Tuesday, February 20, 2007

An Overview of the Sub-Prime Mortgage Market

Editor's note: I am moving over to post at the other blog(also see new articles below).
Feb 20,2007

By Bonddad

I finally broke down and violated my "I refuse to pay for anything on the internet" policy. OK -- I bought a subscription to the Online version of the Wall Street Journal and Barron's (not exactly the most exciting material). But, outside of the editorial page the WSJ does some great economic writing. Below is an excerpt from this story (subscription required) that provides an excellent overview of the sup-prime real estate market.

Why did subprime loans get so popular? Subprime loans made up 12.75% of the $10.2 trillion mortgage market in 2006, up from 8.5% in 2001, according to Inside Mortgage Finance. The homeownership rate has grown to 69% from 65% over the past decade, about half of which came from subprime lending, according to a study by the Federal Reserve Bank of Chicago.

First, note the big increase in sub-prime loans. Over $1 trillion in sub-prime loans are out on the market right now. That's 7.6% of total US GDP.

Let's stop right there because these points raise a really interesting and difficult policy issue. I think everyone believes home ownership is a good thing. However, about half of the increase over the last few years came from sub-prime mortgage lending. Were these borrowers really able to purchase a home?

As this chart indicates, the later sub-prime loans (starting in say mid 2005) may not have been the most prudent.

Photobucket - Video and Image Hosting

Seeking new clients at a time when home values were soaring in many markets, emboldened lenders raced to offer easy credit with exotic loans, such as "piggyback" loans requiring no down payment and "no-doc" loans that let borrowers state their incomes without supporting documentation.

The increased sophistication of loan products also raises very tricky policy issues. Were consumers aware of all the important details? Did lenders provide all the relevant facts? The answer is probably somewhere in between the consumer's and the lender's areas.

Recent Senate hearings on Predatory lending indicates there are some problems within the industry.

Subprime lenders charge higher interest rates -- sometimes four percentage points more than on loans to more credit-worthy borrowers. Investors, eager for bigger returns, have fueled demand by purchasing securities that are backed by these mortgages. That has enabled many mortgage originators to turn around and sell their loans after making them, enabling more loans and reducing their risk.

Here's a short version of how this works. After a lender makes a loan, be sells the loan to another finance company. that company then packages the loan with similar loans (loans that have the same maturity, interest rate etc..) in a pool. That pool is then sold to investment concerns -- mutual funds, insurance companies etc.... Because the sub-prime mortgages have a higher interest rate, investors demanded more. As demand increased, lenders make more loans, and the cycle continued.

Now this pooling of mortgages -- if done properly -- does help to diversify risk. For example, if there is one bad loan grouped with 10 good loans, the bad loan will have a smaller impact on the pool. However, if there are 10 loans in a pool and 7 are bad, then the whole pool is in trouble. In other words, the spreading of risk only works if the risk is actually spread.

But once home prices started dropping, some borrowers began defaulting on their mortgages. One study by the Center for Responsible Lending predicts that as many as one out of every five subprime borrowers who took out reduced payment or low-documentation loans between 1998 and mid-2006 could lose their homes.

As the chart above illustrates, foreclosures for ARMs are increasing at high rates. The WSJ article noted:

Foreclosure rates on "subprime" loans -- those made to borrowers with poor credit records -- more than doubled last year from 2005, according to a UBS report. Some firms that specialized in those loans now face large losses or even bankruptcy.

According to the Implode-o-meter website, 23 lenders have now gone "kaput".

There are a few other interesting facts at the end of the article:

• Nearly 1.2 million foreclosure filings were reported last year, a 42% rise from 2005. That is a rate of one in every 92 U.S. households.

• Colorado, Georgia and Nevada had the nation's highest foreclosure rates last year, according to RealtyTrac. Among the top 100 metropolitan areas, Detroit, Atlanta and Indianapolis topped the list.

About 80% of subprime mortgages today are adjustable-rate mortgages, or ARMs, that have been nicknamed "exploding ARMs" because they have low fixed-interest payments in their first few years but then usually adjust to higher interest payments.

• Creative new subprime loans -- "piggyback," "interest-only," and "no-doc" loans, among others -- accounted for 47% of total loans issued last year. At the start of the decade, they were less than 2% of total mortgage loans.

Borrowers have never been more leveraged. Loan-to-value ratios, the loan amount expressed as a percent of the property value, have grown to 86.5% last year from 78% in 2000.

The facts -- as we know them now -- indicate later made sub-prime loans probably shouldn't have been made. The underwriting standards simply weren't strong enough and the borrowers simply didn't have the credit quality for those loans to be a considered good. Hopefully the spreading of default risk will minimize the problems these defaults may cause. But we'll have to wait and see for that to play out.

For economic and market commentary and analysis, go to the Bonddad Blog

The hate that (used to) dare not speak its name

Saturday, February 17, 2007

In the last six months, we’ve made enormous advances in understanding the unwholesome hold that Zionists have over the American government, and I am optimistic that the truth will continue to come out (six months from now, people behind the curve are going to look quite silly). Just recently, those who were brave enough to point out the massive influence of the Lobby weren’t just considered to be mistaken, or even crazy. The issue was literally unspeakable (at least in polite society). Zionism was the hate that dare not speak its name. The Zionists don’t yet realize that they lost the battle and the war once these issues became debatable.

The United States is currently under a Zionist Occupation Government. Still don’t believe me? This past week the Democrats started to exercise their newly acquired power with a hearing of the Middle East Subcommittee of the House Foreign Affairs Committee on the ‘next steps in the Israeli-Palestinian Peace Process.’ Do you think they invited Jimmy Carter? Bishop Tutu? Nelson Mandela? An neutral expert on the Middle East? A Palestinian? Nope. The three invitees – the only three invitees – were (drum roll, please):

  1. Daniel Pipes (who, it is claimed, was forced on the committee as a witness by the Republicans);
  2. Martin Indyk; and
  3. David Makovsky.

Makovsky works for the ultra-Zionists at WINEP (the Lobby’s think tank). Indyk, the original founder of WINEP and a former research director at AIPAC, is the Director of the Saban Center for Middle East Policy at the Brookings Institution (Saban is the Israeli who is biggest donor to the Democrats and thus the leading member of the Jewish Billionaires Club). I really don’t need to describe Daniel “brown-skinned peoples cooking strange foods and maintaining different standards of hygiene” Pipes. Indyck comes across as moderate but non-committal, Makovsky as a complete hard-ass, and Pipes as absolutely, over-the-top, insane. I imagine the three of them arriving at the hearing arm-in-arm, deftly performing Jewish folk dances, singing Hava Nagila, waving the Israeli flag, and sporting their medals from Israeli for service to Zionist colonialism. For guys like these, a ‘debate’ about the Palestinians consists of a discussion of the appropriate caliber of ammunition to use to shoot Palestinian children in the face. It is not unreasonable to wonder why all the witnesses are on one side of the issue (and for similar shenanigans – more of the ‘diet plan’ – from the same bunch of politicians, see here). Is Congress just the New Knesset?

From the comments to the excellent note by Daniel Levy linked to above (and see also here), I select that of madison1776 (emphasis throughout in red):

“So the Jewish Committee chair Tom Lantos (Likud-CA) and the Subcommittee chair Gary Ackerman (Likud-NY) will hold a hearing on the I-P conflict with David Makovsky (a former US citizen now an Israeli who works for the AIPAC cutout, the Washington Institute for Near East Policy), Martin Indyk (an Australian brought to the US by indicted AIPAC spy, Steve Rosen, to work as his assistant at AIPAC and somehow became a US citizen and our ambassador to (not from) Israel) and Daniel Pipes (National Socialist-Philadelphia).
Thar's it! No Arab-Americans. No Palestinians. Not even one goddam gentile.
Is this a joke.
AND by the way, the staff director of the committee is David Makovsky's brother, Alan Makovsky.
I am not making this up

and Mark Weinberg:

“This in nuts. As a Jew and a Zionist, I believe that this type of arrogance – using the US congress as a venue to promote right-wing zionist propaganda – is going to blow up in all our faces someday.
How dare they? Does it ever occur to Lantos or Ackerman that they are Americans (sort of, in Lantos's case) and should act like it.
This is truly disgusting. Read ‘The Truth About Camp David’ by Clanton Swisher to find out whose these characters are.
God, as a Jew, this is just embarrassing. It's like a bunch of Catholics holding hearings on birth control with the witnesses being Father Mulcahy, Msgr. Herlihy, and Cardinal O'Connor.
Madison 1776 is mad. The real Madison would puke.”

I really have to wonder what evidence would be required to prove the existence of the ZOG to those hold-outs who still refuse to believe it.

Framing the Presidency


[posted online on February 19, 2007]

What kind of executive branch did America's constitutional framers have in mind? It's a question with which federal courts are now busy wrestling. And the quality of liberty American citizens enjoy very much depends on their answers.

Today, President Bush's lawyers claim unlimited power to seize, indefinitely and without charges, individuals the Administration deems "enemy combatants." In two separate appellate court cases--one of which, Omar v. Harvey was argued earlier this month, the President's lawyers made the following, remarkable claim: When international entanglements are involved, signified in the Omar case by a United Nationals Security Council resolution, US officials can detain a US citizen, indefinitely. Last week, the DC Court of Appeals rightly--and squarely--rejected this legally specious claim. It remains to be seen whether the DC Court of Appeals will reject a similar claim in the case of Munaf v. Harvey.

(In Omar v. Harvey, a US citizen, Shawqi Omar, was arrested by US personnel at his home in Baghdad in October 2004. After Omar was arrested, he was taken to a US prison in Baghdad, interrogated and subjected to electric shocks. He remains in US custody, rotated through a series of prisons in Iraq. In Munaf v. Harvey, another US citizen, Mohammed Munaf, now a prisoner at Camp Cropper in Iraq, is claiming an unfair trial in connection with his death sentence imposed by an Iraqi court for his role in the kidnapping of three Romanian journalists, for whom he was acting as translator.)

The Framers had well-articulated trouble with the notion of freewheeling executive power. The Presidency they created, and the institution that is celebrated today, broke decisively from European traditions of monarchical absolutism. Indeed the English tradition of government, upon which ours is modeled, decisively rejected the King's claim to stand above the law; that was in 1688, almost a century before the Anmerican Revolution.

Today, along with all the other US presidents, we remember two great leaders: George Washington and Abraham Lincoln. Both men understood and practiced the wisdom of executive restraint even in times of crisis. They understood that power flows from righteousness not from soldier's steel. The measure of a nation, as much as the measure of a man, is the ability to hold true under pressure to universal truths of decency and humility.

Executive authority strains most vigorously against its constitutional restraints in times of war and in matters of human liberty. Both Washington and Lincoln faced precisely these dilemmas, and resolved them without compromising America's dignity or reputation.

In the Revolutionary War, British forces acted with rank disregard for the well-being of their American prisoners, leaving literally hundreds to die under wretched conditions in prison ships off New York's harbors.

Yet General Washington would not descend to their level. "Treat them with humanity," said Washington in 1776, of British prisoned taken after the Battle of Trenton, "and let them have no reason to complain of our copying the brutal ways of the British Army in their treatment of our unfortunate brethren."

The Bush Administration's current effort to vanquish Al Qaeda and the menace of terrorism rests on America's capacity to maintain the good faith and trust of a globalized world. When our safety depends on Uzbekistan's willingness to secure loose nukes and Indonesia's alacrity in shutting down jihadist websites, international cooperation is at a premium. To act as though the international law of human rights has no application to American action, by contrast, is a surefire way to extinguish that cooperation.

The Civil War era provides equally important lessonsn for our own times. While Lincoln famously decided in April 1861 to suspend the Great Writ of Habeas Corpus, which is the Constitution's committed remedy for unlawful executive detention, he did not purport to stand above the law. To the contrary, Lincoln acted only in the face of imminent and undeniable disaster, with Confederate forces looming on Washington from Virginia, and an angry Baltimore mob attacking Union troop deployments.

Yet as soon as crisis receded, Lincoln returned to Congress to seek legislative approval for the unlawful detentions. Lincoln eloquently pleaded his own case, candidly revealing the causes and dimensions of the moment's need. And Congress duly authorized what, at the time, had been unlawful executive action.

The contrasts to today could not be more stark. The emergency powers the President claims have no expiration date. Unlike Lincoln, President Bush shows no readiness to be candid to Congress. Executive detention operations from Guantánamo to Italy to Iraq have fostered the contempt of the world community. Germany and Italy have issued warrants against CIA agents due to their involvement in the illicit kidnapping of terrorism suspects. Just this week, Argentina's president frankly told visiting Attorney General Alberto Gonzales that the President's torture policies were wholly unacceptable.

When the nation's leading law enforcement official becomes persona non grata around the world, we have cause for concern. Thomas Jefferson said it best in the Declaration of Independence: The fledgling nation, Jefferson noted, had to maintain the "decent respect for the opinions of mankind.

Above all, it is the President, in his respect for the due process of law and the inherent dignity of citizens and non-citizens alike, who must maintain this respect. Today more than other any calendar date is a chance to reflect on whether in the Bush Administration, this trust continues to be fulfilled.

The Real Cost of War

By Mark Boal

Looking back, Adam Koroll was not surprised when he heard the news that Jacob Burgoyne had stabbed a fellow soldier to death. Private Burgoyne predicted he would do something like that during their very first meeting at the Army hospital in Kuwait. Koroll, a medic, listened intently as Burgoyne, his patient, explained himself: After what he had seen and done in Iraq, he had little to lose and even less control over his reactions. He already felt, he said, like "a murderer in his heart." Why not kill again?

Koroll, 23, a National Guardsman in the sixth month of his first tour, was working as a mental health nurse. He recalls the young desert-tanned soldier, fresh from the fighting on the other side of the border, slumped on a rickety bed in a drab room at the 865th Combat Support Hospital. At first glance Burgoyne appeared to be in outstanding physical shape, a six-foot blond warrior with a muscular build and a buzz cut -- he was what the Army calls a trigger puller. But Private Burgoyne was hunched over, holding his head in his hands; tears were streaming down his lean, hollow cheeks as he spoke.

"I'm going to do a quick check of your vitals," Koroll told him. He ran his stethoscope over Burgoyne's chest and back, listening for abnormalities in his heart rate. The medic tried to make small talk as he worked, but his patient's behavior disturbs him to this day. Burgoyne would crack a joke and laugh, and an instant later his face would tighten into a snarl. He'd rant about killing women and children. Tears of remorse would pool in his eyes. Then he'd come back to another nasty joke.

But no matter what shocking act of violence Burgoyne described, his eyes remained flat -- "dull and vacant," Koroll recalls -- even when they were wet from crying.

Post-traumatic stress
disorder is the most common
psychological injury of war.

Burgoyne had been brought into the hospital by one of the other soldiers in his unit after he had been found doubled over in his bunk, having tried to kill himself with an overdose of antidepressants. The attempted suicide, plus the lack of expression in his eyes and his "rapid cycling behavior" from rage to grief and back to rage, were the symptoms of a dangerously ill man. Koroll sensed he was looking at a severe case of post-traumatic stress disorder, the clinical term for someone who continues to experience trauma long after the event has passed. This reexperiencing of the original event can take the form of insomnia, flashbacks, paranoia, panic attacks, emotional numbness and violent outbursts.

These symptoms are treatable, Koroll knew. If he could transfer Burgoyne to a safe, comforting environment, the young man might be restored over time to full health and capacity. That meant getting the soldier out of the dusty chaos of the Kuwaiti Army base, where he was temporarily stationed after a bloody tour in Iraq, and sending him to a hospital in Germany where he could rest on clean white sheets in a quiet room in a first-class psychiatric facility.

It was Koroll's job as the on-duty nurse to make the decision about whether to evacuate Burgoyne. He was ready to do it based on what he'd seen. But he needed to ask one final question before he could order the evac in good conscience.

"So," Koroll said, "right now, at this moment, do you have thoughts of harming yourself or others?"

Burgoyne, he remembers, looked up through those flat, vacant eyes and said quite clearly, "Yeah. Yeah, I do."

Koroll picked up the soldier's chart and wrote in a clear hand, "Evac."

photo: Thomas Dworzak/Magnumphotos

1 2 3 4 5 6 7 8 9 10 NEXT »

ADMINISTRATION The Libby-Cheney Connection

The Libby-Cheney Connection
Libby Testimony Raises More Questions About Cheney's Role In The CIA Leak Case

By Murray Waas, National Journal
© National Journal Group Inc.
Monday, Feb. 19, 2007

The CIA Leak Investigation

Previous coverage from National Journal:
Cheney's Call (2/15/07)
Inside The Grand Jury (1/12/07)
Bush Blocked DOJ Probe (7/18/06)

More related stories

In the fall of 2003, as a federal criminal probe was just getting underway to determine who leaked the identity of CIA officer Valerie Plame to the media, I. Lewis "Scooter" Libby, the then-chief of staff to Vice President Dick Cheney, sought out Cheney to explain to his boss his side of the story.

The explanation that Libby offered Cheney that day was virtually identical to one that Libby later told the FBI and testified to before a federal grand jury: Libby said he had only passed along to reporters unsubstantiated gossip about Plame that he had heard from NBC bureau chief Tim Russert.

The grand jury concluded that the account was a cover story to conceal the role of Libby and other White House officials in leaking information about Plame to the press, and indicted him on five felony counts of making false statements, perjury, and obstruction of justice.

At the time that Libby offered his explanation to Cheney, the vice president already had reason to know that Libby's account to him was untrue, according to sources familiar with still-secret grand jury testimony and evidence in the CIA leak probe, as well as testimony made public during Libby's trial over the past three weeks in federal court.

Yet, according to Libby's own grand jury testimony, which was made public during his trial in federal court, Cheney did nothing to discourage Libby from telling that story to the FBI and the federal grand jury. Moreover, Cheney encouraged then-White House press secretary Scott McClellan to publicly defend Libby, according to other testimony and evidence made public during Libby's trial.

If Libby is found guilty, investigators are likely to probe further to determine if Libby devised what they consider a cover story in an effort to shield Cheney.

If Libby is found guilty, investigators are likely to probe further to determine if Libby devised what they consider a cover story in an effort to shield Cheney. They want to know whether Cheney might have known about the leaks ahead of time or had even encouraged Libby to provide information to reporters about Plame's CIA status, the same sources said.

Special prosecutor Patrick Fitzgerald and defense attorneys for Libby are expected to begin their closing arguments in the case as early as Tuesday morning. Defense attorneys for Libby had said for months that they were going to call Cheney as a defense witness, but informed Federal District Court Judge Reggie Walton, who has presided over the Libby trial, at the last minute that they were not going to call him after all.

Had Cheney testified, he would have been questioned about whether he encouraged, or had knowledge of, the leaking of Plame's CIA status. Sources close to the case say that Cheney would have also been sharply questioned as to why, when presented by Libby with what prosecutors regarded as a cover story to explain away Libby's role in the leak, Cheney did nothing to discourage him.

Dan Richman, a former federal prosecutor for the Southern District of New York and a professor at Fordham Law School, said the significance of Cheney's reaction to Libby's version of events depends on exactly what Libby told him and what Cheney knew at the time. "Only Cheney and Libby know the import of their conversation, and as is often the case, each could have even come away with a different impression of what was meant" by what the other said.

"If Cheney was merely showing surprise and interest at what Libby indicating to him he was going to tell investigators, then the vice president is innocent in the exchange," Richman said. "But if he had reason to believe, or personal knowledge, that what Libby was planning to say was untrue then there is good reason to view Cheney's conduct in an entirely different light -- an obstruction interpretation."

Because nobody else was present during the discussion between the two men, and thus only the two of them know what was said, it is difficult to interpret the intent of either man, most particularly Cheney, Richman said. "One of the challenges for prosecutors, jurors, and historians is trying to recapture the signals incorporated in gestures and words between two close associates," Richman said.

Attorneys for Libby say he is innocent of all of he charges and that anything he told the FBI and the federal grand jury was either true or represented his best recollection. A spokesperson for Cheney declined comment because the issues raised in this article are currently "a matter before the courts."

Libby's Testimony
Libby testified to a federal grand jury that he sought out Cheney as the federal leak probe was getting underway to protest his innocence and to complain that the White House was not aggressively defending him against allegations that he had leaked Plame's identity.

Libby testified to a federal grand jury that he told Cheney shortly after the CIA leak probe became public that even if he, Libby, had told reporters that Plame worked for the CIA, he was only repeating unsubstantiated gossip that he had heard from NBC's Russert on July 10, 2003. But notes of Libby's entered into evidence during his trial indicate that Libby learned that Plame was a CIA officer from Cheney during a June 12, 2003 telephone conversation, almost a month before Libby spoke with Russert. In addition, a senior aide to Cheney testified during Libby's trial that, after learning herself from a senior CIA official that Plame worked for the CIA, she shared that information with both Cheney and Libby during a meeting she had with both men. And Cheney himself told the special prosecutor that he regularly shared any information he learned about Plame with Libby as well, according to people familiar with Cheney's interview with the special prosecutor.

Notwithstanding this, Libby later told very much the very same story he told Cheney during two FBI interviews in the fall of 2003 and later during two appearances before the federal grand jury hearing evidence in the CIA leak case on March 5, 2004 and March, 24, 2004.

Libby's assertion that the information came from Russert and was only gossip was central to his claims that he did nothing wrong because if he instead had learned the information from government officials he might be in trouble for leaking classified information.

At Libby's trial, several government witnesses -- among them an under secretary of State, a senior CIA official, Libby's CIA briefing officer, and a senior aide to Cheney -- said they informed Libby that Plame was a CIA officer.

Testifying as a prosecution witness, Russert said that although he and Libby did indeed speak on July 10, 2003, they never discussed Plame during their conversation.

Libby is also alleged by prosecutors to have lied to the FBI and a federal grand jury in claiming that when he mentioned Plame's name to two reporters -- Matthew Cooper, then of Time magazine, and Judith Miller, then of The New York Times -- he was careful to point out to them he was simply repeating rumors that he had heard from Russert. Cooper and Miller testified that Libby stated no such qualifications to them in telling them about Plame.

Libby also testified to the federal grand jury that when Russert purportedly told him about Plame, he had absolutely no memory of having heard the information earlier from anyone else, including Cheney, and was thus "taken aback" when Russert told him. In his opening argument, Fitzgerald, referring to Libby's conversation with Russert on July 10, said: "You can't be startled about something on Thursday [July 10] that you told other people about on Monday [July 7] and Tuesday [July 8]."

Former White House press secretary Ari Fleischer testified as a prosecution witness that on July 7, 2003, Libby told Fleischer, "Ambassador Wilson was sent by his wife. His wife works for the CIA." Fleischer testified that Libby referred to Wilson's wife by her maiden name, Valerie Plame. "He added it was hush-hush, on the Q.T., and that most people didn't know it," Fleischer said Libby told him.

Libby and other White House officials leaked information about Plame's identity to the media in an effort to discredit her husband, former ambassador Joseph C. Wilson IV, a critic of the Bush administration's war policy.

Wilson had traveled to Niger in February 2002 on a CIA-sponsored mission to investigate allegations that Saddam Hussein's regime had attempted to procure weapons-grade uranium from the African nation. Wilson reported to the CIA that from what he could learn the allegations were almost certainly untrue.

In a July 6, 2003, op-ed in The New York Times, Wilson charged that the Bush administration had "twisted" intelligence information when it cited the alleged Niger-Iraq connection in the president's State of Union address earlier that year.

Cheney cut Wilson's op-ed out of the newspaper and scribbled in the margins: "Have they done this sort of thing before? Send an Amb[assador] to answer a question? Do we ordinarily send people out pro bono to work for us? Or did his wife send him on a junket?"

On the very next day, on July 7, 2003, Libby told Fleischer about Plame, and the day after that, on July 8, he leaked information to the Times' Miller about Plame, according to Miller's testimony.

On July 12, 2003, as Cheney and Libby flew back to Washington D.C. aboard Air Force Two from Norfolk, Va. after attending a ceremony commissioning the U.S.S. Ronald Reagan, they strategized once again as how best to discredit Wilson. During an interview with the FBI and later during an appearance before a federal grand jury, Libby said it was possible that he and Cheney may have discussed leaking information about Plame to reporters. But Libby had claimed that neither he nor Cheney would have been doing anything wrong because the only thing either of them knew about Plame was what Libby had purportedly heard from Russert.

After arriving back in Washington, according to Cooper's and Miller's testimony at Libby's trial, Libby spoke to both of them by telephone and confirmed to them that Plame worked for the CIA and may have played a role in sending her husband to Niger.

Two days later, on July 14, 2003, a column by Robert Novak was published outing Plame as a CIA "operative." Novak testified at Libby's trial that he learned about Plame from then-Deputy Secretary of State Richard Armitage and White House aide Karl Rove.

Libby Talks to Cheney
In the fall of 2003, when it was disclosed that the Justice Department had begun a criminal probe as to who leaked Plame's identity to reporters, Libby sought out Cheney to complain that while then-White House spokesperson McClellan was making public statements that Rove had not been a source of the leak, McClellan refused to do the same on Libby's behalf.

Asked by Fitzgerald whether during that conversation Libby might have in fact told Cheney that he had spoken to reporters about Plame, Libby answered: "I think I did. Let me bring you back to that period. I think I did in that there was a conversation I had with the vice president when all this started coming out and it was this issue as to, you now, who spoke to Novak.

"I told the vice- you know, there was- the president said anybody who knows anything should come forward or something like that... I went to the vice president and said, you know, I was not the person who talked to Novak.

"And he [said] something like, 'I know that.' And I said, you know, 'I learned this from Tim Russert.' And he sort of tilted his head to the side a little bit and then I may have in that conversation said, I talked to other -- I talked to people about it on the weekend," Libby said in apparent reference to his conversations with Cooper and Miller.

Fitzgerald then pressed Libby: "What did you understand from his gesture or reaction in tilting his head?"

Libby responded: "That the Tim Russert part caught his attention. You know, that he- he reacted as if he didn't know about the Tim Russert thing or he was rehearing it, or reconsidering it or something like that... New, new sort of information. Not something he had been thinking about."

Fitzgerald asked: "And did he at any time tell you, 'Well, you didn't learn it from Tim Russert, you learned it from me? Back in June you and I talked about the wife working at the CIA?'"

"No," Libby responded.

"Did he indicate any concern that you had done anything wrong by telling reporters what you had learned?" Fitzgerald asked.

"No," Libby responded.

Later, Fitzgerald asked Libby: "Did you tell the vice president that you had actually spoken to Time magazine and Mr. Cooper and had discussed Wilson's wife's work with Mr. Cooper?

Libby answered: "I think this conversation was about whether -- the leak to Novak. I don't know that I discussed that with the vice president. I did tell him, of course, that we had spoken to the people who he had told us to speak to on the weekend. I think at some point I told him that."

Libby had been frustrated that in recent days that McClellan had made statements saying that Rove had nothing to do with the leak of Plame's identity, but refused to do so for Libby as well. Libby then pressed his case to then-White House chief of staff Andy Card, but to no avail himself until Cheney intervened.

An agitated Cheney wrote in a note to himself: "Not going to protect one staffer + sacrifice the guy who was asked to stick his neck in the meat grinder because of the incompetence of others." Cheney also scribbled: "Must happen today."

Some time later -- Libby wasn't able to provide the grand jury with the exact date -- he went back to Cheney to tell him that he discovered a note indicating that he had first learned from Cheney, not Russert, that Plame was a CIA officer.

Libby told the grand jury: "In the course of the document production, the FBI sent us a request for documents, or Justice Department, I'm not sure technically. In the course of that document production I came across the note that is dated on or about June 12, and the note... shows that I hadn't first learned it from Russert, although that was my memory, I had first learned it when he said it to me.

"And so I went back to see him and said, you know, I told you something wrong before. It turns out that I have a note that I had heard, heard about this earlier from you and I just -- you know, I didn't want to leave you with the wrong... the wrong statement that I heard about it from Tim Russert. In fact, I had heard about it earlier, but I had forgotten it."

Asked by Fitzgerald what Cheney's reaction was, Libby responded by saying that Cheney hardly had anything at all:

"He didn't say much. You know, he said something about, 'From me?' something like that, and tilted his head, something he does commonly, and that was that."

Murray Waas

Get more coverage of pre-war intelligence and the CIA leak investigation.

US 'Iran attack plans' revealed

US contingency plans for air strikes on Iran extend beyond nuclear sites and include most of the country's military infrastructure, the BBC has learned.

It is understood that any such attack - if ordered - would target Iranian air bases, naval bases, missile facilities and command-and-control centres.

The US insists it is not planning to attack, and is trying to persuade Tehran to stop uranium enrichment.

The UN has urged Iran to stop the programme or face economic sanctions.

But diplomatic sources have told the BBC that as a fallback plan, senior officials at Central Command in Florida have already selected their target sets inside Iran.

That list includes Iran's uranium enrichment plant at Natanz. Facilities at Isfahan, Arak and Bushehr are also on the target list, the sources say.

Two triggers

BBC security correspondent Frank Gardner says the trigger for such an attack reportedly includes any confirmation that Iran was developing a nuclear weapon - which it denies.

Alternatively, our correspondent adds, a high-casualty attack on US forces in neighbouring Iraq could also trigger a bombing campaign if it were traced directly back to Tehran.

Long range B2 stealth bombers would drop so-called "bunker-busting" bombs in an effort to penetrate the Natanz site, which is buried some 25m (27 yards) underground.

The BBC's Tehran correspondent Frances Harrison says the news that there are now two possible triggers for an attack is a concern to Iranians.

Authorities insist there is no cause for alarm but ordinary people are now becoming a little worried, she says.


Earlier this month US officers in Iraq said they had evidence Iran was providing weapons to Iraqi Shia militias. However the most senior US military officer later cast doubt on this, saying that they only had proof that weapons "made in Iran" were being used in Iraq.

Gen Peter Pace, chairman of the joint chiefs of staff, said he did not know that the Iranian government "clearly knows or is complicit" in this.

At the time, Iranian President Mahmoud Ahmadinejad said the accusations were "excuses to prolong the stay" of US forces in Iraq.

Middle East analysts have recently voiced their fears of catastrophic consequences for any such US attack on Iran.

Britain's previous ambassador to Tehran, Sir Richard Dalton, told the BBC it would backfire badly by probably encouraging the Iranian government to develop a nuclear weapon in the long term.

Last year Iran resumed uranium enrichment - a process that can make fuel for power stations or, if greatly enriched, material for a nuclear bomb.

Tehran insists its programme is for civil use only, but Western countries suspect Iran is trying to build nuclear weapons.

The UN Security Council has called on Iran to suspend its enrichment of uranium by 21 February.

If it does not, and if the International Atomic Energy Agency confirms this, the resolution says that further economic sanctions will be considered.

Life in Baghdad's Green Zone

The project
Second exclusive extract from Rajiv Chandrasekaran's book on life in Baghdad's Green Zone.

Iran sets condition to halt nuke program ; Ahmadinejad rejects UN nuclear deadline ; ElBaradei interview


FT interview: Mohamed ElBaradei at Financial Times, Feb 19


Note that the U.S. may respond with a strike on Iran... today. Have you practised bending over and kissing your *** goodbye?

By ALI AKBAR DAREINI, Associated Press Writer 52 minutes ago

President Mahmoud Ahmadinejad said Tuesday that Iran would only halt its uranium enrichment program and return to negotiations if other Western nations do the same.

Ahmadinejad told a crowd of thousands in northern Iran one day ahead of a U.N. Security Council deadline that it was no problem for his country to stop, but that "fair talks" demanded a similar gesture from the West.

"That ... we shut down our nuclear fuel cycle program to let talks begin. It's no problem. But justice demands that those who want to hold talks with us shut down their nuclear fuel cycle program too. Then, we can hold dialogue under a fair atmosphere," Ahmadinejad said.

The Security Council has set Wednesday as a deadline for Iran to stop uranium enrichment or face further economic sanctions.

Ahmadinejad spoke in a far more conciliatory tone than the one he usually adopts, avoiding fiery denunciations of the West with a call for talks.

"We are for talks but they have to be fair negotiations. That means, both sides hold talks under equal conditions," he said.

He added, however, that it was unacceptable for countries to demand that Iran stop its nuclear activities without reciprocity.

"We say how is it that your (nuclear fuel) production facilities work 24 hours a day, but you feel threatened by our newly established complex and we need to shut it down for talks," he asked.

Iran has long insisted that it will not stop its nuclear activities as a condition for negotiations to start.

"The condition they set for talks is a condition that deprives us of our rights," Ahmadinejad said of the United States and its Western allies. "We have never been after confrontation and tension. We have always been for dialogue but dialogue under fair conditions."

On Dec. 23 the Security Council agreed to impose limited sanctions against Iran and gave the country 60 days to halt enrichment or face additional measures.

At the time, Iran rejected the resolution as "illegal" and said it would not give up its right under the Nuclear Nonproliferation Treaty to enrich uranium and produce nuclear fuel.

The United States and several of its Western allies believe that Iran is using its nuclear program to produce an atomic weapon — charges Iran denies, saying its aim is to generate electricity.

Enriched to a low level, uranium is used to produce nuclear fuel but further enrichment makes it suitable for use in building an atomic bomb.

Ahmadinejad said Iran would not give in to coercion and warned the United States and its allies they will fail to force it into give up its nuclear program.

"If you want to speak from the position of power and make use of the oppressing leverage of some international institutions, you have to know the you will fail against the unity and resistance of the Iranian nation," he said.

Russia's nuclear agency spokesman warned Tuesday that Iranian delays in payments for the construction of a Russian-built nuclear plant would push back its launch date and uranium fuel deliveries from Russia.

A top nuclear official in Iran on Monday rejected Russian claims that Tehran had been dragging its feet on payments, and accused Moscow of trying to delay the launch of the reactor.

But Russia's Federal Nuclear Power Agency spokesman Sergei Novikov insisted Tuesday that Iran has made no payments this month, and paid only a quarter of what was due last month.

Novikov told The Associated Press that Iran was to pay Russia $25 million a month for construction works at the Bushehr nuclear power plant in southern Iran, adding that Iran has continuously dragged its feet on meeting the obligations.


Associated Press Writer Vladimir Isachenkov contributed to this report from Moscow.

Trial Spotlights Cheney’s Power as an Infighter

Closing Arguments Set in CIA Leak Case
February 20, 2007

WASHINGTON, Feb. 19 — A picture taking shape from hours of testimony and reams of documents in the trial of I. Lewis Libby Jr. shatters any notion that the White House was operating as a model of cohesion throughout President Bush’s first term.

The trial against Mr. Libby has centered on a narrow case of perjury, with days of sparring between the defense and prosecution lawyers over the numbing details of three-year-old conversations between White House officials and journalists. But a close reading of the testimony and evidence in the case is more revelatory, bringing into bolder relief a portrait of a vice president with free rein to operate inside the White House as he saw fit in order to debunk the charges of a critic of the war in Iraq.

The evidence in the trial shows Vice President Dick Cheney and Mr. Libby, his former chief of staff, countermanding and even occasionally misleading colleagues at the highest levels of Mr. Bush’s inner circle as the two pursued their own goal of clearing the vice president’s name in connection with flawed intelligence used in the case for war.

The testimony in the trial, which is heading for final arguments as early as Tuesday, calls into question whether Mr. Cheney, known as a consummate inside player, operated as effectively as his reputation would hold. For all of his machinations, Mr. Cheney’s efforts sometimes faltered as he tried, with the help of Mr. Libby, to push back against critics during a crucial period in the early summer of 2003, when Mr. Bush’s initial case for war was beginning to fall apart. In some of their efforts, Mr. Cheney and his agent, Mr. Libby, appeared even maladroit in the art of news management.

While others on the White House team were primarily concerned about Mr. Bush, the evidence has shown that Mr. Libby had a more acute concern about his own boss. Unbeknownst to their colleagues, according to testimony, the two carried out a covert public relations campaign to defend not only the case for war but also Mr. Cheney’s connection to the flawed intelligence.

In doing so, they used some of the most sensitive and classified intelligence data available, information others on Mr. Bush’s team was not yet prepared to put to use in a public fight against a war critic.

A Quiet Scramble