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Japan credit rating downgraded over ballooning deficit

Japan has the highest debt-to-GDP ratio of any country in the world, with its borrowings estimated to hit 233% of annual economic output in 2011 Credit ratings agency Moody’s criticised the instability at the top of Japanese politics on Tuesday as it slashed the country’s credit rating and warned that its mountain of debt needed to be tackled. Moody’s cut Japan’s rating by one notch to Aa3, its fourth highest rating, and said a tougher deficit reduction plan was urgently needed. The move came just hours before Japan took fresh steps to help corporations cope with the strength of the yen, including a $100bn (£60bn) fund to help fund overseas acquisitions. Japan has the highest debt-to-GDP ratio of any country in the world, with its borrowings estimated to hit 233% of annual economic output in 2011. Moody’s said the rapid turnover of Japanese prime ministers – five different men have held the job since the credit crunch began in August 2007 – had prevented the government from turning “long-term economic and fiscal strategies into effective and durable policies”. Naoto Kan, the current prime minister, is expected to resign next week, triggering yet another leadership battle – and potentially dealing another blow to Japan’s debt-reduction plans. “A divided Diet [the Japanese parliament] and tensions within the ruling Democratic party of Japan risk both the timing and implementation of the reform plan. Indeed, the imminent change in the party’s presidency and the election of a new prime minister reflect the factious nature of the country’s politics,” Moody’s warned. Kan had proposed a fiscal consolidation plan this year, after March’s devastating earthquake added to the country’s economic problems . This included doubling the sales tax later this decade. Moody’s argues that more needs to be done to achieve a primary budget surplus by 2020. Otherwise, it said, “even under the government’s more vigorous and optimistic economic growth scenario, a decline in the debt-burden trajectory would remain elusive”. The downgrade did not alarm traders as most of Japan’s debt is bought by domestic investors, meaning it is less reliant on the international credit markets. The Nikkei 225 closed 1.07% lower at 8639.61. Moody’s told reporters in Tokyo that it did not see the eurozone debt crisis spreading to Japan, and maintained a “stable” outlook on the country’s debt. Recent twists in the financial crisis have driven up the value of the yen to record levels, hurting Japanese exporters. Finance minister Yoshihiko Noda pledged to take “decisive action” to prevent speculators pushing the yen higher, as he announced that $100bn of credit will be made available to countries to help them borrow cheaply and invest overseas. Noda also stepped up the monitoring of foreign exchange positions held by currency dealers. “We decided to compile the package to show our strong determination that we will act if current yen rises persist, or if the yen rises further,” Noda said. The package received a lacklustre reception in the financial markets, though, where there was disappointment that Japan had not intervened in the foreign exchange markets to actively push its currency lower, as it did three weeks ago . The yen rose slightly, hitting ¥76.53 to the dollar. Ratings agencies Yen Japan Currencies Global economy Graeme Wearden guardian.co.uk

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Gaddafi vows ‘martyrdom or victory’ after fleeing compound

Ousted leader calls retreat a ‘tactical move’ and urges Libyans to ‘cleanse the capital of traitors’ in audio recording Muammar Gaddafi has vowed “martyrdom or victory” hours after Libyan rebels swarmed into his fortified compound in Tripoli. Following a day of heavy fighting in the Libyan capital, opposition fighters broke into Gaddafi’s walled citadel, Bab al-Aziziya , where they were seen stamping on a gilded bronze head of the deposed despot and setting fire to his famous tent in a cathartic end to his 42-year rule. But in an audio recording released to a Libyan television station, the dictator called his retreat from the compound a “tactical move”. Gaddafi, who has not been seen in public for weeks, told al-Rai TV that Libyans must “cleanse the capital”, and claimed he had made a discreet tour of Tripoli and felt the city was not in danger. “All Libyans must be present in Tripoli, young men, tribal men and women must sweep through Tripoli and comb it for traitors. I have been out a bit in Tripoli discreetly, without being seen by people, and … I did not feel that Tripoli was in danger,” he said. Government spokesman Moussa Ibrahim, said 6,000 volunteers had arrived in Libya to join Gaddafi’s cause, and warned that loyalist forces were ready and capable of fighting on for months, if not years. In an audio recording, he warned they would turn Libya into “volcanoes, lava and fire against the imperialism”. If the military strikes continued, he warned, Gaddafi forces would transform Tripoli into “a death trap”. “I don’t think that the rebels will stand that fight because they haven’t got the facilities to do that. They always ask Nato to help them and to intervene in their actions all the time. But I think Tripoli will be in two days or three days back to us,” he said. Rebel leaders said 400 people had been killed and 2,000 injured during the fighting, and there were reports of sporadic looting in the capital. But the whereabouts of the Libyan leader and his family remain unknown. Tripoli was calmer on Wednesday morning, although pockets of loyalist resistance remain, including around the Rixos Hotel, where many foreign journalists are still trapped. Loyalist strongholds also remain in the coastal town of Sirte, Gaddafi’s birthplace, and the southern desert city of Sabha, while overnight pro-Gaddafi forces launched a number of Scud missiles towards rebel-held Misrata. But the fall of Gaddafi’s fortress-like city within a city, and the trampling of his likeness under the feet of Libya’s new rulers, represented a symbolic moment of victory after a six-month civil war. Earlier in the day, loyalist snipers and mortars had held the rebels at bay in the streets around Bab al-Aziziya. The rebels responded with every weapon in their possession: artillery, mortars and rocket-propelled grenades, sending plumes of thick black smoke into the sky. By afternoon, bolstered by waves of opposition fighters who had streamed in from Libya’s western mountains and Misrata to the east, they began to move forward on Bab al-Aziziya. They massed at the pale green outer walls and blew the gates off, pouring into what had once been the regime’s inner sanctum on foot, in cars, even in requisitioned golf carts. Another two layers of fortifications were quickly breached and, as the sun set, the rebels reached Gaddafi’s residence, climbing on the statue of a fist clutching a US warplane, a symbol of his defiance after an American bombing raid in 1986. A handful of rebels also tore the golden face off Gaddafi’s statue, throwing it to the ground, prodding it with rifles and kicking it, while others climbed on to the roof of the building, little more than a shell after repeated Nato bombing sorties, and unfurled the red, black and green flag of pre-Gaddafi Libya. A few yards away, Gaddafi’s trademark tent, where he would receive visiting dignitaries, burned furiously. Outside, a rebel fighter had donned one of Gaddafi’s grey and gold ceremonial caps and draped a gold chain around his neck. “Libyans will shock the world,” he promised Sky News. “We want to start a new life, a new Libya.” But in the midst of the triumph, it soon became clear that the man who had ruled Libya for 42 years had slipped away, as had his sons, who had helped maintain his grip on the country and who had expected to inherit his power. On Monday, the rebels claimed to have detained two of his sons, Saif al-Islam and Muhammad, as they swept into the capital. But that boast soon crumbled. Loyalists stormed the villa where Muhammad was being held under house arrest and freed him, while Saif al-Islam appeared at Tripoli’s luxury Rixos hotel on Monday night and took journalists on a tour of nearby streets. The staged photo opportunity turned out to be a last hurrah for a regime that had always been skilled at manipulating the media. By the morning, the pro-Gaddafi crowd had evaporated. But the manhunt for Gaddafi went on. Abdel-Salam Jalloud, one of the leader’s closest lieutenants until he defected earlier this month, told al-Jazeera he thought Gaddafi was moving around the outskirts of Tripoli, taking shelter at private homes, small hotels and mosques. Others thought he might be in Sirte or in Sabha; most observers, including the Pentagon, believed Gaddafi was still somewhere in Libya. In the sky above Tripoli, Nato planes flew sorties. The coup de grâce to the Gaddafi regime was left to Libyan rebel fighters on the ground. But the pause was not expected to last long and the bombing of what strategic targets are left in Tripoli was expected to resume, alliance officials said. On Tuesday night there were reports of more explosions being heard around Tripoli. Meanwhile, a number of serving British special forces soldiers, as well as ex-SAS troops, are advising rebel forces , although their presence is officially denied, the Guardian has learned. The rebels started the day tentatively, but then a convoy of pickups arrived with anti-aircraft guns mounted at the back, and the offensive accelerated. Overnight, the rebels had been reinforced by hundreds of fighters from the opposition enclave of Misrata, who had broken through government lines along Libya’s coastal road near the town of Zlitan, after months of trying, and driven under rocket fire the rest of the way to the capital. Leaders of the National Transitional Council (NTC) who had orchestrated the anti-Gaddafi campaign from the eastern town of Benghazi had been taken aback by the speed of the offensive, and were struggling to keep up with the pace and prevent a power vacuum developing in Tripoli after the initial euphoria faded. Mahmoud Shammam, an NTC spokesman, told the Guardian from Tunisia: ” The swift movement of the battle has left our officials a little bit behind, but we are trying hard. ” Mahmoud Jibril, deputy leader of the NTC, later told a press conference: “There should be no settling of scores. We should not besmirch the last page of the revolution. We have to concentrate on rebuilding and repairing our moral and physical wounds.” Jibril added that some “security measures” would be needed to stabilise the situation in Tripoli and elsewhere. He said the NTC had taken the decision to form a security council that would be composed of Libyan army and police officials who had allied themselves with the rebels in recent months. Members of the rebels’ Tripoli brigade, made up of city residents and specially trained in Qatar, had been assigned to guard the national museum in Tripoli and other cultural sites, although Shammam was unsure how many locations were secure. The NTC broadcast repeated public messages urging the population to stay calm, and not to loot or carry out reprisals. Police officers had been quietly approached in the weeks running up to Tripoli’s fall and urged to stay at their posts. Shammam said half the members of the NTC executive board, now functioning as an interim cabinet, would arrive in Tripoli on Wednesday morning to begin the work of reconstruction and the painful transition from an autocracy that had lasted longer than most Libyans’ lifetimes. He appealed to the international community to unblock Libyan funds frozen in western bank accounts since the fighting started, so that the new administration could pay civil servants and the police. The EU said it was poised to unfreeze the money as soon as it was approved by the United Nations, which will host a meeting of regional organisations on Friday. Libya Muammar Gaddafi Middle East Africa Arab and Middle East unrest Julian Borger Luke Harding guardian.co.uk

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DC Earthquake interrupts Real News interview 8-16-2011 SBTN WASHINGTON DC NEWS 8-16-2011 SBTN WASHINGTON DC NEWS EGeac says: # DC #Earthquake Dominates Social Media Sites: 5 Must-See Stats http://t.co/XxYQwZg #Trends #dcnews #dcearthquake

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Cheque abolition slammed by Treasury

Select committee report critical of Payments Council’s proposal to abolish cheques and wants return of cheque guarantee cards The Payments Council was wrong to announce the abolition of cheques in December 2009 and should consider reinstating cheque guarantee cards, the Treasury select committee has said. Its report, greeted warmly by consumer rights groups, condemned the Payments Council , calling it an industry dominated organisation, which should no longer have the “unfettered power to decide the future of cheques or other payment methods that directly affect millions of people”. In 2009 the Payments Council announced that cheques would be phased out by October 2018 , claiming they were in “terminal decline”. It also abolished the cheque guarantee card scheme from 1 July 2011, meaning it is now no longer be possible to guarantee a cheque up to a maximum of £250 by handing over a card featuring the scheme’s logo or hologram. In response, the Treasury launched an inquiry in February 2010, saying it would examine the organisation’s structure and performance , including whether it was sufficiently accountable for the way its decisions impact on consumers. The Payments Council performed a U-turn on cheques in mid-July 2011, ahead of the Treasury select committee report’s publication, claiming it would not seek to kill them off. In the final report, the select committee’s chairman, Andrew Tyrie, has called for the Payments Council to be regulated, recommending that banks send it “advance sight of any material related to the future availability of cheques that the banks send to their customers”. Tyrie’s report also recommends that all banks be required to write to their customers stating that cheques will continue to be in use for the foreseeable future, that the Payments Council should examine the reintroduction of the cheque guarantee card, and changes be made to the composition of the board of the Payments Council to strengthen the voice of consumers. Tyrie said: “Cheques have been saved, for the moment, but we need to remain vigilant. The incentives for the industry to get rid of cheques has not gone away. Neither have we. “The Payments Council is an industry dominated body with no effective public accountability. Its decision caused great and unnecessary concern among bank customers. And during the course of the Treasury committee’s inquiry it became clear that the Council’s plans did not have the confidence or support of the public, parliament or the government.” He added: “The decision of the Payments Council [to abolish cheques] was taken without an assessment of the costs and benefits and without providing any indication of what alternatives to cheques would be put in place. Banks have also given many customers the impression that the abolition of cheques was a foregone conclusion. This type of behaviour is unacceptable and cannot be allowed to continue.” Consumers groups have welcomed the report. Sarah Brooks, director of financial services at Consumer Focus , said: “We echo the committee’s calls that cheques must not face an unmanaged decline. While use may be declining, around two-thirds of people still cash and write cheques, with over a billion processed every year. “Payment systems can be seen as a utility in the same way as the railway network or National Grid. They should be subject to effective regulation and decision-making to make sure the system works well for everyone who needs them to pay for goods and services.” Richard Lloyd, Which? executive director, said it was “unacceptable that the Payments Council, as an unregulated, industry dominated body has the power to make unilateral decisions about payment methods that affect millions of people. The structure of the Payments Council now needs to be reviewed, and the voice of consumers strengthened on its board.” Gary Hocking, acting chief executive of the Payments Council, said the council would look at how it could ensure that consumers received consistent information about payments. He added: “While we don’t believe increased regulation is required, as part of an existing commitment to the Office of Fair Trading, we are due to review our governance arrangements before the end of the year. We will take the select committee’s recommendations particularly on the role of our independent directors into account.” The financial secretary to the Treasury, Mark Hoban MP said: “In response to public opinion the Payments Council ultimately did the right thing by abandoning its plans to abolish cheques. However, the way they handled this decision does raise questions about the governance of the Payments Council. The Treasury select committee’s report highlights these questions and we will look at its recommendations carefully and respond in due course.” It is thought the government will back the report’s recommendations when it reports to parliament later this year. Cheques Consumer rights Consumer affairs Banks and building societies Mark King guardian.co.uk

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Shocking Video: Tea Party Terrorist Training Camp in Waco, TX

From Accuracy in Media’s Ben Johnson: Have you ever been taken hostage by an 86 year old white haired lady in pink glasses? I have. I am lucky to be alive today and writing this after my near death experience with the terrorists of the Tea Party in Waco, TX. AIM present’s to you, the face Broadcasting platform : YouTube Source : Big Government Discovery Date : 23/08/2011 16:53 Number of articles : 3

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Engadget HD Podcast 262 – 08.23.2011

It’s been a bumpy ride, but we’re back with a new episode of the Engadget HD Podcast. This week brings multiple CableCARD tuners, iPad apps and even a few new projectors. Naturally, we eventually get into the discussion of the latest predictions for Media Center, but while Microsoft figures out where the Xbox 360 fits into its ecosystem, Sony’s snagged a sweet exclusive in the form on NFL Sunday Ticket. Finally, we wrap things up with what we’re watching this week and of course, some football talk. Get the podcast [ iTunes ] Subscribe to the Podcast directly in iTunes (MP3). [ RSS - AAC] Enhanced feed, subscribe to this with iTunes. [ RSS - MP3] Add the Engadget HD Podcast feed to your RSS aggregator [ Zune ] Subscribe to the Podcast directly in the Zune Marketplace [ MP3 ] Download the show (MP3). Host s : Ben Drawbaugh ( @bjdraw ), Richard Lawler ( @rjcc ) Producer : Trent Wolbe 04:56 – Comcast’s Xfinity app debuts on Blackberry, updated on iOS 08:18 – Optoma delivers three new projectors, one does 3D for just $1,499 10:12 – Elgato HDHomeRun iPad app brings (some) cable channels to the tablet 14:28 – SiliconDust delivering HDHomeRun Prime preorders, 3 tuner ships next week 19:48 – HDHomerun Prime CableCARD tuner hands-on 21:00 – Ceton InfiniTV 4 USB tuner priced at $299, ships September 19th 29:04 – Sony drops PS3 price to $250 in US, €250 in Europe 34:00 – DirecTV brings NFL Sunday Ticket to Android tablets and the PS3 this fall 42:00 – Must See HDTV (August 22nd – 28th) Hear the podcast LISTEN (MP3) LISTEN (AAC) Filed under: Podcasts Engadget HD Podcast 262 – 08.23.2011 originally appeared on Engadget on Tue, 23 Aug 2011 22:39:00 EDT. Please see our terms for use of feeds . Permalink

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Back in March, USA Today broke the story about test score cheating in the Washington, DC school system under Michelle Rhee’s watch. Since then, Rhee has been cozy with the DeVos family, Rick Scott, worked to undermine Tennessee schools, and continues her crusade with the assistance of former DNC official Hari Sevugan to bust unions in her quest “for the children.” Yet, she is curiously circumspect when it comes to answering allegations on the cheating scandals, particularly the Washington, DC cheating scandal. The New York Times reports : These days, as director of an advocacy group she founded, StudentsFirst, she crisscrosses the country pushing her education politics: she’s for vouchers and charter schools, against tenure, for teachers, but against their unions. Always, she preens for the cameras. Early in her chancellorship, she was trailed for a story by the education correspondent of PBS News Hour John Merrow. At one point, Ms. Rhee asked if his crew wanted to watch her fire a principal. “We were totally stunned,” Mr. Merrow said. She let them set up the camera behind the principal and videotape the entire firing. “The principal seemed dazed,” said Mr. Merrow. “I’ve been reporting 35 years and never seen anything like it.” And yet, as voracious as she is for the media spotlight, Ms. Rhee will not talk to USA Today . The video at the top of her firing the principal is one on Rhee’s StudentsFirst website. She actually is proud of it, and perhaps it was justified. We really don’t know one way or the other on that. But what we do know is that Beverly Hall may face criminal charges for the cheating in Atlanta on her watch. We know that Hall may go to jail over what appears to be the most egregious case of widespread cheating in U.S. history. The cheating on Rhee’s watch appears to be a close second to Hall’s, which leads me to ask some questions about whether her principal firings were because they wouldn’t cheat, or because they were incompetent. More importantly, why are Democrats still lining up behind Rhee? She could possibly be one of the most divisive forces in the Democratic party today. Between her cozy relationships with the ultra-right wing “reformers,” and her push to bust unions, it makes no sense at all. Stephen Brill’s book Class Warfare seems to confirm a strong tie between Rupert Murdoch and Rhee. According to Brill, Rhee received donations and/or pledges from Eli Broad, Rupert Murdoch, Julian Roberson, Ken Langone and others. At the time, donations for StudentsFirst were being collected from Democrats for Education Reform (DFER), which can only be described as a Third Way-type organization led by hedge fund managers and fat cat investor types. You know, the kind that would love to see public education become a new “market.” Education reform is necessary, but not the kind of education reform Rhee sells. Over on K12 News Network, educator Marion Brady has some harsh words for both the diagnosis and the so-called cure. Here is one of her ideas for a real cure: First,they could stop basing education policy on the opinions of business leaders, syndicated columnists, mayors, lawyers and assorted other education “experts” who haven’t passed the 10,000-hour test – 10,000 hours of face-to-face dialog with real students in real classrooms, all the while thinking analytically about what they’re doing and why. “Experts” who see more rigor, more tests, more international comparisons, more “data-driven decision-making,” more math and science, more school closings, more Washington-initiated, top-down reform policy as the primary cure for education’s ills are amateurs.And policymakers who can’t see the perversity of simultaneously spending billions on innovation and billions on standardization, should find other work. Read the whole thing. Brady debunks the entire myth of “data-based solutions” and brings the discussion to where it should really be: On how best to educate students by meeting them where they are. Rhee and her ilk will continue to get the press, especially as long as businesses will profit from what she’s selling, but these “solutions” are no solutions at all, and threaten to destroy public education entirely.

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Police admit failure to treat Chinese man’s murder as racist

Lothian and Borders force said there were significant and unacceptable flaws in investigation into Simon San’s death The family of a murdered Chinese man have received a public apology after the police admitted that officers had failed to treat an attack by a gang of youths as a racist murder. Lothian and Borders police said on Tuesday there were a series of “significant” and unacceptable flaws in its investigation into the killing last year of Simon San, a 40-year-old takeaway worker. San died from severe head injuries after he was attacked by a group of white youths outside the family’s Chinese takeaway at Lochend in Edinburgh. San’s head hit the ground with fatal force after one attacker, John Reid, 16, struck him with a “poleaxe” blow. After admitting culpable homicide, Reid was jailed for five years while two other attackers, also 16, had their sentences for assault later cut to 26 and 24 months. The police had decided the attack was a robbery because San’s wallet and mobile were taken. They ignored the family’s belief that it was racially motivated, based on earlier incidents and eyewitness testimony that his attackers called San “chinky”. Detectives also found at an early stage that one of San’s attackers was “racially prejudiced” and had been reported for a racist offence, while another two had previously been charged for attacking another Chinese shopkeeper. A year-long internal inquiry overseen by Deputy Chief Constable Steve Allen, the force’s second in command, also discovered that a senior investigator on the case was untrained in murder inquiries, that senior officers failed to identify San’s murder as a “critical incident” and that the force let down San’s family. It also emerged that the police had wrongly described San as Vietnamese and that one senior officer had claimed he was “in the wrong place at the wrong time”, a remark Allen admitted was deeply offensive to the family. Speaking with San’s father Trieu Seng San and other family members sitting in tears behind him, Allen confirmed that the force should have treated San’s death as a racist murder. He said officers involved in the case had been formally disciplined, while the force’s procedures had been significantly overhauled. “There is no doubt that Simon’s family have not had the service from my force that we would hope to give any family or any victim of crime.” San’s family claimed much of the evidence was then overlooked by the Crown Office, Scotland’s prosecution service, and demanded a full inquiry by the Lord Advocate, Frank Mullholland. Aamer Anwar, the family solicitor, said the four accused would have faced much stiffer sentences if racial motivation had been included in the charges. At their trial, the judge, Lord Matthews, had repeatedly asked for information on the motivation for the attack. The Crown Office rejected the family’s demands and distanced itself from the police apology. In a statement on Tuesday, it said prosecutors had been “alert” to the question of racist motivation from the start of the case and had questioned the police, but concluded there was no evidence that the actual attack on San was racially-motivated.”For a racial aggravation to be proved there must be evidence to demonstrate the motivation for the commission of the crime. There was no evidence in law to support this and this remains the case,” it said. It added that the court was made aware of the family’s belief in a racist element in their victim impact statement. The Crown Office said that the area chief prosecutor had offered to meet the Sans but stated: “We can confirm the Lord Advocate will not be instructing an inquiry and is satisfied with the Crown’s prosecution of the case.” Scotland Crime Race issues Police Severin Carrell guardian.co.uk

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Bank of America’s share nosedive fuels fears of a second credit crunch

The rapidly declining housing market is heightening concern that the bank will need to make huge write-offs Bank of America continued its tailspin on Tuesday as shares in the largest US bank tumbled by another 6.4% to their lowest level since March 2009, fuelling fears of a second banking crisis. As concerns mounted that BoA will need to take huge additional write-offs on bad mortgages, the cost of insuring the group’s debt jumped to record levels and investors became increasingly concerned that the financial system could be facing a fresh credit crunch. BoA’s share-price fall followed a 7.9% drop on Monday, which took the stock to less than half its value at the start of the year – a decline that wiped about $65bn from its market capitalisation. “It does sap investor confidence to see a bank of this stature struggling so mightily,” said David Dietze, chief investment strategist at Point View Financial Services in New Jersey. “It casts a shadow over the entire financial sector and puts a negative spin on the growth picture,” added Nick Kalivas, of MF Global Research in Chicago. Dennis Dick, of Bright Trading in Detroit, said: “Every day it’s the same story. BoA keeps leading the charge down on financials and every trader is probably using that as an indicator to trade the rest of the financials too.” Investors continued to offload BoA’s shares on fears that its huge exposure to the rapidly declining US housing market and European sovereign debt mean it will need to make much bigger provisions for bad debts. This would force the bank to raise billions of dollars in additional cash to restore its capital ratios, a move that could push the bank’s shares considerably lower. Mark Coffelt, founder of Money Manager Empiric Advisors in Austin, Texas, said: “The stock’s a dog. It’s on a self-fulfilling downward spiral. I don’t know what’s going to make it go up. It either has to prove unequivocally that it has enough capital in a worst-case scenario, or it has to raise capital, which will be very dilutive to existing shareholders.” Investor hopes that BoA may raise further capital without issuing new equity were depressed on Monday after Chinese officials said the US bank would keep at least half of its remaining 10% stake in China Construction Bank. Shareholders had expected the bank to sell the whole stake for up to $20bn. The bank’s prospects took a further hit on Tuesday with the release of new data showing that sales of new US homes declined more than expected in July to the lowest level in five years. Purchases fell by 0.7% to an annual rate of 298,000, indicating that the housing market is struggling to stabilise, according to the Commerce Department. A glut of cheap, second-hand properties arising from the high levels of foreclosure are depressing demand for new homes, making it harder for the housing cycle to turn around. Foreclosures are likely to remain high for some time as the US economic outlook deteriorates and BoA is particularly susceptible after buying sub-prime mortgage firm Countrywide Financial in 2007, months before these kind of high-risk loans resulted in financial crisis. Graham Turner, of GFC Economics, said it was “small wonder that stocks such as BoA’s are under such pressure,” adding that banks are holding on to many of the properties they have repossessed for fear of precipitating further price declines. “The recent uptick in the unemployment rate increases the risks that early arrears will climb further in Q3. The Lehman Brothers crisis succeeded in pushing 30-day arrears up by 39 basis points over two quarters. A similar increase over the coming six months would push early arrears up to new highs,” Turner said. BoA’s shares tumbled as low as $6.28 in morning New York trading, before regaining some ground. Meanwhile, the cost of insuring the bank’s debts – through so-called credit default swaps – jumped by 64 basis points to a record 435 basis points, or 4.35%, according to Markit. This means it would cost $435,000 a year for five years to insure $10bn of the bank’s bonds. BoA, which last week announced a further 3,500 redundancies, was forced to hold a conference call to appease more than 6,000 analysts and investors this month, in the wake of the group’s tumbling share price. Bank of America Banking US economy United States Housing market Real estate Credit crunch Market turmoil Financial crisis Global economy Economics Global recession Tom Bawden guardian.co.uk

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Turkey says it had killed up to 100 Kurdish fighters in Iraq air strikes

Cross-border attacks on PKK guerrillas in Iraq may trigger civil unrest and ethnic violence in Turkey, warns opposition A series of cross-border air strikes by Turkey has killed up to 100 Kurdish guerrillas in northern Iraq, according to the Turkish military leadership, which warned that further raids are likely. The Turkish army said on its website that between 90 and 100 fighters from the outlawed Kurdistan Workers’ party (PKK) had been killed and at least 80 wounded. The air strikes, which began on Wednesday, followed an attack by the PKK in the south-eastern province of Hakkari in which eight Turkish soldiers and a guard died. In the wake of that attack, Turkey’s prime minister, Recep Tayyip Erdogan, said: “The time for words is over. Now is the time for actions.” The PKK has stepped up attacks on the Turkish army since July, killing almost 40 soldiers. But the government’s continued military action against it has been criticised by the main opposition Republican People’s party (CHP), which attacked what it called a lack of a

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