Month: October 2008

“Under water” mortgages are growing threat to U.S.

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A real estate broker checks a foreclosed California home for damage and missing appliances in a May 2008 photo.
REUTERS/Robert Galbraith

CAPE CORAL, Florida (Reuters) – Long before she filed for bankruptcy, Ann Neukomm was “under water” — she owed more on her mortgage than her house was worth — a situation more and more Americans are finding themselves in.

As the financial crisis hits Main Street America, nearly one in six U.S. homeowners are finding themselves in the same position, threatening the U.S. economy with a new wave of foreclosures and bankruptcies.

About 12 million U.S. homeowners owe more than their homes are worth, compared with 6.6 million at the end of last year and slightly more than 3 million at the close of 2006, said Mark Zandi, chief economist at Moody’s Economy.com.

“At the root it’s ‘the’ problem,” said Zandi. “If you’re going to put your finger on the one thing that’s gotten us into this fiasco, it’s the fact that millions of homeowners are under water on their homes.”

If, like Neukomm, these homeowners go into foreclosure, it would add to the oversupply of homes, delay a recovery in the housing market, and add to pressure on banks.

Already, U.S. consumer spending is slumping as homeowners find they can no longer take equity out of their homes to fund their lifestyles.

In a slowing economy, it doesn’t take much to push an underwater mortgage into default.

Read more“Under water” mortgages are growing threat to U.S.

Credit-Rating Companies ‘Sold Soul,’ Employees Said

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Deven Sharma (R), president of Standard & Poor’s and Raymond McDaniel, chairman and CEO of Moody’s Corporation listen to remarks by committee members as they display a quote on a screen during the House Oversight and Government Reform Committee hearing on “Credit Rating Agencies and the Financial Crisis,” on Capitol Hill in Washington October 22, 2008.

Oct. 22 (Bloomberg) — Employees at Moody’s Investors Service told executives that issuing dubious creditworthy ratings to mortgage-backed securities made it appear they were incompetent or “sold our soul to the devil for revenue,” according to e-mails obtained by U.S. House investigators.

The e-mail was one of several documents made public today at a hearing of the House Oversight and Government Reform Committee in Washington, which is reviewing the role played by Moody’s, Standard & Poor’s and Fitch Ratings in the global credit freeze.

“The story of the credit rating agencies is a story of colossal failure,” Committee Chairman Henry Waxman, a California Democrat, said at the hearing. “The result is that our entire financial system is now at risk.”

Moody’s and S&P in recent months had to downgrade thousands of mortgage-backed securities, many of which were originally given top AAA ratings, as delinquencies on the underlying loans soared well beyond the companies’ estimates and home values fell faster than they expected.

Read moreCredit-Rating Companies ‘Sold Soul,’ Employees Said

House prices to plummet by 35% – the biggest ever fall in Britain

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House prices will fall a record-breaking 35 per cent by next autumn, a leading firm of economists warned yesterday.

The collapse will be the biggest fall ever seen in this country.

The claim, from the consultancy Capital Economics, will horrify homeowners who face being plunged into negative equity.


Not needed: Estate agent boards piled up in a yard in Hull

According to the forecast, around £65,000 will be wiped off the value of the average home. At the height of the property boom last year the average home was worth £186,000. By next autumn it will be worth around £120,000.

Capital Economics had originally expected house prices to drop 35 per cent by the end of 2010.

But yesterday it amended this forecast in the light of recent economic turmoil. The consultancy still expects the same fall, but squeezed into a much shorter period.

Prices are then predicted to stagnate for 18 months before a tentative recovery begins in 2011.

Ed Stansfield, property economist at Capital Economics, said: ‘The sheer speed of adjustment is causing alarm.’


The housing market has been affected by the credit crunch that has frozen the world’s financial markets

Read moreHouse prices to plummet by 35% – the biggest ever fall in Britain

US air strike blunder kills nine Afghan soldiers

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US-led coalition forces have mistakenly killed nine Afghan soldiers in an air strike, the Afghan defence ministry said today.

The overnight attack on an Afghan army checkpoint in the Syed Kheil area of the eastern Khost province also wounded another three troops, according to the regional governor, Arsallah Jamal.

“Nine have been martyred, three wounded, one critically, in the attack by international forces,” said ministry spokesman Zaher Azimi.

The Afghan defence ministry condemned the attack, warning that such incidents would weaken the spirit of the Afghan National Army (ANA) and undermine its relations with the US troops who train the force.

The US military said its forces “may have mistakenly killed and injured” Afghan soldiers in what may have been a case of mistaken identity “on both sides”.

Read moreUS air strike blunder kills nine Afghan soldiers

Wachovia Loses $23.9 Billion on Real-Estate Charges

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Pedestrians walk past a Wachovia branch in New York on Sept. 29, 2008. Photographer: Jin Lee/Bloomberg News

Oct. 22 (Bloomberg) — Wachovia Corp., the bank being acquired by Wells Fargo & Co., reported its third straight quarterly loss, hurt by crumbling mortgage markets and writedowns on securities backed by real estate.

The third-quarter loss was $23.9 billion, or $11.18 a share, compared with net income of $1.6 billion, or 85 cents, in the same period a year earlier, the Charlotte, North Carolina-based company said today in a statement. The loss was $2.23 a share excluding one-time items, versus the average loss estimate of 2 cents from 16 analysts surveyed by Bloomberg.

Wells Fargo outbid New York-based Citigroup Inc. for Wachovia, agreeing to spend $14 billion to create the largest U.S. branch network. San Francisco-based Wells Fargo was aided by a change in tax rules that makes it easier to absorb losses on Wachovia’s mortgages. The bank also agreed to sell assets to comply with U.S. regulations if the combined company controls more than 10 percent of deposits nationwide.

“Wells Fargo will get substantial tax benefits from losses incurred by Wachovia, so the more losses the better off they are,” Chris Marinac, managing director of FIG Partners LLC in Atlanta, said before earnings were released. “It’s kind of a free pass.”

Read moreWachovia Loses $23.9 Billion on Real-Estate Charges

CDO Cuts Show $1 Trillion Corporate-Debt Bets Toxic

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Oct. 22 (Bloomberg) — Investors are taking losses of up to 90 percent in the $1.2 trillion market for collateralized debt obligations tied to corporate credit as the failures of Lehman Brothers Holdings Inc. and Icelandic banks send shockwaves through the global financial system.

The losses among banks, insurers and money managers may spark the next round of writedowns on CDOs after $660 billion in subprime-related losses. They may force lenders to post more reserves against losses after governments worldwide announced $3 trillion in financial-industry rescue packages since last month, according to Barclays Capital.

“We’ll see the same problems we’ve seen in subprime,” said Alistair Milne, a professor in banking and finance at Cass Business School in London and a former U.K. Treasury economist. “Banks will take substantial markdowns.”

The collapse of Lehman Brothers, Washington Mutual Inc. and the three banks in Iceland prompted Susquehanna Bancshares Inc., a Lititz, Pennsylvania-based lender, to lower the value of $20 million in so-called synthetic CDOs by almost 88 percent last week.

Read moreCDO Cuts Show $1 Trillion Corporate-Debt Bets Toxic

Bank of America Credit-Card Unit Loses $373 Million

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Related article: Banks Hoard Cash as Credit Card Defaults Rise

“We have to be prepared that it gets a lot worse,” J.P. Morgan chief executive Jamie Dimon said about the overall economic outlook.
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Oct. 21 (Bloomberg) — Bank of America Corp., the largest U.S. consumer bank, lost money in its credit-card unit for the first time since its January 2006 purchase of MBNA Corp. as more borrowers missed payments amid the slowing economy.

Card services, which includes unsecured loans, lost $373 million in the third quarter, compared with a profit of $1.04 billion in the same period last year, the Charlotte, North Carolina-based company said today in a regulatory filing. Defaults on cards, consumer loans and home mortgages contributed to a 47 percent decline in operating profit at the consumer and small-business division.

Bank of America provided more details on its third-quarter results today, two weeks after reporting a 68 percent decline in profit. Those earnings, released early as the bank announced plans to raise $10 billion by selling common shares, were worse than analysts expected. The world’s biggest financial companies have disclosed $661 billion in losses and raised $634 billion in fresh capital.

“Credit cards have typically been among the most profitable parts of Bank of America’s business,” said Jim Campen, executive director of Americans for Fairness in Lending, a Boston-based nonprofit that studies the credit card industry. “As we enter the biggest financial crisis since the Great Depression, more people aren’t going to be able to pay their credit cards.”

Read moreBank of America Credit-Card Unit Loses $373 Million

Yahoo Reports Profit Drop, Plans to Cut 10% of Jobs

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Oct. 21 (Bloomberg) — Yahoo! Inc., the Internet company that rejected a takeover offer from Microsoft Corp., reported a 64 percent drop in profit and announced plans to cut at least 10 percent of its staff after advertising spending slowed.

Third-quarter net income fell to $54.3 million, or 4 cents a share, from $151.3 million, or 11 cents, a year earlier, Yahoo said today in a statement. Sales, excluding fees passed on to partner sites, rose 3 percent to $1.33 billion.

Read moreYahoo Reports Profit Drop, Plans to Cut 10% of Jobs

Fed to Provide Up to $540 Billion to Aid Money Funds

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Oct. 21 (Bloomberg) — The Federal Reserve will provide up to $540 billion in loans to help relieve pressure on money-market mutual funds beset by redemptions.

“Short-term debt markets have been under considerable strain in recent weeks” as it got tougher for funds to meet withdrawal requests, the Fed said today in a statement in Washington. A Fed official said that about $500 billion has flowed since August out of prime money-market funds, which with other money-market mutual funds control $3.45 trillion.

The initiative is the third government effort to aid the funds, which usually provide a key source of financing for banks and companies. The exodus of investors, sparked by losses following the bankruptcy of Lehman Brothers Holdings Inc., contributed to the freezing of credit that threatens to tip the economy into a prolonged recession.

“The problem was much worse than we thought,” Jim Bianco, president of Chicago-based Bianco Research LLC, said in a Bloomberg Television interview. Policy makers are trying to prevent “Great Depression II” by stemming the financial industry’s contraction, he said.

JPMorgan Chase & Co. will run five special units that will buy up to $600 billion of certificates of deposit, bank notes and commercial paper with a remaining maturity of 90 days or less. The Fed will provide up to $540 billion, with the remaining $60 billion coming from commercial paper issued by the five units to the money-market funds selling their assets, central bank officials told reporters on a conference call.

Read moreFed to Provide Up to $540 Billion to Aid Money Funds

Sir Ken Macdonald: Centuries of British freedoms being broken by security state

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Centuries of British civil liberties risk being broken by the relentless pressure from the ‘security state’, the country’s top prosecutor has warned.

Outgoing Director of Public Prosecutions Sir Ken Macdonald warned that the expansion of technology by the state into everyday life could create a world future generations “can’t bear”.

In his wide-ranging speech, Sir Ken appeared to condemn a series of key Government policies, attacking terrorism proposals – including 42 day detention – identity card plans and the “paraphernalia of paranoia”.

Instead, he said, the Government should insist that “our rights are priceless” and that: “The best way to face down those threats is to strengthen our institutions rather than to degrade them.”

The intervention will be seen as a significant setback to Home Secretary Jacqui Smith who last week saw her plans to lock up terror suspects for 42 days before being charged thrown out by the House of Lords.

It is also a blow to Miss Smith’s plans for a super-database to record the details of millions of people’s online presence, including emails, SMS messages and Facebook profiles as well as the controversial identity card programme.

Sir Ken chose to issue his tough warning about the perils of the “Big Brother” state in his final speech as DPP, days before he leaves his post at the end of this month.

He warned that MPs should “take very great care to imagine the world we are creating before we build it. We might end up living with something we can’t bear”.

Sir Ken, who has held the post for the past five years, said: “We need to take very great care not to fall into a way of life in which freedom’s back is broken by the relentless pressure of a security State.

“Technology gives the State enormous powers of access to knowledge and information about each of us, and the ability to collect and store it at will.”

Read moreSir Ken Macdonald: Centuries of British freedoms being broken by security state

Bush Decides to Keep Guantánamo Open

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WASHINGTON – Despite his stated desire to close the American prison at Guantánamo Bay, Cuba, President Bush has decided not to do so, and never considered proposals drafted in the State Department and the Pentagon that outlined options for transferring the detainees elsewhere, according to senior administration officials.

Mr. Bush’s top advisers held a series of meetings at the White House this summer after a Supreme Court ruling in June cast doubt on the future of the American detention center. But Mr. Bush adopted the view of his most hawkish advisers that closing Guantánamo would involve too many legal and political risks to be acceptable, now or any time soon, the officials said.

The administration is proceeding on the assumption that Guantánamo will remain open not only for the rest of Mr. Bush’s presidency but also well beyond, the officials said, as the site for military tribunals of those facing terrorism-related charges and for the long prison sentences that could follow convictions.

Read moreBush Decides to Keep Guantánamo Open

The Federal Reserve; Why the bailout has already failed; The Pentagon cannot account for $ 2,3 Trillion and the connection to 9/11; The $ 1 Quadrillion derivatives black hole

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Reuters reports: Banks borrow record $437.5 billion per day from Fed (Oct 17, 2008)

CBS NEWS reports one day before 9/11: Pentagon Cannot Account For 2,3 TRILLION Dollars

The Independent: A £516 trillion derivatives time-bomb (Oct.12, 2008)

More articles on the derivatives market: www.infiniteunknown.net/tag/derivatives/


Added: Oct. 01, 2008

Source: YouTube

Homeless numbers are alarming

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Thomas Malinowski, 48, who lived on New York’s streets for 13 years, sits on his cot in the “Safe Haven” shelter in Manhattan on January 21, 2007.

FORECLOSURES INCREASING

A surge in families seeking housing aid or shelter has followed rising home foreclosures nationwide.

Foreclosures Jan.-Aug.

2006: 801,354

2007: 1,341,295

2008: 2,049,782

Source: RealtyTrac

More families with children are becoming homeless as they face mounting economic pressures, including mortgage foreclosures, according to a USA TODAY survey of a dozen of the largest cities in the nation.

Local authorities say the number of families seeking help has risen in Atlanta, Boston, Denver, Minneapolis, New York, Phoenix, Portland, Seattle and Washington.

“Everywhere I go, I hear there is an increase” in the need for housing aid, especially for families, says Philip Mangano, executive director of the U.S. Interagency Council on Homelessness, which coordinates federal programs. He says the main causes are job losses and foreclosures.

Other factors have been higher food and fuel prices hitting families with “no cushion,” says Nan Roman of the National Alliance to End Homelessness.

Read moreHomeless numbers are alarming

Ron Paul: We could take our lumps, save money, pay our bills, restore liberty, and in a year we could have the most booming economy ever

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Ron Paul, whose libertarian-leaning candidacy for the Republican presidential nomination spurred millions of supporters, says the federal government could do much to repair the economy short of regulating.

While running for the Republican presidential nomination, Rep. Ron Paul of Texas frequently sounded the alarm regarding the nation’s fiscal health. Years ahead of the current economic crisis, Paul was questioning the nation’s debt level, now an acutely pressing issue amid all the recent stock market volatility.

With the Treasury Department and the Federal Reserve rapidly moving toward more government intervention in the marketplace while trying to stabilize the nation’s banks and shore up its financial institutions, Paul has argued for a hands-off approach. He opposed both versions of the financial rescue plan that came before the House – the first one, which was rejected, and the second, which was passed and signed into law.

Politico’s David Mark interviewed the 10-term congressman, who has still not endorsed Republican John McCain for president. Here are some excerpts.

Q: With the stock market still in flux and the risk of massive financial failures growing, what’s the worst-case economic scenario you envision over the next couple of years?

A: The worst part could be that this would linger for a decade or more. In fact, a very serious recession or depression is on schedule. You cannot avoid it. Eventually it has to come, but it doesn’t have to end badly. We could take our lumps, save money, pay our bills, restore liberty, and in a year we could have the most booming economy ever. But it would take a complete change in attitude.

If we continue to believe it’s freedom, capitalism and private markets that are the problems, we’re in for very bad times.

Read moreRon Paul: We could take our lumps, save money, pay our bills, restore liberty, and in a year we could have the most booming economy ever

Sarkozy Calls For European ‘Economic Government’

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Sarkozy wants top EU economy team

Mr Sarkozy is steering the EU presidency until January

French President Nicolas Sarkozy has called for a European “economic government” to ensure a more united EU response to financial turmoil.

The leaders of the 15-nation eurozone should co-ordinate their actions with the European Central Bank, he said.

Meanwhile the International Monetary Fund (IMF) said Europe should weather the worst of the turmoil thanks to the EU’s “crisis management” measures.

However, the IMF predicts eurozone growth will slow to 0.2% next year.

That compares with a predicted rate of 1.3% this year and 1.4% in 2010.

In its latest assessment, the IMF forecasts that the Irish Republic and Italy will prove to be in recession already, with growth figures for 2008 of -1.8% and -0.1% respectively.

Both would remain in recession next year, with Spain joining them.

Read moreSarkozy Calls For European ‘Economic Government’

Morgan Stanley’s Bonuses Get Saved By You and Me

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A woman exits the Morgan Stanley headquarters in New York, Sept. 18, 2008. Photographer: JB Reed/Bloomberg News

Oct. 21 (Bloomberg) — Wall Street had it wrong: An investment bank’s most precious asset isn’t the army of employees who head down the elevators each day. It’s the paychecks they take with them out the door.

You can imagine the devilish grins on the faces of Morgan Stanley employees last week, after the Treasury Department said it would pump $10 billion into the bank. Not only did we, the taxpayers, save their company, with the help of a Japanese bank named Mitsubishi UFJ Financial Group Inc. More importantly, we funded their 2008 bonus pool.

Morgan Stanley has accrued $10.7 billion of employee- compensation expense this year, almost twice as much as its pretax earnings. The vast majority of this remuneration hasn’t been paid yet. Now it probably will be, assuming the firm survives through next month. Meantime, Morgan Stanley’s stock- market value has dropped $34.7 billion, to $21 billion, since the company’s fiscal year began.

Read moreMorgan Stanley’s Bonuses Get Saved By You and Me

Kerkorian Cuts Ford Stake, May Exit as $1 Billion Bet Collapses

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Oct. 21 (Bloomberg) — Billionaire Kirk Kerkorian may sell his Ford Motor Co. stake after the $1 billion holding lost two- thirds of its value and put his firm’s casino investments at risk.

Kerkorian’s Tracinda Corp. sold 7.3 million Ford shares yesterday for an average of $2.43 each and said it contacted an investment bank about unloading the rest. Tracinda’s remaining 133.5 million shares were valued at $311.1 million based on yesterday’s closing price.

Kerkorian, 91, acted five days after Ford’s collapsing stock price forced him to pledge another 50 million shares of his MGM Mirage casino company to support the $600 million credit line used to buy stock in the second-largest U.S. automaker. Tracinda paid as much as $8.50.

Read moreKerkorian Cuts Ford Stake, May Exit as $1 Billion Bet Collapses

Volkswagen Falls Most Since 1989 on Short-Selling

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Oct. 20 (Bloomberg) — Volkswagen AG fell the most in almost two decades, counter to a rising German market, as investors short-sold the shares on speculation that the price will decline once Porsche SE gains control of Europe’s biggest carmaker.

Volkswagen’s common shares fell 80.91 euros, or 23 percent, to 277.09 euros, the biggest decline since at least January 1989. The preferred shares lost 3.85 euros, or 5 percent, to 73.10 euros. Short-sellers borrow stock on expectations they can repurchase the shares later at a lower price.

“VW is completely caught in a short-selling frenzy,” said Juergen Pieper, a Frankfurt-based analyst at Bankhaus Metzler who recommends selling the stock. “The share price has been detached from reality for at least six months. These erratic moves lack any fundamental explanation.”

Common shares in Volkswagen have surged 78 percent this year, helped by a 27 percent increase on Sept. 18 when investors bought stock to stem losses on their short-selling strategy. The Sept. 15 collapse of Lehman Brothers Holdings Inc., which lent Volkswagen shares to short-sellers, helped trigger the so-called short-squeeze by forcing the original owners of the stock to buy new shares, people familiar with securities lending said earlier this month.

About 15 percent of Wolfsburg, Germany-based Volkswagen’s common shares as of last month were lent, mostly for short-sales, according to London-based research firm Data Explorers. That was the highest proportion of any company on Germany’s 30-member benchmark DAX Index.

Read moreVolkswagen Falls Most Since 1989 on Short-Selling

Top US Spy Boss: Investigation Underway into ABC News Report

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Allegations Include US Eavesdropping on “Phone Sex” Between Americans


Hundreds of US citizens overseas, including US troops in Iraq, have been eavesdropped on, according to two former military and NSA intercept operators, despite pledges by President George W. Bush and American intelligence officials. (ABC News )

The inspector general for the National Security Agency, the NSA, has begun an investigation into allegations that US intelligence operators intercepted, recorded and shared intimate phone calls and “phone sex” between hundreds of American citizens, the Director of National Intelligence, J.M. McConnell, has told US Senators.

In a letter released today, McConnell said the NSA was unaware of the allegations, made by two former intercept operators, until ABC News reported them.

Former Army Arab linguist Adrienne Kinne and former Navy Arab linguist David Murfee Faulk told ABC News they observed and participated in intercepting private calls between Americans while they were detailed to a NSA listening post at Fort Gordon, outside Augusta, Georgia.

The two said calls by American journalists, aid workers and soldiers serving in Iraq were targeted for interception, because, they say they were told, there were “special waivers” to make it legal.

Read moreTop US Spy Boss: Investigation Underway into ABC News Report

The Problem Was Never Liquidity, But Insolvency . . . And We Should Let Insolvent Banks Fail

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The problem was never really liquidity.

Says who?

Says Anna Schwartz, co-author of the leading book on the Great Depression, and someone who actually lived through it.

The Wall Street Journal ran an interview with Schwartz last weekend:

Most people now living have never seen a credit crunch like the one we are currently enduring. Ms. Schwartz, 92 years old [but still sharp as a tack], is one of the exceptions. She’s not only old enough to remember the period from 1929 to 1933, she may know more about monetary history and banking than anyone alive. She co-authored, with Milton Friedman, “A Monetary History of the United States” (1963). It’s the definitive account of how misguided monetary policy turned the stock-market crash of 1929 into the Great Depression.

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Federal Reserve Chairman Ben Bernanke has called the 888-page “Monetary History” “the leading and most persuasive explanation of the worst economic disaster in American history.” Ms. Schwartz thinks that our central bankers and our Treasury Department are getting it wrong again.

Read moreThe Problem Was Never Liquidity, But Insolvency . . . And We Should Let Insolvent Banks Fail

The federal reserve caused the 700 billion dollar bailout and economic crash

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Added: Oct. 18, 2008
Source: YouTube

The federal reserve caused the 700 billion dollar bailout.

The Rothschilds and the Bank of England, and the London banking houses which ultimately control the Federal Reserve Banks through their stockholdings of bank stock and their subsidiary firms in New York.

The two principal Rothschild representatives in New York, J. P. Morgan Co., and Kuhn,Loeb & Co. were the firms which set up the Jekyll Island Conference The Federal Reserve was created with no constitutional authority in 1913, the Fed prints money out of thin air and loans it to the U.S. treasury at interest.

This can only lead to one outcome: debt. Currently, the Federal Reserve is printing billions of dollars to bail out Wall Street while destroying the middle class and the dollar with inflation.

If our country wants a sound and transparent monetary system, we need to abolish the Federal Reserve.

Paris to quadruple number of CCTV cameras

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Paris will quadruple the number of closed-circuit police cameras in its streets by the end of next year, after President Nicolas Sarkozy’s promise to emulate London in an attempt to track crime and terrorism threats.

While the Paris metro and rail networks already operate around 9,500 CCTV devices, police have only 330 at their disposal to survey outside public areas. The new plan, dubbed “A Thousand Cameras for Paris”, will raise that number to more than 1,200 – with most installed in high-risk areas and outside railway and underground stations.

The figure is still small compared with London, where each citizen is caught on average several hundred times a day. Britain has about four million closed-circuit security cameras compared with France’s 340,000.

The CCTV drive follows Mr Sarkozy’s pledge last autumn to follow London’s surveillance lead. “I am very impressed by the efficiency of the British police thanks to this network of cameras,” the French president said. “In my mind, there is no contradiction between respecting individual freedoms and the installation of cameras to protect everyone’s security.”

Read moreParis to quadruple number of CCTV cameras

Live CCTV on buses to be tested

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Live CCTV launched on buses

A six-month trial of live CCTV on a London bus route has begun.

London Mayor Boris Johnson announced that the technology had been installed on 21 double-decker buses on a north London route.

The real-time images will be beamed to a control room manned by Transport for London (TfL) and police.

The trial will be monitored to determine whether live images can help transport staff deal with disorder more effectively.

Mr Johnson said: “I am determined to banish the sad minority of hoodlums and trouble makers that have blighted our buses.

“Having the facility to access live pictures from buses travelling around the capital will mean our bus controllers can play a far more effective role in sending police officers to sort out troublemakers.

“If this trial is successful then we will consider rolling out the system on other routes as part of our campaign to stamp out the casual disorder that led to a culture of fear on public transport.”

Read moreLive CCTV on buses to be tested

David Davis: We are losing Taliban battle

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In an alarming dispatch from Afghanistan, the Conservative MP reveals the rampant corruption that has infected public life and threatens to destroy Nato’s hopes of bringing peace to this traumatised country


‘We need a new strategy,’ says Tory MP David Davis, on a factfinding mission to Afghanistan

It is time to face facts in Afghanistan: the situation is spiralling downwards, and if we do not change our approach, we face disaster. Violence is up in two-thirds of the country, narcotics are the main contributor to the economy, criminality is out of control and the government is weak, corrupt and incompetent. The international coalition is seen as a squabbling bunch of foreigners who have not delivered on their promises. Although the Taliban have nowhere near majority support, their standing is growing rapidly among some ordinary Afghans.

In Kabul, foreign delegations huddle behind concrete and barbed wire, often with the Afghans’ main roads shut. That causes jams throughout the city, exacerbated by convoys of armoured four-wheel drives loaded with bodyguards that push their way through the traffic. These vehicles carry warning signs telling ordinary Afghans that the occupants reserve the right to shoot anyone who comes within 50 metres. Afghans veer between resentment of the high-handed foreigners and fear of the Taliban, who appear to be inexorably seizing the provinces around the city.

In Britain’s area of responsibility, Helmand, the governor admits the Taliban control most of the province. While we were, properly, celebrating the delivery of the turbine to the Kajaki dam, we were being forced out of one of the richest poppy growing areas, and the Taliban fought their way to within 12km of Lashkar Gar, the provincial capital. Time after time, our soldiers win tactical victories, only to have the advantage lost because of a lack of coherent international strategy.

The regime we are defending is corrupt from top to bottom. While the President’s brother faces accusations of being a drug baron, some three-quarters of the Afghan National Police actively steal from the people. The irony is that Afghan expectations of government are traditionally low, and their faith in President Hamid Karzai was initially high.

Read moreDavid Davis: We are losing Taliban battle

GM Lacks Investors to Fund Deal With Chrysler

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[general motors headquarters]
The General Motors Corporation world headquarters.

General Motors Corp.’s hopes of buying longtime rival Chrysler LLC are floundering because the auto maker remains unable to secure the financing necessary for the deal, say people familiar with the matter.

In recent days GM, its lenders, and Chrysler owner Cerberus Capital Management, have been trying to woo investors with a pitch about the transaction. That pitch touts a combined GM-Chrysler as delivering cost savings of up to $10 billion, an immediate boost in revenue and an increase in cash available to the merged firm. Outside money is needed to fund the cost-cutting — especially buyouts and severance packages for tens of thousands of hourly and salaried employees. Those cuts could total as much as 40,000 jobs if a deal comes together, said people briefed on the talks. And GM is already burning more than $1 billion in cash each month.

The United Auto Workers union has publicly questioned the deal but privately is studying its merits. GM is pitching the combination as a way to better ensure the continued funding of hundreds of thousands of UAW retiree pensions and health-care benefits. A new company would produce upward of $250 billion in annual revenue, while owning more than 30% of the U.S. market. It would also house an estimated $30 billion in cash, thus improving the company’s credit rating and lowering the risk that either GM or Chrysler would have to seek bankruptcy protection over the next 15 months.

But several of the potential lenders remain unconvinced. Credit markets remain extremely tight, and a number of lenders are fearful of the complexity and scale of combining two industrial giants amid an economic downturn. If investors continue to shun the deal, its proponents could take their case to the U.S. government, arguing that a merger is vital to the survival of the nation’s domestic auto industry. It is unclear at this point what role, if any, Washington might be willing to play. But GM, Cerberus and its banks aren’t ruling out selling a stake in the new company to the federal government.

Read moreGM Lacks Investors to Fund Deal With Chrysler