate a better deal for the state’s taxpayers. In fact, Culver didn’t bother to negotiate at all. Instead, Culver took what was asked for by AFSCME and put it into effect leaving the next administration (and taxpayers) to deal with it.
Iowa union workers will see multiple pay raises over the next two years under a contract proposal approved by Governor Culver.
In a rare move Governor Culver accepted AFSCME’s contract proposal as submitted and with no negotiation.
According to the Des Moines Register”
The wage hike plan would give members of the American Federation of State, County and Municipal Employees, better known as AFSCME, two raises in each of the next two fiscal years.
Those employees would receive a 2 percent wage increase on July 1, 2011, and another 1 percent the following Jan. 1. They would receive identical raises in the following year.
In addition, many union members who are not at the top of their pay grade would receive an additional 4.5 percent raise, known as a step increase, for certain professional milestones or for job longevity and other career advancements.
The total cost of the contract is estimated at around $200 million over two years, based on previous data released by the state department of management.
The Sioux City Journal is more pointed, however:
The only thing we might find “historic” about the tentative two-year deal reached Friday between the state’s largest employee union and the Culver administration is the level of contempt it demonstrates for Iowa taxpayers and the brazen, cynical political maneuvering that went on to make it happen.
Iowans should be nothing short of appalled.
The agreement reached Friday - a deal termed “historic” by American Federation of State, County and Municipal Employees Council 61 President Danny Homan – covers nearly 21,000 state workers from July 1, 2011, through June 30, 2013, and likely will be finalized sometime in December after union leaders review the proposal and submit it to rank-and-file members for ratification.
It’s a sweetheart deal for the union, to be sure. At first blush, it may seem “modest,” as Culver’s lead negotiator Jim Hanks termed it, but in totality it is nothing short of exorbitant. In fact, state workers covered by the contract and not yet at full scale stand to see annual wage increases of 7.5 percent during the term of the contract. No, that’s not a typo. They will get a 7.5 percent raise.
The funny thing is, Culver didn’t even bother to negotiate a better deal for the state’s taxpayers. In fact, Culver didn’t bother to negotiate at all. Instead, Culver took what was asked for by AFSCME and put it into effect leaving the next administration (and taxpayers) to deal with it.
Iowa union workers will see multiple pay raises over the next two years under a contract proposal approved by Governor Culver.
In a rare move Governor Culver accepted AFSCME’s contract proposal as submitted and with no negotiation.
According to the Des Moines Register”
The wage hike plan would give members of the American Federation of State, County and Municipal Employees, better known as AFSCME, two raises in each of the next two fiscal years.
Those employees would receive a 2 percent wage increase on July 1, 2011, and another 1 percent the following Jan. 1. They would receive identical raises in the following year.
In addition, many union members who are not at the top of their pay grade would receive an additional 4.5 percent raise, known as a step increase, for certain professional milestones or for job longevity and other career advancements.
The total cost of the contract is estimated at around $200 million over two years, based on previous data released by the state department of management.
The Sioux City Journal is more pointed, however:
The only thing we might find “historic” about the tentative two-year deal reached Friday between the state’s largest employee union and the Culver administration is the level of contempt it demonstrates for Iowa taxpayers and the brazen, cynical political maneuvering that went on to make it happen.
Iowans should be nothing short of appalled.
The agreement reached Friday - a deal termed “historic” by American Federation of State, County and Municipal Employees Council 61 President Danny Homan – covers nearly 21,000 state workers from July 1, 2011, through June 30, 2013, and likely will be finalized sometime in December after union leaders review the proposal and submit it to rank-and-file members for ratification.
It’s a sweetheart deal for the union, to be sure. At first blush, it may seem “modest,” as Culver’s lead negotiator Jim Hanks termed it, but in totality it is nothing short of exorbitant. In fact, state workers covered by the contract and not yet at full scale stand to see annual wage increases of 7.5 percent during the term of the contract. No, that’s not a typo. They will get a 7.5 percent raise.
Saturday, November 20, 2010
Google in Talks to Buy Groupon: Report
Google is in talks acquire popular retail deal site Groupon, according to a report from the Wall Street Journal Friday.
Groupon, which was launched in November 2008 and is reportedly raking in nearly $50 million a month in revenue, was one of the first sites to offer online consumers the option to rally together to purchase products and other services at fire-sale rates.
This isn't the first time Groupon has been courted—talks for a purchase by Yahoo [YHOO 16.57 
© 2010 CNBC.com
Fort Lauderdale looks to spend millions quickly on beach redevelopment
FORT LAUDERDALE —
The city is preparing to go on a major spending spree in the latest effort to revamp the beach and ensure its future as a tourist destination.
As much as $63 million could be spent on a high-style makeover that also broadens the beach's appeal beyond simply sand, surf and sun.
The expansion and remodeling of the International Swimming Hall of Fame is one possible target for aid. Other possibilities include a fishing pier, a more impressive entrance to the beach, more public parking and a wider promenade along State Road A1A.
"It's time to spend the money and build a brand on the beach that gets people coming back," Mayor Jack Seiler said.
The city is sitting on $27 million in cash saved from property taxes paid by businesses and residents in its central beach area and can borrow the rest based on taxes that it expects to collect over the next eight years.
For tourists like Alison Hutson, of Hampton, Va., such improvements are needed. She's fine with Fort Lauderdale for a reunion with old college friends, but said she wouldn't choose it for a family vacation.
"If you're here with a family, it would be tough because there is not much to do other than the beach," Hutson said while walking along the shore. "It really is geared to the beach and the bars."
But others say the beach is enough of a draw. "It's beautiful and clean, and that's good enough for me," said Cara Boucher, of Boston.
City officials and beach business leaders say the spending spree is needed to keep Fort Lauderdale competitive in the tourism market. The plans being drawn up are the latest step in the city's long transition from the nation's college Spring Break capital to an upscale destination that has a wide appeal among travelers.
Fort Lauderdale has been plowing tax money into redeveloping the beach since it broke away from the Spring Break era two decades ago. Tax dollars were spent to demolish the old Holiday Inn at Las Olas and A1A was demolished and turn it into a beach parking lot. The city also built marine facilities and a children's park, added some public restrooms and re-landscaped key parts of A1A and Las Olas.
The public investment was followed by the private development of high-end hotels from the Ritz Carlton to the W.
Officials have been hording cash in preparation for their next move. Now, they say, time is of the essence.
The city and county designated the beach as blighted in 1989, a move that allowed the city to take all city and county property tax revenue paid by businesses and residents in the area and spend it on beach improvement work. But the deal with Broward County government to earmark property tax revenue for beach redevelopment ends in 2019.
City commissioners and beach business leaders plan to set priorities for the money by the end of the year. The move comes at the same time that they are negotiating the redevelopment of the Bahia Mar complex to include a permanent home for the annual boat show.
The renovation of the Swimming Hall of Fame is likely high on the list because of its strong support among commissioners.
Commissioners sought bids last year for the Hall of Fame upgrade and tentatively approved plans in September that include new Olympic-size pools, an aquatic theater and state-of-the art artificial surf machines.
The proposal carries a $71 million price tag, and the city may have to finance up to $52.5 million of the cost. The city and developers are looking for sponsors and other private investment so they can limit how much must come from the pool of cash that the city has for beach redevelopment.
Beach planners have identified other improvements that they say would boost the beach as well. The city would look at partnering with private business so the money could be spread as widely as possible.
The city is considering the construction of a fishing pier at either Sunrise or Las Olas boulevards. Proponents say it would be a landmark that would attract residents and tourists and boost nearby businesses as well as draw fishermen. Other area cities from Sunny Isles Beach to Lake Worth have been investing in upgrades to their piers.
Planners also have suggested replacing municipal parking lots with garages. That would make the beach more accessible by easing the parking crunch on the barrier island. The garages, they say, could have first-floor restaurants and shops and provide room for landscaped plazas on part of the property.
Improving the beach for walkers, joggers and bicyclists is another option. Planners have suggested a wide pedestrian and bike path along the east side of A1A as well as a promenade on the Intracoastal Waterway.
"We need to have destinations on the beach," said Fort Lauderdale attorney Jordana Jarjura, who serves on the city's Beach Redevelopment Board. "We need to ask, how do we enhance the beach? How do we enhance tourism-related activities on the beach?"
Beach resident Mel Rubinstein added, "It would be nice at the end of eight years that we have projects completed that will last forever."
Tourism officials and beach activists worry that the Fort Lauderdale area could lose ground in the battle for tourists without improvement.
The metro area has held comparatively strong in attracting tourists despite the economic downturn. According to the Greater Fort Lauderdale Convention & Visitors Bureau, about 10.6 million people visited Broward County in 2009, down 4 percent from a year earlier. Tourism in the Orlando area fell almost 9 percent during the same period.
But Nicki Grossman, president of the visitors bureau, warns that other communities are putting money into building attractions and that Fort Lauderdale needs to do more to create buzz. She said the area must do more to broaden its appeal.
Some beach activists point south to Hollywood as an example of how Fort Lauderdale needs to change. That city completed a $14 million renovation of its beach walk three years ago, has expanded its beach parking and launched a project to improve the appearance of side streets around the beach.
"Hollywood is cleaning our clock," beach resident Art Seitz said.
Some hurdles stand in the way of Fort Lauderdale's redevelopment push.
Key property near A1A and Las Olas is the subject of a long-running court fight with the developers who wanted to build a condo high-rise there called Palazzo Las Olas. The city rejected those plans in 2003, and the ensuing lawsuit has wound its way through the court system and could continue for two to three more years.
Also, some beach business leaders want at least part of the money spent on planning and marketing events rather than construction. They want aid for holiday lights, nighttime movies on the beach, art fairs, Fourth of July celebrations and Memorial Day events.
They say major events will lure people and showcase the other changes on the beach. Seiler and city commissioners said they would consider earmarking up to 10 percent of the money toward events.
"It is very important that we market ourselves," said Ramola Motwani, a hotel developer on Fort Lauderdale beach. "It's so important that we show the people how we've changed."
Scott Wyman can be reached at swyman@SunSentinel.com or 954-356-4511.
The city is preparing to go on a major spending spree in the latest effort to revamp the beach and ensure its future as a tourist destination.
As much as $63 million could be spent on a high-style makeover that also broadens the beach's appeal beyond simply sand, surf and sun.
The expansion and remodeling of the International Swimming Hall of Fame is one possible target for aid. Other possibilities include a fishing pier, a more impressive entrance to the beach, more public parking and a wider promenade along State Road A1A.
"It's time to spend the money and build a brand on the beach that gets people coming back," Mayor Jack Seiler said.
The city is sitting on $27 million in cash saved from property taxes paid by businesses and residents in its central beach area and can borrow the rest based on taxes that it expects to collect over the next eight years.
For tourists like Alison Hutson, of Hampton, Va., such improvements are needed. She's fine with Fort Lauderdale for a reunion with old college friends, but said she wouldn't choose it for a family vacation.
"If you're here with a family, it would be tough because there is not much to do other than the beach," Hutson said while walking along the shore. "It really is geared to the beach and the bars."
But others say the beach is enough of a draw. "It's beautiful and clean, and that's good enough for me," said Cara Boucher, of Boston.
City officials and beach business leaders say the spending spree is needed to keep Fort Lauderdale competitive in the tourism market. The plans being drawn up are the latest step in the city's long transition from the nation's college Spring Break capital to an upscale destination that has a wide appeal among travelers.
Fort Lauderdale has been plowing tax money into redeveloping the beach since it broke away from the Spring Break era two decades ago. Tax dollars were spent to demolish the old Holiday Inn at Las Olas and A1A was demolished and turn it into a beach parking lot. The city also built marine facilities and a children's park, added some public restrooms and re-landscaped key parts of A1A and Las Olas.
The public investment was followed by the private development of high-end hotels from the Ritz Carlton to the W.
Officials have been hording cash in preparation for their next move. Now, they say, time is of the essence.
The city and county designated the beach as blighted in 1989, a move that allowed the city to take all city and county property tax revenue paid by businesses and residents in the area and spend it on beach improvement work. But the deal with Broward County government to earmark property tax revenue for beach redevelopment ends in 2019.
City commissioners and beach business leaders plan to set priorities for the money by the end of the year. The move comes at the same time that they are negotiating the redevelopment of the Bahia Mar complex to include a permanent home for the annual boat show.
The renovation of the Swimming Hall of Fame is likely high on the list because of its strong support among commissioners.
Commissioners sought bids last year for the Hall of Fame upgrade and tentatively approved plans in September that include new Olympic-size pools, an aquatic theater and state-of-the art artificial surf machines.
The proposal carries a $71 million price tag, and the city may have to finance up to $52.5 million of the cost. The city and developers are looking for sponsors and other private investment so they can limit how much must come from the pool of cash that the city has for beach redevelopment.
Beach planners have identified other improvements that they say would boost the beach as well. The city would look at partnering with private business so the money could be spread as widely as possible.
The city is considering the construction of a fishing pier at either Sunrise or Las Olas boulevards. Proponents say it would be a landmark that would attract residents and tourists and boost nearby businesses as well as draw fishermen. Other area cities from Sunny Isles Beach to Lake Worth have been investing in upgrades to their piers.
Planners also have suggested replacing municipal parking lots with garages. That would make the beach more accessible by easing the parking crunch on the barrier island. The garages, they say, could have first-floor restaurants and shops and provide room for landscaped plazas on part of the property.
Improving the beach for walkers, joggers and bicyclists is another option. Planners have suggested a wide pedestrian and bike path along the east side of A1A as well as a promenade on the Intracoastal Waterway.
"We need to have destinations on the beach," said Fort Lauderdale attorney Jordana Jarjura, who serves on the city's Beach Redevelopment Board. "We need to ask, how do we enhance the beach? How do we enhance tourism-related activities on the beach?"
Beach resident Mel Rubinstein added, "It would be nice at the end of eight years that we have projects completed that will last forever."
Tourism officials and beach activists worry that the Fort Lauderdale area could lose ground in the battle for tourists without improvement.
The metro area has held comparatively strong in attracting tourists despite the economic downturn. According to the Greater Fort Lauderdale Convention & Visitors Bureau, about 10.6 million people visited Broward County in 2009, down 4 percent from a year earlier. Tourism in the Orlando area fell almost 9 percent during the same period.
But Nicki Grossman, president of the visitors bureau, warns that other communities are putting money into building attractions and that Fort Lauderdale needs to do more to create buzz. She said the area must do more to broaden its appeal.
Some beach activists point south to Hollywood as an example of how Fort Lauderdale needs to change. That city completed a $14 million renovation of its beach walk three years ago, has expanded its beach parking and launched a project to improve the appearance of side streets around the beach.
"Hollywood is cleaning our clock," beach resident Art Seitz said.
Some hurdles stand in the way of Fort Lauderdale's redevelopment push.
Key property near A1A and Las Olas is the subject of a long-running court fight with the developers who wanted to build a condo high-rise there called Palazzo Las Olas. The city rejected those plans in 2003, and the ensuing lawsuit has wound its way through the court system and could continue for two to three more years.
Also, some beach business leaders want at least part of the money spent on planning and marketing events rather than construction. They want aid for holiday lights, nighttime movies on the beach, art fairs, Fourth of July celebrations and Memorial Day events.
They say major events will lure people and showcase the other changes on the beach. Seiler and city commissioners said they would consider earmarking up to 10 percent of the money toward events.
"It is very important that we market ourselves," said Ramola Motwani, a hotel developer on Fort Lauderdale beach. "It's so important that we show the people how we've changed."
Scott Wyman can be reached at swyman@SunSentinel.com or 954-356-4511.
Few Businesses Sprout, With Even Fewer Jobs
Fewer new businesses are getting off the ground in the U.S., available data suggest, a development that could cloud the prospects for job growth and innovation.
In the early months of the economic recovery, start-ups of job-creating companies have failed to keep pace with closings, and even those concerns that do get launched are hiring less than in the past. The number of companies with at least one employee fell by 100,000, or 2%, in the year that ended March 31, the Labor Department reported Thursday.
That was the second worst performance in 18 years, the worst being the 3.4% drop in the previous year.
Newly opened companies created a seasonally adjusted total of 2.6 million jobs in the three quarters ended in March, 15% less than in the first three quarters of the last recovery, when investors and entrepreneurs were still digging their way out of the Internet bust.
Research shows that new businesses are the most important source of jobs and a key driver of the innovation and productivity gains that raise long-term living standards. Without them there would be no net job growth at all, say economists John Haltiwanger of the University of Maryland and Ron Jarmin and Javier Miranda of the Census Bureau.
"Historically, it's the young, small businesses that take off that add lots of jobs," says Mr. Haltiwanger. "That process isn't working very well now."
Ensconced in a strip mall behind a Carpeteria outlet, Derek Smith has been tinkering for two years with a wireless electrical system that he says can help schools and office buildings slash lighting bills. With his financing limited to what he earns as a wireless-technology consultant, he has yet to hire his first employee.
This is a far cry from his last start-up, which he cofounded in 2002. At the two-year mark, that company, which makes radio-tracking gear for hospital equipment, had five employees, about $1 million in funding from angel investors and offices with views of downtown San Diego.
"When I started this the plan was to go out and raise a bunch of money," says Mr. Smith, who is 36 years old. That was in late 2008, just as financial markets around the world collapsed. "I quickly discovered I can't do what I did before."
Tough economic times have pushed more Americans into business for themselves, working as consultants or selling wares online. But many are not taking the additional step of forming a company and hiring employees.
For people like Mr. Smith, lack of funding seems to be the biggest problem. Two traditional sources of start-up cash—home-equity loans and credit cards—have largely dried up as banks wrangle with massive defaults and a moribund housing market. Venture-capital firms that typically invest in young companies, as well as angel investors that focus on early-stage start-ups, are pulling back as they struggle to sell the companies they already own.
Venture-capital firms invested $25.1 billion in the year that ended in September, up 10% from the same period a year earlier but still down 27% from two years earlier, according to Dow Jones VentureSource. Angel investment amounted to $8.5 billion in the 2010 first half—30% below the average level in the five years leading up to the financial crisis, estimates Jeffrey Sohl, director of the Center for Venture Research at the University of New Hampshire.
"I've never seen seed capital so low," says Mr. Sohl. "This is alarming."
[STARTUPS]
Some entrepreneurs say it's not all about financing, though. They express concern about taxes, health-care costs and the impact that wrangling in Washington over the federal budget deficit will have on them. "I can't determine what the cost of providing health care for employees would be," says Kevin Berman, 47, who is starting a local-produce company in Orion Township, Mich., called Harvest Michigan. Starting a company "is harder than it was at any time I can remember."
San Diego has long been one of the nation's entrepreneurial hotbeds, a culture that dates back to the 1960s with the founding of Linkabit Corp., a communications company whose alumni have launched scores of technology companies. A 1970s biotechnology start-up, Hybritech Inc., gave rise to a thriving biotechnology industry.
Lately, though, the pace of start-ups securing funding in San Diego has been slowed at the University of California at San Diego center that helps researchers move their work into the commercial sphere. "Investors are moving away from early-stage companies," says Rosibel Ochoa, director of the William J. von Liebig Center. "Nobody wants to touch them."
Scarce funding is putting researchers like Deli Wang in a bind. The 42-year-old engineering professor is an expert on nanowires, thread-like structures with widths less than a thousandth the diameter of an average human hair. He has a plan to make light-emitting diodes using nanowires that, he says, would be far more efficient than existing alternatives. Investors, he says, are interested—if they can see a prototype. Building one would cost Mr. Wang $200,000 that he doesn't have. "We're kind of stuck," he says.
To be sure, some companies are still getting started, particularly in biotechnology, where cash-rich pharmaceutical concerns are eager buyers and investors. In the first half of 2010, health care and biotech accounted for 44% of all angel investments, Mr. Sohl says.
And in many cases, entrepreneurs today don't need as much money, or as many people, to start new businesses. Software, communications technology and high-tech equipment are far cheaper and far more powerful than they were a decade ago.
At Mr. Smith's one-man San Diego start-up, Tesla Controls Corp., circuit boards, semiconductor chips and other components litter a plastic folding table he uses as a workbench. "The hardware stuff is all cheaper," he says. "Any of these chips are $5 or less."
Much of Mr. Smith's economizing is the result of necessity. With a family to support, he doesn't want to borrow against his house. Angel investors, if interested, would demand a larger stake at a lower price than he can stomach. And the small stake he still has in his earlier start-up, Awarepoint Corp., is only paper wealth.
The lack of funding is slowing him down. And the day a week he spends on consulting takes away from the time that he can devote to his new company. "I would love to be able to hire other people," he says. "But right now I can't."
Write to Justin Lahart at justin.lahart@wsj.com and Mark Whitehouse at mark.whitehouse@wsj.com
In the early months of the economic recovery, start-ups of job-creating companies have failed to keep pace with closings, and even those concerns that do get launched are hiring less than in the past. The number of companies with at least one employee fell by 100,000, or 2%, in the year that ended March 31, the Labor Department reported Thursday.
That was the second worst performance in 18 years, the worst being the 3.4% drop in the previous year.
Newly opened companies created a seasonally adjusted total of 2.6 million jobs in the three quarters ended in March, 15% less than in the first three quarters of the last recovery, when investors and entrepreneurs were still digging their way out of the Internet bust.
Research shows that new businesses are the most important source of jobs and a key driver of the innovation and productivity gains that raise long-term living standards. Without them there would be no net job growth at all, say economists John Haltiwanger of the University of Maryland and Ron Jarmin and Javier Miranda of the Census Bureau.
"Historically, it's the young, small businesses that take off that add lots of jobs," says Mr. Haltiwanger. "That process isn't working very well now."
Ensconced in a strip mall behind a Carpeteria outlet, Derek Smith has been tinkering for two years with a wireless electrical system that he says can help schools and office buildings slash lighting bills. With his financing limited to what he earns as a wireless-technology consultant, he has yet to hire his first employee.
This is a far cry from his last start-up, which he cofounded in 2002. At the two-year mark, that company, which makes radio-tracking gear for hospital equipment, had five employees, about $1 million in funding from angel investors and offices with views of downtown San Diego.
"When I started this the plan was to go out and raise a bunch of money," says Mr. Smith, who is 36 years old. That was in late 2008, just as financial markets around the world collapsed. "I quickly discovered I can't do what I did before."
Tough economic times have pushed more Americans into business for themselves, working as consultants or selling wares online. But many are not taking the additional step of forming a company and hiring employees.
For people like Mr. Smith, lack of funding seems to be the biggest problem. Two traditional sources of start-up cash—home-equity loans and credit cards—have largely dried up as banks wrangle with massive defaults and a moribund housing market. Venture-capital firms that typically invest in young companies, as well as angel investors that focus on early-stage start-ups, are pulling back as they struggle to sell the companies they already own.
Venture-capital firms invested $25.1 billion in the year that ended in September, up 10% from the same period a year earlier but still down 27% from two years earlier, according to Dow Jones VentureSource. Angel investment amounted to $8.5 billion in the 2010 first half—30% below the average level in the five years leading up to the financial crisis, estimates Jeffrey Sohl, director of the Center for Venture Research at the University of New Hampshire.
"I've never seen seed capital so low," says Mr. Sohl. "This is alarming."
[STARTUPS]
Some entrepreneurs say it's not all about financing, though. They express concern about taxes, health-care costs and the impact that wrangling in Washington over the federal budget deficit will have on them. "I can't determine what the cost of providing health care for employees would be," says Kevin Berman, 47, who is starting a local-produce company in Orion Township, Mich., called Harvest Michigan. Starting a company "is harder than it was at any time I can remember."
San Diego has long been one of the nation's entrepreneurial hotbeds, a culture that dates back to the 1960s with the founding of Linkabit Corp., a communications company whose alumni have launched scores of technology companies. A 1970s biotechnology start-up, Hybritech Inc., gave rise to a thriving biotechnology industry.
Lately, though, the pace of start-ups securing funding in San Diego has been slowed at the University of California at San Diego center that helps researchers move their work into the commercial sphere. "Investors are moving away from early-stage companies," says Rosibel Ochoa, director of the William J. von Liebig Center. "Nobody wants to touch them."
Scarce funding is putting researchers like Deli Wang in a bind. The 42-year-old engineering professor is an expert on nanowires, thread-like structures with widths less than a thousandth the diameter of an average human hair. He has a plan to make light-emitting diodes using nanowires that, he says, would be far more efficient than existing alternatives. Investors, he says, are interested—if they can see a prototype. Building one would cost Mr. Wang $200,000 that he doesn't have. "We're kind of stuck," he says.
To be sure, some companies are still getting started, particularly in biotechnology, where cash-rich pharmaceutical concerns are eager buyers and investors. In the first half of 2010, health care and biotech accounted for 44% of all angel investments, Mr. Sohl says.
And in many cases, entrepreneurs today don't need as much money, or as many people, to start new businesses. Software, communications technology and high-tech equipment are far cheaper and far more powerful than they were a decade ago.
At Mr. Smith's one-man San Diego start-up, Tesla Controls Corp., circuit boards, semiconductor chips and other components litter a plastic folding table he uses as a workbench. "The hardware stuff is all cheaper," he says. "Any of these chips are $5 or less."
Much of Mr. Smith's economizing is the result of necessity. With a family to support, he doesn't want to borrow against his house. Angel investors, if interested, would demand a larger stake at a lower price than he can stomach. And the small stake he still has in his earlier start-up, Awarepoint Corp., is only paper wealth.
The lack of funding is slowing him down. And the day a week he spends on consulting takes away from the time that he can devote to his new company. "I would love to be able to hire other people," he says. "But right now I can't."
Write to Justin Lahart at justin.lahart@wsj.com and Mark Whitehouse at mark.whitehouse@wsj.com
Northern Mexico's State of Anarchy
Residents Abandon a Border Town as Vicious Drug Cartels Go to War
MIGUEL ALEMÁN, Mexico—Ciudad Mier, a picturesque colonial village on the Texas border, was a sleepy tourist attraction until February, when two rival drug cartels turned it into a slaughterhouse.
Caravans of armored SUVs crammed with gunmen firing automatic rifles prowled the streets. Parents pulled terrified children from schools. The town of 6,000 went dark every time the combatants shot out the transformers. In May, a man was hung alive from a tree in the central plaza and dismembered while town folk heard the screaming from behind shuttered doors.
Rival Mexican drug gangs have turned Ciudad Mier from a tourist town into a ghost town. WSJ's Simon Constable talks to reporter Nicholas Casey about the ravages of the drug war in Mexico's Tamaulipas state.
Then last week, after a new offensive by the Zetas, one of the two groups that have turned the town into a no-man's land, hundreds of residents packed what they could into their cars and fled, leaving eerily empty streets with burned out shells of cars and bullet-pocked walls.
"It's like we're in the Wild West," says Santos Moreno Pérez, a Pentecostal minister who is among the refugees here in neighboring Miguel Alemán. "We have no mayor, no police, no transit system. We have been left to fend for ourselves."
Two years ago, the U.S. military warned that the Mexican government was "weak and failing" and could lose control of the country to drug traffickers. Mexican officials quickly rejected the assertion, and in truth the most dire predictions now seem overblown. Mexico's economy is rebounding from the aftershocks of the U.S. recession, with gross domestic product growth expected to top 4% this year. Foreign companies not only haven't fled, they continue to make some investments along the country's northern manufacturing belt where much of the drug war is playing out. Mexico City and large parts of south so far have escaped the mayhem, and the country as a whole remains stable.
Still, some parts of Mexico are caught in the grip of violence so profound that government seems almost beside the point. This is especially true in northern places like Ciudad Mier and surrounding Tamaulipas state—a narrow, cleaver-shaped province that snakes along the Texas border and hugs Mexico's Gulf Coast.
Across Tamaulipas, gunmen run their own checkpoints on highways. The cartels have forced Mexico's national oil company to abandon several gas fields. Many farmers have given up on tons of soybeans and sorghum in fields controlled by criminals. Leading families, fleeing extortion and threats of kidnapping, have escaped to Texas—as have the mayors of the state's three largest cities.
Most of the brutality that takes place along this vast arid landscape goes unrecorded. Newspapers as well as television broadcasters have been silenced. Rumors have taken the place of news and circulate on social networks like Twitter, which people check regularly to make sure that no shootouts are taking place on the routes they take to work or school.
"Public space has been taken over by criminals, and Tamaulipas society is at their mercy," says Carlos Flores, a visiting professor at the University of Connecticut who studies the state's crime groups.
As goes Tamaulipas also go a small but growing number of Mexico's 31 states, including Chihuahua and Michoacán—places where rival organized crime groups either exert political and territorial control or are in the midst of bloody battles to impose their hegemony. In these states, despite four years of intense effort, the Mexican government and its institutions hold little sway.
The failure of Tamaulipas carries consequences for the U.S. The state shares roughly 230 miles of border with Texas and handles nearly 50% of the merchandise moving between the U.S. and Mexico. Only a river separates it from the U.S. cities of Laredo, McAllen and Brownsville.
Last month, an American riding a jet ski on Falcon Reservoir, a border lake not far from Ciudad Mier, was shot dead by suspected cartel gunmen, his body never recovered. Days later, the severed head of the lead Mexican investigator on the case was dumped in a suitcase in front of a Mexican army barracks.
Mexico's Failing State
A woman from Mier comforted her children after a shootout near the building where they have sought shelter in the neighboring town of Miguel Alemán.
Drug Killings
Nearly 23,000 people have died in drug-related violence since 2006, according to the government, with northern border states experiencing the worst of the violence.
In the state capital of Ciudad Victoria, the man poised to win the state governor's election was ambushed and shot dead in broad daylight this summer, along with his four bodyguards. Two months later, Mexican marines arrived at a secluded ranch and found a grotesque sight—the bodies of 72 would-be immigrants to the U.S who had been lined up and executed. Authorities blamed the Zetas. The investigator in the case was murdered two days later.
Despite such gruesome milestones, Alejandro Poiré, President Felipe Calderón's spokesman on security matters, disputes the notion that Tamaulipas is falling into anarchy. "Tamaulipas is not a failed state," he says. "Organized crime is being fought with strength and determination." He says that Tamaulipas continues to provide public services, collect taxes and organize elections. He notes that violence is concentrated in eight out of the state's 43 municipalities, and that authorities have scored a number of successes against drug lords.
Outgoing governor Eugenio Hernández also said the state's troubles have been exaggerated. "We are far from being a failed state," Mr. Hernández said in an interview in the capital city of Ciudad Victoria. "We are working. We have order. There are some eye-catching events, but most people have no problems."
Days after the interview, the governor struck a less optimistic note, telling journalists that "municipal and state forces, on their own, can't do very much [against organized crime], which is why it's urgent that the federal government send reinforcements to the border region."
The troubles in Tamaulipas stems from a turf war which broke out early this year between the Gulf Cartel and the Zetas, two former allies in drugs and organized crime, now fighting for control of the state. More than 90% of Tamaulipas is in the hands of the crime groups, says a newsman there.
The fighting has caused more than 1,300 deaths so far this year in the state, or one in six drug-war killings nationwide, mostly members of rival gangs, according to the federal government. Since President Calderón took office in December 2006 and declared war on traffickers, about 31,000 people have died.
For Mexico's armed forces, Tamaulipas and next-door Nuevo León, where the fight between the Zetas and the Gulf Cartel has spilled over, are Mexico's most dangerous states. So far this year, the army has been attacked 128 times across Mexico; 91 of those attacks have taken place in Tamaulipas and in Nuevo León, up from only three the previous year.
On a recent day, unknown assailants threw a grenade at an army base in the border city of Matamoros, just across from Brownsville, while cartel gunmen fought in broad daylight in Reynosa, the state's biggest city.
The armed forces have scored some successes. Earlier this month, about 660 Mexican Navy special forces fought a 10-hour battle in the streets of Matamoros with some 300 gunmen from the Gulf Cartel. Fearing stray bullets, the University of Texas at Brownsville on the other side of the Rio Grande suspended classes. The battle ended with the death of one of the cartel's top leaders, Ezequiel Cárdenas Guillén, known as Tony Tormenta.
Ciudad Mier, Tamaulipas's abandoned town, could offer a glimpse of where Mexico may head if the conflict remains unchecked. In 2007, the government declared it a "Pueblo Mágico," or Magic Village, a special designation to attract tourists to the cobblestone streets and artisan markets.
"This was a town where we had outdoor dances, art fairs," recalls a 20-year-old school teacher who fled Ciudad Mier and declined to give his name. People gathered freely for family baptisms or quinceñera celebrations, when girls turn 15. "You walked around at night in Ciudad Mier," he says.
But trouble was brewing here and in the rest of the state. Since the 1980s, Tamaulipas had been home to the Gulf Cartel, which began as an outfit that smuggled electric appliances into Mexico's closed economy and turned into one of the country's largest drug-trafficking groups as trade opened to the U.S. The Gulf Cartel's leader, Osiel Cárdenas Guillén, the younger brother of Ezequiel, planted the seeds for the present bloodletting when he persuaded 31 highly trained Mexican army special forces soldiers, called the Zetas, to defect and work as enforcers for the cartel in the early 1990s, analysts and government officials say.
Mr. Cárdenas Guillén was arrested in 2003 and extradited to the U.S. in 2007. He was sentenced to 25 years in prison this February in a Texas court, although court transcripts say he is cooperating with authorities, which could lead to a sentence reduction. Mr. Cárdenas Guillén's lawyer, Chip B. Lewis of Houston, declined to comment on his client's purported cooperation.
As Mr. Cárdenas Guillén's case was coming to a close, his former allies the Zetas broke from the Gulf Cartel. Now believed to number in the low thousands, they declared a war to grab control of illegal markets, which spread throughout the state.
Though peaceful, Ciudad Mier, a short drive from Roma, Texas, was ripe for conflict. The town and surrounding area had long been a Zeta stronghold. This year, analysts say, the Gulf Cartel tried to oust the Zetas.
On Feb. 23, the city was plunged into chaos after several dozen SUVs arrived at the municipal police station, sacked the facility and took officers hostage. No one has seen them since. Not long afterward, residents found a group of decapitated heads from unknown victims on the outskirts of town.
Ciudad Mier began to collapse. After an attack on the water-treatment facility this year, the town had no drinkable water as workers were too frightened to begin repairs, residents say. For a week this fall, parts of the city had no water at all. Electrical outages became frequent after attacks on transformers. Finding gas became impossible when the city's one gas station was shot up. Residents say they headed to neighboring Miguel Alemán to fill up their cars.
While schools remained in session, parents often refused to send their children, deeming it unsafe. "Every child I taught was thinking: 'I'm next to be killed,'" says a town teacher, who recalled that a theater class he taught suddenly sank from 20 students to just four.
Medical services were scant. "The pharmacies were closing down or weren't open," recalls an 87-year-old man who fled the town last week. Manuel Alejandro Peña, a general practitioner who heads a branch of the state's health office in the village, recalled that he was unable to get penicillin for two months this summer when drivers couldn't safely make the journey from the city of Nuevo Laredo, fearing they'd be attacked on the highway.
"We watched our medicine reserves begin to vanish," Dr. Peña recalled.
By last week, the city was ravaged again. Emboldened by the death of Mr. Cárdenas Guillén, the Gulf Cartel leader known as Tony Tormenta, Zetas staged a counterattack, townspeople say. Signs leading into the town were pocked with hundreds of bullet holes, along with nearly every major building in town.
Except for a few holdouts, nearly all the former residents have fled. Some moved in with family members elsewhere in Mexico or the U.S. About 300 refugees now bunk on cots at a local Lion's Club in nearby Miguel Alemán, a larger city down the road which is thought to be less violent. On a recent day, an older deaf woman sat in a wheelchair by herself as a dozen children watched morning cartoons.
Yet even this place offers limited sanctuary. During a visit by a reporter, automatic-rifle shots broke out as drug gunmen and army troops confronted each other a short distance from the shelter. The refugees screamed and took cover on the floor.
"Don't worry, nothing will happen to us," a mother said to her crying son.
A short time later, the mayor's sister arrived. "Everything is all right," she told the anxious crowd. "They wouldn't have sent me if I were going to get killed here."
Outside experts and residents say the state is unable to defend itself now partly because it failed to confront the cartels earlier. Indeed, they say the Tamaulipas government kept close ties to the Gulf Cartel, an arrangement that worked well until the Zetas violently took on both the cartel and the state.
"The Gulf Cartel managed to co-exist with the state government for decades," says George W. Grayson, a Mexico expert at the College of William & Mary. "But the presence of the Zetas has thrown an electric eel in a barrel of fish."
The governor says there has never been collusion between the Tamaulipas government and drug traffickers. But like many other Tamaulipas residents, he seems nostalgic for past days when drug dealers in Mexico stuck to ferrying drugs to the U.S. and didn't kidnap, extort and kill fellow Mexicans.
"There was no agreement, but they [the Gulf Cartel] stuck to their business," he says. "They behaved differently. They didn't interfere with normal citizens. There were no extortions or kidnappings."
Some local residents blame the federal government for provoking the drug traffickers. "This is a war that was declared by the federal government," says Óscar Luebbert, the outgoing mayor of Reynosa, the state's biggest city and busiest border crossing. Mr. Luebbert objected to military deployments by President Calderón, who belongs to the rival National Action Party. "I don't want to live in a country in war."
While Ciudad Mier remains the only city to have emptied out so far, the rule of law is breaking down elsewhere. In Reynosa, a taco stand a short walk from the main plaza offers a typical encounter with criminals who have no fear of authorities. Days ago, the owners say, a group of men descended from sport-utility vehicles, AK-47 machine guns slung to their belts. "They came for lunch. They didn't pay," says an employee at the stand.
[mexicomapp1]
To fend off the Zetas, the Gulf Cartel is tightening its grip on the city's institutions—particularly news outlets. Reporters interviewed said that many colleagues receive checks from the cartel for favorable coverage. One referred to a "spokesman" for a drug cartel who went to crime scenes after shootouts to dictate angles for news.
The Gulf Cartel even appears to be getting involved in quasi-legitimate activities, such as the sale of alcohol. In a cantina off one of the city's main thoroughfares, a restaurant employee showed a reporter a whiskey bottle with a three-letter stamp that he said is the mark of the Gulf Cartel, which has been selling imports. "There's no choice but to buy from them now," he said. The Zetas, meanwhile, have their own merchandise brands such as bootleg CDs in areas they control.
In Tampico, a port city that bears a passing resemblance to a faded New Orleans, the most important society dance was cancelled this year for the first time in 70 years, says a cattle rancher. Kidnappings have surged. Among the victims: two of the city's former mayors. "Most owners of businesses have left and run their companies by telephone from Texas," says a local resident.
The outgoing mayor, Oscar Pérez, is rarely seen in town. Residents believe he lives in Garland, Texas. The incoming mayor, former schoolteacher Magdalena Peraza, says she plans to mobilize the citizenry, awaken civic pride and create jobs when she takes office in December.
Ms. Peraza's sister urged her not to take the high profile job. Ms. Peraza replied that God would protect her, but her sister urged her again to reconsider, saying that God was very busy.
"I'm worried," says the mayor elect. "But I have faith."
Write to Nicholas Casey at nicholas.casey@wsj.com and José de Córdoba at jose.decordoba@wsj.com
Copyright 2010 Dow Jones & Company, Inc. All Rights Reserved
MIGUEL ALEMÁN, Mexico—Ciudad Mier, a picturesque colonial village on the Texas border, was a sleepy tourist attraction until February, when two rival drug cartels turned it into a slaughterhouse.
Caravans of armored SUVs crammed with gunmen firing automatic rifles prowled the streets. Parents pulled terrified children from schools. The town of 6,000 went dark every time the combatants shot out the transformers. In May, a man was hung alive from a tree in the central plaza and dismembered while town folk heard the screaming from behind shuttered doors.
Rival Mexican drug gangs have turned Ciudad Mier from a tourist town into a ghost town. WSJ's Simon Constable talks to reporter Nicholas Casey about the ravages of the drug war in Mexico's Tamaulipas state.
Then last week, after a new offensive by the Zetas, one of the two groups that have turned the town into a no-man's land, hundreds of residents packed what they could into their cars and fled, leaving eerily empty streets with burned out shells of cars and bullet-pocked walls.
"It's like we're in the Wild West," says Santos Moreno Pérez, a Pentecostal minister who is among the refugees here in neighboring Miguel Alemán. "We have no mayor, no police, no transit system. We have been left to fend for ourselves."
Two years ago, the U.S. military warned that the Mexican government was "weak and failing" and could lose control of the country to drug traffickers. Mexican officials quickly rejected the assertion, and in truth the most dire predictions now seem overblown. Mexico's economy is rebounding from the aftershocks of the U.S. recession, with gross domestic product growth expected to top 4% this year. Foreign companies not only haven't fled, they continue to make some investments along the country's northern manufacturing belt where much of the drug war is playing out. Mexico City and large parts of south so far have escaped the mayhem, and the country as a whole remains stable.
Still, some parts of Mexico are caught in the grip of violence so profound that government seems almost beside the point. This is especially true in northern places like Ciudad Mier and surrounding Tamaulipas state—a narrow, cleaver-shaped province that snakes along the Texas border and hugs Mexico's Gulf Coast.
Across Tamaulipas, gunmen run their own checkpoints on highways. The cartels have forced Mexico's national oil company to abandon several gas fields. Many farmers have given up on tons of soybeans and sorghum in fields controlled by criminals. Leading families, fleeing extortion and threats of kidnapping, have escaped to Texas—as have the mayors of the state's three largest cities.
Most of the brutality that takes place along this vast arid landscape goes unrecorded. Newspapers as well as television broadcasters have been silenced. Rumors have taken the place of news and circulate on social networks like Twitter, which people check regularly to make sure that no shootouts are taking place on the routes they take to work or school.
"Public space has been taken over by criminals, and Tamaulipas society is at their mercy," says Carlos Flores, a visiting professor at the University of Connecticut who studies the state's crime groups.
As goes Tamaulipas also go a small but growing number of Mexico's 31 states, including Chihuahua and Michoacán—places where rival organized crime groups either exert political and territorial control or are in the midst of bloody battles to impose their hegemony. In these states, despite four years of intense effort, the Mexican government and its institutions hold little sway.
The failure of Tamaulipas carries consequences for the U.S. The state shares roughly 230 miles of border with Texas and handles nearly 50% of the merchandise moving between the U.S. and Mexico. Only a river separates it from the U.S. cities of Laredo, McAllen and Brownsville.
Last month, an American riding a jet ski on Falcon Reservoir, a border lake not far from Ciudad Mier, was shot dead by suspected cartel gunmen, his body never recovered. Days later, the severed head of the lead Mexican investigator on the case was dumped in a suitcase in front of a Mexican army barracks.
Mexico's Failing State
A woman from Mier comforted her children after a shootout near the building where they have sought shelter in the neighboring town of Miguel Alemán.
Drug Killings
Nearly 23,000 people have died in drug-related violence since 2006, according to the government, with northern border states experiencing the worst of the violence.
In the state capital of Ciudad Victoria, the man poised to win the state governor's election was ambushed and shot dead in broad daylight this summer, along with his four bodyguards. Two months later, Mexican marines arrived at a secluded ranch and found a grotesque sight—the bodies of 72 would-be immigrants to the U.S who had been lined up and executed. Authorities blamed the Zetas. The investigator in the case was murdered two days later.
Despite such gruesome milestones, Alejandro Poiré, President Felipe Calderón's spokesman on security matters, disputes the notion that Tamaulipas is falling into anarchy. "Tamaulipas is not a failed state," he says. "Organized crime is being fought with strength and determination." He says that Tamaulipas continues to provide public services, collect taxes and organize elections. He notes that violence is concentrated in eight out of the state's 43 municipalities, and that authorities have scored a number of successes against drug lords.
Outgoing governor Eugenio Hernández also said the state's troubles have been exaggerated. "We are far from being a failed state," Mr. Hernández said in an interview in the capital city of Ciudad Victoria. "We are working. We have order. There are some eye-catching events, but most people have no problems."
Days after the interview, the governor struck a less optimistic note, telling journalists that "municipal and state forces, on their own, can't do very much [against organized crime], which is why it's urgent that the federal government send reinforcements to the border region."
The troubles in Tamaulipas stems from a turf war which broke out early this year between the Gulf Cartel and the Zetas, two former allies in drugs and organized crime, now fighting for control of the state. More than 90% of Tamaulipas is in the hands of the crime groups, says a newsman there.
The fighting has caused more than 1,300 deaths so far this year in the state, or one in six drug-war killings nationwide, mostly members of rival gangs, according to the federal government. Since President Calderón took office in December 2006 and declared war on traffickers, about 31,000 people have died.
For Mexico's armed forces, Tamaulipas and next-door Nuevo León, where the fight between the Zetas and the Gulf Cartel has spilled over, are Mexico's most dangerous states. So far this year, the army has been attacked 128 times across Mexico; 91 of those attacks have taken place in Tamaulipas and in Nuevo León, up from only three the previous year.
On a recent day, unknown assailants threw a grenade at an army base in the border city of Matamoros, just across from Brownsville, while cartel gunmen fought in broad daylight in Reynosa, the state's biggest city.
The armed forces have scored some successes. Earlier this month, about 660 Mexican Navy special forces fought a 10-hour battle in the streets of Matamoros with some 300 gunmen from the Gulf Cartel. Fearing stray bullets, the University of Texas at Brownsville on the other side of the Rio Grande suspended classes. The battle ended with the death of one of the cartel's top leaders, Ezequiel Cárdenas Guillén, known as Tony Tormenta.
Ciudad Mier, Tamaulipas's abandoned town, could offer a glimpse of where Mexico may head if the conflict remains unchecked. In 2007, the government declared it a "Pueblo Mágico," or Magic Village, a special designation to attract tourists to the cobblestone streets and artisan markets.
"This was a town where we had outdoor dances, art fairs," recalls a 20-year-old school teacher who fled Ciudad Mier and declined to give his name. People gathered freely for family baptisms or quinceñera celebrations, when girls turn 15. "You walked around at night in Ciudad Mier," he says.
But trouble was brewing here and in the rest of the state. Since the 1980s, Tamaulipas had been home to the Gulf Cartel, which began as an outfit that smuggled electric appliances into Mexico's closed economy and turned into one of the country's largest drug-trafficking groups as trade opened to the U.S. The Gulf Cartel's leader, Osiel Cárdenas Guillén, the younger brother of Ezequiel, planted the seeds for the present bloodletting when he persuaded 31 highly trained Mexican army special forces soldiers, called the Zetas, to defect and work as enforcers for the cartel in the early 1990s, analysts and government officials say.
Mr. Cárdenas Guillén was arrested in 2003 and extradited to the U.S. in 2007. He was sentenced to 25 years in prison this February in a Texas court, although court transcripts say he is cooperating with authorities, which could lead to a sentence reduction. Mr. Cárdenas Guillén's lawyer, Chip B. Lewis of Houston, declined to comment on his client's purported cooperation.
As Mr. Cárdenas Guillén's case was coming to a close, his former allies the Zetas broke from the Gulf Cartel. Now believed to number in the low thousands, they declared a war to grab control of illegal markets, which spread throughout the state.
Though peaceful, Ciudad Mier, a short drive from Roma, Texas, was ripe for conflict. The town and surrounding area had long been a Zeta stronghold. This year, analysts say, the Gulf Cartel tried to oust the Zetas.
On Feb. 23, the city was plunged into chaos after several dozen SUVs arrived at the municipal police station, sacked the facility and took officers hostage. No one has seen them since. Not long afterward, residents found a group of decapitated heads from unknown victims on the outskirts of town.
Ciudad Mier began to collapse. After an attack on the water-treatment facility this year, the town had no drinkable water as workers were too frightened to begin repairs, residents say. For a week this fall, parts of the city had no water at all. Electrical outages became frequent after attacks on transformers. Finding gas became impossible when the city's one gas station was shot up. Residents say they headed to neighboring Miguel Alemán to fill up their cars.
While schools remained in session, parents often refused to send their children, deeming it unsafe. "Every child I taught was thinking: 'I'm next to be killed,'" says a town teacher, who recalled that a theater class he taught suddenly sank from 20 students to just four.
Medical services were scant. "The pharmacies were closing down or weren't open," recalls an 87-year-old man who fled the town last week. Manuel Alejandro Peña, a general practitioner who heads a branch of the state's health office in the village, recalled that he was unable to get penicillin for two months this summer when drivers couldn't safely make the journey from the city of Nuevo Laredo, fearing they'd be attacked on the highway.
"We watched our medicine reserves begin to vanish," Dr. Peña recalled.
By last week, the city was ravaged again. Emboldened by the death of Mr. Cárdenas Guillén, the Gulf Cartel leader known as Tony Tormenta, Zetas staged a counterattack, townspeople say. Signs leading into the town were pocked with hundreds of bullet holes, along with nearly every major building in town.
Except for a few holdouts, nearly all the former residents have fled. Some moved in with family members elsewhere in Mexico or the U.S. About 300 refugees now bunk on cots at a local Lion's Club in nearby Miguel Alemán, a larger city down the road which is thought to be less violent. On a recent day, an older deaf woman sat in a wheelchair by herself as a dozen children watched morning cartoons.
Yet even this place offers limited sanctuary. During a visit by a reporter, automatic-rifle shots broke out as drug gunmen and army troops confronted each other a short distance from the shelter. The refugees screamed and took cover on the floor.
"Don't worry, nothing will happen to us," a mother said to her crying son.
A short time later, the mayor's sister arrived. "Everything is all right," she told the anxious crowd. "They wouldn't have sent me if I were going to get killed here."
Outside experts and residents say the state is unable to defend itself now partly because it failed to confront the cartels earlier. Indeed, they say the Tamaulipas government kept close ties to the Gulf Cartel, an arrangement that worked well until the Zetas violently took on both the cartel and the state.
"The Gulf Cartel managed to co-exist with the state government for decades," says George W. Grayson, a Mexico expert at the College of William & Mary. "But the presence of the Zetas has thrown an electric eel in a barrel of fish."
The governor says there has never been collusion between the Tamaulipas government and drug traffickers. But like many other Tamaulipas residents, he seems nostalgic for past days when drug dealers in Mexico stuck to ferrying drugs to the U.S. and didn't kidnap, extort and kill fellow Mexicans.
"There was no agreement, but they [the Gulf Cartel] stuck to their business," he says. "They behaved differently. They didn't interfere with normal citizens. There were no extortions or kidnappings."
Some local residents blame the federal government for provoking the drug traffickers. "This is a war that was declared by the federal government," says Óscar Luebbert, the outgoing mayor of Reynosa, the state's biggest city and busiest border crossing. Mr. Luebbert objected to military deployments by President Calderón, who belongs to the rival National Action Party. "I don't want to live in a country in war."
While Ciudad Mier remains the only city to have emptied out so far, the rule of law is breaking down elsewhere. In Reynosa, a taco stand a short walk from the main plaza offers a typical encounter with criminals who have no fear of authorities. Days ago, the owners say, a group of men descended from sport-utility vehicles, AK-47 machine guns slung to their belts. "They came for lunch. They didn't pay," says an employee at the stand.
[mexicomapp1]
To fend off the Zetas, the Gulf Cartel is tightening its grip on the city's institutions—particularly news outlets. Reporters interviewed said that many colleagues receive checks from the cartel for favorable coverage. One referred to a "spokesman" for a drug cartel who went to crime scenes after shootouts to dictate angles for news.
The Gulf Cartel even appears to be getting involved in quasi-legitimate activities, such as the sale of alcohol. In a cantina off one of the city's main thoroughfares, a restaurant employee showed a reporter a whiskey bottle with a three-letter stamp that he said is the mark of the Gulf Cartel, which has been selling imports. "There's no choice but to buy from them now," he said. The Zetas, meanwhile, have their own merchandise brands such as bootleg CDs in areas they control.
In Tampico, a port city that bears a passing resemblance to a faded New Orleans, the most important society dance was cancelled this year for the first time in 70 years, says a cattle rancher. Kidnappings have surged. Among the victims: two of the city's former mayors. "Most owners of businesses have left and run their companies by telephone from Texas," says a local resident.
The outgoing mayor, Oscar Pérez, is rarely seen in town. Residents believe he lives in Garland, Texas. The incoming mayor, former schoolteacher Magdalena Peraza, says she plans to mobilize the citizenry, awaken civic pride and create jobs when she takes office in December.
Ms. Peraza's sister urged her not to take the high profile job. Ms. Peraza replied that God would protect her, but her sister urged her again to reconsider, saying that God was very busy.
"I'm worried," says the mayor elect. "But I have faith."
Write to Nicholas Casey at nicholas.casey@wsj.com and José de Córdoba at jose.decordoba@wsj.com
Copyright 2010 Dow Jones & Company, Inc. All Rights Reserved
States Raise Payroll Taxes to Repay Loans
Demands on Depleted Unemployment-Insurance Funds Led to Borrowing of Nearly $41 Billion From Federal GovernmentState governments are borrowing heavily from the federal government to keep paying unemployment-insurance benefits and, even with the weak job market, most states are raising payroll taxes to pay off the loans.
Thirty one states, their unemployment-insurance funds empty, have borrowed nearly $41 billion from the federal government. California alone has borrowed nearly $8.8 billion as of mid-November, according to the Labor Department.
As states try to replenish the funds and begin to repay the loans, employers are facing increases in both state and federal payroll taxes, a potential barrier to new hiring.
"Employers were hit with these adjustments quite a bit last year," said Richard Hobbie, executive director for the National Association of State Workforce Agencies. A National Employment Law Project analysis found 41 states increased unemployment-insurance payroll taxes this year by an average of nearly 33.9%. The largest was a 168.5% boost from 2009 in Hawaii.
Payroll taxes levied by states fund unemployment benefits for up to 26 weeks—and longer in some states. The federal government requires states to pay benefits even if their unemployment funds run out of cash. As in past periods of high joblessness, the federal government has paid for extended unemployment benefits, this time for as long as 99 weeks.
The unemployment-compensation system, initiated during the Great Depression, was designed so most states build reserves when jobs are plentiful and few workers are receiving benefits, and then draw down the reserves in bad times. But few states were prepared for a recession as deep and lasting as the recent one, with unemployment remaining at a historically high 9.6% a year after the economy resumed growing.
During the 2008-09 fiscal year, states collected $31 billion of unemployment-insurance taxes and spent $79.4 billion on jobless benefits. Taxes are typically levied on a per-worker basis.
Arizona, which owed the federal government $172.8 million as of mid-November, increased its tax on employers by more than 50% at the beginning of this year to an average of $145.60 a year per employee. "The dilemma we face is, how do you do that without hurting the economic recovery we all hope is coming?" said Steve Meissner, communications director for the Arizona Department of Economic Security. "No one wants to do anything that would impose a new tax burden on businesses that are trying to come back in a tough economic time."
ndiana Gov. Mitch Daniels proposed cutting unemployment benefits earlier this month despite his state's 10.1% unemployment rate. Indiana has borrowed nearly $1.9 billion from the federal government to shore up its unemployment-compensation fund; next year, the state is to begin taxing businesses more to replenish the coffers.
Federal loans to states have so far been interest-free under a provision in the Obama administration's 2009 fiscal-stimulus law. But that waiver expires in January.
Texas, which has borrowed nearly $1.6 billion from the federal government and raised employer taxes, is offering $1.1 billion in tax-exempt bonds to repay loans before Washington begins imposing interest charges because, said Ann Hatchitt, a spokeswoman for the Texas Workforce Commission. The state, which employed the same strategy in the early 2000s recession, figures it will pay investors less than it has to pay the federal government.
The federal government also imposes a payroll tax on employers to fund unemployment compensation. In certain circumstances, Washington will increase its tax on companies in states that aren't repaying loans from Washington. Employers in as many as 26 states will face tax increases of between $21 and $84 per employee per year if their state governments don't repay Washington by November 2011. Employers in Michigan are already paying the added fee.
A business-advocacy group, Strategic Services on Unemployment & Workers' Compensation, is urging Congress to waive the interest on federal loans and delay the federally mandated tax increases until 2012. "This is something that is going to impose an additional payroll tax on businesses in almost all those states just at the time when we're trying to keep the cost of hiring down," said Douglas J. Holmes, president of the organization.
—Amy Merrick contributed to this article.
Thirty one states, their unemployment-insurance funds empty, have borrowed nearly $41 billion from the federal government. California alone has borrowed nearly $8.8 billion as of mid-November, according to the Labor Department.
As states try to replenish the funds and begin to repay the loans, employers are facing increases in both state and federal payroll taxes, a potential barrier to new hiring.
"Employers were hit with these adjustments quite a bit last year," said Richard Hobbie, executive director for the National Association of State Workforce Agencies. A National Employment Law Project analysis found 41 states increased unemployment-insurance payroll taxes this year by an average of nearly 33.9%. The largest was a 168.5% boost from 2009 in Hawaii.
Payroll taxes levied by states fund unemployment benefits for up to 26 weeks—and longer in some states. The federal government requires states to pay benefits even if their unemployment funds run out of cash. As in past periods of high joblessness, the federal government has paid for extended unemployment benefits, this time for as long as 99 weeks.
The unemployment-compensation system, initiated during the Great Depression, was designed so most states build reserves when jobs are plentiful and few workers are receiving benefits, and then draw down the reserves in bad times. But few states were prepared for a recession as deep and lasting as the recent one, with unemployment remaining at a historically high 9.6% a year after the economy resumed growing.
During the 2008-09 fiscal year, states collected $31 billion of unemployment-insurance taxes and spent $79.4 billion on jobless benefits. Taxes are typically levied on a per-worker basis.
Arizona, which owed the federal government $172.8 million as of mid-November, increased its tax on employers by more than 50% at the beginning of this year to an average of $145.60 a year per employee. "The dilemma we face is, how do you do that without hurting the economic recovery we all hope is coming?" said Steve Meissner, communications director for the Arizona Department of Economic Security. "No one wants to do anything that would impose a new tax burden on businesses that are trying to come back in a tough economic time."
ndiana Gov. Mitch Daniels proposed cutting unemployment benefits earlier this month despite his state's 10.1% unemployment rate. Indiana has borrowed nearly $1.9 billion from the federal government to shore up its unemployment-compensation fund; next year, the state is to begin taxing businesses more to replenish the coffers.
Federal loans to states have so far been interest-free under a provision in the Obama administration's 2009 fiscal-stimulus law. But that waiver expires in January.
Texas, which has borrowed nearly $1.6 billion from the federal government and raised employer taxes, is offering $1.1 billion in tax-exempt bonds to repay loans before Washington begins imposing interest charges because, said Ann Hatchitt, a spokeswoman for the Texas Workforce Commission. The state, which employed the same strategy in the early 2000s recession, figures it will pay investors less than it has to pay the federal government.
The federal government also imposes a payroll tax on employers to fund unemployment compensation. In certain circumstances, Washington will increase its tax on companies in states that aren't repaying loans from Washington. Employers in as many as 26 states will face tax increases of between $21 and $84 per employee per year if their state governments don't repay Washington by November 2011. Employers in Michigan are already paying the added fee.
A business-advocacy group, Strategic Services on Unemployment & Workers' Compensation, is urging Congress to waive the interest on federal loans and delay the federally mandated tax increases until 2012. "This is something that is going to impose an additional payroll tax on businesses in almost all those states just at the time when we're trying to keep the cost of hiring down," said Douglas J. Holmes, president of the organization.
—Amy Merrick contributed to this article.
U.S. in Vast Insider Trading Probe
Federal authorities, capping a three-year investigation, are preparing insider-trading charges that could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders and analysts across the nation, according to people familiar with the matter.
The criminal and civil probes, which authorities say could eclipse the impact on the financial industry of any previous such investigation, are examining whether multiple insider-trading rings reaped illegal profits totaling tens of millions of dollars, the people say. Some charges could be brought before year-end, they say.
The investigations, if they bear fruit, have the potential to expose a culture of pervasive insider trading in U.S. financial markets, including new ways non-public information is passed to traders through experts tied to specific industries or companies, federal authorities say.
One focus of the criminal investigation is examining whether nonpublic information was passed along by independent analysts and consultants who work for companies that provide "expert network" services to hedge funds and mutual funds. These companies set up meetings and calls with current and former managers from hundreds of companies for traders seeking an investing edge.
O
Among the expert networks whose consultants are being examined, the people say, is Primary Global Research LLC, a Mountain View, Calif., firm that connects experts with investors seeking information in the technology, health-care and other industries. "I have no comment on that," said Phani Kumar Saripella, Primary Global's chief operating officer. Primary's chief executive and chief operating officers previously worked at Intel Corp., according to its website.
In another aspect of the probes, prosecutors and regulators are examining whether Goldman Sachs Group Inc. bankers leaked information about transactions, including health-care mergers, in ways that benefited certain investors, the people say. Goldman declined to comment.
Independent analysts and research boutiques also are being examined. John Kinnucan, a principal at Broadband Research LLC in Portland, Ore., sent an email on Oct. 26 to roughly 20 hedge-fund and mutual-fund clients telling of a visit by the Federal Bureau of Investigation.
"Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information," the email said. "(They obviously have been recording my cell phone conversations for quite some time, with what motivation I have no idea.) We obviously beg to differ, so have therefore declined the young gentleman's gracious offer to wear a wire and therefore ensnare you in their devious web."
The email, which Mr. Kinnucan confirms writing, was addressed to traders at, among others: hedge-fund firms SAC Capital Advisors LP and Citadel Asset Management, and mutual-fund firms Janus Capital Group, Wellington Management Co. and MFS Investment Management. SAC, Wellington and MFS declined to comment; Janus and Citadel didn't immediately comment. It isn't known whether clients are under investigation for their business with Mr. Kinnucan.
The investigations have been conducted by federal prosecutors in New York, the FBI and the Securities and Exchange Commission. Representatives of the Manhattan U.S. Attorney's office, the FBI and the SEC declined to comment.
Another aspect of the probe is an examination of whether traders at a number of hedge funds and trading firms, including First New York Securities LLC, improperly gained nonpublic information about pending health-care, technology and other merger deals, according to the people familiar with the matter.
Some traders at First New York, a 250-person trading firm, profited by anticipating health-care and other mergers unveiled in 2009, people familiar with the firm say.
A First New York spokesman said: "We are one of more than three dozen firms that have been asked by regulators to provide general information in a widespread inquiry; we have cooperated fully." He added: "We stand behind our traders and our systems and policies in place that ensure full regulatory compliance."
Key parts of the probes are at a late stage. A federal grand jury in New York has heard evidence, say people familiar with the matter. But as with all investigations that aren't completed, it's unclear what specific charges, if any, might be brought.
[PROBEjump]
The action is an outgrowth of a focus on insider trading by Preet Bharara, the Manhattan U.S. Attorney. In an October speech, Mr. Bharara said the area is a "top criminal priority" for his office, adding: "Illegal insider trading is rampant and may even be on the rise." Mr. Bharara declined to comment.
Expert-network firms hire current or former company employees, as well as doctors and other specialists, to be consultants to funds making investment decisions. More than a third of institutional investment-management firms use expert networks, according to a late-2009 survey by Integrity Research Associates LLC in New York.
The consultants typically earn several hundred dollars an hour for their services, which can include meetings or phone calls with traders to discuss developments in their company or industry. The expert-network companies say internal policies bar their consultants from disclosing confidential information.
Generally, inside traders profit by buying stocks of acquisition targets before deals are announced and selling after the targets' shares rise in value.
The SEC has been investigating potential leaks on takeover deals going back to at least 2007 amid an explosion of deals leading up to the financial crisis. The SEC sent subpoenas last fall to more than 30 hedge funds and other investors.
“Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information.... We obviously beg to differ, so have therefore declined the young gentleman's gracious offer to wear a wire and therefore ensnare you in their devious web.” John Kinnucan, of Broadband Research, in an Oct. 26 email to clients
Some subpoenas were related to trading in Schering-Plough Corp. stock before its takeover by Merck & Co. in 2009, say people familiar with the matter. Schering-Plough stock rose 8% the trading day before the deal plan was announced and 14% the day of the announcement. Merck said it "has a long-standing practice of fully cooperating with any regulatory inquiries and has explicit policies prohibiting the sharing of confidential information about the company and its potential partners."
Transactions being focused on include MedImmune Inc.'s takeover by AstraZeneca Plc in 2007, the people say. MedImmune shares jumped 18% on Apr. 23, 2007, the day the deal was announced. A spokesman for AstraZeneca and its MedImmune unit declined to comment.
Investigators are also examining the role of Goldman bankers in trading in shares of Advanced Medical Optics Inc., which was taken over by Abbott Laboratories in 2009, according to the people familiar with the matter. Advanced Medical Optics's shares jumped 143% on Jan. 12, 2009, the day the deal was announced. Goldman advised MedImmune and Advanced Medical Optics on the deals.
A spokesman for AstraZeneca and its MedImmune unit declined to comment.
In subpoenas, the SEC has sought information about communications—related to Schering-Plough and other deals—with Ziff Brothers, Jana Partners LLC, TPG-Axon Capital Management, Prudential Financial Inc.'s Jennison Associates asset-management unit, UBS AG's UBS Financial Services Inc. unit, and Deutsche Bank AG, according to subpoenas and the people familiar with the matter.
Representatives of Ziff Brothers, Jana, TPG-Axon, Jennison, UBS and Deutsche Bank declined to comment.
Among hedge-fund managers whose trading in takeovers is a focus of the criminal probe is Todd Deutsch, a top Wall Street trader who left Galleon Group in 2008 to go out on his own, the people close to the situation say. A spokesman for Mr. Deutsch, who has specialized in health-care and technology stocks, declined to comment.
Prosecutors also are investigating whether some hedge-fund traders received inside information about Advanced Micro Devices Inc., which figured prominently in the government's insider-trading case last year against Galleon Group hedge fund founder Raj Rajaratnam and 22 other defendants.
Fourteen defendants have pleaded guilty in the Galleon case; Mr. Rajaratnam has pleaded not guilty and is expected to go to trial in early 2011.
Among those whose AMD transactions have been scrutinized is hedge-fund manager Richard Grodin. Mr. Grodin, who received a subpoena last fall, didn't return calls. An AMD spokesman declined to comment.
The criminal and civil probes, which authorities say could eclipse the impact on the financial industry of any previous such investigation, are examining whether multiple insider-trading rings reaped illegal profits totaling tens of millions of dollars, the people say. Some charges could be brought before year-end, they say.
The investigations, if they bear fruit, have the potential to expose a culture of pervasive insider trading in U.S. financial markets, including new ways non-public information is passed to traders through experts tied to specific industries or companies, federal authorities say.
One focus of the criminal investigation is examining whether nonpublic information was passed along by independent analysts and consultants who work for companies that provide "expert network" services to hedge funds and mutual funds. These companies set up meetings and calls with current and former managers from hundreds of companies for traders seeking an investing edge.
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Among the expert networks whose consultants are being examined, the people say, is Primary Global Research LLC, a Mountain View, Calif., firm that connects experts with investors seeking information in the technology, health-care and other industries. "I have no comment on that," said Phani Kumar Saripella, Primary Global's chief operating officer. Primary's chief executive and chief operating officers previously worked at Intel Corp., according to its website.
In another aspect of the probes, prosecutors and regulators are examining whether Goldman Sachs Group Inc. bankers leaked information about transactions, including health-care mergers, in ways that benefited certain investors, the people say. Goldman declined to comment.
Independent analysts and research boutiques also are being examined. John Kinnucan, a principal at Broadband Research LLC in Portland, Ore., sent an email on Oct. 26 to roughly 20 hedge-fund and mutual-fund clients telling of a visit by the Federal Bureau of Investigation.
"Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information," the email said. "(They obviously have been recording my cell phone conversations for quite some time, with what motivation I have no idea.) We obviously beg to differ, so have therefore declined the young gentleman's gracious offer to wear a wire and therefore ensnare you in their devious web."
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{/if}The email, which Mr. Kinnucan confirms writing, was addressed to traders at, among others: hedge-fund firms SAC Capital Advisors LP and Citadel Asset Management, and mutual-fund firms Janus Capital Group, Wellington Management Co. and MFS Investment Management. SAC, Wellington and MFS declined to comment; Janus and Citadel didn't immediately comment. It isn't known whether clients are under investigation for their business with Mr. Kinnucan.
The investigations have been conducted by federal prosecutors in New York, the FBI and the Securities and Exchange Commission. Representatives of the Manhattan U.S. Attorney's office, the FBI and the SEC declined to comment.
Another aspect of the probe is an examination of whether traders at a number of hedge funds and trading firms, including First New York Securities LLC, improperly gained nonpublic information about pending health-care, technology and other merger deals, according to the people familiar with the matter.
Some traders at First New York, a 250-person trading firm, profited by anticipating health-care and other mergers unveiled in 2009, people familiar with the firm say.
A First New York spokesman said: "We are one of more than three dozen firms that have been asked by regulators to provide general information in a widespread inquiry; we have cooperated fully." He added: "We stand behind our traders and our systems and policies in place that ensure full regulatory compliance."
Key parts of the probes are at a late stage. A federal grand jury in New York has heard evidence, say people familiar with the matter. But as with all investigations that aren't completed, it's unclear what specific charges, if any, might be brought.
[PROBEjump]
The action is an outgrowth of a focus on insider trading by Preet Bharara, the Manhattan U.S. Attorney. In an October speech, Mr. Bharara said the area is a "top criminal priority" for his office, adding: "Illegal insider trading is rampant and may even be on the rise." Mr. Bharara declined to comment.
Expert-network firms hire current or former company employees, as well as doctors and other specialists, to be consultants to funds making investment decisions. More than a third of institutional investment-management firms use expert networks, according to a late-2009 survey by Integrity Research Associates LLC in New York.
The consultants typically earn several hundred dollars an hour for their services, which can include meetings or phone calls with traders to discuss developments in their company or industry. The expert-network companies say internal policies bar their consultants from disclosing confidential information.
Generally, inside traders profit by buying stocks of acquisition targets before deals are announced and selling after the targets' shares rise in value.
The SEC has been investigating potential leaks on takeover deals going back to at least 2007 amid an explosion of deals leading up to the financial crisis. The SEC sent subpoenas last fall to more than 30 hedge funds and other investors.
“Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information.... We obviously beg to differ, so have therefore declined the young gentleman's gracious offer to wear a wire and therefore ensnare you in their devious web.” John Kinnucan, of Broadband Research, in an Oct. 26 email to clients
Some subpoenas were related to trading in Schering-Plough Corp. stock before its takeover by Merck & Co. in 2009, say people familiar with the matter. Schering-Plough stock rose 8% the trading day before the deal plan was announced and 14% the day of the announcement. Merck said it "has a long-standing practice of fully cooperating with any regulatory inquiries and has explicit policies prohibiting the sharing of confidential information about the company and its potential partners."
Transactions being focused on include MedImmune Inc.'s takeover by AstraZeneca Plc in 2007, the people say. MedImmune shares jumped 18% on Apr. 23, 2007, the day the deal was announced. A spokesman for AstraZeneca and its MedImmune unit declined to comment.
Investigators are also examining the role of Goldman bankers in trading in shares of Advanced Medical Optics Inc., which was taken over by Abbott Laboratories in 2009, according to the people familiar with the matter. Advanced Medical Optics's shares jumped 143% on Jan. 12, 2009, the day the deal was announced. Goldman advised MedImmune and Advanced Medical Optics on the deals.
A spokesman for AstraZeneca and its MedImmune unit declined to comment.
In subpoenas, the SEC has sought information about communications—related to Schering-Plough and other deals—with Ziff Brothers, Jana Partners LLC, TPG-Axon Capital Management, Prudential Financial Inc.'s Jennison Associates asset-management unit, UBS AG's UBS Financial Services Inc. unit, and Deutsche Bank AG, according to subpoenas and the people familiar with the matter.
Representatives of Ziff Brothers, Jana, TPG-Axon, Jennison, UBS and Deutsche Bank declined to comment.
Among hedge-fund managers whose trading in takeovers is a focus of the criminal probe is Todd Deutsch, a top Wall Street trader who left Galleon Group in 2008 to go out on his own, the people close to the situation say. A spokesman for Mr. Deutsch, who has specialized in health-care and technology stocks, declined to comment.
Prosecutors also are investigating whether some hedge-fund traders received inside information about Advanced Micro Devices Inc., which figured prominently in the government's insider-trading case last year against Galleon Group hedge fund founder Raj Rajaratnam and 22 other defendants.
Fourteen defendants have pleaded guilty in the Galleon case; Mr. Rajaratnam has pleaded not guilty and is expected to go to trial in early 2011.
Among those whose AMD transactions have been scrutinized is hedge-fund manager Richard Grodin. Mr. Grodin, who received a subpoena last fall, didn't return calls. An AMD spokesman declined to comment.
Pentagon Says 'Aware' of China Internet Rerouting
The U.S. Defense Department is aware that Internet traffic was rerouted briefly through China earlier this year, a Pentagon spokesman said on Friday, referring to what a congressionally appointed panel has described as a hijack.
The U.S.-China Economic and Security Review Commission charged in its annual report on Wednesday that state-owned China Telecom advertised erroneous network routes that instructed "massive volumes" of U.S. and other foreign Internet traffic to go through Chinese servers during an 18-minute stretch on April 8.
Marine Colonel David Lapan, a Defense Department spokesman, told reporters, "We're aware that on the 8th of April ... Internet traffic was rerouted through China."
He added at one point that he did not know if "we've determined whether that particular incident ... was done with some malicious intent or not."
Moments later, he said there was no evidence that anything malicious had occurred, a position he repeated when pressed about the discrepancy in his remarks.
The U.S.-China Commission in its 2010 report said the incident affected traffic to and from U.S. government and military sites, including those for Secretary of Defense Robert Gates' office, the armed forces and some commercial websites.
"When I see things like this happen, I ask: 'Who might be interested in all the communication from the entire Department of Defense and the federal government? It's probably not a graduate student from Shanghai University."
Larry Wortzel, Commissioner
In Beijing, China's Foreign Ministry on Friday condemned the commission's report on China's military capabilities and economic policies, saying it distorted reality and was symptomatic of Cold War thinking.
China Telecom [CHA 51.28 -0.26 (-0.5%) ] separately has denied the charge that it "hijacked" U.S. Internet traffic by sending false notifications that prompted other servers to route traffic through China on the assumption that it was the most efficient path.
The commission said the evidence did not clearly show whether the incident was perpetrated intentionally "and, if so, to what ends. However, computer security researchers have noted that the capability could enable severe malicious activities," the report said.
Commissioner Larry Wortzel, a retired U.S. Army colonel who served two tours as a military attache in China, told reporters that the incident could have let someone mine email addresses and then send authentic-looking messages bearing attachments with malicious code or other harmful software.
"When I see things like this happen, I ask: 'Who might be interested in all the communication from the entire Department of Defense and the federal government? It's probably not a graduate student from Shanghai University,'" Wortzel said on Wednesday.
Lapan, the Pentagon spokesman, said the Defense Department's internal networks would not have been affected by any improper rerouting of traffic through Chinese servers.
"We do have tools to protect any of the traffic that goes outside" the internal networks, he added, referring to encryption and devices that warn when Internet traffic is being rerouted.
Senator Sheldon Whitehouse, who led a Senate Intelligence Committee cyber task force that submitted a classified report to the panel in July on cyber threats, said on Wednesday that certain threats cannot be countered without the U.S. government's unique "authorities and capabilities."
In a Senate floor speech, the Rhode Island Democrat reiterated a proposal to create a "dot.secure" domain to protect crucial U.S. services such as power grids, financial networks, transportation and communications hubs.
"We simply cannot leave that core infrastructure on which the life and death of Americans depends without better security," Whitehouse said.
The U.S.-China Economic and Security Review Commission was set up in 2000 to examine the security implications of growing economic ties with China.
Dean Cheng, an expert on Chinese security issues at the conservative Heritage Foundation, said the alleged Internet hijacking appeared to be part of what he described as a disturbing pattern of aggressive Chinese cyber activities.
"All of this suggests that, from China's view, a global conflict is already underway - in the virtual world of cyberspace," he wrote. "The ability to redirect vast amounts of data constitutes a threat, not only to national security, but also to private companies and individuals, as their information, too, has now been put at risk."
The U.S.-China Economic and Security Review Commission charged in its annual report on Wednesday that state-owned China Telecom advertised erroneous network routes that instructed "massive volumes" of U.S. and other foreign Internet traffic to go through Chinese servers during an 18-minute stretch on April 8.
Marine Colonel David Lapan, a Defense Department spokesman, told reporters, "We're aware that on the 8th of April ... Internet traffic was rerouted through China."
He added at one point that he did not know if "we've determined whether that particular incident ... was done with some malicious intent or not."
Moments later, he said there was no evidence that anything malicious had occurred, a position he repeated when pressed about the discrepancy in his remarks.
The U.S.-China Commission in its 2010 report said the incident affected traffic to and from U.S. government and military sites, including those for Secretary of Defense Robert Gates' office, the armed forces and some commercial websites.
"When I see things like this happen, I ask: 'Who might be interested in all the communication from the entire Department of Defense and the federal government? It's probably not a graduate student from Shanghai University."
Larry Wortzel, Commissioner
In Beijing, China's Foreign Ministry on Friday condemned the commission's report on China's military capabilities and economic policies, saying it distorted reality and was symptomatic of Cold War thinking.
China Telecom [CHA 51.28 -0.26 (-0.5%) ] separately has denied the charge that it "hijacked" U.S. Internet traffic by sending false notifications that prompted other servers to route traffic through China on the assumption that it was the most efficient path.
The commission said the evidence did not clearly show whether the incident was perpetrated intentionally "and, if so, to what ends. However, computer security researchers have noted that the capability could enable severe malicious activities," the report said.
Commissioner Larry Wortzel, a retired U.S. Army colonel who served two tours as a military attache in China, told reporters that the incident could have let someone mine email addresses and then send authentic-looking messages bearing attachments with malicious code or other harmful software.
"When I see things like this happen, I ask: 'Who might be interested in all the communication from the entire Department of Defense and the federal government? It's probably not a graduate student from Shanghai University,'" Wortzel said on Wednesday.
Lapan, the Pentagon spokesman, said the Defense Department's internal networks would not have been affected by any improper rerouting of traffic through Chinese servers.
"We do have tools to protect any of the traffic that goes outside" the internal networks, he added, referring to encryption and devices that warn when Internet traffic is being rerouted.
Senator Sheldon Whitehouse, who led a Senate Intelligence Committee cyber task force that submitted a classified report to the panel in July on cyber threats, said on Wednesday that certain threats cannot be countered without the U.S. government's unique "authorities and capabilities."
In a Senate floor speech, the Rhode Island Democrat reiterated a proposal to create a "dot.secure" domain to protect crucial U.S. services such as power grids, financial networks, transportation and communications hubs.
"We simply cannot leave that core infrastructure on which the life and death of Americans depends without better security," Whitehouse said.
The U.S.-China Economic and Security Review Commission was set up in 2000 to examine the security implications of growing economic ties with China.
Dean Cheng, an expert on Chinese security issues at the conservative Heritage Foundation, said the alleged Internet hijacking appeared to be part of what he described as a disturbing pattern of aggressive Chinese cyber activities.
"All of this suggests that, from China's view, a global conflict is already underway - in the virtual world of cyberspace," he wrote. "The ability to redirect vast amounts of data constitutes a threat, not only to national security, but also to private companies and individuals, as their information, too, has now been put at risk."
Roubini Maps Out Nightmare Scenario of Domino Debt Collapse in Europe
We have too much private debt in the case of Ireland," according to Nouriel Roubini.
But the nub of the crisis is this: "We have decided to socialize the private losses of the banking system. Now you have a huge increase in public debt—going from 7 percent to 100 percent of GDP. Soon it will be 120 percent."
And, turning more broadly to the rest of Europe, "Greece is already at 120 percent."
Roubini believes that further attempts at intervention have only increased the magnitude of the problems with sovereign debt. He says, "Now you have a bunch of super sovereigns— the IMF, the EU, the eurozone—bailing out these sovereigns."
Essentially, the super-sovereigns underwrite sovereign debt—increasing the scale and concentrating the problems.
Roubini characterizes super-sovereign intervention as merely kicking the can down the road.
He says wryly: "There's not going to be anyone coming from Mars or the moon to bail out the IMF or the Eurozone."
But, despite the paper shuffling of debt at the national level—and at the level of supranational entities—reality ultimately intervenes: "So at some point you need restructuring. At some point you need the creditors of the banks to take a hit —otherwise you put all this debt on the balance sheet of government. And then you break the back of government—and then government is insolvent."
And then there is the case of France. "Sarkozy came to power saying 'I'm going to do lots of reform.' He has not done it. Right now, he is weak. He might lose the election. And, therefore, they are going to delay fiscal austerity and reforms."
And that, according to Roubini, is a major problem for the fiscally challenged French.
The bond vigilantes may have woken up first in Greece, Ireland, and Portugal. "But France," Roubini says, "does not look much better than the periphery."
In Roubini's view, the probability of the right steps being taken in France soon is not great. "Politically they are constrained from making reforms." For example, after the French made relatively small changes in their social welfare system—raising the retirement age from 60 to 62 —"You had massive riots in the streets."
And that, in Roubini's view, was just the beginning of the necessary austerity.
"What's going to happen when you do more radical reform? That's an open question in the case of France."
Looking beyond France to the future trajectory of the crisis, Roubini says, "The next one in line is going to be Portugal. "Due to the severity of Portuguese debt problems, Portugal is going to lose market access—and that means they are going to require IMF support as well.
But the real nightmare domino is Spain. Roubini refers to the Spanish debt problems as "the elephant in the room".
"You can try to ring fence Spain. And you can essentially try to provide financing officially to Ireland, Portugal, and Greece for three years. Leave them out of the market. Maybe restructure their debt down the line."
"But if Spain falls off the cliff, there is not enough official money in this envelope of European resources to bail out Spain. Spain is too big to fail on one side—and also too big to be bailed out."
With Spain, the first problem is the size of its public debt: €1 trillion. (Greece, by contrast, has €300 of public debt.) Spain also has €1 trillion in private foreign liabilities.
And for problems of that magnitude, there simply are not enough resources—governmental or super-sovereign—to go around.
But the nub of the crisis is this: "We have decided to socialize the private losses of the banking system. Now you have a huge increase in public debt—going from 7 percent to 100 percent of GDP. Soon it will be 120 percent."
And, turning more broadly to the rest of Europe, "Greece is already at 120 percent."
Roubini believes that further attempts at intervention have only increased the magnitude of the problems with sovereign debt. He says, "Now you have a bunch of super sovereigns— the IMF, the EU, the eurozone—bailing out these sovereigns."
Essentially, the super-sovereigns underwrite sovereign debt—increasing the scale and concentrating the problems.
Roubini characterizes super-sovereign intervention as merely kicking the can down the road.
He says wryly: "There's not going to be anyone coming from Mars or the moon to bail out the IMF or the Eurozone."
But, despite the paper shuffling of debt at the national level—and at the level of supranational entities—reality ultimately intervenes: "So at some point you need restructuring. At some point you need the creditors of the banks to take a hit —otherwise you put all this debt on the balance sheet of government. And then you break the back of government—and then government is insolvent."
And then there is the case of France. "Sarkozy came to power saying 'I'm going to do lots of reform.' He has not done it. Right now, he is weak. He might lose the election. And, therefore, they are going to delay fiscal austerity and reforms."
And that, according to Roubini, is a major problem for the fiscally challenged French.
The bond vigilantes may have woken up first in Greece, Ireland, and Portugal. "But France," Roubini says, "does not look much better than the periphery."
In Roubini's view, the probability of the right steps being taken in France soon is not great. "Politically they are constrained from making reforms." For example, after the French made relatively small changes in their social welfare system—raising the retirement age from 60 to 62 —"You had massive riots in the streets."
And that, in Roubini's view, was just the beginning of the necessary austerity.
"What's going to happen when you do more radical reform? That's an open question in the case of France."
Looking beyond France to the future trajectory of the crisis, Roubini says, "The next one in line is going to be Portugal. "Due to the severity of Portuguese debt problems, Portugal is going to lose market access—and that means they are going to require IMF support as well.
But the real nightmare domino is Spain. Roubini refers to the Spanish debt problems as "the elephant in the room".
"You can try to ring fence Spain. And you can essentially try to provide financing officially to Ireland, Portugal, and Greece for three years. Leave them out of the market. Maybe restructure their debt down the line."
"But if Spain falls off the cliff, there is not enough official money in this envelope of European resources to bail out Spain. Spain is too big to fail on one side—and also too big to be bailed out."
With Spain, the first problem is the size of its public debt: €1 trillion. (Greece, by contrast, has €300 of public debt.) Spain also has €1 trillion in private foreign liabilities.
And for problems of that magnitude, there simply are not enough resources—governmental or super-sovereign—to go around.
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