Pentagon Signals Security Risks of Climate Change

Abstract: WASHINGTON — The Pentagon on Monday released a report asserting decisively that climate change poses an immediate threat to national security, with increased risks from terrorism, infectious disease, global poverty and food shortages. It also predicted rising demand for military disaster responses as extreme weather creates more global humanitarian crises. The report lays out a road map to show how the military will adapt to rising sea levels, more violent storms and widespread droughts. The Defense Department will begin by integrating plans for climate change risks across all of its operations, from war games and strategic military planning situations to a rethinking of the movement of supplies. Defense Secretary Chuck Hagel, speaking Monday at a meeting of defense ministers in Peru, highlighted the report’s findings and the global security threats of climate change. “The loss of glaciers will strain water supplies in several areas of our hemisphere,” Mr. Hagel said. “Destruction and devastation from hurricanes can sow the seeds for instability. Droughts and crop failures can leave millions of people without any lifeline, and trigger waves of mass migration.” The report is the latest in a series of studies highlighting the national security risks of climate change. But the Pentagon’s characterization of it as a present-day threat demanding immediate action represents a significant shift for the military, which has in the past focused on climate change as a future risk. Image Defense Secretary Chuck Hagel on Monday at a meeting of defense ministers in Peru. Credit Paolo Aguilar/European Pressphoto Agency Before, the Pentagon’s response to climate change focused chiefly on preparing military installations to adapt to its effects, like protecting coastal naval bases from rising sea levels. The new report, however, calls on the military to incorporate climate change into broader strategic thinking about high-risk regions — for example, the ways in which drought and food shortages might set off political unrest in the Middle East and Africa. Experts said that the broadened approach would include considering the role that climate change might have played in contributing to the rise of extremist groups like the Islamic State. “Climate change and water shortages may have triggered the drought that caused farmers to relocate to Syrian cities and triggered situations where youth were more susceptible to joining extremist groups,” said Marcus D. King, an expert on climate change and international affairs at George Washington University. The Islamic State, often referred to as ISIS, has seized scarce water resources to enhance its power and influence. As the Pentagon plans for the impact of climate change, it is conducting a survey to assess the vulnerability of its more than 7,000 bases, installations and other facilities. In places like the Hampton Roads region in Virginia, where there is the largest concentration of American military sites, rapidly rising sea levels have led to repeated flooding. The new report does not make any specific budget recommendations for how the military will pay for its climate change agenda, but if the Pentagon does request funding from Congress for its initiatives, it will clash with congressional Republicans, many of whom question the established scientific evidence that human activities are causing climate change. “ISIS is still gaining ground and causing havoc in Syria and Iraq, with foreign fighters from over 80 countries coming and going into the fight and then returning to their home country,” Senator James M. Inhofe of Oklahoma, the ranking Republican on the Senate Armed Services Committee and a prominent skeptic on climate change , said of the Pentagon report. “It is disappointing, but not surprising, that the president and his administration would focus on climate change when there are other, legitimate threats in the world.” The Pentagon’s increased emphasis on the national security threats of climate change is aimed in part at building support for a United Nations agreement, to be signed next year in Paris, that would require the world’s largest producers of planet-warming carbon pollution to slash their emissions. Climate change negotiators from around the world will meet in Peru in December to draft that deal. Mr. Hagel’s speech on Monday appeared intended to build support for that effort. “In two months, the United Nations will convene countries from around the world here in Peru to discuss climate change,” he said. “Defense leaders must be part of this global discussion. We must be cleareyed about the security threats presented by climate change, and we must be proactive in addressing them.” Experts say that Mr. Hagel’s increasingly prominent role in pushing for a new global climate change treaty is a sign that the urgency of the issue is starting to drive changes in the political debate. In 1997, Mr. Hagel, then a Republican senator from Nebraska, played a crucial role in blocking the United States from taking part in the world’s first climate change treaty. He wrote, with Senator Robert C. Byrd, Democrat of West Virginia, a resolution ensuring that the Senate would never ratify the Kyoto Protocol , which required the world’s largest economies to cut their planet-warming fossil fuel emissions. Today, Mr. Hagel’s efforts to lay the groundwork for a new global climate deal signal a remarkable shift. “It’s significant that the secretary is focusing his remarks at the defense ministers’ meeting of the Americas on natural disasters and climate change,” said Sherri W. Goodman, senior vice president at the CNA Corporation. “His making it a priority among the many other things he has to address — ISIS, Ebola, Russia — is a signal that the administration intends to place a priority on this in international climate change negotiations.”

US Military
Climate Change
Global Warming
Terrorism
Shortages
Drought
Pentagon
Chuck Hagel


San Francisco Board Picks Edwin Lee as First Asian Mayor

Abstract: SAN FRANCISCO — After weeks of debate — and often open verbal combat — the San Francisco Board of Supervisors effectively elected Edwin M. Lee, the city administrator, as its new mayor on Friday, making him the first Asian-American to lead the city. The 10-to-1 vote, officially just a recommendation made on the current board’s last day of service, is likely to be finalized by a new board next week. If all goes as expected, Mr. Lee will succeed Gavin Newsom , who was elected as California’s lieutenant governor in November and will be inaugurated next week. As the city’s so-called successor mayor, Mr. Lee, a well-respected former civil rights lawyer, will serve out the remainder of Mr. Newsom’ s term — some 11 months — before a new mayor is elected by San Francisco voters in the fall. Mr. Lee, who had been said to be initially reluctant to take the job but had warmed to the idea, was traveling in Taiwan on Friday and was not expected back to the city until Sunday. But Rose Pak, the powerful leader of the city’s Chinatown Chamber of Commerce, said she was ecstatic with the vote. “It’s been a long time coming,” said Ms. Pak, who had tears in her eyes. “We did it.” The vote was taken during a relatively cordial special session that was called after a regular meeting on Tuesday devolved into name-calling. One departing supervisor, Chris Daly, threatened to “haunt” the board’s president, David Chiu, for his support of Mr. Lee. As that exchange suggested, the issue of who will lead San Francisco inflamed political passions on the board, whose 11 members are all Democrats, though several identify themselves as progressives who are even further to the left. For that bloc, Mr. Newsom’s resignation seemed a golden opportunity to elect one of their own. In the end, however, it was the moderates who opted to make a different type of history, electing Mr. Lee as mayor of a city in which roughly one-in-three residents is of Asian descent. Mr. Chiu called the vote a historic occasion for “a community that has struggled, a community that has seen discrimination.” Mr. Lee’s election would prove, he said, that even children of immigrants “can someday reach the very top echelon of San Francisco.” The recommendation of Mr. Lee was also a victory for Mr. Newsom, a political moderate who worried that a progressive mayor might undo his legacy. Several more liberal candidates had been floated, but Mr. Newsom worked behind the scenes, along with Ms. Pak and former Mayor Willie L. Brown, to help build support for Mr. Lee. On Friday, Mr. Newsom praised the board for crossing the ideological spectrum — presumably from further left to moderate left — and for recognizing Mr. Lee’s “experience, unquestionable integrity and years of government and community service.” But Mr. Daly seemed unimpressed, casting the single ‘no’ vote and calling Mr. Lee’s potential election a victory for the status quo. “As candidate Obama said, we need change,” said Mr. Daly, a longtime foe of Mr. Newsom’s. “And what we have in front of us today is not that change.”

Lee Edwin M
Politics and Government
Elections
San Francisco (Calif)
San Francisco Board of Supervisors
Newsom Gavin


Recession Hint Sends Stocks Down Sharply

Abstract: Buffeted by concerns about a weakening economy, the stock market fell last week after two weeks of gains. On Tuesday, the Institute for Supply Management reported that an index measuring the service sector of the economy fell in January to its lowest level since October 2001, in the aftermath of the Sept. 11 terrorist attacks. That sharp decline brought the index to a level signaling that the economy has been slowing — perhaps into a recession. Financial services stocks took a beating during the week. Citigroup shares fell 12.3 percent, the worst weekly performance among the Dow industrials. For the week, the Dow Jones industrial average dropped 561.06 points, or 4.4 percent, to close at 12,182.13. The Standard & Poor’s 500-stock index lost 64.13 points, or 4.6 percent, to close at 1,331.29. The Nasdaq composite index lost 108.51 points, or 4.5 percent, to close at 2,304.85. The yield on the 10-year Treasury note rose to 3.64 percent from 3.59 percent the previous week.

Stocks and Bonds
Nasdaq Composite Index
Dow Jones Stock Average
Recession and Depression
Economic Conditions and Trends


At Clinton’s Side in Pennsylvania, Governor Rendell Is a Dedicated and Often Blunt Promoter

Abstract: KING OF PRUSSIA, Pa. — Edward G. Rendell , the governor of Pennsylvania , demonstrated his value to Senator Hillary Rodham Clinton last weekend, helping her quickly devise a strategy to counter and exploit remarks by Senator Barack Obama. When Mr. Obama provided an opening by saying that small-town voters in Pennsylvania facing hard economic times “get bitter, they cling to guns or religion” to explain their frustrations, Mr. Rendell was ready to pounce. He instantly mobilized his political machinery, organizing many mayors in Pennsylvania to speak on Mrs. Clinton’s behalf and to hold rallies. He also suggested that she reshuffle her schedule to visit Scranton, where her father grew up and where, in a hastily arranged visit on Sunday, she highlighted her link with small-town Pennsylvania. But Mr. Rendell could not actually speak with Mrs. Clinton, in part because he was consumed with the intricate task of negotiating with others to map out her final week before the state’s primary next Tuesday — deciding who gets to see the candidate, and who does not. Few presidential candidates have ever had the benefit of a local promoter like Mr. Rendell, who before being elected governor was the mayor of Philadelphia. He is campaigning as vigorously for Mrs. Clinton’s election as he would for his own, and constantly talking her up with remarks that, alas, sometimes go off message. (On Monday, he shrugged off the impact of Mr. Obama’s comments. “It will cost a couple of points at the margin, but it won’t be a sea-changer,” the governor said.) But Mr. Rendell is at the ready. He helps craft Mrs. Clinton’s messages, escort her around the state and introduce her at events. He has enlisted his fund-raisers to assist her, ginned up endorsements and coaxed some superdelegates into staying neutral until after the Pennsylvania primary. He has made commercials for her. He juggles state business and her political business with equal urgency — haggling over financing for a development project in Wilkes-Barre and an airport expansion in Erie one minute, calling in to Andrea Mitchell on MSNBC the next. His credibility as a local spokesman automatically vaulted him into the national spotlight. “Every time I turn on the TV, I see you,” Senator Edward M. Kennedy of Massachusetts, a leading supporter of Mr. Obama, told Mr. Rendell backstage recently at a Democratic dinner here in the Philadelphia suburbs. Mrs. Clinton’s daughter, Chelsea, attended the same dinner. Ms. Clinton spoke briefly to the crowd, and when she said she was proud to be campaigning with Mr. Rendell, the audience whooped and hollered. “Well, gosh,” she said, looking slightly amazed. “I feel like I should just stop there.” Mr. Rendell is redefining the role of political host, putting to shame the other Democratic governors who have endorsed either Mrs. Clinton or Mr. Obama and have helped them navigate their states ahead of a primary or caucus. And his bluntness frequently makes for good copy. For example, he told reporters in March that he would happily support a Clinton-Obama ticket or an Obama-Clinton ticket (“Either way,” he said). He said in a recent interview with The New York Times that the Clinton campaign had made some “God-awful decisions.” He also said that women had warmed up to her tremendously during the course of the campaign, after having initially considered her “an intellectually snobby feminist.” But with a three-decade record on the public stage, Mr. Rendell is seen as an undeniable asset to Mrs. Clinton, particularly in the Philadelphia media market, where 40 percent of the state’s voters live. He won re-election as governor in 2006 by a landslide 20 percentage points and generally gets good grades for sprucing up the reputation and finances of his Rust Belt state. Even as he promotes Mrs. Clinton — she is the best prepared to be president, he says, and she “gets it” — Mr. Rendell is careful to keep the door open with Mr. Obama should she not succeed in winning her party’s presidential nomination. In an interview in his ornate wood-carved office in Harrisburg, the governor referred to Mr. Obama several times in positive ways, as he did publicly at the Democratic dinner here. He frequently says he will “work my butt off” for Mr. Obama if Mr. Obama wins the nomination. His real ire is directed at the news media for “drinking the Kool-Aid” and not being tougher on Mr. Obama. “The press hates the Clintons,” he said in the interview. “No question about it.” Mrs. Clinton, of New York, still maintains a lead in the polls here, but that lead was shrinking, at least before Mr. Obama, of Illinois, made his comments about small-town voters. Even Mr. Rendell had been revising downward his estimate of her margin of victory, to four percentage points from five — far lower than the double-digit lead that polls first suggested she held here. If Mrs. Clinton does not win Pennsylvania, most agree, she cannot go on. But if she does win, and by a healthy margin, Mr. Rendell, 64, who is in his second and final term as governor, will undoubtedly receive a good share of the credit — and perhaps some of the political spoils should she make it to the White House. The Clinton administration delivered for Philadelphia when Mr. Rendell was mayor, providing help to revitalize the Philadelphia Naval Shipyard and to put more cops on the streets, a program that Mrs. Clinton said last week she would revive. President Bill Clinton appointed Mr. Rendell’s wife, Marjorie O. Rendell, to the federal bench in 1994 and elevated her to the United States Court of Appeals for the Third Circuit in 1997. He named Mr. Rendell chairman of the Democratic National Committee during the 2000 election. While some suggest that Mr. Rendell may be angling for vice president, he is an unlikely choice. A native New Yorker and a Jew, he would not expand Mrs. Clinton’s base. But he does not rule out interest in serving in her cabinet, after his term as governor ends in 2011. They are clearly comfortable with each other; Mrs. Clinton seems to light up around Mr. Rendell and enjoy the game a bit more. Those who know him and Mr. Clinton say the two share many traits, like outsized personalities, a natural gift for politics and a love of the sport (and sports, or at least watching them on television). As Mr. Rendell gripped a map of the state last week and pointed to yellow circles around the towns he wanted Mr. Clinton to visit, he laughed at the former president’s eagerness. “He’s a bear,” said Mr. Rendell, chuckling, as he planned a route through the hinterlands. “He always wants more. Hillary never asks for more, but Bill always asks for more.” And the strategy in sending Mr. Clinton to these outposts? “Basically he goes to the places that nobody else goes to,” Mr. Rendell explained, “and it was apparently very effective in Texas.” A little chuckle at what was unsaid: That Mr. Clinton, like him, can wander off-message, but he draws big crowds in places that have never seen a former president. Mr. Rendell was initially neutral in the race for the Democratic nomination, out of deference to two friends who were also candidates, Senator Joseph R. Biden Jr. of Delaware and Gov. Bill Richardson of New Mexico. After they dropped out, Mr. Rendell endorsed Mrs. Clinton, just before Feb. 5, when Delaware and New Jersey were among the states voting. Areas of both are in the Philadelphia media market. Once Ohio and Texas breathed new life into Mrs. Clinton’s candidacy on March 4, the primary in Pennsylvania suddenly mattered. Mr. Rendell swung into action, but he insists that the time he is devoting to her cause has not cut in to his devotion to state business. He says he simply gets up earlier and goes to sleep later. That consuming energy is part of what makes him an effective surrogate. “He jumps in with both feet,” said Senator Arlen Specter, Republican of Pennsylvania, who first hired Mr. Rendell when Mr. Specter was Philadelphia’s district attorney in the 1970s. “He knows the territory. And he knows where the bodies are buried.” Mr. Rendell describes himself as “the last of the Mohicans,” by which he means he is loyal to the end, even if the tide may look like it is going the other way “Last of the Mohicans!” he said to Mr. Kennedy when they met here. It was a reminder that Mr. Rendell had stuck with Mr. Kennedy through his ill-fated bid for the Democratic presidential nomination in 1980. The governor had also given a lift to Senator John Kerry in 2004, when he was the party’s nominee. Now Mr. Kerry supports Mr. Obama, and he and Mr. Rendell recently squared off at a party event in Cumberland County. “All the people I’ve worked hard for, I’m now opposing them on TV,” Mr. Rendell rued, sounding suddenly and uncharacteristically forlorn as he mulled Mrs. Clinton’s campaign. “I do feel like the last of the Mohicans. It’s me and Stephanie Tubbs.” Ms. Tubbs, a representative from Ohio, is also visible in her support for Mrs. Clinton. “No disrespect to Stephanie,” he added.

Presidential Election of 2008
Rendell Edward G
Clinton Hillary Rodham
Pennsylvania
Endorsements
Governors (US)
Philadelphia (Pa)


Shar-pei Wrinkles and Fevers Linked to Single Gene

Abstract: Shar-peis are an ancient Chinese dog breed characterized by two singular traits: thick, wrinkly skin and frequent bouts of fever . Researchers now say that the same gene mutation is responsible for both the wrinkles and the fever. “All shar-pei dogs have this mutation that causes the wrinkles, but the more copies they have, the higher the risk to have this fever,” said Mia Olsson, a doctoral student at Uppsala University in Sweden who worked on the study. The research appears in the journal PLoS Genetics . It was already known that the wrinkles were a result of excess production of a substance called hyaluronic acid distributed throughout the dogs’ skin. That excess is likely caused by to the overactivation of a gene called hyaluronan synthase 2 . Dogs that carry multiple mutations of the gene seem predisposed to periodic fever , Ms. Olsson and her colleagues reported. Although the fever is short-lived, it can be intense and frequent, and cause inflammation. With more information, breeders might be able to avoid breeding shar-peis that have duplications of the gene mutation, Ms. Olsson said. The research was conducted with the help of breeders in the United States, Sweden and Spain. “Our highest priority right now is to see if there’s some way to create some kind of test or tool to reduce the number of dogs with the fevers,” she said. The fever closely resembles certain periodic fevers that humans inherit, and studying the mutation in the dogs could help human geneticists develop treatments. The most common periodic fever among humans is known as familial Mediterranean fever . It tends to affect people of Mediterranean and Middle Eastern descent, and there is no cure.

Genetics and Heredity
Dogs
Medicine and Health
Science and Technology


Tarsiers Hint Primates Developed Color Vision at Night

Abstract: A new study suggests that primates’ ability to see in three colors may not have evolved as a result of daytime living, as has long been thought. The findings , published in the journal Proceedings of the Royal Society B , are based on a genetic examination of tarsiers, the nocturnal, saucer-eyed primates that long ago branched off from monkeys, apes and humans. By analyzing the genes that encode photopigments in the eyes of modern tarsiers, the researchers concluded that the last ancestor that all tarsiers had in common had highly acute three-color vision, much like that of modern-day primates. Such vision would normally indicate a daytime lifestyle. But fossils show that the tarsier ancestor was also nocturnal, strongly suggesting that the ability to see in three colors somehow predated the shift to daytime living. The coexistence of the two normally incompatible traits suggests that primates were able to function during twilight or bright moonlight for a time before making the transition to a fully diurnal existence. “Today there is no mammal we know of that has trichromatic vision that lives during night,” said an author of the study, Nathaniel J. Dominy , associate professor of anthropology at Dartmouth. “And if there’s a pattern that exists today, the safest thing to do is assume the same pattern existed in the past. “We think that tarsiers may have been active under relatively bright light conditions at dark times of the day,” he added. “Very bright moonlight is bright enough for your cones to operate.”

Research
Animals
Monkeys and Apes
Eyes and Eyesight


Korean Community Leaders Urge McDonald’s Boycott

Abstract: Word ricocheted around the Korean enclaves of Queens, then onto the Internet, where it was picked up by Korean news media and sent in translation to the homeland. The situation inspired television news reports, an animated parody and on Thursday culminated in a summit on a Flushing street corner calling for a boycott: all because a McDonald’s had appeared to disrespect several older Korean people who treat a neighborhood branch of the fast-food chain like their living room. “This really is difficult,” Lisa McComb, a spokeswoman for McDonald’s, wrote in an email. “The restaurant has welcomed these guests for a long time,” she said, but the endless table sitting “has led to uncomfortable interactions with the McDonald’s workers.” On Thursday afternoon, several Korean community leaders hand-delivered a letter to a manager of the McDonald’s franchise at the corner of Parsons and Northern Boulevards, outlining their outrage that, over the past several months, the management has called 911 to oust older men and women who sit for hours hovering over a single cup of coffee. The dispute was reported by The Korea Times and this week by The New York Times. “Senior citizens should not be treated as criminals,” said Christine Colligan, a leader of the Korean Parents Association of New York, as she stood outside the restaurant, her voice rising. “They should be respected.” That morning, Ms. Colligan had contacted her sprawling network in the Korean community urging a “worldwide” boycott of the fast-food restaurant for the month of February. In a letter, she attacked what she saw as “stark racism” by McDonald’s: “We will teach them a lesson,” the letter said. Whether the Koreans, many in their 70s and 80s, were right or wrong to spend their days at the restaurant, arriving as early as 5 a.m. and paying as little as $1.09 for a cup of coffee during their daylong stays, seemed not to matter much to the small but vocal group protesting against McDonald’s before an assortment of television cameras and photographers. What seemed to nettle the Korean community most was the perception that in asking police officers to remove the group, the business had been rude. “You call the police on your grandmother?” Ms. Colligan said. Officer Hee-Jin Park-Dance from the Community Affairs Bureau of the Police Department works out of Flushing. She said: “In Korea or any other Asian cultures, the elder is treated like gold. When you see an elder you get up, you give a seat right away. It’s a sign of respect.” In policing the area, she said, “you need to know your community.” Elected leaders were drawn into the imbroglio: A conference call was swiftly arranged between State Assemblyman Ron Kim, a Democrat, who represents Flushing and was the first Korean-American to have been elected to the Legislature, and the owner of the franchise, Jack Bert, Ms. McComb said. More than discomfort is at stake: Staff members at the franchise said the ever-present older people caused the business to lose money. The patrons sat far longer than the 20 minutes requested on signs posted in the restaurant. Other customers asked for refunds, unhappy that there were no seats at which to eat a Happy Meal. “I’m sure you can imagine any business would find this situation to be difficult when customers prevent other customers from enjoying the restaurant,” Mr. Bert, the franchise’s operator, said in an emailed statement. Even among the community’s champions of business, like Young Jin Kim, the chairman of the Korean American Business Council of New York, there was little sympathy. “Respecting elders is particularly serious and important,” Mr. Kim said. That reverence can supersede business interests, he said. Behind him, beyond the glass and golden arches, several older men sat watching inside the McDonald’s, sipping coffee.

Korean American
McDonald's
Queens
Old age,elderly,senior citizens
Flushing Queens
Loitering


ConAgra Shares Fall Despite 15% Profit Increase

Abstract: ConAgra Foods Inc. reported a 15 percent increase in quarterly profit on Thursday, but its shares fell because of weakness in its crucial consumer goods segment. The consumer segment, which accounts for more than half of the company’s sales and includes products like Healthy Choice meals, Chef Boyardee pasta and Hunt’s ketchup, posted a 16 percent drop in earnings as the cost of ingredients jumped. The company also had some customer service problems. Although earnings rose in ConAgra’s trading and food ingredient businesses, the decline in the consumer segment worried investors. Profit rose to $244.8 million, or 50 cents a share, in the second quarter ended on Nov. 25, from $213.3 million, or 42 cents a share, in the period a year earlier. Excluding costs from the recall of Banquet pot pies, earnings were 53 cents a share, compared with the analysts’ average forecast of 43 cents, according to Reuters Estimates. The pot pies were recalled Oct. 11 because of salmonella contamination. After a review of the plant where they were made, the company resumed shipping the pies this month. Sales rose 13.7 percent, to $3.51 billion. Shares of ConAgra fell 51 cents Thursday, to $24.28.

ConAgra Foods Incorporated
Company Reports
Recalls and Bans of Products


Concerns on Economy Are Shifting to Inflation

Abstract: In the past 48 hours, Wall Street has issued a sobering message: The days of easy money from the Federal Reserve are nearly over. There is a growing sense among investors that the Fed has shifted its focus to the fight against inflation, leaving behind — for now — concerns about the outlook for economic growth. The implication is that the Fed’s nine-month campaign of reducing rates, the most aggressive in history, is at or near its end. Investors now expect interest rates to stay steady, or start to rise, in the months ahead. This week, striking moves across the bond and currency markets spotlighted that belief. The beaten-down dollar, a scourge of the economy, rallied to its biggest two-day gain against the euro since late 2005. The yield on the two-year Treasury bond finished on Tuesday up more than half a percentage point from where it started the week, the sharpest two-day spike in more than two decades. Both moves suggest that investors are bracing for higher rates. The price of crude oil, which rose nearly $11 in a single day last week, tumbled again on Tuesday by $3.04 to $131.31 a barrel. Crude oil, which is traded in dollars, has given up $7 a barrel in two days, another sign that investors expect the value of the dollar to strengthen. “Up until now, the Fed had been concerned about the economic consequences of a credit crisis,” said Marc Chandler, who oversees currency strategy at Brown Brothers Harriman. “The market now is convinced that the Fed has shifted its focus away from the downside risks to the economy and is on a heightened alert against inflation.” That shift was solidified by remarks from Ben S. Bernanke, the chairman of the Fed, who said on Monday night that the central bank would “strongly resist an erosion of longer-term inflation expectations,” implying a pause in its rate-cutting campaign and, perhaps, eventual rate increases. “It had become clear that the Fed was more focused on inflation,” Mr. Chandler said. “Those messages were driven home by Bernanke, who basically said that the fear of a significant downturn in the economy had left him.” But a stronger dollar does not necessarily mean a better economic outlook for Americans. The Fed’s signals were attached to a growing fear that inflation would accelerate, driven up by the large increase in global commodity prices. In other words, even if rates were to move higher, Americans would remain at risk of dealing with higher prices. “If the Fed intends on hiking rates, it broadcasts the message that the risk of future stability that is coming from higher inflation is greater than the risk that stems from slower economic growth,” said David Kovacs, who leads quantitative strategies at Turner Investment Partners in Berwyn, Pa. Tuesday’s developments led investors away from fixed-income markets and into stocks. The Dow industrials posted their second gain in a row, rising more than 9 points to 12,289.76. But it was what did not happen in the stock markets that reflected the relative strength of equities. After an overnight sell-off in the Chinese markets, American indexes opened lower but ended mixed, with the Dow having a modest gain. Adding to the anxiety was a report that expensive oil pushed American imports to a record in April. Americans bought more fuel, and at a more expensive rate, than ever before, the Commerce Department said, widening the trade deficit. The broader Standard & Poor’s 500-stock index fell slightly, by about a quarter of a percentage point, as shares of energy and oil companies dropped on the retreat in oil prices. Technology stocks fell as well, dragging down the Nasdaq composite index, which lost 0.4 percent. The euro dropped 2 cents to $1.5463, as the British pound and yen fell slightly against the dollar. The two-year Treasury yield, which moves opposite its price, gained 0.214 percentage point, to 2.925 percent. The price of the benchmark 10-year Treasury note fell 28/32, to 98 4/32. Its yield rose to 4.1 percent, from 4 percent. Following are the results of Tuesday’s Treasury auction for four-week bills and five-day cash management bills:

Interest Rates
Economic Conditions and Trends
Stocks and Bonds
United States Economy
Federal Reserve System
Prices (Fares Fees and Rates)


Data Hints Hiring Slowdown May Be Short-Lived

Abstract: WASHINGTON (Reuters) — The number of Americans lining up for new jobless benefits fell last week for the first time since April, providing a hint that a slowdown in hiring last month may only be temporary. The data on state unemployment claims, released by the Labor Department on Thursday, takes some of the edge off a report by the government last week that showed job creation slowed sharply in May. Many economists say they believe that mild weather in the winter led employers to hire more workers then at the expense of spring, but that the weather effect should be short-lived. Some economists suggested the claims data backed that view. The report “gives us more confidence that the trend in payrolls is stronger than the May payroll data implied,” the Swiss bank UBS said in a note to its clients. Four consecutive months of slowing job creation had fueled speculation that the Federal Reserve Board would ramp up efforts to prop up the American economy. But in Congressional testimony on Thursday, the Federal Reserve’s chairman, Ben S. Bernanke, gave little indication that further monetary stimulus was imminent, even though he said the central bank was ready to shield the economy if financial troubles began to mount. The Labor Department said initial claims for state unemployment benefits dropped by 12,000 to a seasonally adjusted 377,000 last week, matching the median forecast of economists polled by Reuters. “If the economy were really swooning because of events in Europe, it should be accompanied by a backup in jobless claims,” said Carl Riccadonna, an economist at Deutsche Bank. Before last week, claims had risen for four consecutive weeks, adding to concerns about several months of lackluster hiring data. While the United States emerged from a deep recession three years ago, the jobless rate has remained stubbornly high. In May, it edged up to 8.2 percent. Still, most of the recent increases in new jobless claims were marginal, and the overall level of new aid applications has held at levels consistent with a modest labor market recovery. Last week’s decline in jobless claims was the first drop since the week that ended April 28. The four-week moving average for new claims, a measure of labor market trends, increased by 1,750 last week to 377,750. A report from the Fed showed American families continued to shed debt in the first quarter. Efforts by households to dig out of a big debt pile have been a persistent headwind for the economy. Total household debt dropped for the 16th straight quarter, declining at a 0.4 percent annual rate. Mortgage debt, which is the biggest component of consumer debt, fell at a 2.9 percent annual rate, while consumer credit rose by 5.8 percent during the quarter. A separate Fed report pointed to some shakiness in borrowing, with consumer credit expanding in April by the least in six months. The Fed said household wealth increased by $2.8 trillion during the period, largely because of higher prices in the stock market.

United States Economy
Labor and Jobs
Unemployment
Labor Department (US)
Hiring and Promotion
Unemployment Insurance


The Salahis, Obama’s Uninvited Guests, Prompt an Inquiry

Abstract: WASHINGTON — The Secret Service is investigating how a couple aspiring to be reality-show celebrities managed to appear at President Obama ’s first state dinner without being on the guest list, provoking questions about security at the White House. The inquiry was begun after a Virginia couple, Michaele and Tareq Salahi, slipped past multiple layers of high-level White House security Tuesday night and managed to rub shoulders, literally, with Vice President Joseph R. Biden Jr. and the White House chief of staff, Rahm Emanuel , among others, at Washington’s most exclusive social event this year. Edwin M. Donovan, a spokesman for the Secret Service who spent his Thanksgiving Day dealing with phone calls from reporters, would not discuss the investigation in detail but said the initial focus was on “a Secret Service checkpoint which did not follow proper procedure to ensure these two individuals were on the invited guest list.” While the question of how well the president is protected is never a casual one, it has taken on special resonance with Mr. Obama, the nation’s first black president. Even when he was a candidate, his security rivaled that of a sitting president, because of both the size of the crowds he attracted and the number of threats. Secret Service agents began guarding him 18 months before the November 2008 election, the earliest a candidate has ever been provided protection. It was not clear how close the couple got to the Obamas. Representative Peter T. King, the ranking Republican on the House Homeland Security Committee, called for a Congressional investigation, saying in an interview Thursday that he was shocked at the lack of security at the White House on Tuesday night. Since 2003, the Secret Service has been part of the Department of Homeland Security . “Obviously, somebody dropped the ball,” said Mr. King, of New York. “I mean, you’re talking about the president of the United States and the vice president and a powerful world leader, the prime minister of India .” The prime minister, Manmohan Singh , was the guest of honor. Mr. King said he had seen people turned away from similar White House events, including a congressman who brought his daughter instead of his wife, whose name was on the list. He also raised concerns about the Secret Service’s assertion that Mr. Obama was safe because all guests passed through metal detectors. “The fact they went through the magnometer is incidental,” he said. “They could have had anthrax on them. They could have grabbed a knife from the dining room table.” He added, “The next time it will be a far worse reality than a reality TV show.” Mr. and Mrs. Salahi, meanwhile, remained silent Thursday about their White House visit. Producers for Bravo, the cable channel, have been following and filming the couple this fall. The channel confirmed that Michaele Salahi was being seriously considered for the coming series “The Real Housewives of D.C.” In a statement on Thursday, Bravo said Half Yard Productions, the producer for the series, had been under the impression that the Salahis, two polo-playing devotees of Washington’s social swirl and online social networks alike, had been invited to the dinner. The “Housewives” cast “has not been finalized,” Bravo said. “Michaele Salahi is under consideration as a cast member; as such, Half Yard Productions were filming the Salahis on that day. Half Yard was only aware that per the Salahis they had been invited as guests.” A White House official, informed of Bravo’s statement, said that was not the case. “We’ve already confirmed that they weren’t invited,” he said. A publicist for the couple, Mahogany Jones, said they would not comment formally for now, but issued a statement. Their counsel, Paul W. Gardner, “states emphatically that the Salahis did not ‘crash’ this event,” the statement said. “We look forward to setting the record straight very soon.” Mr. Gardner, an entertainment lawyer, did not respond to a message left at his Baltimore office. Brian Williams , the anchor of “ NBC Nightly News” and a guest at the dinner, saw the Salahis arrive when he was waiting in a line of cars to enter the East Gate of the White House. In interviews broadcast on NBC on Thursday, Mr. Williams said the couple’s vehicle was turned away, adding, “Actually the first ring of Secret Service security had worked.” “After their vehicle was turned away, they hopped out,” Mr. Williams said. “What attracted our attention was there was at least one camera trailing them. And a makeup woman got out and fixed the woman’s hair and then started powdering the man’s forehead.” The Salahis apparently then joined a line of dinner guests at an entrance for pedestrians. What happened at checkpoints at that entrance is the focus of the Secret Service investigation. Not two hours after the party, Mrs. Salahi had on her Facebook page a dozen photos of her and her husband with Washington’s social elite. There the couple were, with Mayor Adrian M. Fenty of the District of Columbia “and his lovely wife,” Michelle (Mrs. Salahi is holding Mr. Fenty’s elbow). There Mrs. Salahi was, with three Marines in full-dress attire (her hand is touching the collar of one Marine, who smiles at the camera). And then there she was, her sari glittering, snaked around a grinning Mr. Biden, her hand resting on his chest, his arm wrapped around her waist; and both Salahis, with a smiling Mr. Emanuel, described on Mrs. Salahi’s Facebook page as “Chief of Staff of the United States White House.” It was not clear who took the pictures for Facebook. The White House has said the Salahis were not seated for the dinner. It was not clear Thursday when they left the White House on Tuesday, and under what circumstances. Whether or not they wind up on “Housewives,” the couple have certainly acted as if they were stars. They are now scheduled to be on “ Larry King Live” on Monday. On her celebrity-minded Facebook page, Mrs. Salahi telegraphed her television aspirations, writing, “Get Ready Kelly Ripa — Don’t you want a friend to tag team Regis!” She also suggested herself as a co-host for NBC’s “Today” show. On Facebook, she has more than 4,000 friends. “There are definitely people that lobby very aggressively to be on shows,” said Michael Hirschorn, a former executive vice president for original programming at the reality-centric VH1 channel and a founder of Ish Entertainment. The stunt brought to mind another set of fame-seekers: the Heene family of Fort Collins, Colo., who mesmerized the nation for several hours last month after setting aloft a homemade saucer-shaped balloon — and the notion that their 6-year-old son was in it — in an apparent effort to gain attention from television producers. Mr. Hirschorn said prospective reality stars were becoming smarter about “self-producing,” knowing they had to inject drama into the shows. “At this point,” he said, “there must be what, a thousand reality personalities on TV at any one time? So they know they have to stand out.” Even so, Mr. Hirschorn added, this “would seem extreme to me.”

Bravo
White House
Secret Service
Barack Obama
Joe Biden
Rahm Emanuel
Michaele Salahi
Tareq Salahi


Lavrov Seems to Soften Russia’s Support for Syria and Assad

Abstract: MOSCOW — The foreign minister of Russia , the Syrian government’s most powerful supporter, used some of his harshest language on Tuesday in criticizing President Bashar al-Assad of Syria and his violent repression of a year-old uprising there, saying that Mr. Assad had committed many mistakes and that “no one is inviting him to Moscow” should he resign. While the foreign minister, Sergey V. Lavrov, insisted that Russia still opposed any United Nations Security Council effort that might coerce Mr. Assad’s exit, he appeared to soften Russia’s adamant support for him. At the same time, however, Mr. Lavrov also was deeply critical of the opposition forces confronting Mr. Assad, and he accused Western nations that want to see Mr. Assad’s departure of complicity in prolonging the Syrian conflict. The tone of Mr. Lavrov’s remarks on Syria, first at a news conference in Moscow and later in an interview with Kommersant-FM, a Russian station, was more abrasive than other language used by Russian officials concerning their impatience with Mr. Assad’s behavior. The Syrian leader has dismissed criticism of his government, even among friends. Mr. Lavrov spoke as diplomatic momentum was increasing at the Security Council for a so-called presidential statement that would endorse the effort by Kofi Annan, the special emissary of the United Nations and Arab League, to broker a cease-fire. Mr. Annan has said he hoped the effort would create the basis for a political dialogue, a peaceful outcome and aid to the victims. Mr. Lavrov said Russia would support a presidential statement, which carries less weight than a resolution, if it did not deliver an ultimatum to Mr. Assad. Russia vetoed two attempts at Security Council resolutions that would have condemned Mr. Assad, concerned that they would create a justification for the kind of foreign military intervention and leadership change that shaped the Libyan conflict, a result that deeply angered the Kremlin. “We absolutely do not justify the Syrian leadership,” Mr. Lavrov said on Kommersant. “We consider that the Syrian leadership reacted incorrectly to the rise of nonviolent protest, that despite the promises that were made in response to our numerous appeals, they are making many mistakes, and those steps being made in the proper direction are happening late.” But he also suggested that the vilification of Mr. Assad had played a counterproductive role. “It is for Assad to decide,” Mr. Lavrov said. “He will make his decision not because someone in Russia, or Moscow, has asked him to. In many Western capitals, he is discussed as if he is a war criminal. They say he has a spot in The Hague or an international tribunal. That means that those people who make these pronouncements should explain to him what his options are — but not us. And the main thing is that the Syrian people should decide.” Some political analysts said the Russians still had little incentive to turn against Mr. Assad. Peter Harling, project manager on Syria for International Crisis Group, said Russia’s support for Mr. Assad gives it “a huge role” and leverage over the West. “If they turn against the regime more decisively, they will lose all leverage and soon be ignored by all, including the West,” he said.

Middle East and North Africa Unrest (2010- )


Shiite Bloc Fails to Go to Meeting on Iraq-U.S. Pact

Abstract: BAGHDAD — Iraq ’s political leaders held a high-level meeting on Saturday to gauge support for a security agreement that will determine the future role and presence of American forces in Iraq before crucial votes in the cabinet and Parliament. But the most powerful Shiite bloc in Parliament, the Islamic Supreme Council of Iraq , did not attend, and the meeting ended without any clear public resolution. The agreement, which Iraq and the United States have been negotiating for months, faces a vote by the cabinet, which is expected on Sunday, and then a vote in Parliament, which has not set a date for it. The agreement will replace the United Nations mandate authorizing American military operations in Iraq, which expires on Dec. 31. The unexpected no-show of the Supreme Council, a close ally of Prime Minister Nuri Kamal al-Maliki, was confirmed by two Iraqi lawmakers, one of whom attended the meeting. Other lawmakers expressed concern and said they were puzzled by what it meant. The meeting follows months of contentious political maneuvering by many of Iraq’s political factions, amid a political climate in which many Iraqi leaders are trying to demonstrate their nationalist credentials by insisting on major concessions from the Americans. Mr. Maliki is not expected not send the pact to Parliament until he is sure that he has the votes to pass it. The decision of Iraq’s 37-member cabinet, essentially a microcosm of the Parliament, is expected to be a good indicator of whether the agreement will pass. The assembly has not yet announced the date of its vote, but it is scheduled to go into recess on Nov. 24. Several groups have expressed their support or disapproval, but not enough to predict an outcome of the vote. Mr. Maliki’s Dawa party supports the pact. Haidar al-Abadi, a senior figure in Dawa, said, “This is the only deal on the table, and we cannot afford to leave the country in such a poor condition on Dec. 31.” Abbas Bayati, a Turkmen member of the Shiite-dominated governing coalition, indicated that the coalition members were increasingly likely to sign it. “We find that the American response is positive and good, a foundation for establishing a good future relationship,” he said, referring to the recent acceptance by the United States of several Iraqi demands. Although much of the draft agreement has yet to be made public, principal elements include a timeline for American troop withdrawals from Iraqi cities by next June and a withdrawal of combat troops from the country by the end of 2011. Of the other major national blocs, Mahmoud Othman, an independent member of the Kurdish Alliance, said that the leaders of the most prominent Kurdish parties were enthusiastic supporters of the deal. The Kurds control more than 50 seats in the 275-member assembly. Other parliamentary parties and alliances are keeping their options open. Iraq’s most influential Shiite cleric, Grand Ayatollah Ali al-Sistani, has indicated that he would support the security agreement, but only if it received a broad national consensus. The Sunni Tawafiq bloc, which controls more than 40 seats, has called for the pact to be put to a national referendum. “We were supporting the negotiations, but when we submitted our suggestions to the prime minister, he didn’t take any of them,” said Ayad Samarrai, deputy general secretary of the largest party in Tawafiq. He added that the cabinet should explain every paragraph in the pact to the Parliament in public, so the public could understand what is at stake. “We think a referendum is the best course.” The Bush administration has pressed the Iraqis to reach an agreement for most of the year, making its own concessions on deadlines for troop withdrawals and immunity for American soldiers. On Saturday, a spokesman expressed hope that a vote was imminent. “We think this is a good document that serves both Iraqis and Americans well,” the spokesman, Gordon D. Johndroe, said. “We remain hopeful that the Iraqi government will conclude this process soon.” Also on Saturday, a car bomb exploded in a car dealership in the northwestern town of Tal Afar, killing nine people and wounding 40, according to Iraqi police and United States military officials. Tal Afar is about 40 miles northwest of Mosul in Nineveh Province, and is split among Turkmens, Sunnis and Shiites and once was a place of almost relentless violence. Khisro Goran, the deputy governor of Nineveh, blamed Sunni insurgents for the attack and said it was evidence of “too much hatred between Sunnis and Shiites.” Another car bomb exploded Saturday afternoon in a square near Iraq’s National Theater in central Baghdad. Three people were killed and 25 wounded, according to an Interior Ministry official, who did not want to be identified because he was not authorized to speak to reporters. Around the country on Saturday, tribal groups held demonstrations in support of the prime minister. The so-called tribal support councils, which Mr. Maliki has been organizing since early summer, are a mix of Sunni and Shiite tribes that support the central government. Mr. Maliki has been courting tribal leaders and Sunni Arab nationalists in an effort to shore up government support, especially in areas where there is a heavy Kurdish influence. The tribal support councils are seen by many Kurds, especially, as an attempt by Mr. Maliki to project his personal power. In Hilla, about 3,000 council members marched on the city’s center. The police also reported Saturday that an American military helicopter crashed in eastern Mosul on Saturday evening after hitting a television broadcasting tower. Witnesses said that they saw two people, who were engulfed in flames, falling from the helicopter. The United States military confirmed that an OH-58 Kiowa helicopter “made a hard landing” when it hit wires in Mosul, and that two crew members were killed. The event was not combat-related. American-led forces quickly secured the area, a military spokesman said in an e-mail message.

Iraq
Status of Forces Agreements
Supreme Islamic Iraqi Council


Apple’s Hype Envelops Penney

Abstract: Apple’s reality distortion field has enveloped J. C. Penney . The department store chain poached Ron Johnson, the man behind Apple’s stores, to be its eventual chief executive. The hiring helped lift J. C. Penney’s market value by nearly a fifth, or $1.2 billion, before edging back a bit at the end of trading on Tuesday. It is true that Mr. Johnson also spent 15 years at the retailer Target, but Apple’s halo looks too wide. When Apple opened its first retail stores in Tysons Corner, Va., and Glendale, Calif., a decade ago, the concept was widely derided as folly. Almost no one could understand why consumers would be more inclined to buy computers and gadgets in an Apple store instead of in any number of other electronics shops. After all, places like Circuit City offered a wider selection of brands for comparison. But Mr. Johnson pulled it off — and in style. Circuit City is long gone while Apple commands some of the highest sales per square foot of any retailer. Its more than 300 stores worldwide generated $10 billion in revenue in the last fiscal year and accounted for almost one in every eight dollars of Apple’s operating income. And Mr. Johnson is no one-hit wonder, either. He was instrumental in one of the more unlikely retail transformations, turning Target from a dowdy Midwestern chain into a popular destination for chic suburbanites. Still, investors may be expecting too much. A little Apple marketing goes a long way. New iPads and iPhones practically sell themselves. Wrangler jeans and American Living polo shirts don’t. J. C. Penney also lacks Apple’s rabid fan base and a commensurate product development team. There’s a simple measure of the exuberance. Mr. Johnson undoubtedly has contributed to Apple’s powerhouse status. But Steven P. Jobs, Apple’s chief executive, can claim a far larger role reinventing a nearly bankrupt company into one worth more than $300 billion. When Apple announced Mr. Jobs was going on indefinite medical leave in January, the share price fell 2 percent. However great Mr. Johnson’s retailing prowess, his appointment probably doesn’t justify a stock move at J. C. Penney of almost an order of magnitude larger. Fickle Commodities It’s back to the classroom for Glencore investors. Just when they were getting their head around its moving parts, the commodity trader — which went public in an initial offering last month — has shown it can be unpredictable. First-quarter earnings, unveiled on June 14, were flat compared with the last three months of 2010. Momentum stalled as a result of the disruption surrounding the Japanese earthquake, and Glencore says it had fewer opportunities to arbitrage commodity prices around the world. The effect was acutely visible in the year-on-year quarterly comparison, with operating profit from trading metals and minerals down 21 percent. Investors who bought into Glencore on the basis that its commodity trading arm would thrive in all market conditions weren’t totally misguided. Helped by energy, the overall trading business was still up year-on-year. And when Japan starts buying commodities again, that should show up in Glencore’s numbers. Earnings in the last two quarters have been running at their average for 2007, when Glencore made a record $5.2 billion for the year, including a sizable contribution from its 34 percent stake in the mining group Xstrata. Before the float in May, even the most bearish analysts thought Glencore could achieve the same result this year. Though Glencore’s stock dropped on Tuesday, investors still seem to think that’s achievable. Annualized, the trading division’s first-quarter earnings, assuming a 10 percent tax rate, stand at $2.4 billion. On a 12 times multiple — a reasonable discount to Glencore’s main listed counterpart — that implies a $29 billion valuation. Annualized Ebitda in Glencore’s mining operations, excluding the Xstrata contribution, is $3.5 billion, implying a $16 billion market value on a sector multiple of 4.5 times. Glencore’s stakes in publicly traded groups are worth about $28 billion. Adjust for net debt and apply a 10 percent holding company discount, and that gets to around the current $58 billion market value. But the first-quarter figures demonstrate Glencore’s sensitivity to the macroeconomic backdrop. Recent weak economic data in the United States and evidence that China is responding to high commodity prices by running down inventories may be the next disappointments. A record year isn’t guaranteed.

Penney J C Co
Appointments and Executive Changes
Shopping and Retail
Apple Incorporated
Commodities
Economic Conditions and Trends
Japan Earthquake and Tsunami (2011)
Johnson Ron


F.B.I. Is Slow to Translate Intelligence, Report Says

Abstract: WASHINGTON — The F.B.I. ’s collection of wiretapped phone calls and intercepted e-mail has been soaring in recent years, but the bureau is failing to review “significant amounts” of such material partly for lack of translators, according to a Justice Department report released Monday. “Not reviewing such material increases the risk that the F.B.I. will not detect information in its possession that may be important to its counterterrorism and counterintelligence efforts,” said the report, which was issued by the office of the department’s inspector general, Glenn A. Fine . In a statement, the Federal Bureau of Investigation said that it was working to reduce its backlog of unreviewed audio recordings and electronic documents, and that it continued seeking to hire or contract with more linguists. “The F.B.I. remains committed to reviewing all foreign language material in a timely manner and setting priorities to ensure that the most important material receives the most immediate attention,” the agency said in a statement. The government’s ability to review and translate materials quickly has been a subject of concern since the 2001 terrorist attacks. Two previous inspector general reports also faulted the bureau for significant backlogs in reviewing information in other languages. Senator Charles E. Grassley, an Iowa Republican who has pressed the F.B.I. to improve its translation abilities, praised the bureau for its recent arrest of several terrorism suspects inside the United States but said that its linguist department remained “a big hole.” “Today’s report appears to point to more of the same by the F.B.I. with its translation department,” Mr. Grassley said in a statement. “The F.B.I. needs their feet held to the fire in order to make substantive changes in the translation area.” The inspector general report consisted largely of numbers — some of which were disputed by the bureau — and did not contain any specific examples of cases in which the bureau failed to detect a potential terrorist as quickly as possible because of a delay in reviewing material. The report also contains new information about the bureau’s efforts to hire more translators. It showed that the number of the bureau’s linguists — both staff members and contractors — had fallen slightly to 1,298 as of September 2008, from a peak in 2005. It met its hiring targets in 2008 for only 2 of 14 targeted languages. The process of hiring linguists has been slowed because of lengthy security vetting and competition with other intelligence agencies that are also trying to hire more translators, the report said. The report did find “significant improvements” in some F.B.I. practices. In particular, for the past three years the bureau has reviewed every text — a fax or paper document — its agents have collected for top-priority counterterrorism investigations. But the inspector general found that there were backlogs in reviewing audio recordings, including telephone calls, and electronic files, like e-mail messages and Web pages. The F.B.I. and the inspector general disagreed over how to measure those backlogs. Mr. Fine’s office found that the F.B.I. had failed to review 7.2 million electronic files collected by counterterrorism investigators. Nearly all of that backlog dates from 2008, when the bureau’s intake of such materials for all types of investigations nearly tripled, to 46 million files, the audit said. But the F.B.I. argued that as the volume of such files had increased, its analysts increasingly used sophisticated computer searches of databases to find high-priority files rather than opening each individual file by hand. The inspector general report, citing field office reports, also said there might be as many as 47,000 hours of counterterrorism audio recordings that were not reviewed as of September 2008, which would be a more than fivefold increase in the backlog since 2003. But the F.B.I. argued that the inspector general report was double-counting duplicate recordings. The bureau said that its primary system for storing counterterrorism recordings had only about 4,470 hours waiting for review, and that it had reduced its backlog in that system by about 40 percent since 2003. But the F.B.I. also acknowledged that some counterterrorism materials were stored in other systems, and that it could not say what their status was. It agreed to overhaul its tracking of such materials as well as act on 23 related recommendations in the report. Senator Patrick J. Leahy, Democrat of Vermont and chairman of the Senate Judiciary Committee, which oversees the F.B.I., called the report “troubling.” “While the F.B.I. has made progress in this area,” Mr. Leahy said in a statement, “I remain concerned that the bureau’s ability to adequately review this material is still seriously deficient.” “The ability to quickly and thoroughly translate and review these materials is essential to our national security,” he added.

Federal Bureau of Investigation
Fine Glenn A
Justice Department
Translation
Espionage
Terrorism
Language and Languages


Nets Discuss Lopez’s Foot Surgery and His Recovery

Abstract: EAST RUTHERFORD, N.J. — On a day that had been set aside to discuss the Nets’ plans for Thursday’s N.B.A. draft, attention at the team’s training facility shifted from potential future players to a current star. General Manager Billy King spent a majority of his time Monday talking about a bent screw that had been replaced in Brook Lopez’s surgically repaired right foot. King said the bent screw was discovered on X-rays when Lopez had his physical after the Nets were eliminated by the Chicago Bulls in the first round of the playoffs. The procedure, which took place sometime after the Nets’ season ended on May 4, was strictly precautionary, according to the Nets. They expect Lopez to return to basketball-related activities sometime in August. Lopez, who averaged 19.4 points and 6.9 rebounds in 74 games last season as he made his first All-Star team, has now had three operations on his right foot since 2011. Two unrelated fractures in the foot cost him most of the 2011-12 season. King said that Lopez was in a walking boot and that his rehabilitation would take place in the New York City area. King stressed several times that Lopez would be fine, and that he had not experienced any pain by the bent screw. “For me, I don’t have any concern,” King said. “It didn’t prevent him from playing.” Faced mostly with questions about Lopez and what appears to be a weeks-old surgery, King dealt with fewer inquiries than expected about the Nets’ plans for their first-round pick, the 22nd over all, on Thursday. Image The Nets' Brook Lopez, who averaged 19.4 points and 6.9 rebounds in 74 games last season, has had three operations on his right foot since 2011. Credit Don Emmert/Agence France-Presse — Getty Images King did mention that the Nets could benefit from a draft class that is projected to produce more solid, complementary players than stars. “For where we are, it’s better because you’re going to get guys who are more polished and more who they are,” he said. “They may not be a franchise guy, but they could be a good piece.” King said his priorities this off-season would be to acquire athletic players who could shoot from the perimeter. One of the Nets’ biggest needs is finding a suitable backup point guard for Deron Williams. The Nets expect C. J. Watson, who held that role last season, to opt of out of his contract and become a free agent. King did not mention Watson on Monday, instead saying he wanted to bring in another guard who could compete for the role with Tyshawn Taylor, whom the Nets obtained from the Portland Trail Blazers in last year’s draft. Two such players who could fit that bill and have been projected to be selected somewhere in the high teens to low 20s in the draft are guards Tim Hardaway Jr. and Erick Green, the most notable of the six players the Nets invited for a workout. King, who was not asked about Hardaway or Green, brushed off the suggestion that he would consider taking a center as insurance for Lopez. “No, not at all,” he said. King, after pausing for few seconds, then laughed and added: “There’s nobody as good as Brook Lopez in the draft, either. We know the guys we want to have, and Brook is going to be our starter.”


John McAfee’s New Mexico Land Auctioned for $1.15 Million

Abstract: The software entrepreneur John McAfee, whose fortune has dwindled to about $4 million, from more than $100 million, sold the last of his major real estate holdings on Saturday: a 157-acre spread in Rodeo, N.M., where he and his friends flew lightweight airplanes. The property was sold at auction for $1.15 million. In a telephone interview, Mr. McAfee said he was relieved that the auction was behind him so that he could get back to his life in Belize. Jim Gall, president of the Auction Company of America, handled the auction and estimated that 400 people, from 22 states, showed up to bid on the property. Mr. McAfee had agreed to sell the property to the highest bidder, no matter how low the price, as he needed cash to pay his bills amid the downturn in real estate and stocks . He said the final sale price was roughly in line with what he had expected. Mr. McAfee bought the land in 2004 and then poured an estimated $11.5 million into building a complex that would accommodate visitors interested in aerotrekking, the flying of unlicensed, lightweight planes with open cockpits. After reading about aerotrekking in an airline magazine on a flight to Nepal some years ago, Mr. McAfee said, he was intrigued by the concept. He took flying lessons in Phoenix and then sought a suitable place to build a base where he could fly safely. After searching for several months through the Southwestern United States, he settled on Rodeo — a desolate area with very little air traffic, making it safe to fly. To accommodate his fellow fliers, he built a general store, cafe, movie theater and several hangars. His home on the property had two guest houses and a swimming pool. He also bought a fleet of antique cars for his guests to use. Mr. McAfee, who started McAfee Associates in the late 1980s to sell computer antivirus software, had made a fortune of about $100 million by 1994, when he sold off his last shares of the company, about two years after it went public. The recent collapse of the stock and real estate markets has quickly taken a huge toll on his fortunes. Over the years, he had built several homes in remote locations. In late August, he sold a property in Hawaii for about $1.5 million. In 2007, he sold a 10,000-square-foot home in Colorado with a view of Pike’s Peak for $5.7 million. He had invested about $25 million in the land and the main houses and guest houses that he built on the Colorado property.

McAfee John
McAfee Inc
Housing and Real Estate
Auctions


Americans Knocked Out in Rome

Abstract: The only two American men in the field at the Rome Masters were eliminated within a few hours of the start of play, with Richard Gasquet of France beating Sam Querrey, 6-2, 7-6 (8), and Denis Istomin of Uzbekistan beating John Isner, 5-7, 7-6 (5), 6-3.

Tennis
John Isner
Richard Gasquet
Rome
Denis Istomin


Dual Suicide Blasts Kill at Least 40 in Tribal Pakistan

Abstract: PESHAWAR, Pakistan — Two suicide bombers dressed as police officers detontated explosive vests at a meeting of hundreds of people with the top civilian official in the tribal agency of Mohmand, killing more than 40 and wounding at least 100, government officials said. The meeting, dubbed a peace jirga, had been called to strategize ways to stand up to the Taliban, who have carved out a haven in the strategic region on the Afghan border, resisting a nearly two-year campaign by the Pakistani military to oust them. Such Taliban attacks have by now become a familiar tactic. The insurgents have often struck with suicide bombers at meetings of government officials and tribal elders to prevent them from forming anti-Taliban militias. At the time of the attack Monday, the compound was filled with hundreds of anti-Taliban tribesmen and tribal elders who were meeting with the top civilian official in the region, Amjad Ali Khan, who escaped unhurt. “This was their pre-emptive to stall a possible military operation,” Mr. Khan said afterward. “But we are not deterred.” The bombers had filled their suicide jackets with bullets, rather than ball bearings, to make them more deadly, leaving many of the wounded in critical condition. Dressed as local tribal policemen, they struck inside the compound of that houses Mr. Khan’s regional headquarters, where the meeting was taking place. One struck near the office of one of Mr. Khan’s deputies; the other set off his explosives when guards tried to overpower him. Among those killed were two journalists from Pakistani television stations. The wounded were taken to hospitals in Peshawar, the provincial capital adjacent to Mohmand. “Mondays are public days and usually we have two thousand to three thousand tribesmen,” said Mr. Khan said. “Thank God, it was prayers’ time. Otherwise the casualty figure would have been much higher.” A mountainous, heavily forested area with easy escape routes to Afghanistan, Mohmand is a strategically important region where the Taliban have managed to organize men and weapons with relative ease. The Pakistani army has been fighting in Mohmand for nearly two years but has so far had little success in clearing the area of militants. An earlier report said that the bombers wanted to target a pro-government peace committee from the Safi region in Mohmand, but Mr. Khan said that only one tribal elder from the area had been killed in the attack. A similar attack earlier this year also targeted government officials and people who were trying to form a lashkar, or local militia, to stand up to the Taliban. . In that attack, a suicide bomber detonated a car bomb, killing more than 60 people.


Digital Designers Rediscover Their Hands

Abstract: GEVER TULLEY has only one qualification for training software designers how to become more creative. He teaches children how to build objects like gravity-powered wooden roller coasters with their hands, at his Tinkering School in Montara, Calif., south of San Francisco. Now Mr. Tulley does the same thing for dozens of adults who are in the front ranks of software design at Adobe, the big software supplier based in San Jose, Calif. In daylong workshops, about 100 Adobe designers wrestle with plastic beads, small electronic displays, Ikea water glasses and tiny sensors to create wacky motion games. Usually, about the only thing these folks touch on the job is a computer mouse. “Some people thought we were crazy to do this,” says Michael Gough, a vice president for design at Adobe. “But for others, the experience has started to inform how they work,” giving them a better appreciation of how customers experience Adobe’s programs. “So we’re going to keep pushing it,” Mr. Gough says. Mr. Tulley’s transformation highlights a little-noticed movement in the world of professional design and engineering: a renewed appreciation for manual labor, or innovating with the aid of human hands. “A lot of people get lost in the world of computer simulation,” says Bill Burnett, executive director of the product design program at Stanford. “You can’t simulate everything.” Using computers to model the physical world has become increasingly common; products as diverse as cars and planes, pharmaceuticals and cellphones are almost entirely conceived, specified and designed on a computer screen. Typically, only when these creations are nearly ready for mass manufacturing are prototypes made — and often not by the people who designed them. Creative designers and engineers are rebelling against their alienation from the physical world. “The hands-on part is for me a critical aspect of understanding how to design,” said Michael Kuniavsky , a consultant in San Francisco who for three years has convened a summer gathering of leading designers, called “Sketching in Hardware.” At last month’s session, at the Rhode Island School of Design, attendees broke into small groups, wielding soldering irons and materials their grandfathers probably knew more about. Such experiences hone instinct and intuition as opposed to logic and cognition, advocates say, and bring the designer closer to art than science. “I’m not sure employers are recognizing the importance of hands-on,” Mr. Kuniavsky says. Mr. Gough began to appreciate the possibilities of Mr. Tulley’s “learn by making” idea for Adobe only after his own children attended the Tinkering School. Part of corporate resistance to experimenting with hands-on activities comes from the difficulty of measuring the value of paying employees to, say, build a go-cart or a radio set while in the office. Yet educators say the benefits, even if intangible, are clear. “All your intelligence isn’t in your brain,” Mr. Burnett says. “You learn through your hands.” At Stanford, the rediscovery of human hands arose partly from the frustration of engineering, architecture and design professors who realized that their best students had never taken apart a bicycle or built a model airplane. For much the same reason, the Massachusetts Institute of Technology offers a class, “How to Make (Almost) Anything,” which emphasizes learning to use physical tools effectively. “Students are desperate for hands-on experience,” says Neil Gershenfeld, who teaches the course. Paradoxically, yearnings to pick up a hammer — or an oscilloscope — may deepen even as young people immerse themselves in simulated worlds. “People spend so much time in digital worlds that it creates an appetite for the physical world,” says Dale Dougherty, an executive at O’Reilly Media, which is based in Sebastopol, Calif., He manages a magazine, Make, that is devoted to building digital-era gear. Fifty years ago, tinkering with gadgets was routine for people drawn to engineering and invention. When personal computers became widespread starting in the 1980s, “we tended to forget the importance of physical senses,” says Richard Sennett, a sociologist at the London School of Economics. Making refinements with your own hands — rather than automatically, as often happens with a computer — means “you have to be extremely self-critical,” says Mr. Sennett, whose book “The Craftsman” (Yale University Press, 2008), examines the importance of “skilled manual labor,” which he believes includes computer programming. EVEN in highly abstract fields, like the design of next-generation electronic circuits, some people believe that hands-on experiences can enhance creativity. “You need your hands to verify experimentally a technology that doesn’t exist,” says Mario Paniccia, director of Intel’s photonics technology lab in Santa Clara, Calif. Building optical switches in silicon materials, for example, requires engineers to test the experimental switches themselves, and to build test equipment, too. Bringing human hands back into the world of digital designers may have profound long-term consequences. Designs could become safer, more user-friendly and even more durable. At the very least, the process of creating things could become a happier one. While working in simulated computer worlds has undeniable appeal, Mr. Tulley says, “the physical act of making things helps the whole person.”

Software
Design
Engineering and Engineers
Adobe Systems Inc


Volunteers Find Relaxation in Building a Sculpture for New York Botanical Garden

Abstract: LAST year, the New York Botanical Garden had a hard time finding volunteers to help assemble its giant bamboo sculpture by the Japanese artist Tetsunori Kawana. This year, however, the project was cast as a soothing balm in light of the grim economic times. “Despite the gloomy headlines of the past week,” garden officials wrote in an e-mail message to news organizations, “some people are finding therapeutic remedy at the New York Botanical Garden.” Sawing pieces of madake bamboo might not seem the obvious way to find serenity amid financial turmoil. But the eight people in attendance on Tuesday at the garden, in the Bronx, did discover that tapping into their inner artist, not to mention their inner manual laborer, was a relaxing way to pass an afternoon. “We just had a lot more people who are willing to spend time consistently,” said Karen Daubmann, the director of the exhibit. Last year, only five volunteers showed up; this year, more than 30 were on hand for the 10-day task of assembling a new bamboo sculpture. The volunteers were helping to turn 350 pieces of bamboo from a farm in Georgia into something resembling a cloud forest. “In the jungle, there’s a lot of trees that go up and the clouds hang pretty low, so you see the stems of the trees and you see a cloud cover,” Ms. Daubmann explained. “That’s kind of like a tropical forest situation.” This year’s crop of volunteers included Sophia Rasul, a 31-year-old graphic designer from Elmhurst, Queens, who was charged with the task of sawing bamboo stalks into pieces. “It’s like volunteering to photocopy at work,” said Ms. Rasul, who was accompanied by her recently retired father, Zubair. “It’s like brainless, and you just get into a rhythm and you daze.” Ms. Rasul cushioned her knees on a blue tarp as she methodically sawed pieces of bamboo. She stopped briefly to glance at the garden employees who were suspended in the bamboo clusters many feet above her, perched in strategically crisscrossed branches and taking their cues from the artist. “They look like pandas,” Ms. Rasul said with a giggle. Volunteers also included Ariel Alvarez, who described himself as a nurse by profession but an artist by nature. Mr. Alvarez, who is 57 and was wearing a navy Mount Sinai T-shirt, had been spending most of his days off from the hospital volunteering at the sculpture. “The kind of work I do is high-stress,” he said, “so, definitely, just doing physical, manual stuff for me can ease a lot of that.” Back in the sawing area, as small piles of bamboo dust slowly collected, Mr. Rasul, who is 71, said he was enjoying the exercise and spending the day with his daughter. “To be very honest,” he admitted, “I don’t understand art.”

Bamboo
Sculpture
Art
Volunteers
New York Botanical Garden
Bronx (NYC)


Hurd’s Departure From H.P. Under S.E.C. Investigation

Abstract: SAN FRANCISCO — Federal investigators have been gathering information about Mark V. Hurd ’s sudden departure from Hewlett-Packard , the latest twist in a five-month story that has put the company in the middle of Silicon Valley’s version of a soap opera. Officials with the Securities and Exchange Commission have started a preliminary investigation that centers on Mr. Hurd’s surprise resignation from H.P. in August, according to a person with knowledge of the matter who asked for anonymity because he was not authorized to discuss the matter publicly. The exact nature of the investigation remains unclear, this person said. An H.P. spokeswoman, Mylene Mangalindan, said, “H.P. is cooperating fully with the S.E.C. on its investigation.” John Nester, a spokesman for the S.E.C., declined to comment. The agency typically does not comment on such matters. Mr. Hurd resigned from H.P. after his personal relationship with a female marketing contractor named Jodie Fisher came to light. H.P.’s directors said that Mr. Hurd had violated the company’s code of conduct with misstatements on expense reports connected to Mr. Hurd’s meetings with Ms. Fisher. Ms. Fisher had presented the H.P. board with a complaint that included allegations of sexual harassment, although the company did not find evidence to support these claims. She also claimed that Mr. Hurd had told her about a meeting he planned to have with an executive from Electronic Data Systems before H.P. had bought the company, this person said. Ms. Fisher did not say she traded on the information. Unless she traded on it, or passed the information on to someone who did, Mr. Hurd’s disclosure, if it occurred, would not constitute insider trading. The H.P board did not disclose the insider information allegation by Ms. Fisher when it announced Mr. Hurd had resigned. An online report in The Wall Street Journal on Monday stated that the S.E.C. had requested information about the E.D.S. matter and Mr. Hurd’s expense reports. It was also examining allegations that Mr. Hurd had destroyed information on a computer. Mr. Hurd had a laptop used by various members of his family from which information had been removed by a professional computer cleaning service, said a person with knowledge of the matter. “Mark acted properly in all respects,” said David Satterfield, a spokesman for Mr. Hurd. “It is understandable that the S.E.C. is looking into the events surrounding Mark’s departure, which was followed by a precipitous drop in the value of H.P.’s stock.” H.P.’s share price plummeted 10 percent when Mr. Hurd resigned and has yet to recover. H.P. and Mr. Hurd have been sparring over the circumstances of his resignation, and Mr. Hurd’s arrival at its rival, Oracle, only increased tension between the two companies. Mr. Hurd is Oracle’s co-president. Mr. Hurd’s supporters have said that H.P.’s board acted rashly when Ms. Fisher made her initial charges. Lawrence J. Ellison, the chief executive of Oracle, went so far as to say H.P.’s board had made one of the worst management decisions in the technology industry’s history by prompting Mr. Hurd to resign. At one point, H.P. sued Mr. Hurd in a bid to disrupt his move to Oracle. The parties settled the matter a short time later. Oracle and H.P., however, have continued to spar in the marketplace, eroding one of the closest partnerships in Silicon Valley. In September, H.P. named Léo Apotheker, a former executive at Oracle’s rival SAP, as its new chief executive. In a recent lawsuit, Oracle tried to connect Mr. Apotheker to a software theft by a unit of SAP. SAP admitted wrongdoing, but it denied Mr. Apotheker had played a role. A jury awarded Oracle $1.3 billion in damages.

Hurd Mark V
Hewlett-Packard Co
Suspensions Dismissals and Resignations
Sexual Harassment
Appointments and Executive Changes
Securities and Exchange Commission


U.S. Tightens Airstrike Policy in Afghanistan

Abstract: KABUL, Afghanistan — The new American commander in Afghanistan said he would sharply restrict the use of airstrikes here, in an effort to reduce the civilian deaths that he said were undermining the American-led mission. In interviews over the past few days, the commander, Gen. Stanley A. McChrystal , said the use of airstrikes during firefights would in most cases be allowed only to prevent American and other coalition troops from being overrun. Even in the cases of active firefights with Taliban forces, he said, airstrikes will be limited if the combat is taking place in populated areas — the very circumstances in which most Afghan civilian deaths have occurred. The restrictions will be especially tight in attacking houses and compounds where insurgents are believed to have taken cover. “Air power contains the seeds of our own destruction if we do not use it responsibly,” General McChrystal told a group of his senior officers during a video conference last week. “We can lose this fight.” “When we shoot into a compound, that should only be for the protection of our forces,” he said. “I want everyone to understand that.” The statements by General McChrystal signaled the latest tightening of the rules for using airstrikes, which, while considered indispensable for protecting troops, have killed hundreds of civilians. They have also angered the Afghan government, which has repeatedly criticized American and NATO forces for not taking enough care with civilian lives. In December, the American commander at the time, Gen. David D. McKiernan, issued guidelines ordering his soldiers to use force that was proportional to the provocation and that minimized the risk of civilian casualties. General McChrystal’s new guidelines follow a deadly episode last month in the Afghan village of Granai, where American airstrikes killed dozens of civilians. The episode highlighted the difficulties facing American officers under fire, as they are forced to balance using lethal force to protect their troops with rules restricting the use of firepower to prevent civilian deaths. The episode, on May 4, began when a large group of Taliban fighters attacked a group of about 200 Afghan soldiers and police officers and American advisers. During the firefight, which began just after noon and carried on into the night, the Americans on the ground called for air support. American fighter jets, and then bombers, came to the scene, dropping a number of 500- and 2,000-pound bombs. The bombs succeeded in ending the attack, but they did much more damage as well. A Pentagon report estimated that at least 26 civilians had been killed in the airstrikes. It concluded that American personnel had made significant errors, including violating procedures, that led to those deaths. Among those errors, the report said, was a failure by the American personnel to discern whether Afghan civilians were in the compound before they attacked. Other credible estimates of civilian deaths in Granai ranged much higher. An investigation by a Kabul-based group, the Afghan Independent Human Rights Commission , said that at least 86 women and children had been killed, and as many as 97 civilians altogether. The Afghan government said 140 civilians had been killed. The Pentagon report did not dispute the conclusions reached by the Afghan Independent Human Rights Commission, and referred to its “balanced, thorough investigation.” The deaths in Granai make up part of the huge rise in civilian casualties that are characterizing the war in Afghanistan. A United Nations report found that the number of Afghan civilians killed in 2008 was 40 percent higher than in 2007. The Taliban and other insurgents caused the majority of the civilian deaths, primarily through suicide bombers and roadside bombs. The changes highlighted by General McChrystal go to the heart of what went wrong in Granai. In that case, there were at least four airstrikes: the first by F-18 fighters and the other three by a B-1B bomber. The report found that it was the last two airstrikes that probably caused the civilian deaths. In those cases, the report found, the bomber’s crew tracked suspected Taliban fighters as they entered a building, and then attacked without determining whether civilians were inside. The report said there were probably civilians inside those buildings when they were destroyed. Under the rules that General McChrystal outlined, those strikes would almost certainly be prohibited. They would be prohibited, the general said, even if it meant letting some Taliban get away. Referring to airstrikes, General McChrystal said, “If it is just to defeat the enemy, then we are not going to do it, even if it means we are going to step away from that firefight and fight another time.” According to the Pentagon report, the B-1B dropped five 500-pound bombs and two 2,000-pound bombs. The initial airstrikes, carried out by four F-18 fighters-bombers, the report said, killed insurgents but no civilians. Ahmad Nader Nadery, the director of the Afghan Independent Human Rights Commission, said Sunday that the American response in Granai was “disproportionate.” And he said he was pleased by the changes outlined by General McChrystal. “We are looking forward to seeing the new guidelines, and actually seeing how they would be translated into practice,” he said. Last September, Defense Secretary Robert M. Gates ordered new rules specifically to defuse tensions over Afghan civilian deaths. During a recent visit to Kabul, Mr. Gates said the American military would quickly apologize and offer compensation to survivors in cases of civilian deaths, even in advance of formal investigations to determine exactly what had happened. “I think the key for us is, on those rare occasions when we do make a mistake, when there is an error, to apologize quickly, to compensate the victims quickly, and then carry out the investigation,” Mr. Gates said after a meeting with President Hamid Karzai.

United States Defense and Military Forces


Colleges Expect Lower Enrollment

Abstract: An annual survey of colleges and universities found that a growing number of schools face declining enrollment and less revenue from tuition. The survey, released by the credit ratings agency Moody’s Investors Service on Thursday, found that nearly half of colleges and universities that responded expected enrollment declines for full-time students, and a third of the schools expected tuition revenue to decline or to grow at less than the rate of inflation. “The cumulative effects of years of depressed family income and net worth, as well as uncertain job prospects for many recent graduates, are combining to soften student market demand at current tuition prices,” Emily Schwarz, a Moody’s analyst and lead author of the report, said in a statement. The growing financial challenges for colleges and universities come as students and graduates have amassed more than $1 trillion in student debt, and many are struggling to pay their bills. Nearly one in six people with an outstanding federal student loan balance is in default, the federal government says. Before the financial crisis of 2008, colleges and universities routinely raised tuition with little effect on the number of prospective students who applied. Some private colleges said that applications actually rose when they increased prices, apparently because families equated higher prices with quality. But that attitude has changed, in part because family incomes have declined. Ms. Schwarz also noted, “Tougher governmental scrutiny of higher education costs and disclosure practices is adding regulatory and political pressure to tuition and revenue from rising at past rates.” In addition, she noted that budget negotiations in Congress could lead to cuts in student aid programs while the share of students that depend on government help continued to rise. At public universities, federal loans finance a median of 40 percent of student charges; at private schools, the median is 21 percent. While nearly half the schools that responded to the survey expected enrollment declines, the changes are expected to be minimal and overall enrollment should remain relatively flat. The enrollment declines are more pronounced among graduate programs; small, lower-rated universities; and public schools in the Northeast and Midwest, where the number of high school seniors is declining. By comparison, about 15 percent of the schools that responded to the survey in the fall of 2010 reported enrollment declines. Image Daniel J. Hurley, director of state relations and policy analysis at the American Association of State Colleges and Universities, said he was not surprised by the findings. He said that after years of cuts, he expected an uptick in state financing for public colleges and universities in the coming year. In addition, he said states had become more strategic in how they finance higher education, offering incentives for schools that provide more graduates in critical fields, like engineering. Tony Pals, spokesman for the National Association of Independent Colleges and Universities, which represents nonprofit private schools, said the report confirmed the tough realities of higher education. “Economic, demographic, marketplace and technological trends are converging to cause an unprecedented time of change for higher education. The new reality is that colleges are expecting to have to do more with less for years to come,” he said in an e-mail. But Mr. Pals noted that his members had a history of resiliency and innovation. “We are seeing a jump in three-year bachelor’s degree programs, so-called no-frills satellite campuses and academic partnerships between four-year private colleges and local community colleges.” Over all, 18 percent of private universities and 15 percent of public schools in the survey projected a decline in net tuition revenue for fiscal 2013. A much larger share, one-third, said net tuition revenue would decline or grow by less than 2 percent. “Such weak revenue growth often means a college cannot afford salary increases or new program investments unless it cuts spending on staff and existing programs,” the Moody’s report said. By comparison, in fiscal 2008, only 11 percent of private schools and 9 percent of public schools did not increase tuition revenue by 2 percent or more. Since the financial crisis, tuition at public schools has grown more rapidly than private ones, largely to offset sharp costs in state financing. Public universities have responded by recruiting more out-of-state and international students, who can pay more than in-state students. Private schools have provided more and more financial aid to students to offset their higher price, a trend that many view as unsustainable. Moody’s has a more upbeat view of the most elite private schools and flagship public universities, which continue to have strong student demand and, in many instances, many other sources of revenue. The Moody’s survey included 165 nonprofit private universities and 127 four-year public universities.

College
Tuition payments
Endowments
Moody's