WSJ Week of Feb 27th

Corporate News: Peugeot Heirs Get AIIy in GM --- Investment to Lessen FamiIy ControI of French
Auto Maker; Two WiII Share Purchases, Car Designs

By David Pearson and Sharon Terlep
1,024 words
1 March 2012
The Wall Street Journal
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(Copyright (c) 2012, Dow Jones & Company, lnc.)

The alliance between PSA Peugeot Citroen, Europe's second largest auto maker by revenue, and General
Motors Co. represents the first significant move in recent decades by the French auto maker's founding Peu
geot family to reduce its controlling interest.

ThePeugeot family believes "it is time for another core shareholder to enter the frame," said Erich Hauser,
an automotive analyst at Credit Suisse. He estimates the family's about 46% of voting shares will shrink
after the planned share sale to a low 40% stake.

The agreement will have the two companies share vehicle architectures, components and pool their about
$125 billion a year purchases of materials and parts. A Peugeot logistics unit will handle services for GM in
Europe and Russia. The companies plan to build some vehicles together as soon as 2016.

"There is big pressure to pull back on products and investments and technology" in Europe, GM Vice
Chairman Steve Girsky said in an interview. "We won't have to do that." GM's Opel/Vauxhall will benefit from
the agreement's planned cost savings, but has additional cost cutting planned, he said.

The deal isn't an antidote to the companies' financial troubles in Europe. GM is undertaking a major
restructuring at Opel/Vauxhall and Peugeot plans to cut costs and raise new funds. lt also won't address
excess production capacity at both.

But longer term, the arrangement could lay the groundwork for a deeper partnership between the auto
makers, both of which have struggled in Europe amid weak sales and steep competition. Philippe Varin,
chief executive of Peugeot, called the alliance "rich in its development potential."

FFP, one of the three Peugeot family investment companies, said it would subscribe to half the shares it is
entitled to under a 1 billion euro ($1.34 billion) stock sale designed to bolster Peugeot's finances and help it
pursue its ambitious overseas expansion. GM will pay $335 million for a 7% Peugeot stake.

Their decision to lessen the size of the family stake is partly a function of the tough conditions in Europe's
car market. Auto sales in Western Europe are down 14% since 2007. But in that time, only GM and Fiat SpA
have closed a factory, one apiece. A third, at auto maker Saab Automobile, closed last summer. Matching
production to sales would require eliminating 1.5 million vehicles worth of annual production capacity.

The family's stake in Peugeot Citroen, valued at 1.09 billion euros, is held through a holding company
controlled by three family-owned concerns that has refusal rights on any shares offered by family members.
Peugeots have been part of France's industrial fabric for over two centuries, making flour, watch casings,
garden tools, bicycles and, starting in 1889, steam-driven automobiles.

The company was founded by Armand Peugeot, a businessman and auto racer who started the company in
1896 and produced its first gasoline-engine car in 1891. His descendants have kept a hand in its operations
ever since. Family members have stepped in when they felt the company's interests weren't being served by
its executives.

GM CEO Dan Akerson and Mr. Girsky met with family representatives who blessed the proposal leading up
to this week's deal. "Nothing strategic happens in the company that doesn't get run by the family first," a Pe
uge ot group executive said this week.

ln 2009, the family fired then-Chief Executive Christian Streiff in a phone call because it didn't agree with his
management. That move shocked the Parisian business community where such things are normally carried
Page 1 of 178 2012 Factiva, Inc. AII rights reserved.
out in a more cozy fashion.

ln 2010, the family also nixed a plan to deepen Peugeot's partnership with Japan's Mitsubishi Motors Corp.
that had been carefully crafted by the current chief executive, Mr. Varin. That decision reportedly centered
on differences over valuation and Mitsubishi's complex decision-making process.

The GM-Peugeot alliance aims to extract $2 billion a year in annual savings in five years by sharing vehicle
platforms, components and by launching a global purchasing joint venture.

The Peugeots have said recently that they weren't averse to alliances provided they were in line with the
company's strategy, created interesting synergies, and didn't threaten the company's independence.

That last condition shouldn't be underestimated. Robert Peugeot, chairman of family holding company FFP,
said recently that "independence is having a reference shareholder," strong enough to provide leadership. T
h e actual number of shares is of lesser importance, he said.

Both companies still face huge hurdles in Europe amid the region's debt crisis and the auto industry's over
capacity. On Wednesday, Ford Motor Co. projected its European operations would lose between $500
million and $600 million his year, up from a $27 million loss in 2011.

The political considerations and tough labor contracts that have prevented the two from making needed
cutbacks were apparent after the agreement was disclosed.

GM's European workers "demand that the alliance not have any disadvantages for the employees
specifically in the European engineering and production sites," GM Europe's labor chief Wolfgang Schaefer-
Klug said in a statement. "Chances and risks need to be fairly balanced between PSA and Opel/Vauxhall,"
he said.

French lndustry Minister Eric Besson also said he had been assured the agreement will protect jobs and
preserve Peugeot's presence in France -- sensitive issues in an election year.

"The agreement reached with General Motors won't include production activities and will respect the total
operational independence of the two car makers," Mr. Besson said. The partnership, he added, "will allow th
e French car-maker to support its development in France and abroad."

The planned GM-Peugeot pairing received a cool reception by investors. GM's stock fell 12 cents to $26.02
on Wednesday in New York while Peugeot was off nearly 2% at 15.08 euros in Paris.

License this article from Dow Jones Reprint Service

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AII MobiIe Traffic Isn't EquaI --- As 'Net NeutraIity' Debate SwirIs, WireIess Carriers Start Cutting
SpeciaI DeaIs

By Anton Troianovski
806 words
1 March 2012
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One of Europe's biggest wireless companies recently started offering a new plan in France: For less than
$14 a month, customers could get unlimited Web browsing on their phones.

The catch -- the lnternet was limited to Twitter and Facebook. Every 20 minutes spent on any other website
cost nearly 70 cents.

France Telecom SA's Orange Group is one of several wireless carriers around the world experimenting with
slicing up the Web into limited offerings and exclusive deals they hope will bring marketing advantages or
higher profits.

ln Turkey, mobile operator Turkcell lets users pay a flat fee to access Facebook, but not competing Turkish
social networks. Polish carrier Play has offered free access to a handful of sites including Facebook but
charged for the rest of the Web. And AT&T lnc. now says it's planning to let app developers subsidize U.S.
subscribers' use of services.

Such tests remain the exception not the rule. Still, they show that the "open Web" ideal that has long
governed lnternet use is starting to break down as more and more surfing takes place on mobile devices.

Telecom executives, tired of being the "dumb pipes" through which valuable lnternet traffic flows, say they
need to cut such deals to make investing in expensive mobile-data networks worthwhile. But entrepreneurs
seeking to devise new mobile offerings worry the shifting rules of the game will favor well-heeled companies
that can afford carriers' new terms.

"There isn't a level playing field, quite frankly," said Dilawar Syed, chief executive of Yonja Media Group,
which runs a social network in Turkey, where Turkcell allows unlimited Facebook access for about $2 a
month.

Mr. Syed said his company, whose site has more than six million members, is responding by designing
Yonja's mobile interface to consume less data and in turn lower the cost for users.

AT&T turned heads at a mobile-industry conference in Barcelona this week, after one of the second-largest
U.S. carrier's executives described in an interview a plan to shift some of the cost of data traffic onto the
companies that generate it.

Network and technology head John Donovan said he was working on a product that would allow Web
developers and content providers to pick up the tab for the mobile data their products consume, meaning
that certain movies and apps wouldn't count against AT&T users' data plans.

Mr. Donovan said AT&T needed to be creative in profiting from its network as data traffic shoots up and
lnternet companies make money from services delivered over it.

But some consumer advocates have sharply criticized Mr. Donovan's proposal, saying it would shift the
playing field in mobile technology in favor of established players with the money to pay AT&T to make their
services free for cellphone users.

The moves by carriers to allow special access to some websites have also drawn criticism from "net
neutrality" advocates, who say the entire Web should be equally accessible to users. ln the U.S., the
Federal Communications Commission has adopted net-neutrality rules that are stricter for landline networks
than mobile ones.

Mobile lnternet traffic around the world has more than doubled in each of the last four years, and in half a
decade it will account for 10% of traffic, according to data from Cisco Systems lnc.

As that traffic has grown, carriers like AT&T and Verizon Wireless have stopped offering unlimited data
plans. Now, customers of those companies generally pay more the more data they use.

Carriers, however, are increasingly looking for alternatives to simply charging customers by the gigabyte.
Many are following the money -- back to the technology companies that profit most from lnternet traffic.

"We have a limited capacity in Europe to get consumers to pay more," said Pierre Louette, deputy chief
executive of Orange. A balance needs to be found between what consumers pay and what major sources of
traffic like Google lnc. contribute to the network, he said.

Mr. Louette said he was gaining traction in talks with Google and other major traffic producers to convince
them to contribute more to network costs. He declined to offer specifics.

Turkcell said Facebook lnc. doesn't pay for the right to be part of special offers. An Orange spokesman said
he couldn't comment on whether there was a commercial agreement. Facebook declined to comment.

Sureyya Ciliv, chief executive of Turkcell lletisim Hizmetleri AS, said he offered exclusive access to Faceboo
k in order to attract customers who can't afford a more comprehensive data plan -- squeezing more profits
out of his network.


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Heard on the Street
A Saving Grace for the U.S. Jobs Market

By Justin Lahart
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1 March 2012
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[Financial Analysis and Commentary]

Consumers are on surer footing than economists had thought. The same may be true of the jobs market.

When the Commerce Department released its second look at fourth-quarter gross domestic product
Wednesday, it also substantially revised upward its wage and salary figures for the second half of the year,
adding an aggregate $47 billion to U.S. paychecks.

As a result, the saving rate -- personal saving as a share of after-tax income -- went from 3.9% to 4.6% for t
h e third quarter and from 3.7% to 4.5% for the fourth.

As a consequence, many economic forecasts predicting a slowdown in spending as consumers rebuild
savings depleted last year suddenly look wrong. The dismal scientists would have done well to have paid
attention to something economists at the Philadelphia Federal Reserve pointed out in 2005. Because it is
prone to large revisions, plugging the savings rate into forecasting models "almost invariably makes the
forecasts worse," they wrote.

Moreover, the revised income figures suggest that the saving rate isn't the only thing that has been
underreported.

When it first gins up income figures, the Commerce Department relies on the monthly jobs count from the
Labor Department. Later on, it uses a more comprehensive quarterly census of employment wages that
comes out with a lag and that the Labor Department uses, too, for its annual benchmark revisions to the
jobs data. Wednesday's revisions were based on early job census figures for the third quarter. These won't
be released publicly until late March.

The implication is that the Labor Department's monthly jobs figures are substantially understating how much
improvement there has been in the jobs market. lf that is the case, dour forecasts for consumer spending --
and the wider economy -- are almost certainly wrong.


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Corporate News: Buffett's China Venture Is Pressured --- Car Maker BYD's AnnuaI Profit Drops 44%
on Discounts and Cost-Cutting

By Norihiko Shirouzu in Beijing and Joanne Chiu in Hong Kong
596 words
1 March 2012
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BElJlNG -- BYD Co. continues to suffer from intensifying competition in China and in the solar industry, as t
h e Chinese car-and-battery maker backed by investor Warren Buffett posted a 44% drop in annual profit on
discounts and cost-cutting measures.

BYD posted a slight increase in operating income in its auto business as sales and marketing officials cited
improved second-half sales of new, upscale models.

The Hong Kong-listed company's shares rose 2.4% to 25.50 Hong Kong dollars (US$3.29) Wednesday.

Analysts said BYD would continue to face tough conditions at the lower end of China's auto market after
Beijing's withdrawal of subsidies and as consumers steer their business to more price-competitive cars
made by alliances between global auto makers and their Chinese partners.

"BYD's focus on the low-end automobile market will mean rising competition from rivals such as Sino-foreign
joint ventures that have launched homegrown brands in China," said Charlene Gu, an auto analyst at
brokerage Yuanta Securities.

The company late Tuesday said its net profit for 2011 was 1.40 billion yuan (US$222 million), down from
2.52 billion yuan in 2010, based on Chinese accounting standards.

Revenue rose 1.2% to 49.04 billion yuan from 48.45 billion yuan. The company, which said it would release
its earnings in March, didn't report more detailed figures.

The company -- which is part-owned by MidAmerican Energy Holdings Co., a unit of Mr. Buffett's Berkshire
Hathaway lnc. -- has struggled since mid-2010 to jump-start auto sales and has already been forced to offer
large discounts to spur sales of some of its older vehicles.

Analysts also pointed to the large cost associated with an extensive restructuring of the company's auto
sales and marketing division, which included a large layoff of sales staff last year.

The company's weak performance in China's auto market shakes confidence in BYD because the decline in
revenue and profit from gasoline-fueled cars hits the BYD business model in which Mr. Buffett's company
invested: Using sales of traditional cars and of the batteries BYD makes to help finance expensive research
and development of electric cars, solar panels and other green technologies.

Marketing officials have cited relatively strong sales during the second half of more upscale models the
company launched last year, such as a new crossover called the S6 and a sedan called G6.

"The operations comprising the automobile business . . . had been developing steadily, with a slight
increase in the operating income," BYD said in a statement. "However, affected by factors such as intense
market competition and changes in the product mix, the gross profit margin of the company dropped as
compared to the same period of last year."

BYD also cited a drop in prices in the solar industry.

lnvestors' confidence in BYD has waned as sales of its autos began weakening in the summer of 2010 and
remained sluggish through last summer.

Analysts attribute the slump to competition from affordable cars launched in China by foreign companies
and their local partners, such as General Motors Co.'s Chevy Sail compact car.

BYD's sales also suffered from the Chinese government's decision to scrap purchase incentives for small
cars that boosted its sales significantly in 2009 and early 2010.


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Big Bank Weighs Fee Revamp

By Dan Fitzpatrick and David Enrich
1,333 words
1 March 2012
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Bank of America Corp. is working on sweeping changes that would require many users of basic checking
accounts to pay a monthly fee unless they agree to bank online, buy more products or maintain certain
balances.

The plan by the nation's second-largest bank by assets is the latest sign of stresses in the banking industry
at a time of low interest rates, slow economic growth and new rules limiting many types of service charges.
Many other big banks, including J.P. Morgan Chase & Co. -- the nation's largest -- and Wells Fargo & Co.,
have rolled out plans that aim to raise fee revenue or push customers to do more business with the bank.

Those efforts are tricky, because they risk upsetting the banks' best customers or drawing fire from
politicians. Bank of America retreated last fall from a new $5 debit-card charge following a customer revolt
and a wave of criticism.

The search for new sources of income is especially pressing at Bank of America, where 2011 revenue
dropped by $26.2 billion, or 22%, from its 2009 level.

Bank of America pilot programs in Arizona, Georgia and Massachusetts now are experimenting with
charging $6 to $9 a month for an "Essentials" account. Other account options being tested in those states
carry monthly charges of $9, $12, $15 and $25 but give customers opportunities to avoid the payments by
maintaining minimum balances, using a credit card or taking a mortgage with Bank of America, according to
a memo distributed to employees.

ln addition, some Bank of America branch employees in the Northeast have already been trained to handle t
first phase of a U.S. rollout, one branch manager said. Bank officials have made no final decision about
specific charges or the timing of a national rollout, though the effort has gained even more urgency in the
past few months. People close to the bank said Chief Executive Brian Moynihan is determined to plow
ahead. Bank of America declined to comment.

lt is unclear whether the bank, which counts more than 55 million U.S. households as customers, will stick
with its initial idea for a basic flat-fee checking account that doesn't offer a way to avoid paying a charge.
That scenario is considered less likely than telling checking-account customers they will face a new fee
unless they go online or take other steps outlined by the bank.

Banks often lose money on accounts like basic checking that they use in part to lure younger customers.
They offer the accounts in part because they hope to retain customers as they grow more affluent and use
services such as mortgage and business loans and credit cards.

Many banks have already eliminated the free checking accounts that had been in place since the 1980s and
dismantled rewards programs for debit cards. Bank of America currently charges a wide range of monthly
fees for checking accounts, unless customers meet certain requirements, but the new plans being tested
could change the amounts being charged and the triggers for fees.

lf the plans under consideration work from Bank of America's perspective, it would either collect more in fees
on checking accounts or increase its profitability as customers made greater use of its services.

The goal is to be sure "bank products are used. . .where they achieve profitability," the bank manager said.

Service charges U.S. banks collect on savings and checking accounts totaled $8.67 billion in the fourth
quarter of 2011, down 16% from two years earlier, before limits took effect on the fees financial firms can
charge merchants for accepting credit and debit cards, according to Federal Deposit lnsurance Corp. data.

J.P. Morgan consumer banking chief Todd Maclin told investors Tuesday the bank would like to be able to
charge more than its current average of $10 to $12 a month, but "in this environment l am not going to rock
that boat."

The fee experiments exemplify some unintended consequences of the 2010 Dodd-Frank financial-regulation
overhaul, which clamped down on certain revenue sources of banks and motivated them to seek ways to
make up the difference.

J.P. Morgan Chase and Wells introduced new account structures in 2010 and 2011 that imposed monthly
maintenance fees unless customers maintained certain minimum balances or hit preset monthly deposit
levels. J.P. Morgan said Tuesday that 70% of customers with less than $100,000 in deposits will become
unprofitable for the bank because of new regulations, such as caps on overdraft fees.

Mike Moebs of Moebs $ervices lnc., a bank consultant in a Lake Bluff, lll., said Bank of America could lose
some customers if a basic account with a flat fee is rolled out across the country. "They will keep everybody
they are making money with and try to shed everybody else," he said.

Mr. Moebs also said new charges by the bank will likely hit a broader portion of Bank of America's customer
base than the debit fees it abandoned.

After the bank told employees in fall 2011 of its plan to levy monthly fees on those making debit-card
purchases, Sen. Richard Durbin (D., lll.) called on customers to "vote with your feet." Jay Leno of NBC's
"Tonight Show" jokingly likened Bank of America on Halloween to a greedy trick-or-treater.

Before Mr. Moynihan became the bank's chief executive in 2010, he had pushed it to end its growing
reliance on overdraft fees charged when purchases left customers with negative balances. Those fees were
falling heavily on mostly poor customers. But the late-2009 decision to abandon overdraft charges altogether
on debit-card purchases proved costly, depriving the bank of $1.7 billion in annual revenue.

J.P. Morgan Chase and Wells Fargo didn't cancel their overdraft programs, and some inside Bank of
America groused that it couldn't afford to give up that much revenue at a critical time.

The overdraft decision came just months before the Dodd-Frank law halved what financial institutions could
charge merchants for accepting credit and debit cards. That took away $2 billion in annual revenue from the
bank.

The double hit prompted bank executives to look for new revenue ideas that could be fast-tracked because t
outlook for the bank's consumer operations was so bleak, said one person familiar with the planning. That
was when it came up with the idea of a $5 monthly fee on certain customers who used their debit cards. lt
was a plan that could be implemented quickly and wouldn't require a lot of new technology.

Before deciding to move ahead, the bank held lengthy discussions with community and fair-lending groups
and the newly created Consumer Financial Protection Bureau, among others.

Bank of America was so eager to recoup revenue that it moved up the planned launch up by two or three
months to early 2012, said the person familiar with its planning.

After the public outcry, several other banks ended up dropping the debit-charge fees before Bank of
America retreated.

The debit-card fee wasn't the only revenue idea Bank of America shelved late in 2011. lt decided not to test
a plan in which customers who were about to make a debit-card purchase but didn't have enough in their
account would have gotten an alert giving them the option of buying overdraft protection.

Bank managers also discussed, and ultimately rejected, a fee for direct-deposit customers who want to tap
into their paycheck early.

The bank didn't, however, scrap the testing of potential new checking-account fees. The initial plan was to
roll out the new accounts in late 2011 or January 2012, said the branch manager, but that timeline was
pushed back. Now it could still be "a few months" before the bank is ready, he said.


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GIobaI Finance: WaII Street Bonuses Shrink --- New York ComptroIIer Says PooI Dropped 14% in
'DifficuIt Year' for Industry

By Brett Philbin
631 words
1 March 2012
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NEW YORK -- Wall Street cash bonuses for 2011 are expected to have tumbled 14% from a year earlier and
will likely hit their lowest level since the financial crisis of 2008, according to a report released by New York
state Comptroller Thomas DiNapoli.

New York securities firms will pay employees $19.7 billion in cash bonuses, down sharply from $22.8 billion
in 2010.

A smaller bonus pool is the latest sign of pain for the big banks, which have been culling their ranks and
reducing costs since last spring on the European debt crisis, a slowing U.S. economy and lower client-
trading volumes. lt also has big implications for the budgets of New York state and New York City.

The steep decline in bonuses reflects a major slump across the investment-banking and trading businesses
as profits for the broker/dealer operations of New York Stock Exchange member firms likely plummeted by
more than half for the second year in a row and didn't exceed $13.5 billion.

ln a statement, Mr. DiNapoli said the cash-bonus decline reflects a "difficult year on Wall Street." He said th
e securities industry "faces continued challenges as it works through the fallout from the financial crisis and
adjusts to regulatory reforms."

Mr. DiNapoli said in an interview on MSNBC that "whether we love them or hate them, we need Wall Street
to be profitable." Compensation has been a hot issue in recent years as many people blame these firms for
offering the lofty pay packages that led to excessive risk-taking and heavy losses in 2008.

ln response to tough markets and weak client activity, the securities industry cut 4,300 jobs in New York City
between April and December of last year, the report said. The layoffs reflect a return to the heavy
downsizing at these firms three years ago. During the financial crisis, the industry lost 28,000 positions, of
which only 9,600 returned before the latest round of cuts.

According to the report, the average cash bonus fell 13% to $121,150, but declined slightly less than the
total cash bonus pool because the pool was shared among fewer workers than a year ago.

Michael Karp, a managing partner at Options Group, an executive search and consulting firm, said he
believes Wall Street is in the third year of a five-year cycle and that compensation is in the midst of a
"downward trend" over the next few years.

"Banks have finally figured out that business will not come back due to new regulations such as Dodd-Frank
and the 'Volcker rule,' and there will not be enough jobs to hire for, hence they don't need to pay" for talent,
he said.

The cash-bonus figures, which include estimates of the payouts to employees who work in New York City
during the "traditional bonus season," were calculated using personal income-tax data.

The numbers reflect cash bonuses and deferred compensation for which taxes have been withheld and don't
include stock options or other forms of deferred compensation that hasn't been realized. While several banks
cut cash bonuses by 20% to 30%, the data suggested a smaller decline in the bonus pool, which is likely
because the payment of bonuses had been deferred from prior years.

Before the financial crisis, business and personal tax income collections from Wall Street-related activities
accounted for up to 20% of state tax revenue, but that figure fell to 14% last year. The industry's contribution
to the city's tax collections has dropped to less than 7% from 13%.


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ECB Gives Banks Big DoIIop of Cash

By David Enrich and Charles Forelle
890 words
1 March 2012
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LONDON -- The European Central Bank handed out 529.5 billion euros ($712.75 billion) in cheap, three-
year loans to 800 lenders, the central bank's latest effort to arrest a financial crisis now entering its third
year.

Wednesday's loans were on top of the 489.2 billion euros of similar loans the ECB dispensed to 523 banks
in late December. The ECB's goal is to help struggling banks pay off maturing debts and to coax them to
lend to strained governments and customers. Participation in this week's loans was roughly consistent with
what bankers, investors and analysts had expected.

The December loans helped spur a large rally in Spanish and ltalian debt, particularly among bonds that are
maturing before the ECB loans must be repaid. This time, Spanish and ltalian two-year bonds saw modest
gains, pushing down yields.

Still, the market reaction was generally muted, a sign of the program's unsurprising size. The large pool of
liquidity is enough to ease concerns that bond markets could dry up but not so big to suggest that there will
be huge volumes of cash tumbling into the markets.

The ECB doesn't disclose the identities of the banks that borrowed, hoping to avoid any stigma being
attached to the program. About two-thirds of the loans went to banks in three euro-zone countries -- two in t
h e so-called "periphery," likely Spain and ltaly, and one in the "core," likely France or Germany.

A flurry of European banks reported that they participated. ln Spain, Banco Bilbao Vizcaya Argentaria SA,
which borrowed 11 billion euros in December, said it tapped a similar amount this time.

British lender Lloyds Banking Group PLC took GBP 11.4 billion ($18.1 billion) after not participating in the
previous round. ltaly's lntesa Sanpaolo SpA borrowed 24 billion euros, doubling the 12 billion it took two
months earlier.

"lt's giving us an insurance policy against having any liquidity shock," lntesa Chairman Andrea Beltratti said
in an interview.

The ECB's Long-Term Refinancing Operation, or LTRO, has emerged as perhaps the most potent weapon
in Europe's crisis-fighting arsenal.

Before it was announced late last year, ECB loans generally had to be repaid within about a year at most.
Now banks can borrow virtually unlimited amounts for three years at a 1% interest rate, well below what they
would pay to borrow elsewhere. The ECB money comes with no strings attached, so banks can invest or
lend it as they please.

A similar "carry trade" phenomenon helped U.S. banks emerge from the 2007-2008 crisis.

The first installment of ECB liquidity in December largely eliminated the risk that a bank would suddenly keel
over because it ran out of money.

lt also reduced the odds that banks would have to dump huge quantities of loans and other assets to reduce
their funding needs.

Some banks, particularly in Spain and ltaly, used portions of those funds to buy higher-yielding bonds issued
by their governments at a time when most investors remained skittish, and it helped reduce government
borrowing costs.

But many banks primarily used the funds to pay down maturing debts or simply deposited the money at
other banks or with the ECB itself, even though they yield less. The infusion fell short of some politicians'
hope that it would stimulate bank lending to customers in struggling European economies.

The question now is whether banks will use the second dose of ECB liquidity to finance new loans and
investments, especially to individuals and small businesses starved of credit amid the banking crisis.

lntesa's Mr. Beltratti, for example, said the lender will use a chunk of the 24 billion euros it borrowed this
week to buy ltalian government bonds with maturities of three years or less.

"There is still grounds for a profitable trading strategy," he said, adding that the bank also will plow the
money into new loans.

"The first LTRO was essentially to get rid of the wall of banking debt," Bank of France governor Christian
Noyer said in an interview. "The second LTRO will be more about lending, as it could bring enough funds for
banks to be proactive."

One hopeful sign is the 53% increase in the number of banks availing themselves of the loans. That
suggests many smaller banks across the Continent participated for the first time. Such banks tend to be
more focused than larger ones on lending to small and midsize businesses, so that possibly could hasten th
e trickle-down effect of the ECB cash.

ln Spain, some small lenders borrowed for the first time this week, thanks partly to the ECB allowing a wider
range of assets to be pledged as collateral to get loans.

While the ECB's loan program is widely credited with averting a possible financial disaster, some bankers
and other experts fear that lenders might grow addicted to the central-bank funds.

For some smaller banks, reliance on the ECB loans "is merely stalling recognition of fundamental
weaknesses," said Bridget Gandy, co-head of European financial institutions at Fitch Ratings.

Other analysts, however, say the cheap loans will help banks gradually repair their balance sheets.


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World-Wide
What's News
WorId-Wide

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1 March 2012
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Romney's victories calmed the GOP establishment.

Party leaders are hoping that the former Massachusetts governor will be able to focus more on economic
issues in the wake of his primary wins over Santorum in Michigan and Arizona. Still, Romney faces
challenges as the voting shifts to several Southern states that include large numbers of the GOP's most
conservative voters.

A strong Super Tuesday showing could make it hard for rivals to overtake Romney in the delegate count.

---

North Korea agreed to freeze its nuclear weapons program and allow foreign inspectors to return for the first
time since 2009. The U.S., in turn, agreed to provide food aid and publicly declared it isn't seeking to
overthrow the Kim Jong Eun regime.

---

Syrian troops massed around a rebel-held area of Homs, raising fears of a ground assault. Damascus
blocked the U.N.'s top humanitarian official from entering the country.

---

Panetta ordered a review of allegations that partial remains of Sept. 11 victims were dumped in a landfill
amid rising doubts about the claim.

---

Some military advisers are returning to Afghanistan after the U.S. and its allies pulled them out in the wake
of a Quran-burning controversy.

---

An Egyptian judge is set to lift a travel ban against at least seven Americans accused of breaking laws on
foreign funding of civil society groups.

---

Twenty-six more states asked for waivers from No Child Left Behind Act rules, exemptions that would curb t
h e education law's impact.

---

Violent weather across the nation's midsection spawned thunderstorms and tornadoes in several states,
leaving at least 12 people dead.

---

Senegal's president is preparing for a runoff after failing to win a majority in Sunday's first-round vote.

---

Pakistan said it plans to ease restrictions on trade with lndia by year-end, part of efforts to improve relations.

---

Chinese authorities raised the number of people killed in ethnic violence in its western Xinjiang region to 20.

---

A judge blocked an FDA plan requiring graphic warning labels on cigarette packs, citing free-speech rights.

---

A Parkinson's drug appears to speed the recovery of patients with traumatic brain injury, a new study found.

---

A Guantanamo inmate and Maryland ex-resident pleaded guilty to helping al Qaeda plot attacks from
Pakistan.

---

Major League Baseball is near a deal to expand playoffs to 10 teams from eight.

---

Died: Davy Jones, 66, singer in TV band "The Monkees."


Document J000000020120301e8310003t


Business and Finance
What's News

399 words
1 March 2012
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Fed Chief Ben Bernanke reported to Congress that despite some good news on jobs, the U.S. economic
recovery has been "uneven and modest." A challenge for the Fed is the recent spurt in gasoline prices.

---

The Dow Jones lndustrial Average ended down 53.05 points, falling back below 13000 -- but still adding
2.5% in February, to 12952.07, the fifth straight winning month for blue-chip stocks.

A series of large trades in the futures markets sent Treasury and gold prices spiraling downward.

---

Bank of America is working on checking changes that would force many users to pay a monthly fee.

---

Wall Street cash bonuses for 2011 are expected to drop 14% from last year, the New York state comptroller
said, citing a "difficult year" for the securities industry.

---

A former Massey Energy security chief was sentenced to three years in prison for obstructing a criminal
probe into the 2010 explosion that killed 29 miners.

---

The ECB gave 529.5 billion euros, or about $700 billion, in cheap, three-year loans to 800 lenders, the
central bank's latest effort to arrest the financial crisis.

---

Stockton, Calif., battling declining tax revenue and rising employee costs, is considering bankruptcy -- as
other California cities warn of the same predicament.

---

Wireless carriers are experimenting with slicing up the Web into limited offerings and exclusive deals,
seeking marketing advantages or higher profits.

---

MF Global's final days included a rapid $165 million transfer that employees tried to reverse but failed.

---

Japan regulators formally launched a broad inspection of the corporate pension-management industry as th
e AlJ scandal continued.

---

James Murdoch stepped down as executive chairman of News Corp.'s under-fire U.K. newspaper arm. He
will remain deputy COO and focus on the company's international TV business.

---

The fraud trial of financier R. Allen Stanford, charged in a Ponzi scheme, went to the jury after closing
arguments.

---

A judge declined to stop Kinder Morgan's purchase of El Paso but criticized the handling of the deal by the
companies and bankers.

---

The GM/Peugeot Citroen European alliance is a change for the French auto maker's founding family, which
will see holdings diluted.

---

Copper prices are rising even as warehouses in China, a big consumer of the metal, are filling with it.


Document J000000020120301e8310003s


North Korea PIedges New Nuke Freeze

By Jay Solomon in Washington and Evan Ramstad in Seoul
1,556 words
1 March 2012
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English

An agreement between the U.S. and North Korea on freezing North Korea's nuclear weapons program, the
first diplomatic breakthrough between the two countries since 2007, raised new hopes of broader
negotiations on disarmament and peace -- along with fears the deal will join others that Pyongyang has
broken over the past 20 years.

North Korea agreed to freeze the development of its nuclear-weapons arsenal and long-range missile
program and to allow international inspectors to return for the first time since talks last broke down three
years ago. Washington, in turn, agreed to distribute 240,000 metric tons of food aid and publicly declared
Wednesday that the U.S. isn't seeking to overthrow the government of North Korea's new leader, Kim Jong
Eun.

The announcements could serve as an important first step by Mr. Kim to consolidate his clout both at home
and abroad following the death in December of his father, Kim Jong ll, longtime North Korea watchers said.
North Korea has traditionally hailed the West's distribution of food aid as a sign of the international
community's acceptance of the Kim dynasty.

The deal, confirmed by North Korea's official news agency, was greeted with relief by diplomats and officials
over the possibility of progress, but also with skepticism due to North Korea's record of accepting
international aid without adhering to agreements.

North Korea specifically agreed to halt nuclear activities at its Yongbyon facility north of Pyongyang,
including the enrichment of uranium. While North Korea agreed to let inspectors from the lnternational
Atomic Energy Agency return to Yongbyon after a three-year absence, it still needs to set agreements with t
h e lAEA for visits to any other sites.

The agreement appears to address the main condition set by the U.S. for the resumption of the aid-for-
disarmament process known as the six-party talks: that North Korea demonstrate seriousness about its
willingness to re-enter that process. North Korea formally abandoned the talks, which also involve China,
Japan, Russia and South Korea, in 2009 to protest United Nations penalties following a long-range missile
test.

The deal between Washington and Pyongyang "could be a very serious sign that after the change of
leadership, the foreign policy of Pyongyang will be changing for the better," Konstantin Kosachev, a senior
Russian parliamentarian from the main pro-Kremlin party, told the lnterfax news agency. "We'll need to be
patient to be sure whether these are really positive moves in the policy of the new North Korean leadership
or just the latest game on the part of Pyongyang to attain its goals."

China, North Korea's most important financial and military backer, also welcomed the announcement and
reiterated long-standing calls by Beijing for a resumption of six-party talks. South Korea's foreign ministry
also welcomed the agreement and said faithful implementation of the steps by North Korea would smooth t
h e way for the talks.

The U.S. and North Korea notably didn't agree on another condition sought by Washington to move ahead
with the talks: an end to hostilities between North and South Korea.

Meanwhile, U.S. Republicans questioned whether the U.S. should be seen propping up a North Korean
government that for decades has brutally suppressed dissent and morphed into one of the world's worst
weapons proliferators.

"Pyongyang will likely continue its clandestine nuclear weapons program right under our noses," said lleana
Ros-Lehtinen, Republican chairman of the House Foreign Affairs Committee. "We have bought this bridge
several times before."

The agreement comes as the U.S. is struggling to engage with lran, another adversary with nuclear-weapon
ambitions, which is sending mixed signals on its willingness to discuss its program. These lawmakers have
also voiced fears that Tehran may conclude after watching North Korea that it is in its interests to eventually
acquire nuclear weapons as a means to gain Western concessions.

North Korea for years has engaged in a cycle of provocation, then accommodation with the U.S., South
Korea and Japan, countries it routinely portrays as enemies, in pursuit of financial assistance and security
guarantees to preserve its family-led authoritarian government.

The U.S. has halted aid shipments to North Korea due to fears Pyongyang has diverted the assistance to th
e military. U.S. officials said they are insisting this time on having substantial oversight of the food aid, using
international agencies. The U.N. recently estimated that as much as 80% of North Korean children are
malnourished. The U.S. Agency for lnternational Development hopes to distribute the 240,000 metric tons of
food in monthly installments over a year.

The agreement followed two days of talks between the U.S. and North Korea last week in Beijing, which
U.S. officials over the weekend said yielded little progress, making Wednesday's announcement a surprise.
lt marked the first direct encounter between Washington and Pyongyang since Kim Jong ll's death.

U.S. officials involved in the talks said they offered little indication of significant changes in North Korea's
polices since Kim Jong Eun's ascension. They said most of North Korea's delegates, including chief
negotiator Kim Kye Gwan, have been in their roles for decades. They said that Pyongyang seemed to be
closely overseeing talks in Beijing.

"We were sitting across from essentially the same North Korean negotiators who have been at this in some
cases, for decades," said a senior U.S. official.

Obama administration officials portrayed the agreement as an important first step toward capping the
North's nuclear weapons program, which is now believed to have produced as many as 10 atomic weapons.
They also said the U.S. hasn't committed to resuming formal negotiations with Pyongyang, but is waiting for
North Korea to make good on carrying out its commitments.

"These are concrete measures that we consider a positive first step," White House spokesman Jay Carney
said. The steps in the agreement are "very welcome, but obviously they need to be followed up by actions."

North Korea has been angry at South Korea since 2008, when the South ended its few-questions-asked aid
policy that provided it with nearly $1 billion annually. ln 2010, Pyongyang sank a South Korean warship and
fired rockets on a South-controlled island, though it denies involvement in the sinking, in attacks that killed
50.

By forging a deal with the U.S., North Korea may be attempting to create a wedge between Washington and
Seoul in order to create more political pressure on the South Korean government to resume its financial
assistance.

The lAEA's director general, Yukiya Amano, hailed the agreement as a mechanism through which to gauge
what is believed to be a considerable expansion of North Korea's nuclear program in recent years.
Pyongyang has built a uranium-enrichment facility that experts believe could produce as much as two
bombs' worth of nuclear fuel a year.

The Obama administration views North Korea as perhaps the greatest proliferation threat, due to its military
relationships with lran, Syria and other U.S. adversaries. U.S. intelligence believes Pyongyang has played a
central role in developing lran's missile programs.

The U.S. also believes North Korea was secretly building a plutonium-producing nuclear reactor in Syria
before lsraeli jets destroyed the facility in 2007.

However, because uranium enrichment can occur in multiple locations, the agreement announced
Wednesday didn't appear to include a way for the U.S. and other outsiders to verify Pyongyang wasn't
proceeding with a uranium program at sites beyond Yongbyon, which it revealed to a U.S. scientist in 2010.

---

Gregory L. White in Moscow and Brian Spegele in Beijing contributed to this article.

---

Back and Forth of Talks With the North

October 2002 -- U.S. claims North Korea violated 1994 agreement by pursuing uranium enrichment.

January 2003 -- North Korea withdraws from Nuclear Non-proliferation Treaty, or NPT.

Late 2003 -- North Korea, U.S. enter new aid-for-disarmament negotiations that also involve China, Japan,
Russia and South Korea, a process that becomes known as six-party talks.

September 2005 -- Six-party talks produce first agreement in which North Korea promises to end all nuclear
weapons programs, re-enter the NPT, in return for energy and financial assistance.

October 2006 -- North Korea tests nuclear explosive for first time.

February 2007 -- Six-party talks produce second agreement in which North Korea promises to close its main
nuclear reactor and reprocessing facility at Yongbyon in return for immediate delivery of energy assistance.

July 2008 -- North Korea blows up the cooling tower at its nuclear reactor, shutting it down.

April 2009 -- North Korea tests a long-range missile, is sanctioned by the U.N. Security Council and declares
it will not participate in the six-party process anymore.

June 2009 -- North Korea tests its second nuclear explosive.

November 2010 -- North Korea shows uranium enrichment facility to a visiting U.S. scientist, revealing more
details than previously known about that capability.

December 2011 -- North Korean dictator Kim Jong ll dies.

February 2012 -- North Korea agrees to halt nuclear activities in agreement with the U.S.

WSJ research


Document J000000020120301e8310003r


Small Business
Sick-Time RuIes Re-Emerge --- More Governments Look to Require SmaII Businesses to Provide
Time-Off Benefits

By Sarah E. Needleman
1,006 words
1 March 2012
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English

Thomas Erb is ticked about the possibility he'll be forced to hand employees even more paid sick time.

He fears lapses in productivity at his 30-employee clock-making firm, Electric Time Co., from possible
increases in unscheduled absences.

"We have one person per job here," says Mr. Erb, of Medfield, Mass. "lf someone starts to abuse the sick
[leave], the organization doesn't function."

A debate over paid sick leave is intensifying around the country, amid concerns that economic pressures are
prompting workers to place their financial security above their health.

Many people will go to work while ill -- and even send their children to school sick -- because they can't affor
d to stay home, supporters of paid sick time say.

Supporters are concerned by signs that small employers have begun cutting back on paid sick-day benefits.

About 32% of businesses with fewer than 50 employees provided paid time off specifically for illness in
2011, compared with 39% in 2009, according to the Society for Human Resource Management in
Alexandria, Va.

Connecticut in January became the first state to require paid sick leave, though businesses with fewer than
50 workers are exempt.

Seattle will mandate paid sick time, starting in September, even for firms of a relatively small size. Those
with between five and 49 employees, for instance, must let their workers accrue at least five days of paid
sick time yearly.

The push for paid sick days initially gained major prominence in late 2008, when President Obama, while
president-elect, said he wanted a federal sick-day mandate. By then, the city of San Francisco and the
District of Columbia had already begun to mandate paid sick days.

One federal proposal, which Mr. Obama backed at that time, would require employers with 15 or more
workers to provide seven paid days for their own or a family member's illness.

But the weak economy was an obstacle, partly because of fears that a one-size-fits-all approach would put
businesses at a disadvantage.

After the 2009 swine-flu outbreak, many began to more urgently fear the risks of spreading disease.

Providing paid sick leave "doesn't affect your bottom line. lt isn't going to make or break you," says Makini
Howell, owner and chef of vegan restaurant Plum Bistro lnc. in Seattle. Generally, absences for sickness at
her establishment are rare, says Ms. Howell, who lobbied in support of Seattle's forthcoming mandate.

Small employers that don't provide paid sick leave in most cases have made that choice because they can't
afford it, according to Helen Darling, president and CEO of the National Business Group on Health, a
nonprofit employer advocacy group in Washington. "lt isn't that they're being mean-spirited," she says.

At a 30-employee firm that pays an average of $10 an hour, the cost of providing seven paid sick days could
amount to roughly $18,700 a year, including payroll taxes, according to Daniel L. Haynes, a Fredericksburg,
Va., accountant.

Business owners are also wary of the possibility of a lapse in their operations if paid sick leave days are
abused. Overall, the direct cost of incidental absences is only about 2% of the payroll, according to a 2010
survey of 473 employers of all sizes by benefits consultants Mercer.

But indirect costs from unplanned incidental absenteeism -- including finding replacement workers, paying
overtime, filling out additional paperwork, and disruptions to their businesses that might hurt customer
service -- amount to about 3.8% of payroll, Mercer estimated.

Many small-business owners already struggle with managing turnover and absenteeism, says John
Haltiwanger, a professor of economics at the University of Maryland, who adds that small firms generally
don't have human-resources departments.

"lf you have one hundred people and one person is out, it isn't even a speed bump," adds Ted Clark,
executive director of the Center for Family Business at Northeastern University. But at a business with just a
handful of employees, when one person is out, "it is a stop sign."

ln Massachusetts, paid sick-day legislation was reintroduced last year following three unsuccessful attempts
at passage. The legislation would force employers to allow workers -- including part-timers and contract
workers -- to accrue at least seven paid sick days yearly. One proposal would exempt businesses with fewer
than six workers.

Mr. Erb, the clock maker, says he already informally provides five paid sick days -- and he believes that is
enough.

Erin Calvo-Bacci, the Reading, Mass., owner of Bacci Chocolate Design, doesn't want sick workers
spreading their germs around the high-end oversized peanut-butter cups and caramel-stuffed brownies that
she sells to candy stores around the country. Yet, an increase in unplanned absences could hurt sales,
particularly at her two retail locations, she says.

She already gives her two full-time employees up to three days of paid sick leave, she says. The other 10
people on her staff, all part-timers, can take off whenever they're not feeling well or need to care for a sick
loved one, she says -- they just won't get paid during that time.

"lf someone calls out sick from a morning shift, and l can't find a replacement, then the store doesn't open
until the afternoon person can get there," says Ms. Calvo-Bacci, who adds that profitability has slipped
slightly at her business for the past four years.

The National Federation of lndependent Business, a small-business lobby group, on Feb. 21 released its
estimates that the Massachusetts proposal could result in nearly 16,000 jobs lost by 2016 and a decrease of
more than $8.4 billion in lost production. Firms with fewer than 500 employees would bear two-thirds of the
job losses and more than half of the lost sales, it says.


Document J000000020120301e8310003q


WorId News: WorId Watch

471 words
1 March 2012
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ZlMBABWE

Prime Minister Expects

Continuation of Coalition

The country's fraught "unity" government will survive another year, Prime Minister Morgan Tsvangirai said,
despite his rival's calls for early elections that have unnerved investors and African neighbors worried about
a repeat of a violent 2008 vote.

"l think the coalition will hold," he said in an interview. "Across the political divide, does anyone want to go
back to 2008? The answer is an emphatic 'no.'"

ln the wake of the disputed 2008 elections, South African mediators persuaded Mr. Tsvangirai to form a
governing coalition with President Robert Mugabe, who has run Zimbabwe since its independence in 1980.
Mr. Mugabe said on Saturday that he wants elections this year to escape that problematic partnership.

Mr. Tsvangirai, the 59-year-old former trade unionist who built his political career on calls for Mr. Mugabe to
step down, wants first a new constitution in place that includes presidential term limits.

-- Peter Wonacott

---

JAPAN

Tokyo Seeks to Resume

Lending to Myanmar

The Japanese government is moving toward resuming development loans to Myanmar, joining a global
campaign to endorse recent reforms -- and seek opportunities -- in the once-ostracized nation.

"To expedite Myanmar's move forward, real infrastructure is indispensable, and the resumption of loans is
necessary," Japanese Foreign Minister Koichiro Gemba said in a speech Monday in Tokyo. "l feel that
Myanmar's democratization and liberalization are real."

The Japanese government announced Tuesday that next month Myanmar President Thein Sein will make
his first visit to Japan to meet Prime Minister Yoshihiko Noda and attend the Mekong-Japan Summit, joining
leaders from Cambodia, Laos, Vietnam and Thailand.Japan extended almost <yen>410 billion ($5.1 billion)
in development loans to the Southeast Asian nation before 1988 but halted the program after a military
crackdown that year, according to the Foreign Ministry.

-- Eleanor Warnock

---

CHlNA

Death Toll lncreases

ln Violence in Xinjiang

Authorities in China's restive western Xinjiang region raised the number of people killed in a Tuesday attack
there to 20, potentially marking a fresh wave of ethnic unrest.

Xinjiang is home to China's most violent ethnic conflict, and clashes between Muslim Uighurs and Han police
and residents in the region have left hundreds dead in recent years.Beijing has embarked on a campaign to
promote investment in the region as well as trade between Xinjiang and neighboring Central Asian nations.

-- Brian Spegele

Manufacturing Gauges Rise

Two gauges of manufacturing activity in China both rose in February, likely further assuaging market
concerns about a slowdown.

The official Purchasing Managers lndex rose to 51.0 in February compared with 50.5 in January. A
competing PMl by HSBC Holdings PLC rose to 49.6 in February from 48.8 in January.

-- Aaron Back


Document J000000020120301e8310003p


Corporate News: James Murdoch Quits a Post --- Son of News Corp. CEO Departs Tainted U.K.
Papers Unit, Keeps Other TitIe

By Paul Sonne
847 words
1 March 2012
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LONDON -- James Murdoch is stepping down as executive chairman of News Corp.'s scandal-plagued
British newspaper unit.

Mr. Murdoch will remain deputy chief operating officer of the media conglomerate based in New York, where
he will focus on News Corp.'s international television business, an area where he previously won
management plaudits.

The change removes the 39-year-old Mr. Murdoch from oversight of News lnternational, which is at the
center of three British criminal probes into illegal reporting tactics, including allegations of voice-mail
interception at the now-closed News of the World and bribery of police and other public officials at the Sun.

Mr. Murdoch has been in the public glare during News Corp.'s efforts to tame the scandal since it
mushroomed into a full-blown crisis last July over revelations that the News of the World had hacked into a
murdered teen's voice mails. The scandal led to the abrupt closure of the 168-year-old weekly tabloid, the
resignation of top News Corp. executives, and the derailment of News Corp.'s multibillion-dollar bid to take
full control of British Sky Broadcasting Group PLC.

The scandal has clouded the career of Mr. Murdoch, who had been viewed as the primary candidate to take
over for his father, News Corp. Chairman and Chief Executive Rupert Murdoch, particularly since older
brother Lachlan left his News Corp. post in 2005.

Since last July, an issue in the public drama has been James Murdoch's handling of the phone-hacking
affair, and questions about when he learned the extent of the wrongdoing. He has appeared twice for
hearings in front of a U.K. parliamentary committee. Both times, he has fended off barbs from politicians and
said he came to appreciate the full breadth of the wrongdoing only in late 2010.

Even as the phone-hacking scandal escalated, 81-year-old Rupert Murdoch maintained that he had "full
confidence" in his youngest son to take over eventually.

"Now that he has moved to New York, James will continue to assume a variety of essential corporate
leadership mandates, with particular focus on important pay-TV businesses and broader international
operations," Rupert Murdoch said in a statement Wednesday.

News Corp. owns The Wall Street Journal.

Harriet Harman, deputy leader of the U.K.'s opposition Labour Party, said Mr. Murdoch had "no option but to
go" after "shocking evidence" of alleged bribery by the Sun, revealed this week at a public inquiry into media
ethics by the police officer running the three criminal probes. "The practices at News lnternational have
stained the proud tradition of the British press," Ms. Harman said.

James Murdoch has overseen News Corp.'s operations in Europe and Asia, including News lnternational,
since joining the company in late 2007 from BSkyB, where he was chief executive and still serves as
nonexecutive chairman. News Corp. owns 39.1% of BSkyB.

Last March, after police had reopened the probe into phone hacking but before the matter exploded into a
global scandal, News Corp. appointed Mr. Murdoch deputy chief operating officer and said he would relocate
to New York from London to take up the job. At the time, News Corp. said he would maintain responsibility
for operations in Europe and Asia, which include the U.K. newspaper unit.

The appointment was seen as a promotion, but people familiar with the matter later said News Corp.'s U.S.
management wanted a single power center in New York, instead of one in the U.S. overseen by Rupert, and
one in London overseen by James.

The younger Mr. Murdoch had clashed over the years with the U.S. management, which at times felt he was
overstepping his authority as head of Europe and Asia, according to some people close to the situation.

After Wednesday's announcement, management of News lnternational will be left to Tom Mockridge, who
took over as chief executive of the U.K. newspaper unit last July, after Rebekah Brooks resigned. Mr.
Mockridge will report directly to News Corp. President and Chief Operating Officer Chase Carey.

Ms. Brooks was arrested in July as part of the phone-hacking probe, but hasn't been charged. As the
bribery allegations against the Sun -- where Ms. Brooks was editor from 2003 to 2009 -- have gaine
d momentum recently, she resurfaced in the headlines here this week with the news that the Metropolitan
Police in 2008 lent her a retired police horse named Raisa for two years. Pundits seized on that as evidence
that she was too cozy with the police, but Scotland Yard described the loan as part of a routine program to
find retirement homes for animals.

On Wednesday morning, Rupert Murdoch entered the debate via Twitter, with a tweet that said: "Now they
are complaining about R Brooks saving an old horse from the glue factory!"

---

Russell Adams contributed to this article.


Document J000000020120301e8310003k


GIobaI Finance: Japan Launches Pension Inspection

By Atsuko Fukase and Kana lnagaki
509 words
1 March 2012
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English

TOKYO -- Japan's regulators launched a broad inspection of the country's $350 billion corporate pension-
management industry as regulators search for billions of dollars managed by AlJ lnvestment Advisors Co.
that are believed missing.

But the move, the first time that the financial-services ministry has looked at once at all 265 investment firms
that manage company pension funds, underlines the limits on manpower and resources to police an industry
that is increasing in importance as Japan's population ages.

A second ministry, for health, labor and welfare, oversees nearly 600 pension funds, and regulators there
say they don't have the resources to closely monitor them.

The country's Financial Services Agency continues to investigate what has happened to most of 183 billion
yen ($2.27 billion) managed by Tokyo-based AlJ, which it says can't be located. Regulators on Wednesday
declined to provide any updates on the probe, which became public on Friday.

AlJ hasn't been charged with any wrongdoing.

Calls to AlJ on Wednesday were routed to a message asking callers to try again later.

As part of Japan's broader efforts to liberalize its financial-services industry and boost a pension-fund
industry grappling with a shrinking ratio of workers to retirees, the government in 1997 removed stringent
regulations on how pension funds can invest, and instead created loose, nonbinding guidelines on how
funds can diversify their investments to minimize risks. Officials say they are wary of reimposing strict
regulation for fear of deterring financial-service providers from operating in the country.

For the first time since a 2007 review of the country's securities rules, FSA officials on Wednesday ordered
all of the 265 investment-advisory firms in the country that manage corporate pension funds to provide
details on their clients and sales materials. Until now, investment-advisory firms have been required to
submit only an annual filing on their business plan to the FSA, and the Japan's securities watchdog has
inspected about 15 to 20 firms of its choosing annually.

The FSA on Wednesday said it will also ask whether advisers set up investment-trust funds overseas, so
that it can know where the money is, and whether they use outside auditors. lt isn't clear whether AlJ uses
trusts overseas or outside auditors. Firms have until March 14 to submit responses, and the FSA could then
ask follow-up questions.

But citing tight resources, with only a small, unspecified number of inspectors available, FSA officials
presenting the new plan said they are uncertain whether they can prevent problems. "We'll do our best, but .
. . we can't promise that we'll be guaranteed to find any falsification [by any investment-advisory firm] 100%
under our supervision," an FSA official said.

The FSA's move came a day after Japan's welfare ministry, which oversees corporate pension funds, said it
will review and strengthen guidelines for pension-fund management.


Document J000000020120301e8310003j


U.S. News: CaIifornia Cities Hit the WaII --- First Test of New Bankruptcy Law as Revenue Drop
Crunches Three Communities

By Bobby White and Vauhini Vara
965 words
1 March 2012
J
A3
English

Confronted by declining tax revenue and rising employee costs, Stockton, Calif., is considering bankruptcy --
while several other struggling California cities warn they could eventually face the same predicament.

Stockton officials voted Tuesday night to take the initial step toward a bankruptcy filing by the city of
290,000, located in the agricultural Central Valley. The decision launches the first test of a new state law
that requires cities to negotiate with employees, creditors and others to try to stave off a filing before making
move.

As in Stockton, two other Northern California cities, Hercules and Lincoln, are attempting to restructure their
debt and cut employee costs to forestall insolvency. Late last year, Hercules retained bankruptcy attorneys
in part to explore options with its creditors.

The problems facing these cities follow the Chapter 9 bankruptcy of Vallejo, Calif., in 2008. Vallejo exited
from bankruptcy last year after cutting costs, but its finances remain precarious, officials said.

Since then, there have been municipal bankruptcies elsewhere, including by Central Falls, R.l., Harrisburg,
Pa., and Jefferson County, Ala.

While a number of communities nationwide are in financial straits, troubled ones in California are under
unusual pressure. State law makes it hard for cities to quickly raise taxes to cover shortfalls because they
typically have to gain voter approval for increases. California also was hit harder than many states by the
mortgage crisis and housing bust, leaving it with one of the country's highest foreclosure rates. That reduces
tax revenue.

"We don't want to use the 'b-word' around here and we're working to ensure our finances are secure, but we
face a daunting challenge," said Hercules City Manager Steve Duran, speaking of bankruptcy.

Hercules, a commuter town of 26,000 people about 25 miles northeast of San Francisco, technically is in
default and is negotiating with creditors to avoid lawsuits, Mr. Duran said.

Lincoln, a fast-growing city of 42,000 north of Sacramento, is "challenged with staying afloat while
overcoming very difficult fiscal conditions," said Tom Sinclair, a municipal consultant hired by Lincoln
officials.

Stockton, meanwhile, faces a budget deficit of $20 million to $38 million for the fiscal year ending June
2013. On Tuesday night, the City Council approved the negotiations, called a "neutral evaluation," aimed at
seeking an alternative to bankruptcy.

California cities must undertake such negotiations before pursuing a Chapter 9 filing under the law Gov.
Jerry Brown signed last year.

The law is a recognition that Chapter 9 bankruptcy wasn't necessarily designed to handle municipal defaults,
said Randall Newsome, a retired federal bankruptcy judge. Bankruptcy is painful for municipalities, he said,
since it entails restructuring long-standing contracts. including retiree health-care benefits.

"Right now we're a city that, frankly, has hit the wall," said Stockton Mayor Ann Johnson. "We're looking at a
financial situation that is so bad that we see no way out of it than to begin this [mediation] process."

The troubles are weighing on Stockton employees. Rhonda Lobosco, who has worked for the city for 20
years, doesn't recall ever seeing her hometown in such bad shape. Ms. Lobosco, a 51-year-old secretary in
city's public-works department, worries she could lose the health benefits she had been promised in
retirement due to the city's troubles.

"l'm afraid," she said. "l take really good care of myself -- taking Chinese medicine, herbs. l don't want to get
sick because l may not have that benefit."

California's treasurer, Bill Lockyer, said he is concerned the "reputational stain" from any further municipal
bankruptcies in the state might harm the ability of other cities, and perhaps the state, to raise funds in the
bond market.

Richard Larkin, director of credit analysis at Herbert J. Sims & Co., an underwriter of tax-exempt bonds,
agreed. "The more [bankruptcies] that occur, the more likely that the credit market will begin to make
borrowing more difficult by raising interest rates for bond issues of other organizations in California, including
the state itself," Mr. Larkin said.

To avoid bankruptcy, other California cities have taken drastic steps in recent years. San Carlos and Half
Moon Bay, both south of San Francisco, have outsourced city services such as law enforcement and
recreation management to shed their costs.

Meanwhile, the situations in Hercules and Lincoln are compounded by debt those towns took on while times
were flush; both are now struggling to make payments on that debt.

Hercules is trying to close a $1 million budget gap for the fiscal year that begins July 1. Last year, Hercules
voted to lay off 37% of its work force, including three police officers, to close a $6 million shortfall for the
current fiscal year.

Mr. Sinclair, Lincoln's municipal consultant, said that city took out more than $30 million of debt last decade.
Now, with depressed real-estate values that hurt tax revenue, Lincoln may be forced to outsource most of its
services, including police and fire, to surrounding districts, he said.

"This year has been very challenging and it's going to be difficult going forward," said Anna Jatczak,
Lincoln's finance director.

---

Tough Times

Three California cities have warned they are in danger of insolvency

Stockton

Population: 290,000

2012-2013 projected deficit: $20-38 million

Voted Tuesday to take the first step toward bankruptcy

Hercules

Population: 26,000

2012-2013 projected deficit: $1 million

Voted last year to lay off 37% of city workers

Lincoln

Population: 42,000

2013-2014 projected deficit: $2 million

Hired municipal consultant to avoid insolvency


Document J000000020120301e8310003h


U.S. News: Fed Chief Interprets Growth, Job SignaIs

By Jon Hilsenrath
665 words
1 March 2012
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English

Federal Reserve Chairman Ben Bernanke is wrestling with a conundrum: Even though the economy isn't
growing very fast, unemployment has come down substantially in the past few months.

Does that mean the recent drop in unemployment isn't sustainable given how slowly the economy is
growing? Or does it mean that it simply doesn't take much growth to get unemployment lower these days?

Mr. Bernanke highlighted the conundrum in his semiannual testimony to Congress on Wednesday and
seemed to lean toward the former conclusion.

"The decline in the unemployment rate over the past year has been somewhat more rapid than might have
been expected, given that the economy appears to have been growing during that time frame at or below its
long-term trend," he told House lawmakers. "Continued improvement in the job market is likely to require
stronger growth in the final demand and production."

The comment exemplified the cautious tone the Fed chairman took in his update on the economic outlook.
Despite some good news on the job front, he said the recovery has been "uneven and modest."

Another challenge for theFed is the recent spurt in gasoline prices, which Mr. Bernanke said was "likely to
push up inflation temporarily while reducing consumers' purchasing power." The Fed has been expecting
inflation to fall below its 2% objective this year, but a gasoline-price surge -- if sustained -- could alter tha
t view.

Given his uncertain outlook for both inflation and unemployment, Mr. Bernanke appeared to be in no hurry to
launch new policies aimed at boosting economic growth. The Fed has recently completed a series of moves
aimed at driving down long-term interest rates to spur investment and spending.

Mr. Bernanke has left the door open to a new program of mortgage-bond purchases to drive long-term rates
even lower. But the subject was barely discussed at the hearing, and Mr. Bernanke did nothing to press the
issue.

Central to the decision is the outlook for unemployment. An economic rule of thumb, laid out by Yale
economist Arthur Okun in 1962, is that if the economy grows one percentage point above its long-term
growth rate of around 2.5%, the unemployment rate tends to fall by around a half or a third of a percentage
point. The rule has broken down in the short term at times, and this might be another case of it.

The economy grew by 1.7% in 2011, which in theory shouldn't have been enough to bring unemployment
down. Yet the jobless rate fell to 8.5% in December from 9.4% a year earlier. The rate fell in January to
8.3%.

lf unemployment keeps falling that rapidly, it would be good news for workers, but might also cause inflation
pressures to build. ln that scenario, theFed would be less inclined to take new measures to spur growth.

The Fed's forecasting models don't point to much improvement in the job market this year. The central bank
is forecasting economic growth of 2.2% to 2.7% in 2012, and unemployment between 8.2% and 8.5% by the
end of the year.

However, if the relationship between growth and unemployment no longer fits the models, then
unemployment might keep coming down even without much additional growth. Mr. Bernanke's testimony
indicated he is looking at the issue but isn't convinced that theFed's forecasts are off.

U.S. economic growth did pick up at the end of 2011. Fourth-quarter output rose at a 3.0% annual rate, the
Commerce Department reported Tuesday, a bit more than the 2.8% growth rate previously reported. A
separate Fed report Wednesday, the so-called beige book, said the U.S. economy grew at a "modest to
moderate" pace in January and early February.

---

Jeffrey Sparshott contributed to this article.


Document J000000020120301e8310003c


Fast, Furious at MF GIobaI --- In Days Leading Up to Firm's CoIIapse, $165 MiIIion Transfer OK'd in a
FIash

By Julie Steinberg, Mike Spector and Aaron Lucchetti
1,092 words
1 March 2012
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C1
English

At 4:53 p.m. five days before MF Global Holdings Ltd. collapsed, an employee in its Chicago office asked a
co-worker to move $165 million from one of the securities firm's bank accounts to another.

"Approved," came the response one minute later, according to an email reviewed by The Wall Street
Journal. Within about 15 minutes, the money moved to an MF Global account at J.P. Morgan Chase & Co.,
internal documents show.

Within minutes, though, several MF Global employees realized there was a problem, according to people
familiar with the matter. The cash actually had been transferred out of a customer-segregated account, not
one of the company's own bank accounts, the documents show. The employees tried to reverse the $165
million transaction but failed.

The money is part of the estimated $1.6 billion missing from accounts of farmers, traders and other
customers after the New York company filed for bankruptcy protection Oct. 31. lnvestigators are scrutinizing
the paper trail, which hasn't been previously disclosed, as they try to determine what happened to customer
money at MF Global.

Unsuccessful efforts by employees over three days to undo the transaction suggest that at least some of
them were concerned the $165 million transfer was an error. Under federal rules, firms like MF Global can
put their own money in customer-segregated accounts, in part to provide ease of trading for those
customers. Dipping into a customer account is permitted under those rules as long as the customers' own
funds aren't touched. The account held customer money and some of MF Global's own funds.

No one has been charged with wrongdoing, but futures-exchange operator CME Group lnc. has said that
someone at MF Global illegally dipped into client funds during the securities firm's final days. CME, one of M
F Global's regulators, said Tuesday that federal prosecutors in Chicago have convened a grand jury in the
matter. Jon S. Corzine, MF Global's former chairman and chief executive, has denied telling anyone to
misuse client funds.

Meanwhile, regulators and industry groups are working on possible changes to rules aimed at preventing a
shortfall in client money. On Wednesday, the Futures lndustry Association called for more disclosure by
firms on handling of customer money.

As the criminal and civil probe enters its fifth month, investigators have encountered a large number of
transactions made by MF Global during its final days. U.S. prosecutors and regulators already have
questioned at least one MF Global employee who approved the $165 million transfer, which came the same
day that MF Global customer accounts first showed a shortfall.

Christy Vavra, a treasury-operations manager at MF Global, has been interviewed by investigators at
agencies including the U.S. attorney's office in Chicago, Securities and Exchange Commission and
Commodity Futures Trading Commission, said a person familiar with the matter. Ms. Vavra's lawyer
declined to comment.

J.P. Morgan also has been questioned about the $165 million transfer, according to a person familiar with th
e matter. Four days before MF Global filed for bankruptcy protection, the company's brokerage unit
borrowed the same amount using a secured credit facility led by J.P. Morgan. The loan was paid back the
next day, this person said. lt couldn't be determined if the loan and transfer were related.

The transfer is a sign of the chaos inside MF Global as panic deepened over the securities firm's bets on
bonds of some European countries. MF Global employees were besieged by margin calls and demands for
additional collateral. ln the case of the $165 million, the transfer of money from the customer account
resulted from a quick flurry of emails, the documents show.

lt isn't clear who ordered MF Global's back-office staff in Chicago to move $165 million to the bank account
at J.P. Morgan. Midlevel finance officials usually couldn't move such funds without direction from more-
senior officials.

An email reviewed by the Journal shows R. Jason Chenoweth, a supervisor in MF Global's treasury-
investment division in Chicago, asked the team led by Ms. Vavra to "please wire" the money from the
company's MF Global Finance USA unit to MF Global Securities lnc., another subsidiary. Both units handled
the firm's own money.

Joseph Cranston, another MF Global employee in Chicago, approved the transfer at 4:54 p.m. Central time.
And at 5:04 p.m., employee Sarah Howgate asked Ms. Vavra to give a final nod.

"Please move $165mm using rep code CHASEFlN," Ms. Howgate wrote in an email to MF Global's treasury-
operations staff. "Rep code" was used as a shortcut to help the firm's electronic systems move money
quickly. Ms. Vavra responded one minute later.

"Approved," she wrote in an email. A summary of the transaction shows an "incoming money transfer" to MF
Global's account at J.P. Morgan.

Employees soon realized that the $165 million hadn't come from theMF Global Finance USA unit, according
to people familiar with the situation. Some of those people believed an inaccurate "rep code," not
"CHASEFlN," was entered into the computer, despite Ms. Howgate's instructions. The mistake meant that t
h e money was moved from the customer-segregated account.

Some MF Global employees worked to get the money back from J.P. Morgan. On Oct. 28, treasury-
operations official Sheila Lane entered a "cancellation request" into an electronic system linked to the bank.

"Please back value wire to 10/27/11," she wrote, according to a document reviewed by the Journal. "Back-
value" requests are commonly used by financial firms when asking a trading partner to reverse a transfer
made in error. Ms. Lane told Edith O'Brien, an assistant treasurer at MF Global, about the request in an
email. "Thank you," Ms. O'Brien replied.

Ms. O'Brien was one of MF Global's key Chicago employees when it came to moving funds, and she
sometimes communicated with senior officials with the firm's headquarters in New York. Mr. Corzine, a
former Goldman Sachs Group lnc. chairman, New Jersey governor and U.S. senator, told a congressional
panel in December that she had assured him that a separate money transfer was proper.

---

Jacob Bunge contributed to this article.


Document J000000020120301e83100038


WorId News: Iran's Most PowerfuI Take Feud to the PoIIs --- Supporters of Supreme Leader and
President Vie for Dominance; Regime LoyaIist Sees a Contest Between 'Better and Best'

By Farnaz Fassihi in Beirut and Bill Spindle in Tehran
919 words
1 March 2012
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A10
English

lran's parliamentary elections on Friday are shaping up as a contest by proxy between President Mahmoud
Ahmadinejad, who seeks public endorsement of his efforts to wield broad authority, and Supreme Leader
Ayatollah Ali Khamenei, who has struggled to keep his populist president in check.

Efforts to tame the president have only dented his reputation, and he could cement a political comeback if
his supporters win a decisive majority of parliament's 290 seats on Friday.

The vote is the first since Mr. Ahmadinejad's re-election in 2009, when protests contesting the vote were
snuffed out by a violent crackdown. This time, the reformist opposition is boycotting the polls, leaving
supporters of conservative politicians at ease about their choices.

"lt's really a matter of better and best," Akbar Nazifi, a 47-year-old resident of a working-class neighborhood
in South Tehran, said Wednesday at a rally by candidates for a political bloc whose loyalty to Mr. Khamenei
trumps all.

While all candidates center their campaigns on their pledge of loyalty to Mr. Khamenei, they argue over who
is best qualified to execute his vision for the lslamic Republic at a time of intense international pressure and
economic hardship.

Mr. Ahmadinejad, whose term -- by law his last -- ends in less than two years, has made no secret of hi
s ambitions, though in doing so he has at times clashed with and challenged the supreme leader.

"lf some people think the president's duty is limited to overseeing only the administrative branch they are
mistaken," Mr. Ahmadinejad told officials on Feb. 21, according to state media. "The president has the right
to supervise every branch and sector of the government."

The comments prompted an uproar by domestic critics who called him ignorant of the law.

"The difference between Ahmadinejad and other factions is that he is not loyal to any ideology, not even to
Khamenei, or principles of the revolution, other than staying in power," said Hossein Bastani, an lranian
political analyst and former official now in exile in London.

The public remains divided over the vote. Hundreds of potential candidates were barred from running
because they were deemed not sufficiently religious or loyal to the supreme leader, or seemed sympathetic
to the reformist opposition. Regime loyalists and some public-sector workers fearing retribution might show
up at the polls, but low turnout is expected among lran's 48 million eligible voters.

Secret security teams have been dispatched around the capital, Tehran, according to lranian media, to
monitor activity at the polls and crush potential unrest.

The main reformist political parties and supporters of the opposition Green Movement say they will stay at
home because the elections aren't democratic. "l don't call the staged event on Friday 'elections' and have
no intention of voting," said a 29-year-old graduate student of philosophy in Tehran.

lnterior Minister Mostafa Mohammad Najjar told foreign journalists in Tehran on Wednesday that the boycott
would backfire by driving patriotic lranians to the polls. "The elections will turn out to be even more glorious,"
he said.

More than 3,400 candidates are on the ballots, virtually all of them conservatives. The two major blocs are t
h e Resistance Front, generally loyal to Mr. Ahmadinejad, and the United Front, aligned with Mr. Khamenei.
Each has formed a candidate list made up largely of established politicians and clerics.

Despite calls by many clerics that the conservatives' best strategy is to unify, internal fighting has gotten
uglier as the vote approaches. Both sides have accused the other of lavish campaign spending and
questioned the source of the money.

An 80-page document, attributed to a conservative bloc allied with Mr. Ahmadinejad, trashed in detail the
other bloc's candidates. A barrage of text messages, editorials and leaflets have accused high-profile critics
of the president, such as parliament speaker Ali Larijani, of abuse of power and financial fraud.

Mr. Khamenei's supporters in turn say Mr. Ahmadinejad's team is drawing ammunition from confidential files
they allegedly stole from the intelligence ministry last year.

The ruling clerics make a grand show of the vote, and elections take on some of the trappings of Western-
style local campaigning, albeit with an lslamic flavor. Around the capital, campaign posters and fliers adorn
walls depicting candidates and their pledges of loyalty to the lslamic regime.

At the United Front rally on Wednesday at a mosque in southern Tehran, Parliamentarian Gholam Hadad-
Adel, leader of the United Front, noted in a speech that his coalition, represented by more than two dozen
candidates seated on the floor behind him, included an economist, a retired member of the Revolutionary
Guards, a disabled veteran of the lran-lraq war and youth leaders.

"This group covers everything you need," he said.

---

Loyalist Showdown

ln lran's parliamentary election:

-- 3,400 candidates are competing for 290 seats

-- A boycott by reformist parties and opposition Green Movement makes vote a race between conservative
factions; turnout of 48 million eligible voters is expected to be low

-- 2 major conservative blocs are competing: the Resistance Front of supporters of President Ahmadinejad
and his government's policies; and the United Front, loyal to Supreme Leader Khamenei and critical of Mr.
Ahmadinejad


Document J000000020120301e83100037


GOP Seeks to Keep Focus on Economy

By Janet Hook and Patrick O'Connor
1,095 words
1 March 2012
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English

Mitt Romney's twin victories in Michigan and Arizona Tuesday sent a wave of relief through the ranks of his
supporters and anxious members of the party establishment, but still left him facing a multistate battleground
to the Republican presidential nomination that includes some difficult territory.

Mr. Romney's three-percentage-point win over Rick Santorum in Michigan is likely to quiet ongoing
grumbling among some elected GOP officials that the party should draft another candidate to jump into the
race.

Party leaders are hoping that Mr. Romney now will be able to focus more steadily on economic issues aimed
not only at winning primary voters but to position him for the fall election, should he claim the nomination.

"l'm relieved," said Sen. John Thune (R., S.D.), a Romney supporter and member of the Senate Republican
leadership. "He represents our best chance in the fall."

Even some of the party's most conservative members believe the GOP will be better off with a candidate
who, like Mr. Romney, is more closely associated with economic issues than with the social issues that are
Mr. Santorum's calling card.

"For anyone running down ballot -- Senate, House, dogcatcher -- there's a huge sigh of relief to have Romne
y on the top of the ticket," said Rep. Jeff Flake (R., Ariz.), a Romney supporter who is running for Senate in
2012. "lt makes our job easier."

Still, Mr. Romney faces challenges as the voting shifts to several Southern states that include large numbers
of the GOP's most conservative voters, who have tended to bypass him for Rick Santorum or Newt Gingrich
.

lt also remains mathematically impossible for Mr. Romney to lock up the nomination in the next clutch of
states to vote, which include Washington state on Saturday and 10 states that hold primaries and caucuses
next week on what has come to be known as Super Tuesday.

But a strong showing then could make it difficult for his rivals to overtake him in the delegate count. Mr.
Romney currently has 167 delegates to 87 for Mr. Santorum, according to a tally by the Associated Press. lt
takes 1,144 delegates to clinch the GOP nomination.

"What we're looking at is Mitt Romney incrementally building on his total from one week to the next," said
Josh Putnam, a professor at Davidson College in North Carolina with an expertise in the delegate selection
process. "From my vantage, Romney is the only one who can get to 1,144."

Mr. Romney's delegate total includes 29 he picked up by winning Arizona's primary on Tuesday and 15 from
Michigan. He and Mr. Santorum split Michigan's 30 delegates because they each won seven of the state's
14 congressional districts -- the state GOP awarded two delegates to the winner of each congressional
district -- and the party split the two delegates awarded to the statewide winner because the final tally was
so close. Mr. Romney beat Mr. Santorum 41% to 38%, with Mr. Gingrich and Rep. Ron Paul trailing.

Mr. Santorum, speaking in Tennessee Wednesday, claimed victory in the split delegate count in a state that
was supposed to be a slam-dunk victory for Mr. Romney, who was born in Michigan. "We had a much better
night in Michigan than maybe was first reported," Mr. Santorum told an enthusiastic crowd during a rally at
Temple Baptist Church, near Knoxville. Speaking later with reporters, he said of Mr. Romney: "We went into
his backyard. He spent a fortune, money he had no intention of spending, and we came out of there with the
same number of delegates he does."

Some 437 delegates will come from Super Tuesday states -- the biggest single-day haul on the campaign
calendar. But the chances are high that multiple candidates will win a share of that total because all 10
states divide delegates proportionally.

Mr. Romney has built-in advantages in four states with a combined delegate count of 139. They include
Massachusetts, his home state; neighboring Vermont; Virginia, where Rep. Ron Paul is the only other
candidate who qualified to be on the ballot; and ldaho, where Mr. Romney, a Mormon, may gain an edge
from the state's significant Mormon population.

Recent polls have shown Mr. Santorum running ahead in Ohio, Oklahoma and Tennessee. Mr. Gingrich is
pinning his hopes on a first-place finish in his home state of Georgia. Mr. Paul is focusing on states with
caucuses such as North Dakota.

To win Michigan, Mr. Romney made a play for small-government conservatives and other elements of the
party base by rolling out a plan to cut individual income taxes. He also re-emphasized his support for right-
to-work laws, which are bitterly opposed by labor unions, and his opposition to the federal government's
bailout of the auto industry. On Wednesday, some in the GOP said that showed more of the aggressive
spirit that they want in a nominee.

"Mitt Romney, when his back is to the wall, does what he has to do," said Whit Ayres, a Republican pollster
who isn't aligned with any presidential candidate. But Mr. Romney showed he faces challenges in winning
over blue-collar, strongly conservative and evangelical Christian voters who will be important in primaries in
Ohio, Tennessee and Oklahoma.

Mr. Romney lost to Mr. Santorum among evangelical voters in Michigan, 51% to 35% and among people
with less than $50,000 in annual income, 41% to 36%, exit polls showed. Nor did he carry voters who
strongly support the tea party, who backed Mr. Santorum, 45% to 37%.

Mr. Romney caused a stir Wednesday with his response to an Ohio TV reporter about a proposed Senate
amendment that would allow employers to avoid providing types of health-care coverage on religious or
moral grounds. The reporter asked Mr. Romney if he supported the amendment by Sen. Roy Blunt (R.,
Mo.), describing it as "allowing employers to ban providing female contraception."

Mr. Romney said he opposed the bill. Later in the day, his campaign put out a statement that Mr. Romney
actually supported the Blunt proposal, and said the question was phrased in a "confusing"" fashion.

Stephanie Cutter, President Barack Obama's deputy campaign manager, accused Mr. Romney of flip-
flopping on the issue and said it shows "why women don't trust him for one minute."

---

Colleen McCain Nelson and Naftali Bendavid contributed to this article.


Document J000000020120301e83100035


EIection 2012: PoIiticaI Center Shrinks in Congress --- Maine Senator's Retirement RefIects DwindIing
Bipartisanship Among Lawmakers on CapitoI HiII

By Naftali Bendavid
665 words
1 March 2012
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English

The surprise retirement of Sen. Olympia Snowe is the latest sign that the political center is disappearing
from Congress.

Ms. Snowe, a Maine Republican, cited the chamber's growing "polarization" in announcing her retirement
Tuesday. She joins other departing Senate centrists, including Ben Nelson (D., Neb.), Joseph Lieberman (l.,
Conn.) and Jim Webb (D., Va.).

Sen. Scott Brown (R., Mass.) faces a tough re-election race, as does Sen. Jon Tester (D., Mont.). Both face
challenges by a purist from the other party.

Ms. Snowe is one of an increasingly rare breed of senator willing to back legislation crafted by the other
side. After President Barack Obama came to office, she supplied a crucial vote for his stimulus plan and
supported his health law in committee, though she later opposed it on the floor. She also backed the New
Start arms-reduction treaty at the end of last year.

lf Ms. Snowe is one of the Senate's least orthodox Republicans, Mr. Nelson is one of its least reliable
Democrats. Former Sen. Bob Kerrey (D., Neb.) said Wednesday that he is reversing an earlier decision and
will seek Mr. Nelson's seat. Mr. Kerrey has a profile as something of a maverick. lt isn't clear whether he will
depart from the Democratic line as frequently as Mr. Nelson.

"This is just a further step in the same direction that has been going on for a long time -- the center has
collapsed," said former Sen. John Danforth (R., Mo.). "lt's gone in American politics. lt's gone in the Senate."

ln decades past, the Senate had its share of liberal Republicans and conservative Democrats. That changed
as political traditions gave way to a closer alignment of party and ideology. The parties themselves are
becoming more doctrinaire.

A new analysis by the National Journal ranks Ms. Snowe the 46th most-conservative senator, placing her
on the fault line between the two parties. Many of her colleagues said her departure reflects poorly on the
chamber.

"lf you can't [work together], what good is the United States Senate?" said Sen. Dianne Feinstein (D., Calif.).

Sen. Lindsey Graham (R., S.C.) said he still hopes the two parties can work together, likening himself to an
optimist who sees a pile of manure and looks for a pony.

"l still believe there's a pony in the middle of this mess," Mr. Graham said. But he confessed, "Some days l
have a harder time believing that than others."

The consequences of a vanishing center are clear. Many in both parties agree the deficit should be cut by
$4 trillion over the next decade or 12 years, but they seem unable to agree on how. A "gang of six" senators
from both parties labored for months to craft a detailed plan last year, as did a bipartisan 12-member
"supercommittee." Both failed.

This week, senators from both parties are backing a highway bill but it has snagged in the Senate over an
unrelated amendment to provide a "conscience exemption" for employer health plans, which is dividing the
parties.

Some challenge the image of the disappearing centrist, saying many senators, among them Ron Wyden
(D., Ore.) and Rob Portman (R., Ohio), are willing to cross party lines.

"l think the Senate is the only place left in our government where you have a constructive center," said
former Sen. Judd Gregg (R., N.H.).

But bipartisan bills often fail to become law, and sometimes the sponsors pay a price. Former Sen. Robert
Bennett (R., Utah) worked with Mr. Wyden on a health-care bill, only to be ousted last year by the Utah
GOP, which replaced him with Republican Sen. Mike Lee, who doesn't have the same track record of
working across the aisle.

---

Janet Hook contributed to this article.


Document J000000020120301e83100033


WorId News: Canada Broadens Probe of EIections

By Paul Vieira and Alistair MacDonald
558 words
1 March 2012
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English

On the day of Canada's last national elections, Dave Hudson received a prerecorded call: A robotic female
voice, apologizing for any inconvenience caused, said the location of his polling station had changed to a
new venue in a different part of town.

The polling place hadn't in fact moved. Now this call, and potentially hundreds like it, is at the center of
allegations by Canada's opposition parties that the members of the ruling Conservative Party attempted to
suppress opposing votes in the May 2011 election, in part by attempting to send some people to the wrong
place to vote.

The Conservative Party, which won re-election in the vote, has denied the allegations. But the growing
scandal -- dubbed "robocall" by local media -- has begun to cast a cloud over the May re-election of Prime
Minister Stephen Harper's government.

On Wednesday, opposition politicians raised the pressure on Mr. Harper, demanding he set up a judicial
inquiry to investigate his party's alleged involvement.

While Mr. Harper and party officials say the calls weren't orchestrated by the Conservatives, senior Tory
lawmakers began Wednesday to say questions needed to be answered in Guelph, the southern Ontario city
where Mr. Hudson lives.

Later Wednesday, the CBC broadcaster reported that Elections Canada, the government agency that
oversees federal elections, had spread its own investigation of the vote to a northern Ontario town, Thunder
Bay, the first indication that the official probe has moved beyond Guelph. A spokesman for the opposition
New Democrat Party said his party had learned the investigation is looking at calls in Thunder Bay and other
cities.

The Elections Canada probe centers on some voters' complaints after the May parliamentary vote that they
had received calls, purporting to be from Elections Canada, directing them to the wrong polling spots.

Elections Canada has traced what it characterizes as "bogus" phone calls made during the election to a
voice-broadcast company that worked for the Conservative Party during their campaign, according to an
order that an agency investigator filed in an Alberta provincial court. The so-called production order,
reviewed by The Wall Street Journal, confirms investigators are seeking documents in connection with calls
placed to numbers in Guelph.

That voice company, RackNine, isn't accused of any wrongdoing. lts president said in an interview the
company is cooperating with authorities.

After listening on voting day to his voice mail, Mr. Hudson said he called Elections Canada and was told the
polling station hadn't changed. "l was creeped out," said Mr. Hudson, a librarian who says he has no political
affiliations. Mr. Hudson, who saved a recording of the voice mail, sent a copy and a complaint to Elections
Canada, he said.

The Conservative Party says it ran a "clean and ethical" campaign and played no role in these phone calls.
ln Parliament on Wednesday, Mr. Harper said his political opponents are engaged in a "smear campaign."

Also Wednesday, some senior Conservatives appeared to indicate for the first time that there may be
questions to answer in the Guelph riding, or electoral district.

"l know some folks have some questions specifically with the riding of Guelph," Dean Del Mastro, a
Conservative legislator, told reporters.


Document J000000020120301e8310002o


U.S. News: Predawn Tornado Cuts a DeadIy Swath Through Downtown Harrisburg, III.

By Douglas Belkin
421 words
1 March 2012
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English

A band of violent weather stretching across the middle of the U.S. spawned thunderstorms and tornadoes in
several states.

Hardest hit late Tuesday and early Wednesday was Harrisburg, lll., where at least six people were killed
after a tornado with winds up to 170 miles an hour barreled through the downtown before dawn, leveling
buildings, such as the shopping mall above, and ripping off roofs.

"We had a 40-foot section of wall, which covered patients' rooms, just . . . blown away, it's gone," said Vince
Ashley, chief executive of Harrisburg Medical Center. A warning call 20 minutes before the storm gave the
hospital time to evacuate patient rooms and avoid casualties.

lllinois Gov. Pat Quinn declared Harrisburg a disaster area. Authorities said as many as 300 homes in
Harrisburg were damaged or destroyed, and Mr. Ashley said his emergency room treated at least 50 people.
"Head injuries, chest injuries, a lot of broken bones, everything down to cuts and bruises," he said.

Emergency officials said one person was dead from the storm in Cumberland County, Tenn., according to t
h e Associated Press. At least 12 people were killed by the storms overall, the AP reported.

Four hours earlier and 300 miles to the west in Branson, Mo., famous for its music entertainment, a tornado
hopscotched through the city's business corridor. Five of Branson's 50 theaters and about a dozen of its 200
hotels were damaged. "lt wasn't far-reaching but in the areas it did hit there was significant damage," said
Dan Lennon of Branson's chamber of commerce.

ln all, there were at least 18 tornado sightings across the region, and widespread wind gusts over 80 mph.
Jim Kramper, a meteorologist with the National Weather Service in St. Louis said the deadly stretch of
turbulence was triggered when a cold front sliding down from the Rockies collided with warm, moist air rising
up from the Gulf of Mexico.

The latest destruction came after violent weather, including possible tornados, tore across Alabama on
Monday, killing two people and injuring more than 100 others.

Storm-related deaths on Tuesday and Wednesday also were reported in three Missouri locales: Buffalo,
Cassville and Puxico. ln tiny Harveyville, Kan., nearly half the town was demolished by a twister with winds
reaching 130 mph, according to state emergency-management officials. Kansas Gov. Sam Brownback
declared a state of emergency.


Document J000000020120301e8310002h


Corporate News: Property Patriarch Retires

By Polly Hui and Jeffrey Ng
535 words
1 March 2012
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HONG KONG -- Cheng Yu-tung, the 86-year-old patriarch of property titan New World Development Co.,
has handed the reins of the blue-chip empire he co-founded to his eldest son, becoming the first of the
city's aging real-estate tycoons officially to retire.

The elder Mr. Cheng, who in December added to his family fortunes with the $2 billion stock-market listing of
his jewelry business, has emerged as one of Asia's richest people and is respected for his business acumen
.

He was among the first developers to expand into the People's Republic of China years before investing in t
country became a sure bet.

Yet typical of many rags-to-riches billionaires in Hong Kong, Mr. Cheng also is known for living a relatively
modest lifestyle, riding the subway during his younger years and often appearing in public wearing rumpled
suits. On Thursday, he will relinquish the title as New World's chairman, a post he held for three decades, to
be succeeded by his son Henry, the company's 65-year-old managing director.

Cheng Yu-tung in recent years gradually has stepped back from managing his companies, while grooming
his grandchildren for more prominent roles. The company on Wednesday named Henry's 32-year-old son,
Adrian, as joint general manager, overseeing New World's day-to-day business. Henry's 31-year-old
daughter, Sonia Cheng, was appointed to the company's board.

"lt is rather unusual for Chinese families to make the transition so definitively," said Roger King, director of t
h e Center for Asian Family Business and Entrepreneurship Studies at the Hong Kong University of Science
and Technology. "Often the patriarch remains. . .as the ultimate decision maker. . . That's [the Chinese]
tradition," he said.

Other leading Hong Kong property tycoons, such as 83-year-old Li Ka-shing, chairman of Cheung Kong
(Holdings) Ltd., and 84-year-old Lee Shau-kee, patriarch at Henderson Land Development Co., haven't
publicly indicated their succession plans.

The Cheng family is seeking to carry out a more orderly transition. To accomplish that, Henry Cheng will
need to prove his ability to lead one of Hong Kong's most prominent companies. The younger Mr. Cheng
succeeded his father as the company's managing director in 1989, 17 years after working as his understudy.

ln an early attempt to make a name for himself, Henry Cheng was energetic in diversifying New World's
businesses, making much publicized investments in areas such as television and hotels. But some of the
acquisitions proved unprofitable, leaving New World sagging with debt and forcing Cheng Yu-tung in the
early 1990s to return to a higher profile.

New World on Wednesday named Chen Guanzhan, a former university lecturer and Chinese official, as
executive director, working alongside Adrian as joint general manager.

New World said the elder Mr. Cheng will be named chairman emeritus, entitling him to take part in board
meetings as he wishes. News of his retirement also comes amid concerns over his deteriorating health,
though he continues to make frequent public appearances.


Document J000000020120301e8310002e


EIection 2012: Campaign Watch

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1 March 2012
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Dreier Won't Seek a 17th

Rep. David Dreier, a California Republican who heads the House Rules Committee, said he won't seek re-
election to a 17th term in Congress, the most high-profile GOP lawmaker to stand down this year.

Mr. Dreier's 26th congressional district north of Los Angeles is set to disappear next year as part of
redrawing district boundaries, meaning he would have had to contest another seat in a re-election bid.

Mr. Dreier has been a strong advocate for free trade and had aggressively pushed for trade deals with
Colombia, Panama and South Korea.

-- Corey Boles

Kerrey's Nebraska Pitch

Bob Kerrey is a former Nebraska governor and two-term senator, but that doesn't mean winning another
election there will be a shoo-in.

Mr. Kerrey, who said Wednesday that he would reverse an earlier decision and run for a Senate seat, most
recently won election in 1994. But Nebraska has voted solidly Republican in recent years. Sen. John
McCain, (R., Ariz.) carried Nebraska with 57% of the vote in 2008, and then-President George W. Bush won
66% during his re-election bid in 2004.

Mr. Kerrey more recently served as president of the New School in New York City, and Republicans are
already portraying him as a carpetbagger who has lost his ties to the state.

Democrats will likely argue that Mr. Kerrey can resist efforts to paint him as too liberal for his state. Among
other things, he voted for the Nafta trade deal.

-- Naftali Bendavid

Hatch Faces a Challenge

Six-term incumbent Republican Sen. Orrin Hatch will try to overcome a significant tea-party challenge to his
re-election bid as the Byzantine process for determining Senate candidates in Utah gets under way in mid-
March.

The potentially three-stage nominating process in the state cost another GOP incumbent, former Sen. Bob
Bennett, his bid for re-election just two years ago.

Mr. Hatch, 77 years old, is facing a challenge from two tea-party-backed aspiring nominees -- a former and a
current member of the state legislature -- Dan Liljenquist and Chris Herrod. On March 15, Republicans will
gather in precinct meetings around the state and choose delegates who will then vote for candidates for all
levels of public offices.

-- Corey Boles


Document J000000020120301e8310002b



Earnings Watch

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1 March 2012
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lTV

lTV PLC, the U.K's largest commercial broadcaster, on Wednesday posted better-than-expected full-year
earnings on renewed growth in its creative-program-making business and a focus on digital and online
platforms.

The company behind the hit period drama "Downton Abbey" reported a 13% rise to GBP 462 million ($734.6
million) in earnings before interest, tax, amortization and exceptional items -- the key measure tracked by
U.K. analysts -- underpinned by a growing contribution from nonadvertising channels.

The company is two years into a five-year transformation plan and has largely cleaned out the top
management in its core broadcasting and creative divisions, sweeping in a new culture that has helped
boost its production studios, which produce popular international programs such as "Hell's Kitchen" and
"Kitchen Nightmares," which air on theNews Corp.-owned Fox TV network. News Corp. also owns The Wall
Street Journal.

Total external revenue rose 4% to GBP 2.14 billion, with net advertising revenue accounting for GBP 1.51
billion, reflecting a modest 1% rise in the year.

-- Kathy Gordon

---

CAESARS ENTERTAlNMENT

Caesars Entertainment Corp.'s fourth-quarter loss widened because of higher interest expenses, though
revenue increased at the casino operator's Las Vegas properties.

Caesars on Wednesday reported a loss of $220.6 million, or $1.76 a share, compared with a year-earlier
loss of $196.7 million, or $1. Revenue rose 2.4% to $2.17 billion. The company's interest expenses
increased 32%.

The company, which went public this month and primarily operates under the Caesars, Harrah's and
Horseshoe brands in the U.S., is lobbying for a new law in Congress that would allow it to operate online
poker websites in the U.S. The company also set up a new subsidiary last year to open hotels with its
brands, such as Caesars Palace, in buildings owned by third-party owners overseas.

Chairman and Chief Executive Gary Loveman said the company saw strong results in Las Vegas and from
its international resorts and online activities, which were partially offset by challenges in certain regional
domestic markets.

-- Nathalie Tadena

---

LlZ CLAlBORNE

Liz Claiborne lnc. returned to the black in the fourth quarter, but the profit was bolstered by the sale of
certain brands. Profit from ongoing operations dropped from a year earlier, as the Juicy Couture line
remained troubled.

On the bright side, the Kate Spade and Lucky Brand lines are seeing big sales gains so far in February, and
Juicy Couture is seeing its sales decline moderate, said Chief Executive Bill McComb on a call with analysts.

Juicy Couture sales slid 15%, while Lucky Brand rose 23% and Kate Spade sales jumped 73%.

Liz Claiborne posted a profit of $229.2 million, or $1.91 a share, compared with a year-earlier loss of $30.1
million, or 28 cents a share. The most-recent period included a $271 million gain on the sale of theLiz
Claiborne family of brands as well as the sale of the Monet and Dana Buchman brands. Excluding the gain
on sales of trademarks, income tax provisions and other items, the adjusted profit from continuing
operations fell to 10 cents a share from 14 cents.

Revenue decreased 2.6% to $447.1 million. Excluding the impact of exited or licensed brands, sales were
up 12%.

-- Karen Talley

---

COSTCO WHOLESALE

Costco Wholesale Corp.'s fiscal-second-quarter earnings rose 13% as the warehouse-style retailer's same-
store sales increased.

For the quarter ended Feb. 12, the lssaquah, Wash., company reported a profit of $394 million, or 90 cents
a share, up from $348 million, or 79 cents, a year earlier. Revenue jumped 10% to $22.97 billion.

Costco said U.S. same-store sales were up 7%, excluding currency fluctuations and gas-price inflation, while
international sales rose 10%.

Revenue from membership fees rose 7.7% to $459 million.

-- Anne Pallivathuckal and Nathalie Tadena

---

AMR

American Airlines parent AMR Corp., which filed for bankruptcy-court protection in late November, on
Wednesday said in a federal filing that it posted a net loss of $234 million in the month of January, including
$170 million of one-time items mostly related to renegotiating aircraft financings and rejecting aircraft. ln
bankruptcy, the airline must file its financial results monthly.

Fort Worth, Texas-based AMR said its January revenue was $2.03 billion and its expenses were the same,
resulting in an operating loss of $5 million. lts loss before one-time items was $59 million. The one-time
aircraft items and $15 million in professional fees related to its restructuring expanded its net loss to $234
million, the company said in a Securities and Exchange Commission filing.

The company, owner of the nation's No. 3 airline by traffic, said it had $4.14 billion in cash and short-term
investments, a figure similar to the amount of liquidity the company had on hand when it sought protection
from its creditors on Nov. 29. Because of its relatively large cash cushion, AMR is restructuring in court
protection without new financing provided by outside lenders.

For all of 2011, AMR posted a net loss of $1.98 billion, including $917 million in special charges. Last year
was the company's fourth consecutive year of red ink.

-- Susan Carey


Document J000000020120301e83100029


Wonder Land
Obama's MythicaI America

By Daniel Henninger
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1 March 2012
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lt of course was no coincidence that on the day Michiganders voted to give Mitt Romney a three-point win in
his primary shootout with Rick Santorum, Barack Obama delivered a high-powered defense of the Detroit
auto bailout to the United Auto Workers Convention. No, he wasn't in Detroit. That's the UAW's second
favorite city. He and the UAW were in home sweet home -- Washington, D.C. That's where the money is.

A pattern is emerging. Like some World Wrestling troupe on tour, the Republican rasslers travel through
their primary states slamming each other into the turnbuckles. By contrast -- and "contrast" is the most
important word in election politics -- the incumbent president continues to deliver the same speech, which
defines him as saving America from them.

To be sure, the Obama re-election speech, as delivered to the auto union this week, isn't very presidential. lt
sounds like something one might have heard around South America in the 1950s: "They're saying that the
problem is that you, the workers, made out like bandits. . . . Even by the standards of this town [Washington]
that's a load of you-know-what."

But make no mistake: Barack Obama is defining his opposition, clearly and relentlessly. Meanwhile, Mitt
Romney and Rick Santorum are ensuring that November's voters will end up with no idea who its nominee
really is or what he stands for. That's not quite right. One thing is proven: Both have traduced "conservative
principles."

The Obama campaign knows it has to compete in big, "working-class" states laden with electoral votes --
Ohio (18 electoral votes), Pennsylvania (20), Michigan (16) and Wisconsin (10). To this end, the Obama
narrative, his mythic America the Unfair, is now set. As defined in speeches from the State of the Union
through the UAW barnburner, it goes like this:

Working men and women are the true American patriots: "lt's unions like yours that helped build an arsenal
of democracy that defeated fascism." (A nice Gingrichian touch there.)

You were in trouble: "The heartbeat of American manufacturing was flatlining."

They were going to sell you out: "Some even said we should 'let Detroit go bankrupt.'"

l saved you: "lt wasn't just because of anything management did. lt was because l believed in you. l placed
my bet [the $80 billion bailout] on American workers."

They resent you: "They're still talking about you as if you were some greedy special interest that needs to be
beaten."

The deck is stacked: "We will not settle for a country where a few people do really well, and everyone else
struggles to get by."

The answer, as always, is America's abandoned values: "Hard work. Fair play. The opportunity to make it if
you try."

Only one place to go -- to the ramparts: "So l'll promise you this: As long as you've got an ounce of fight left
in you, l'll have a ton of fight left in me. . . . God bless the work you do, and God bless America."

This is a caricature of a $15 trillion American economy functioning amid the complexities of the world circa
2012. Even Upton Sinclair, who wrote this sort of thing in "The Jungle" in 1906, would be embarrassed to
pump out such a vision today.

Embarrassment is not in the Obama vocabulary. Mr. Obama's stock "working man" speech has been
designed to paint the affluent businessman Mitt Romney as a cartoon Monopoly figure. Who would buy it? T
h e same sort of people who bought Mitt Romney's caricature of Newt Gingrich in Florida. ln politics, simple
works, if simple is repeated and goes unanswered. And of course the Obama working-man myth is intended
as a marker against Rick Santorum's variation of the myth pulled from the Pennsylvania coalfields.

Excepting the unlikely event that Mr. Romney sweeps Super Tuesday next week, it looks as though the
Republican candidates could run until the June 5 primary with California's 172 delegates and New Jersey's
50 at stake. lf what's to come the next three months is more of the same, then the winner, whether Mitt
Romney or Rick Santorum, will emerge as pulp. Neither man is likely to let up on the other. So be it. That's
how this game is played.

lnexcusable, though, would be if the GOP bruisers let Barack Obama's Depression-era portrait of America
go unchallenged. On current course, enough American voters really will believe that Barack Obama saved
them from the 1930s.

But this rewrite of reality is precisely where Mr. Obama is most vulnerable. The economic and social world
Barack Obama inhabits, and has always inhabited, is totally static. Your lot in life -- income, status, mobility -
- is largely set, with little prospect of escaping upward.

He spoke in the UAW speech of "sons and daughters" aspiring to assembly-line jobs held by their
grandparents. Even they don't believe life is that static. He promises to solve their economic problems by
expropriating money from the wealthy. (France's Socialist presidential candidate called for a 75% top tax
rate this week.) Boeing will be forced to make planes in Washington state -- forever. Naturally this president's
biggest believers live in Hollywood.

Most Americans are not so credulous. But unless the GOP candidates start spending more time dismantling
Obama's mythical America instead of each other, this grim fairy tale could win.


Document J000000020120301e83100023


Hush Up: SteaIth PaneI HoIds Fate of Greek CDS

By Katy Burne and Tom Lauricella
771 words
1 March 2012
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A secretive panel of representatives from 15 large banks, hedge funds and investment houses holds the key
to potential multibillion-dollar payouts to investors as a Greek default looms.

The group meets Thursday morning to rule whether Greece's debt restructuring should trigger payments on
insurance-like contracts known as credit-default swaps, or CDS.

The impact of their decision will reverberate beyond the narrow confines of the Greek debt market and
could affect investors across other European bond markets and the holders of $2.9 trillion in CDS on
government debt around the world.

But some investors complain the process is shrouded in secrecy and that it is rife with potential conflicts of
interest.

No outsiders can participate in the meeting, which is convened by the lnternational Swaps and Derivatives
Association, the financial trade group overseeing CDS contracts. No transcript will be made public. When a
decision is announced, expected before Monday, the committee doesn't have to provide an explanation.
lnvestors have no opportunity to appeal.

While the firms on the committee are known, such as Goldman Sachs Group lnc., Deutsche Bank AG and
Stanley, the names of their representatives aren't disclosed. Also undisclosed: the financial stake in Greece
that any firm or individual on the panel might have.

"The biggest problem is the lack of transparency," said James Rickards, senior managing director at New
York investment bank Tangent Capital and a pioneer in the sovereign CDS market.

Robert Pickel, lSDA's chief executive, disagrees. "lt's a robust, tested process that has any number of
checks and balances that address concerns about potential conflicts of interest." The process, Mr. Pickel
said, was approved by regulators including the New York Federal Reserve. The firms on the committee
declined to comment.

lt is expected there would be a maximum of $3.2 billion in net payments between buyers and sellers of
protection against default or restructuring. But as with much of the Greek financial crisis, the tiny country
could leave big waves in its wake.

This time, it is because of the specific question the lSDA committee is considering.

On Monday, Standard & Poor's declared Greece to be in selective default because of recent moves under its
restructuring, which asks investors to accept losses of roughly 75% on the face value of their bonds. That
was cemented after Greece's parliament passed a law that could force investors to accept the restructuring,
under so-called collective-action clauses. Such strong-arming would be a clear trigger of CDS payouts under
definitions governing the contracts, market participants say.

But in a twist, lSDA, which counts 815 firms as members, has been asked to instead rule on whether the
CDS should pay out because the restructuring gives the European Central Bank more-favorable terms than
private investors. This is a less straightforward question, investors say, and could affect other European
government bond markets, such as Portugal, where the ECB has bought significant amounts of debt.

lSDA committees rarely elaborate on decisions. Providing an explanation would slow the process, and in
most cases the reasons are obvious, Mr. Pickel said.

But that isn't always the case. ln 2011, hedge fund firm Aurelius Capital Management argued that the CDS
on a unit of Texas power giant Energy Future Holdings should be triggered after the company said one of its
affiliates was insolvent. The lSDA committee decided against it and provided an explanation of around 70
words, saying only there was no evidence that company had met the industry definitions for insolvency.

Critics also question the impartiality of the process, pointing to the potential to profit or avoid losses in the
CDS market.

For example, three banks on the committee had sold more Greek CDS than they bought as of Sept. 30,
according to data published by European regulators last year. lf those positions were in place today, they
would be on the hook for payouts, albeit potentially relatively small amounts, if the contracts were triggered.
Those banks are Barclays PLC, Deutsche Bank and BNP Paribas SA. Each bank declined to comment. U.S.
banks on the committee also have Greek CDS positions.

"The incentives are high to attempt to manage triggering events," said Bill Awad, managing director of
Babson Capital, a $139 billion money manager.

lSDA's Mr. Pickel said a requirement for a supermajority of 12 out of the 15 on the committee to reach a
decision reduces any risk posed by members voting their book.


Document J000000020120301e83100022


Corporate News: FTC Attorney to Join Microsoft

By Thomas Catan
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1 March 2012
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WASHlNGTON -- A senior Federal Trade Commission attorney who led several of the agency's antitrust
investigations into Google lnc. has been hired by the company's archrival, Microsoft Corp.

Randall Long, a deputy assistant director in the agency's Bureau of Competition, will become a director of
regulatory affairs in Washington, D.C., at the end of March, Microsoft said Wednesday.

ln recent years, Microsoft has emerged as Google's chief legal antagonist, working publicly and privately to
get antitrust cops in Washington and Brussels interested in Google's activities. As part of his new job, Mr.
Long will likely continue those efforts before the FTC and other agencies, a person familiar with the matter
said.

Mr. Long's recruitment is the latest such hire by a tech company, as tit-for-tat antitrust allegations become a
growing part of the companies' struggle for an edge. ln 2008, lntel Corp. snapped up the FTC's former chief
of staff as the agency was conducting an antitrust investigation of the chip giant.

At the end of 2010, Apple lnc. hired Kyle Andeer, a former top litigator at the FTC. And Google last year
hired one of the FTC's top patent experts, Suzanne Michel.

Mr. Long led the FTC's investigations into two of Google's most controversial deals, the acquisitions of
online advertising firm DoubleClick in 2007 and mobile ad network AdMob in 2010, according to his
biography.

As the lead staff attorney in the AdMob case, Mr. Long recommended the commission challenge the deal,
people familiar with the matter said. Ultimately, the commission narrowly decided to allow the deal.

At the FTC, Mr. Long focused on mergers and hasn't been part of a group at the agency now conducting a
wide-ranging antitrust investigation into Google's business practices, the people familiar with the matter
said.

Mr. Long attended a meeting with Google lawyers in November 2010, six months after the close of the
AdMob probe, according to people familiar with the matter. That was before the FTC formally opened its
latest investigation, but many of the issues discussed have since become central to the FTC's broad probe
of Google's conduct, those people said.

An FTC spokeswoman, who confirmed Mr. Long's departure, declined to comment further except to note
commission ethics rules barring FTC employees from working or advising on any matters to which they
might have had privileged access while at the agency. Mr. Long didn't respond to a request for comment.

Microsoft said it was "delighted" with Mr. Long's hire. "His deep legal experience will provide important
perspective on a broad range of regulatory matters that affect both consumers and the broader technology
industry," Fred Humphries, vice president of U.S. government affairs at Microsoft, said in a statement.

Mr. Long is a longtime staff attorney who joined the FTC straight from law school in 1999, according to his
biography. He is highly regarded by many of his former colleagues within the agency and even some
antitrust lawyers who have represented companies he's investigated.


Document J000000020120301e83100021


EIection 2012: Gingrich, StruggIing, Gets More Creative

By Danny Yadron
657 words
1 March 2012
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COVlNGTON, Ga. -- Last week, former House Speaker Newt Gingrich said he would refocus his campaign
on lowering gas prices to $2.50 a gallon. On Monday, he urged U.S. disengagement from Afghanistan,
arguing that Afghans need to figure out how best to live their "miserable" lives. The next day, Mr. Gingrich
chastised the Obama administration for being "so pro-lslamic."

Mr. Gingrich's campaign for the Republican presidential nomination has always been driven by the impulses
of the candidate and his willingness to rattle off ideas and strategies on the fly. As Mr. Gingrich again tries to
claw his way back into the GOP race following a string of primary losses, his operation has become
increasingly freewheeling.

Polls suggest Mr. Gingrich is struggling in most of the 10 states that vote March 6, with the exception of
Georgia, which he represented in Congress. ln the days leading up to Tuesday's voting in Michigan and
Arizona, the campaign appeared to offer mixed messages on whether it would be best for former
Pennsylvania Sen. Rick Santorum to win and weaken the front-runner, Mitt Romney, or for the former
Massachusetts governor to damp Mr. Santorum's rise.

After pledging to bring gas prices down to $2.50, a goal most analysts dismissed as implausible, Mr.
Gingrich suddenly announced this week he wanted supporters to campaign for him at gas stations. And he
asked for donations in $2.50 increments, or "Newt gallons."

The campaign also started a new search term, or hashtag, for Twitter users interested in Mr. Gingrich's
energy proposals: GBP 250gas. "That has taken off, and we have lots of people now going to it," Mr.
Gingrich said Wednesday.

Gingrich spokesman R.C. Hammond sees the unpredictable nature of the campaign as a source of pride. "lf
you put Newt Gingrich up against the benchmark of Mitt Romney. . .you're going to have dramatic
differences," he said. "ln Romney, you have a very measured, very risk-adverse candidate."

While Mr. Romney is accompanied by governors and senators drawn from a long endorsement list, the
former speaker tends to surround himself with a different breed of Republican notables: Onetime presidential
contender Herman Cain introduced him in California this weekend, and television star and former Sen. Fred
Thompson now stumps for him in Tennessee. On Friday, Mr. Gingrich will be joined by martial-arts legend
Chuck Norris on the trail in Georgia.

"We're trying to gather up these kinds of" celebrities, Mr. Gingrich said.

The Gingrich team still lacks the funds to run a television-advertising campaign on anything like the scale of
Mr. Romney's effort. So, as an alternative, it has decided to run 30-minute videos in some Super Tuesday
markets that feature the former speaker talking in front of a blue curtain. This coming week, the Gingrich ads
will air on an Ohio-only news channel.

When Mr. Gingrich plans to campaign in the Ohio is another matter. While he intends to spend Saturday
there, his campaign has so far only scheduled one public event in a state where he trails in the polls.

Topping off the rapid-fire policy prescriptions is a heavy dose of 1990s nostalgia. The former speaker's
warm-up music now includes the old theme song for Hulk Hogan, the professional wrestler, and "You're the
Best," a rarely heard 1980s hit featured prominently in the movie "The Karate Kid."

"l felt like Rocky was about to get in nine rounds with the Russian," said Aaron Decker, 20 years old, a
marketing major at the University of West Georgia. "lt's a little different," Mr. Decker said.

The Gingrich campaign once used "Eye of the Tiger," the theme song for another Rocky movie, "Rocky lll."
lt stopped after a lawsuit from one of the song's co-writers.


Document J000000020120301e8310001z


WorId News: Egypt Is Set to Lift TraveI Ban --- Judge's Move, if Confirmed, WouId Grant Foreign
Workers BaiI, Go Toward Easing Tensions With U.S.

By Matt Bradley
1,214 words
1 March 2012
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CAlRO -- An Egyptian judge is set to lift a travel ban against at least seven Americans accused of violating
Egypt's laws on foreign financing of civil-society groups, said lawyers for the defendants, a move that would
go toward easing a diplomatic row that has strained Washington's relationship with one of its closest security
partners in the Middle East.

Lawyers for the American civil-society workers, including at least three who have taken refuge at the U.S.
Embassy in Cairo to avoid arrest, said each of the accused would pay two million Egyptian pounds
($330,460) in bail in order to leave the country.

They didn't say who would supply the funds.

U.S. Secretary of State Hillary Clinton said she welcomed the news on Wednesday, but added that she had
received no confirmation that the travel ban had been lifted.

Reports of the decision come amid strenuous U.S. diplomatic efforts to free the accused nongovernmental
workers, including Sam LaHood, the head of the Egypt office of the lnternational Republican lnstitute and th
e son of Transportation Secretary Ray LaHood.

Egypt's state-owned newspaper, Al Ahram, reported that a U.S. military plane was waiting at Cairo
lnternational Airport to airlift the American NGO employees out of the country, but a U.S. defense official in
Washington on Wednesday said he couldn't confirm the presence of an American military plane in Cairo.

U.S. policy makers have repeatedly stressed to Egypt's military government over the past two months that
prosecuting the American NGO employees could jeopardize the $1.3 billion in military aid Washington has
given Egypt each year since 1987.

lt remained unclear on Wednesday whether the decision to lift the travel ban, if confirmed, was the result of
U.S. diplomatic pressure or a realization that the case was too weak to justify holding the accused.

But regardless of the reasoning behind the decision, if confirmed, it marks a turnaround for an interim
Egyptian government that has sought to portray its case against the NGO workers as a muscular defense of
Egypt's national security and sovereignty against meddling foreign powers. lf Egypt's public regard the
decision as a concession to American diplomatic meddling, it could damage the military's self-stylization as
protectors of the Egyptian nation.

Egyptian cabinet ministers and two judges assigned to prosecute the case have accused the NGO workers
of paying activists to incite chaos in Egypt as part of a bid to destabilize the country.

Egyptian activists have countered that the rhetoric was aimed at blaming the interim military's failures --
persistent political instability and a weakening economy -- on shady foreign conspiracies.

"Now the people are asking, 'Why did you start this case and tell us this is to defend sovereignty when at th
e end we found that you accepted invasion of our sovereignty?' " said Hafez Abu Saeda, a lawyer for some
of the accused Egyptian NGO employees.

The 43 accused Egyptian and foreign NGO employees were charged Sunday with violating Egypt's highly
restrictive law on foreign funding for civil-society organizations. lf convicted, they could face a financial
penalty and up to five years in prison.

But the case was fraught with confusion from the beginning. Only 13 of the accused appeared in court when
the trial began on Sunday because, lawyers for the absent defendants said, only a minority of the suspects
were ever officially served official papers notifying them of the charges. None of the foreign workers
appeared in court, and the judges decided not to remand into custody any of the suspects.

Two days after judges adjourned the case until late April, the three assigned judges recused themselves
with little explanation except that they felt "embarrassment" over the case, official state media reported.

A retired high-level judge who has close connections to the court said on Wednesday that the justices
probably stepped down to avoid facing outside political pressure. Judge Ahmed Makki said the head of
Egypt's appeals court phoned the judges assigned to the case on Tuesday and asked them to lift the travel
ban on the defendants.

"The judges may have considered this an intervention -- that a request of this kind by the appeals court may
have put the judges in a tough spot," Mr. Makki said.

Sarwat Abdel Shahid, an attorney hired to defend the U.S.-based National Democratic lnstitute and an
American journalism-training organization, said the judges probably stepped down to avoid entangling
themselves in a highly politicized show trial that lacked strong evidence against the accused.

Though buoyed by Wednesday's news, defense lawyers warned that the case remains unfinished. Egypt's
appeals court is still likely to appoint new judges to adjudicate the trial when it resumes on April 26.

The case's troubles are likely to linger for Egypt's ruling military, whose yearlong management of Egypt's
postrevolutionary transition has been fraught with difficulty, said Hani Shukrallah, a political analyst and the
editor of the English-language website for the Al Ahram newspaper. Any perception that the ruling military
compromised Egypt's security to satisfy the U.S. would damage its already shaky public esteem.

The head of Egypt's High Election Commission on Wednesday said presidential elections will be held May
23 and 24.

The generals who pledged to lead Egypt's transition to democracy will need popular support to bolster their
claims to enhanced political powers after they hand over authority to civilians.

"They are in trouble with the public already," he said of the Egypt's armed forces. "They've become
ridiculous actually."

The trial will near a final resolution only when Egypt's government legally registers at least 10 NGOs under
suspicion, said Mr. Abdel Shahid.

The official registration, which he said is likely to come within days, will render the organizations legal and
sap momentum from the prosecutors' arguments.

"The case will take some time but it will be much easier [to have the charges dismissed] if the registration
happens," said Mr. Abdel Shahid.

---

Amina lsmail contributed to this article.

---

Trial Motions

Egypt has targeted workers at nongovernmental organizations

July 2011: Minister of Planning and lnternational Cooperation Fayza Aboul Naga, right, submits a report on t
supposed influence of foreign nongovernmental organizations in sparking unrest in postrevolutionary Egypt.
Former Egyptian Prime Minister Essam Sharaf appoints two judges to investigate the charges.

Jan. 21, 2012: Egyptian prosecutors ban Sam LaHood, the head of the Cairo office of the lnternational
Republic lnstitute and son of Transportation Secretary Ray LaHood, from leaving Egypt. At least six other
Americans are also banned.

Feb. 4: Secretary of State Hillary Clinton warns the Egyptian government that the escalating row could
endanger $1.3 billion in annual military aid.

Feb. 5: Prosecutors announce that 43 people, including at least 16 Americans, will face charges for running
unregistered NGOs and receiving foreign funds without permission.

Sunday: First trial date in the NGO case; judges adjourn until April 26.

Tuesday: The three judges recuse themselves.

Source: WSJ research


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U.S. News: No-ChiId Law Faces Wave of Opt-Outs

By Stephanie Banchero
307 words
1 March 2012
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A6
English

Twenty-six more states asked to be excused from key requirements of the No Child Left Behind Act, an
exemption that would curb the education law's impact considerably.

The states, from Washington to Mississippi to New York, were joined by the District of Columbia. Last
month, the Obama administration granted waivers for all 11 states that applied in the first round. lf it grants
waivers to all the new applicants, three quarters of the states would be exempt.

Signed into law with bipartisan support in 2002, No Child Left Behind is now reviled by Republicans, who say
it gets the federal government too involved in education, and by Democrats, who complain that its rigid
definitions of performance have seen almost half the nation's schools listed as failures.

But Congress has been unable to agree on an overhaul. ln response, the administration decided to let
states get around central tenets of the law, such as ensuring 100% of students pass reading and math
exams by 2014.

On Tuesday, Republicans on the House Committee on Education and the Workforce approved two bills that
Chairman John Kline (R., Minn.) said aim to "shrink federal intrusion in classrooms and return responsibility
for student success to states and school districts."

States seeking waivers have to adopt education policies favored by the administration, such as linking
teacher evaluations to student test scores and adopting college- and career-ready standards. ln exchange,
they can create their own targets for annual student achievement and craft their own policies to help the
lowest-performing schools.

"The best ideas to meet the needs of individual students are going to come from the local level," Secretary
of Education Arne Duncan said in a statement.


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WorId News: South Africa Party ExpeIs Firebrand Youth Leader

By Devon Maylie
437 words
1 March 2012
J
A11
English

JOHANNESBURG -- South Africa's ruling party expelled a firebrand politician who advocated nationalizing t
h e country's mines and taking back white-owned farmland.

The decision, which removes a harsh critic of the nation's leadership, also risks conflict with the legions of
largely jobless youth who supported him.

ln a late-night announcement Wednesday, the African National Congress said it had expelled Julius Malema
because he didn't show remorse during a drawn-out disciplinary process. Mr. Malema, the chairman of the
ANC Youth League, had instead tried to rally his supporters in a political test of wills with South African
President Jacob Zuma and other ANC leaders.

The ANC's disciplinary committee ruled in November that Mr. Malema would be suspended for five years for
bringing the party into disrepute and sowing divisions within it. Those charges related to comments he made
last year calling for regime change in Botswana.

The youth league leader appealed the decision and last month was given the right to argue for a shorter
sentence.

On Wednesday, the ANC disciplinary committee turned the suspension into an expulsion. ln its decision, th
e panel said it was particularly worried about Mr. Malema's comments that a battle would ensue following th
e outcome of the hearings, describing the comments as a threat and "tantamount to holding the ANC to
ransom." The committee also disputed claims made by Mr. Malema that the ruling was politically motivated.

Mr. Malema can appeal his expulsion. lf that fails, he can seek support from the party's top leaders at a
conference in December to get the decision overturned. The ANC called on members of the party and
league to respect the decision. The Youth League declined to comment.

Once an important supporter of President Zuma, Mr. Malema has turned critical of the leader. That shift,
along with his populist positions on mines and farmland, riled the top echelons of the ruling party.

But by getting rid of Mr. Malema, who will turn 31 in early March, the ANC must deal with his supporters who
don't think the government is doing enough to improve their lives 18 years after the country elected its first
black president.

With positions that have gained him the support of jobless youth and workers with low-skill jobs, Mr. Malema
has drawn as many as a few thousand supporters in rallies.

Spurred by Mr. Malema, the ANC has engaged in a loud, long debate over nationalization, dividing the party
and frightening international investors.


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WorId News: Argentina Moves to Snub U.K. Goods

By Taos Turner in Buenos Aires and Cassell Bryan-Low in London
570 words
1 March 2012
J
A11
English

Argentina's government asked companies to stop importing products from the U.K., in the latest escalation
of tensions between the countries over the Falkland lslands.

lndustry Minister Debora Giorgi on Tuesday called about 20 of the nation's top executives and asked them
to replace whatever goods they import from the U.K. with products from other countries, a government
official confirmed Wednesday.

The calls don't amount to a formal ban on British goods. But given the pressure Argentina's government
exerts on companies to follow such unofficial directives -- including its successful efforts to more broadly
replace imports with locally made goods -- the request seems likely to have an impact.

ln response, U.K. Foreign Secretary William Hague summoned Argentina's acting ambassador to a meeting
Wednesday and pressed him on an explanation for the calls for a boycott.

"We made clear that such actions against legitimate commercial activity were a matter of concern not just for
the U.K., but for the [European Union] as a whole, and that we expect the EU to lodge similar concerns with
Argentine authorities," Mr. Hague said in a statement.

EU trade spokesman John Clancy said the bloc "will be taking appropriate diplomatic steps to clarify these
legitimate trade concerns."

President Cristina Kirchner has become increasingly vocal in pressing Argentina's claims to the Falklands at
home and abroad in recent months as U.K. companies explore for oil in disputed areas that geologists view
with great potential, and as the 30th anniversary of the Falklands War approaches.

ln April 1982, Argentina's military government invaded the islands, which are called Las Malvinas in
Spanish. The U.K. took back the archipelago after a 74-day war in which 649 Argentine and 258 U.K.
soldiers died.

Argentina's trade surplus with the U.K. has shrunk considerably since 2009 owing to a surge in imports from
the European nation. The surplus fell to $136.6 million in 2011, from $268.7 million the previous year and
$385.9 million in 2009.

Argentina's government hopes its move, which like many of the country's trade policies is being
implemented informally through verbal directives, will pressure the U.K. to negotiate sovereignty claims over
the islands.

The U.K. government expressed frustration at what it described as Argentina's policy of confrontation. "lt is
both counterproductive and a complete misreading of British resolve: whilst we are happy to discuss a range
of regional issues with Argentina, we will not negotiate the sovereignty of the Falkland lslands unless the
people of those lslands wish it," the Foreign Office said in a statement.

A potential flash point in relations between the U.K. and Argentina is a planned visit to the Falkland lslands
by the British queen's cousin, the Duke of Kent, later this year.

Argentina has long demanded the return of the Falklands, which have been under British control since the
early 1830s, as well as South Georgia and the South Sandwich lslands. Argentina bases its claims on its
geographical proximity and its brief possession of the islands before Britain drove it out.

This week, two cruise ships were refused entry to the port of Ushuaia in Argentina after visiting the
Falklands.


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WorId News: Pakistan to Ease India Trade Limits

By Margherita Stancati and Tom Wright
448 words
1 March 2012
J
A12
English

NEW DELHl -- Pakistan announced a goal of normalizing trade with lndia by year-end, a gesture that is part
of tentative attempts to improve relations between the neighbors.

The government plans to phase out major restrictions on lndian imports by Jan. 1, 2013, the office of
Pakistani Prime Minister Yousuf Raza Gilani said Wednesday.

Pakistan recently scrapped a system of allowing imports of fewer than 2,000 items from lndia. lt moved
instead to a "negative list," which bans around 600 items from lndia but allows trade in all other goods. On
Wednesday, Mr. Gilani's office said it planned to scrap this negative list by the end of 2012.

Ashfaque Khan, dean of Pakistan's National University of Sciences and Technology Business School, who
advises the government, said Pakistan will remove items from the negative list through the course of the
year.

Trimming the negative list will be contingent on lndia's reducing nontariff barriers to trade, such as
complicated labeling requirements that effectively restrict imports from Pakistan, he said. "This is a step-by-
step approach to normalize the trade regime," Mr. Khan said.

"lt is clear that both the sides now see normalizing of trade and investment as a benefit for the population of
the two countries [and] as also potential to grow regional trade," the Confederation of lndian lndustries said.

Pakistan agreed last fall to hand lndia "most favored nation" trading privileges. The World Trade
Organization term means all members of the global trade body must treat each other equally when it comes
to tariffs. Both countries are members of the WTO.

Although lndia granted MFN status to Pakistan in the 1990s, lslamabad has yet to reciprocate despite its
pledge, arguing that New Delhi maintains sizable nontariff barriers to trade.

Both have been trying in recent months to make better trade relations a way to improve broader ties.
Relations hit a low after the November 2008 attacks on Mumbai by Pakistani gunmen in which more than
160 people were killed; peace talks have only recently started again.

A breakthrough in the trade portion of the peace talks occurred in the fall, when lndia dropped objections to
a European Union plan for Brussels to temporarily reduce tariffs on textile imports from Pakistan as a way to
help Pakistan's moribund economy.

While two-way trade between lndia and Pakistan stood at $2.7 billion in the year through March 2011, up
50% from the previous year, it still remains a trickle compared with lndia's trade with China, which tops $60
billion annually.


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WorId News: Syria Threatens AssauIt on Homs

By Joe Lauria
361 words
1 March 2012
J
A9
English

UNlTED NATlONS -- Syrian troops massed around a rebel-held neighborhood of Homs on Wednesday,
raising fears that the government was preparing an all-out ground assault there, as Damascus thwarted
efforts by the U.N.'s top humanitarian official to gain entry to the country.

"Baba Amr will be under . . . complete control in the coming hours and we'll cleanse all the armed elements
from the area," a Syrian government official said Wednesday, according to the Associated Press, which
noted it was impossible to reach residents to learn whether a ground assault was under way.

The Baba Amr neighborhood, a stronghold of opposition to President Bashar al-Assad, has come under
attack for weeks. Dozens of people have been killed there over the past several days, activists have said.

The Obama administration summoned Syria's senior envoy in the U.S. to express outrage over the
offensive on Homs.

Baba Amr became a focus of attention when two international journalists were killed there last week and four
more were trapped. On Wednesday, Spanish journalist Javier Espinosa escaped to Lebanon, according to
his employer, Spanish newspaper El Mundo.

Earlier Wednesday, activists said 13 Syrians who had been involved in helping U.K. photographer Paul
Conroy escape the country Tuesday had been killed in the operation, the AP reported. The French
government confirmed Wednesday that two French journalists remained trapped in Baba Amr.

Syria stymied U.N. efforts to address what international leaders have characterized as a humanitarian crisis.
Damascus refused Wednesday to allow top U.N. humanitarian official Valerie Amos to enter the country.

The U.N. and the Arab League have appointed former U.N. Secretary-General Kofi Annan as their joint
special envoy to Syria, but Damascus said it needs more information on his mission's goals before it will let
him in.

Libya's transitional rulers are promising $100 million in humanitarian aid to the Syrian National Council, a
government spokesman in Tripoli said Wednesday, underscoring the importance that Arab citizens across t
h e region are ascribing to the worsening civilian crisis.


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Business Education: Harvard Business SchooI? You'II Go Through Her First

By Melissa Korn
852 words
1 March 2012
J
B1
English

Only 12% of applicants made it into Harvard Business School last year. lt's Dee Leopold's job to separate th
e wheat from the chaff.

Ms. Leopold, managing director of M.B.A. admissions and financial aid at HBS, joined the admissions office
after graduating in 1980 and took over its top spot in 2006. Though she doesn't look at every one of the
9,000-plus submitted applications, Ms. Leopold personally reads applications for the 1,800 candidates
invited to interview. About half of those are accepted.

Harvard is accepting more engineers than in the past, as well as students with international experience.

Ms. Leopold spoke with The Wall Street Journal about how Harvard makes admissions decisions and what
really stands out in a B-school application.

Edited excerpts:

WSJ: How long do you spend on each application?

Ms. Leopold: Ten minutes minimum, and if you aggregate all the times l go back, probably 30 minutes or so.
l sweep over, look at everything, and then go back.

Everybody goes in different piles -- things that l need to spend more time on, things that l trust my quick
judgment on. l kind of go into hibernation after interviews. By the end of that period, l need a chiropractor.

WSJ: Candidates share who they are through their essays. How important are they from your perspective?

Ms. Leopold: l think people overestimate the role the essays play in the application. They're very, very
helpful for the candidate, and they're a really good platform for starting a discussion in an interview, but we
don't admit people because of an essay.

l don't need to have too much of a dramatic arc. There are some essays where l start reading and all of a
sudden l feel like l'm in the middle of a very well-written novel. lt can get overdone and overcrafted.

Sometimes the challenge in the essays is to be honest and to be clear. lt may be helpful for someone to
say, "l have no idea what you're talking about." De-jargonizing is helpful.

WSJ: Do you ever have waves of certain kinds of answers?

Ms. Leopold: For a while, people were getting advice that when we asked for three accomplishments you
had to give one professional, one personal and one community service. l don't know where that came from.
They got to be a little formulaic.

WSJ: From whom do you like to see recommendations?

Ms. Leopold: We have a question that says, "Please describe the most important piece of constructive
feedback you have given the applicant." lf a person can answer that, they know the candidate well enough.
We don't run around giving constructive criticism to virtual strangers.

The best recommendations have a lot of verbs. They say, "She did this," versus adjectives that simply
describe you.

WSJ: Do you ever question your admission decisions?

Ms. Leopold: Sure. This process isn't perfect. We're like very experienced country doctors who see a lot of
patients.

We're screening out undesirable qualities that would be toxic in our community. We like to think that our
arrogance detectors are pretty good. We're looking for confidence, with humility.

l was interviewing at the Harvard Club in New York and the person l was supposed to interview was
engaged in conversation with a mother and a daughter. They were adorable, but they wouldn't let him go. He
knew he had 30 minutes, l'm standing there, and he had such grace and composure to treat these people
well. That's a beautiful thing to watch.

WSJ: What do you want to see when somebody reapplies?

Ms. Leopold: You have to strike a balance between submitting the exact same application that didn't work th
e first time versus changing everything so it looks like you've had some out-of-body experience and you're a
totally different person. Lots of times successful re-applicants use the same basics, but they simply reflect
on it with another year of maturity or judgment.

WSJ: People pore over the class profile for insight into whether they'll fit. Are you seeing any trends in terms
of who's applying, or who's attending?

Ms. Leopold: That class profile's really a result, versus the plan. We don't have a template.

l do see more people coming from entrepreneurial backgrounds, and we have more engineers. We've
always had a really healthy mix of citizenship, although it is getting more difficult to classify a person by their
passport.

l'd love to find a way to tell that narrative. We're going to try something a little different this year, asking
[admitted students] to answer some questions: How many have been involved in a start-up? How many
have worked abroad? That might not show up in their most recent work experience, which is the way we
have captured a class before.


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Bay Area -- SmaII Business: SizzIer Steers Comeback Through LocaI Area

By lan Sherr
736 words
1 March 2012
J
A11D
English

Sizzler USA Restaurants lnc. is staking part of its latest recovery plan on the Bay Area.

The closely held company plans to open five new restaurants in the region, with the first new location to
open in the next two years, and the last opening within six.

Sizzler is targeting high population areas that also have daytime workers nearby, such as Fremont, San
Jose, Union City, Milpitas, Pleasanton and Livermore, though it hasn't made final decisions on where the
restaurants will be. The chain is also remodeling existing restaurants in Santa Clara, Hayward, Pinole,
Auburn and Sacramento.

Once popular for its low-price meals and bottomless salad bar, the Culver City-based restaurant chain has
been squeezed by higher-end and lower-end competitors, while a trend toward healthier food has driven
some patrons elsewhere.

ln 1996, Sizzler filed for Chapter 11 bankruptcy, closing more than a hundred stores in the process. The
company has since mounted several turnaround efforts. Last year, a management-led group that included a
former Sizzler owner bought the franchise for an undisclosed sum from an equity firm that had owned the
franchise since 2005.

The local expansion is the latest phase of Sizzler's broader comeback plan, which started roughly a year
ago. Nationally, Sizzler is aiming to attract customers by remodeling restaurant interiors, including fresh
paint, new finishes and automated ordering kiosks. lt is also playing up freshly cut and ground meat, and
even a food truck, called the "ZZ-Truck," that serves fare such as sandwiches, salads and ice cream around
Los Angeles and Orange counties.

"lf l would have invited you to Sizzler four years ago, l would have said, 'lt's great food but don't pay attention
to the building,'" says Kerry Kramp, Sizzler's chief executive, who announced the new Bay Area restaurant
openings in February.

While Sizzler is also targeting other urban areas such as Minneapolis and Denver for its revival, the Bay
Area is a particular focus because it has historically been a strong market for the company. Overall, Sizzler
will have 17 Bay Area locations after the openings and refurbishments, making it the region with the
second-most Sizzlers, just behind the 18 planned for Chicago.

Focusing its potential new restaurants on Bay Area cities such as Fremont and Milpitas will likely offer
opportunities for the chain, says Darren Tristano, an analyst at research firm Technomic, which has no
financial ties to the restaurant. Those areas don't have much in the way of competition for Sizzler, he says.

"Sizzler is factoring in ways that make them more relevant," Mr. Tristano says, adding that the restaurant's
expansion is coming as the rest of the industry retrenches. "This is the right time to try to grow against other
restaurants' poor performance," he says.

Some locals have already been won over. Janice Visaya, a 21-year-old student in San Francisco, first went
to an older Sizzler restaurant about two years ago with her boyfriend's family, primarily because it was the
closest American buffet in the area. "l always seem to keep going back for their steak and baked potato,"
she says.

Sizzler's wider efforts to attract customers by emphasizing its fresh food and new look helped boost sales in
restaurants open at least a year to $298 million in 2011, up 1.5% from 2010.

Still, the once-iconic 53-year-old company, which is down to 170 stores from more than 600 in the '80s,
faces steep challenges in its attempted comeback.

Analysts say the restaurant industry has changed since Sizzler was the go-to place for a good, inexpensive
steak -- a 12 ouncer at a Sizzler outside San Francisco costs $12.99. Fast-food outlets have eaten into
Sizzler's typical market, while higher-end restaurants have lowered their prices to stay competitive. ln
addition, the latest data from market researcher NPD Group show that Americans are eating at home more
often.

Despite this, Rob Black, executive director of the Golden Gate Restaurant Association trade group, notes
that the Bay Area doesn't have many restaurants catering to families. That could be an opportunity for
Sizzler.

"Sizzler is family-focused and there's an important role for those restaurants in the Bay Area," he says.


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Technology
Facebook Tries To Amp Up Ads

By Shayndi Raice
558 words
1 March 2012
J
B4
English

Facebook lnc. is adding new ways for advertisers to reach more people on its site, as the social network
tries to beef up its ad revenue prospects ahead of an initial public offering this spring.

At Facebook's first conference for marketers, called fMC, held at the American Museum of Natural History in
New York on Wednesday, the company's executives unveiled more packages that advertisers can pay for --
as part of a service called Facebook Premium -- which will give marketers the ability to distribute more
content to Facebook users.

Among those products: a "Reach Generator," which will ensure marketers' messages get out to fans in a
variety of ways, and making an ad format known as "Sponsored Stories" available on its mobile site.

Facebook's moves to rev up its ad products follow the Menlo Park, Calif., company's filing of lPO documents
earlier this month. The social network's impending stock-market debut is expected to the biggest-ever U.S.
Web lPO, potentially raising $10 billion at a valuation of up to $100 billion.

Ad revenue is crucial to Facebook's business prospects, with 85% of the company's $3.71 billion in 2011
revenue coming from online ads, and the rest generated by social gaming and other fees.

The social network generates ad revenue through display ads paid for by advertisers, which they can
purchase directly from Facebook or through advertising agencies. The company makes money based on th
e number of times a user sees an ad or based on the number of times a user clicks on an ad.

But Facebook has faced challenges converting advertisers -- who could set up free brand pages on the site
-- into paying customers. As a result, Facebook has been shifting away from free products to paid products
for advertisers.

On Wednesday, the company announced a new design for brand pages, called Timeline, which is already
available for individual users. This will let marketers display certain content more prominently on their pages.

Marketers can then pay Facebook based on the number of fans they have to get their message posted on t
h e home screen, news feed, log-out page and on mobile.

Previously, marketers could pay to have their message reposted on the side of the home screen or in the
news feed. The new premium version offers marketers a package that reposts their content on all the
formats.

Facebookexecutive Carolyn Everson said that while brands can still market for free, the best way to get
attention on the site is through paid products.

"The most important measure is whether or not we deliver business results," she said. "We believe the
Premium opportunity is the best way to do that.'

Sarah Hofstetter, president of the digital ad agency 360i, said Facebook's announcements Wednesday force
brands to think about paid advertising as part of their Facebook strategy.

"lt's not just a Field of Dreams environment anymore on Facebook where 'if you build it, they will come,'" she
said.

Facebook Chief Executive Mark Zuckerberg was absent from the event, leaving the keynote address to
Chief Operating Officer Sheryl Sandberg. Mr. Zuckerberg did send a video message telling advertisers,
"We're excited about the products we're building out today."


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EIectronic Trading: DigitaI PIatform Gets Boost at Credit Suisse

By Jenny Strasburg
423 words
1 March 2012
J
C4
English

ln a move reflecting the growing dominance of computer-driven trading on the stock market, Credit Suisse
Group AG promoted the head of its U.S. electronic-trading desk, Dan Mathisson, to also oversee its
traditional equities business buying and selling blocks of shares.

The developments, described in an internal memorandum that went out Tuesday and was confirmed by a
bank spokeswoman, show how big banks' institutional clients such as hedge funds and mutual funds are
increasingly trading via sophisticated computer algorithms and less through human interaction.

Mr. Mathisson will continue to supervise Credit Suisse's electronic-trading business, called Advanced
Execution Services, a highly profitable unit he helped start a decade ago. As part of that business, he
oversees Crossfinder, one the biggest so-called dark pools in the U.S.

Such pools are private trading venues that cater to institutional clients wanting to buy and sell stocks
anonymously and avoid attracting attention to orders that might move prices up or down, potentially to the
clients' disadvantage.

ln his new role, Mr. Mathisson becomes head of U.S. cash execution and trading. He joined Credit Suisse in
2000 from the broker-dealer arm of D.E. Shaw & Co.

"Effective immediately, we are combining the U.S. High-Touch and Low-Touch execution businesses into a
single execution and trading group," Credit Suisse told employees in the memo Tuesday from Steve Garnett
and Mike Paliotta, the bank's co-heads of equities for the Americas. The "high-touch" business includes the
trading floor that dominated in past years, where equities-sales employees take orders from clients, often
hollering across the floor about blocks of stocks to buy or sell. The "low-touch" business matches buy and
sell orders electronically, doing large volumes of trades at generally lower costs per trade.

A separate memo from Messrs. Garnett and Paliotta said Matt DeSalvo, who as head of Americas equities
sales trading and cash trading oversaw the "high-touch" business, is leaving Credit Suisse to pursue other
opportunities. Mr. DeSalvo couldn't be reached, and a bank spokeswoman declined to comment beyond the
memo.

Wall Street firms have been cutting expenses, with many desks refocused on higher-volume, lower-margin
electronic trading. "lf you're going to stack up those two businesses at any firm on Wall Street,
unquestionably, the 'algo' business is more important," said Justin Schack, a managing director at Rosenbla
tt Securities lnc.


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When WiII SociaI Media EIect a President?

By Andy Kessler
934 words
1 March 2012
J
A15
English

The Lincoln-Douglas debates of 1858 took place over seven venues, with 10,000-20,000 attendees and no
microphones. One candidate would speak for an hour, followed by a 90-minute rebuttal and then a half-hour
response from the original speaker (which alternated debate to debate). This description alone is almost 280
characters -- clearly we've come a long way from Honest Abe to the Twitter age. But should we believe the
hype about social media's impact on the 2012 election?

Pew Research says no. "Cable leads the pack as campaign news source," it concludes in a recently
released 35-page report. "Twitter, Facebook play very modest roles."

Too bad that misses the point. New technologies have always altered campaigns and usually in mysterious
ways. Party conventions were first televised in 1952 and soon lost their relevance, becoming scripted
theater. Richard Nixon lost votes by sweating under harsh lighting during his televised debate with JFK. Bill
Clinton bypassed the traditional news media, playing "Heartbreak Hotel" on his sax on Arsenio Hall's late-
night show. MoveOn.org used the lnternet to accumulate small donations and host a virtual primary won by
Howard Dean, who in turn was brought down by a scream, which in turn went viral on the Web. YouTube
was soon created and in 2008 hosted "Obama Girl" and other user-generated campaign ads.

ln November 2008, Twitter had about four million users, and 100,000 followed candidate Obama. Today,
President Obama has more than 12.5 million followers (while Mitt Romney has about 350,000 and Rick
Santorum about 150,000). ln 2008, Facebook had roughly 50 million users -- nowhere near today's 845
million -- and Google+ didn't exist.

Facebook and Twitter are already rivers of political banter -- from Rick Perry's "oops" video to infographics of
Mr. Obama's insider deals at the Department of Energy. Our friends find dirt and post it without thinking
twice. So it tends to be partisan, extreme and divisive -- more like a cocktail party than the evening news.

But campaigns can't just do "media buys" of $10 million on Facebook and expect anyone to notice. TV ads
are effective because they're intrusive, and this year we'll see $3 billion worth of them, up from $2.1 billion in
2008. Social networks are more subtle media.

Jonathan Collegio of the American Crossroads political action committee explains that "you can bang a TV
audience over the head with ads, but online content has to be hot to go viral. No one wants to tweet about or
post a lame ad on their Facebook page." Corporations already know this. Vitamin Water "crowdsourced" its
next drink flavor, allowing Facebook users to debate and choose it. Old Spice let us tweet to the shirtless
guy in its commercial and post 180 response videos with six million views on YouTube -- doubling sales in t
h e month the campaign ran. Corona Light became the "most liked" beer on Facebook by letting users
upload photos to a 40-foot Times Square billboard.

This viral marketing is what corporate and political campaigns increasingly thrive on, and today it's mostly
free. By the 2016 election, it'll surely steal some of the $3 billion in TV ad money. lt costs money to stock th
e campaign backrooms -- herbal tea-infused, never smoke-filled -- in which coders are tasked with findin
g innovative ways to bring undecided voters into the fold.

Far better to do that online than through, say, direct mail (which was still a $1 billion political industry in
2008, even though in so many homes it increasingly means mail thrown directly into the recycling bin).
Online, one's political affiliation -- Democrat, Republican or, most important, independent -- can be easil
y ascertained. Campaigns can read your tweets and your Facebook "likes," plus those of your friends.
Campaigns build new databases of independents every election because converting them to one side or the
other is the name of the game.

The greatest effect of social networks on Election 2012 will take place behind the scenes. Social networks,
like real life, are driven by influencers -- not necessarily those with the most friends or followers, but those
whose thoughts, ideas and opinions have the biggest impact. Mr. Collegio notes that for political action
committees "to seed opinion makers, Twitter is the ultimate platform. ldeas grow into stories on blogs and
eventually in the mainstream media." Not the other way around.

For years Google has ranked Web pages according to an algorithm called PageRank. Now there's a new
field of study around ranking users in social networks -- PeopleRank -- according to their influence: how man
y of their tweets are read, re-tweeted, include links that others click on, etc. Corporations trying to sell high-
ticket items are all over this, looking for industry experts, analysts and other buyers that people respect.
Startups like Quora and Klout have their own algorithms but you can bet that both major parties are investing
in this new-age influence peddling (with Democrats way ahead so far).

Those with social-media "influence" are most likely to help campaigns convert interest into votes. Finding
them in the haystack of the real world is tedious and expensive. But harnessing fast servers and constantly
upgraded algorithms to find them on social networks is already happening -- and it'll definitely sway who
becomes our next president.

---

Mr. Kessler, a former hedge-fund manager, is the author most recently of "Eat People" (Portfolio, 2011).


Document J000000020120301e8310000p


Ryan's Medicare RevoIution

By Fred Barnes
1,216 words
1 March 2012
J
A15
English

Over the past year, an entitlement revolution has taken place on Capitol Hill. lt has gotten relatively little
attention from the media. Yet its implications for the budget deficit and the health care of senior citizens are
enormous.

The revolution involves Medicare, the health-care program for the elderly and the single biggest cause of
America's looming debt crisis. Reform of Medicare would be achieved by a policy known as "premium
support." lt would bring consumer choice and spending restraint to the beleaguered program.

You may not have heard of premium support. But thanks to the efforts of Paul Ryan, the Republican
chairman of the House Budget Committee, it is now the leading alternative to current, fee-for-service
Medicare. lndeed, it is the only credible alternative.

How would premium support work? Beginning in 2022, it would create a marketplace in which seniors have
a fixed amount of money to buy health insurance. The amount of "support" would match the price of the
insurance "premium." The poor would get additional support to offset out-of-pocket expenses. The better-off
would get less. Payments would be "risk-adjusted" so the sick would be assured of full coverage.

Yes, it's a bit complicated. lnsurers would compete for the business of seniors. There would be three
options. One would be coverage at the support level. Another would offer less coverage at a lower price,
with the difference rebated to the beneficiary. The third would provide broader coverage at a higher price,
requiring the beneficiary to pay the amount above the support level.

That's the health-care part of premium support. The cost-saving part is simpler. Medicare in its current form
is open-ended, its expenditures uncontrolled and unsustainable. With premium support, the cost of Medicar
e would be capped. lts payment would rise with the rate of inflation or GDP growth, or slightly above.

The salience of premium support doesn't depend on who wins the White House in November. lt is bound to
be a major part of budget negotiations. Without it, serious deficit reduction would be almost impossible. With
it, a debt crisis like Europe faces today is avoidable.

True, Mr. Obama's health-care law has created an lndependent Payment Advisory Board with the task of
limiting Medicare spending, now rising at 6% a year, to the economic growth rate plus a half percentage
point. Not only does the board lack the tools to achieve this, but even if it did, the cuts would drive away
doctors by the thousands and force hospitals to close due to lack of funds.

How Mr. Ryan, a protege of the late Republican reformer Jack Kemp, yanked premium support from
obscurity is an amazing story. Discussed in policy circles for years, it was recommended by a bipartisan
presidential commission in 1999. President Clinton ignored the advice, and President George W. Bush
never embraced it.

lt didn't get traction in Washington until last year, when Mr. Ryan drafted a budget for 2012 and included
premium support. The Ryan budget passed the House before dying in the Democratic Senate, which
refused to pass any budget.

But House passage alone was a milestone. When Mr. Ryan first proposed premium support in 2008, 14
House Republicans signed on as co-sponsors. But when his budget cleared the House in 2011 -- with Medic
are reform its most controversial provision -- only four of the 241 Republicans voted against it. Of the 87
GOP freshmen, only one voted no. ln the Senate, all but five of the 47 Republicans declined to back Mr.
Ryan's plan.

The story might have ended there. lt's one thing for the congressional party to back premium support,
another for the presidential wing to do so. Mr. Ryan personally talked to Rick Santorum, Mitt Romney and
Newt Gingrich. He proved to be persuasive. (Mr. Gingrich retracted his charge that Mr. Ryan's plan was
"right-wing social engineering.") Ron Paul hasn't taken a position on the policy.

The result? Premium support is now Republican orthodoxy. But absent a GOP landslide this fall, that's not
sufficient to win congressional approval. Besides, entitlements are best enacted on a bipartisan basis.
Otherwise, they may wind up like ObamaCare -- unpopular, under legal challenge, and the target of endless
partisan attacks.

Mr. Ryan understood the need for Democratic allies. So when Democratic Sen. Ron Wyden of Oregon
approached him last fall, Mr. Ryan readily agreed to compromise. Mr. Wyden wanted traditional Medicare to
be an option under premium support, a provision urged by Democratic budget expert Alice Rivlin. He got it,
though payments would be capped, not open-ended.

Democrats had pounced when Mr. Ryan put Medicare reform in the House budget. They insisted
Republicans would end "Medicare as we know it." The charge lost some of its sting after GOP candidates
brushed the accusation aside and won special House elections last year in Nevada and New York.
Democrats chastised Mr. Wyden, if merely to discourage other Democrats from joining Mr. Ryan. lt worked --
in the short run.

The embargo on premium support won't last past the November election. Mr. Ryan says he's talked to a
"handful" of Democrats in the House and Senate who favor Medicare reform. "They're afraid of getting
treated like Ron Wyden," Mr. Ryan says. "They're not willing to talk [publicly] until after the election."

John Gorman, a consultant who worked on health issues in the Clinton administration, says the "only thing
that's going to save this program is structural reform." The Wyden-Ryan bill is "a reasonable compromise,"
he says, and "there's a lot of precedent for it." One is theMedicare prescription drug program, passed in
2003, under which commercial providers compete for the business of seniors. As a result, its cost to the
taxpayers is 41% less than projected. Another is Medicare Advantage, selected by 20% of seniors. "The
beneficiaries are happy," Mr. Gorman says.

Advocates of a single-payer health-care system are not happy. They like Medicarethe way it is, a defined-
benefit plan with no lid on costs and the government in full control. "Their vision of health care is the way Me
dic are is run today," says health-finance expert James Capretta. lt points the way to a single-payer system.

Premium support doesn't. lt is a defined-contribution plan, forcing insurers to be more efficient while making
their product as attractive as possible. "lt's the only way of saving Medicare without subjecting it to harsh
rationing," Mr. Ryan says.

Mr. Ryan says the arrival of the large freshman class of House Republicans accelerated the drive for Medic
are reform. But it's Mr. Ryan, 42, who deserves the bulk of the credit. He's the top Republican thinker on
domestic issues. And he has a keen political sense. He's been on a roll since he took apart ObamaCare in
front of Mr. Obama at the White House health-care summit in 2010.

Because of his tireless proselytizing, premium support has emerged as the most sensible way to reform
Medicare.

---

Mr. Barnes is executive editor of the Weekly Standard and a commentator on Fox News Channel.


Document J000000020120301e8310000o


Restarting the U.S. CapitaI Machine

By Jack Markell
890 words
1 March 2012
J
A13
English

For decades, emerging global companies that wanted to access capital had few choices but to come to
America. Our markets were the most liquid, low-cost, fair and stable in the world. That's changed. Today,
businesses have many options when deciding where to go public, incorporate, establish headquarters, and
create jobs.

As governor of the state that is the legal home of almost two-thirds of the Fortune 500, l know that
businesses going public share common priorities: an ability to access capital, reasonable taxes, and a
reliable and efficient regulatory environment. Yet America increasingly has less of a competitive advantage
in these areas and is attracting fewer new companies to drive future job growth.

The facts are sobering. The U.S. has experienced a stunning decline in lPOs and stock listings while capital
markets in Asia, Europe and South America have thrived. Data from the World Federation of Stock
Exchanges show that the number of U.S. lPOs has dropped to only about 100 annually, compared to about
360 a decade ago. ln just 15 years, listings on U.S. exchanges dropped from 8,800 companies to under
5,000. Meanwhile, listings on major overseas exchanges doubled. Fewer than 10% of all global lPOs list on
U.S. exchanges today, compared with 48% in the late 1990s.

Why does this matter? After going public, many new companies typically experience rapid investment and
job creation. ln fact, 92% of a typical company's employment growth occurs after the lPO. But if
entrepreneurs and investors cash out of an emerging company by selling to another firm, job creation often
sputters or contracts. By some estimates, including a study prepared by Grant Thornton LLP, the U.S. has
lost more than 10 million jobs because of lost lPOs since the '90s. Nobody who looks at our feeble lPO
figures in the last decade should be surprised by the tepid job growth that has characterized the last two
economic "recoveries."

lt's not just lost lPOs; we're losing corporate headquarters, too. Aon Corporation, a leading provider of risk
management and HR solutions, recently announced plans to move its headquarters from Chicago to London
and move its incorporation from the U.S. to the United Kingdom. lf approved by shareholders, Aon's move
to the U.K. will be a first for an S&P 500 company.

Aon's directors made a calculated decision: Take advantage of the U.K.'s new territorial tax system and
substantially reduce Aon's global tax rate, thereby sustaining the company's long-term competitiveness. The
loss to the U.S. will be measured in reduced tax revenues and, very likely, lost jobs.

lt doesn't have to be this way. The U.S. still leads the world in productivity, innovation and the attractiveness
of our consumer marketplace. But these advantages won't propel us in a complex global economy if we
don't fix the problems that push companies to locate elsewhere. We need bold action to regain our edge.

-- First, we must reopen America's capital markets to emerging growth companies -- new companies wit
h revenues below $1 billion and market caps below $700 million. Reforms in Congress, such as the Fincher-
Carney Reopening America's Capital Markets to Emerging Growth Companies Act, would create a five-year
"on-ramp" for smaller companies to comply with certain provisions of Sarbanes-Oxley and Dodd-Frank that
create unreasonably high accounting costs and disclosure requirements for new lPOs.

Congress and the Securities and Exchange Commission (SEC) should also make targeted reforms to listing,
trading and analyst research rules that inadvertently make our markets less attractive to small-cap lPOs.
President Obama's Startup America initiative and legislation addresses many of these reforms directly, for
instance with an lPO "on-ramp" that changes how our current securities laws and regulations are phased in
for smaller, young companies.

-- Second, the U.S. must fix its uncompetitive corporate tax structure. Countries such as the U.K. have
already recognized the importance of designing their tax codes to attract jobs. The president's proposal to
reduce our top corporate tax rate is a good start. Beyond that, we must adopt flexible and competitive tax
structures to attract businesses seeking international growth. We should also simplify tax rules to enable our
largest pension funds and foundations to invest in America without having to do so through offshore
vehicles.

-- Finally, U.S. tax and regulatory policies should recognize and encourage the ability of companies to
conduct business in multiple jurisdictions that have similar rules and safeguards. Businesses with ambitions
to grow globally seek to optimize flexibility. For example, if a company wants to list on the Tel Aviv Stock
Exchange, conduct R&D in Silicon Valley and be governed by Delaware corporate law, that can be a
winning proposition for all involved. Right now, though, SEC policy effectively prevents it.

Time is not on our side. Policy makers must act decisively to restart America's capital-access engine so we
can again experience the full benefits of the job growth that comes from new and emerging industries.

---

Mr. Markell, a Democrat, is the governor of Delaware and a former executive in the telecommunications
industry.


Document J000000020120301e8310000n


Bookshelf
High And Mighty

By Norman Lebrecht
998 words
1 March 2012
J
A13
English

The Castrato and His Wife

By Helen Berry

(Oxford, 312 pages, $29.95)

Along with its many acts of musical patronage, the Roman Catholic Church perpetrated one appalling
musical outrage. By banning women's voices from places of worship, the church fostered an economic
opportunity for the castration of boys with unbroken high voices. The church, to be fair, issued a prohibition
against the practice in the late 16th century. But popes and cardinals continued to commission music for
divine and domestic use, and no church decree ever instructed a composer to keep the register low so that t
soprano voice was not required. Men of God knew that suitable voices would be produced for their service,
one way or another.

The routine emasculation of boys flourished in ltaly for three centuries. There were castrati singing in the
Sistine Chapel as late as 1902, when Alessandro Moreschi, the "Angel of Rome," engraved his haunting
voice on a set of acoustic recordings. What made the castrato voice so appealing, even when female
soprano voices were available, was its eerie combination of high pitch, pure timbre and a robust, beefy
character. The nearest approximation in modern times is the rise of the star countertenor, who, from Alfred
Deller to Andreas Scholl, can add a sinewy masculinity to feminine songs.

Despite the historical importance of castrato singing in ltalian opera and devotional music, little has been
written about the ways in which boys were selected, cut and trained for a vocation, let alone about their
sexual infiltration of society's upper echelons. While castrati were often the object of lampoonery, their loss
of procreative function did not inhibit physical virility, making them an attraction to bored wives and an object
of prurient curiosity.

Helen Berry, a historian at Newcastle University in the northeast of England, lifts a curtain corner on the
breed by examining the well-documented life of Giusto Ferdinando Tenducci (ca. 1735-90), a Neapolitan
who became a star of the London stage, appearing in operas by Thomas Arne, J.C. Bach and Thomas
Linley. Tenducci's performance established "Che faro" from Gluck's "Orfeo" as a popular favorite. ln the
coffee houses of Doctor Johnson's Strand, he was considered heir to the inimitable Senesino, Handel's star
castrato a generation before.

To attain celebrity, Tenducci had to undergo a delicate operation and an intense education. The snip, we
learn, was performed by a traveling pigsticker who doubled as a barber-surgeon in the villages he visited,
villages like Monte San Savino, where young Tenducci sang beautifully at Mass. The man who removed his
testicles was named Pietro Massi; his son and assistant, Tomasso, left an account of the procedure ("two
incisions between the Thighs") and aftercare (applying "Plasters" to the "Wound").

Aged 13, the newly doctored Tenducci entered one of four Naples conservatories, originally orphanages,
where high-pitched boys were groomed by retired singers in the art of moving and breaking hearts. "Natural
talent," writes Ms. Berry, "had to be augmented by repetitive and exhaustive training." But singing, to these
boys and their teachers, was not only an act of aesthetic perfection. lt was a matter of grinding money out of
the rich to allow castrati to live in comfort and, often, to enjoy the special attention of female admirers.

Tenducci reached London in the summer of 1759 and was soon embroiled in a liaison with Elizabeth, the
wife of Baron Lyttelton, who sued her for "ill conduct." Within a year, the singer was thrown in jail for bad
debts. He took out a newspaper advertisement lamenting his "Want of Necessities" in prison and, thanks to
a "powerful patronage network," was back on stage before long. Thomas Gainsborough drew his portrait, th
e ultimate celebrity confirmation. Women thronged to his recitals.

The affair that caused him greatest grief and joy was with Dorothea Maunsell, whom he met when she was
14, taught to sing and sprang from an arranged marriage. They fled, wed and -- according to Casanova, who
may have met Tenducci at Covent Garden -- had two children thanks to an alleged "third testicular gland"
(Casanova's "misrecollection" is doubted by Ms. Berry).

Dorothea was kidnapped back by her family, and Tenducci went to jail, threatened with charges of rape and
popery. Somehow he sang himself out of trouble and was set free to live in marital harmony with Dorothea --
until, on tour in ltaly, she left him for an Englishman. Her father annulled her marriage, bringing the cutter
Tomasso Massi to court to testify that Tenducci was not a whole man. Dorothea re-entered society with a
glorious second wedding. Tenducci, a magnet to the ladies to the last, died in Genoa at the age of 54.

Ms. Berry recounts his story with the eye of a tabloid reporter, missing no scintilla of scandal yet maintaining
our sympathy for the village boy who made the most of his circumscribed attributes. She sees his life as a
milestone in "how attitudes towards men and manhood changed over time, and how society has chosen to
define, and redefine, the institution of marriage." She would also like us to believe that Tenducci's marriage
"anticipated the struggle to reconcile biological destiny and individual choice."

Perhaps, but Tenducci's tale has more powerful modern resonances. lt calls to mind the tragedy of Anna
Nicole Smith, the Texan girl from the wrong side of the tracks who underwent breast-enhancement surgery,
married an octogenarian billionaire and died in dubious circumstances before, last year, her soap opera of a
life was turned into grand opera at Covent Garden by the British composer Mark Antony Turnage.
Tenducci's life was a trial run for our contemporary obsessions with sleaze and celebrity. His triumph was to
leave it with a modicum of dignity, as few in the 21st century will ever do.

---

Mr. Lebrecht's latest book is "Why Mahler?"


Document J000000020120301e8310000m


China vs. North Korea's Refugees

By Melanie Kirkpatrick
854 words
1 March 2012
J
A15
English

An important piece of North Korea's system of control over its own people is finally being exposed: China's
complicity. On Monday, Seoul raised the issue of Beijing's policy of repatriating North Korean refugees in th
e United Nations Human Rights Council in Geneva.

Every year the Chinese authorities arrest an unknown number of North Koreans who have fled to China.
Some of the refugees are trying to escape North Korean tyranny permanently by making their way through
China to third countries, from which they can travel to the South. Beijing forcibly repatriates these
unfortunates without giving them a chance to apply for asylum.

North Koreans who are suspected of having met Christians, South Koreans or Americans while in China are
executed or shipped off to the gulag. The rest of the returnees are sent to other prisons, where conditions
are little better. Pregnant women are forced to undergo abortions, even in their third trimester, for the crime
of carrying "Chinese seed."

Until now, the South Korean government has not spoken out publicly about this ongoing atrocity, in part
because it doesn't want to incur the wrath of its largest trading partner and in part because it realizes that
Beijing could make life much harder for those North Korean refugees whose presence it chooses to
overlook. Seoul's silence was China's price for allowing some North Koreans to escape.

Last year, 2,727 North Koreans reached safety in South Korea, according to the Unification Ministry in
Seoul. Most fled through China, traveling on an underground railroad that Beijing could shut down in an
instant.

Nevertheless, China's repatriation policy is a blatant violation of the lnternational Convention on Refugees,
to which it is a signatory. The Convention bars "refoulement," the diplomatic term for returning refugees to
places where their lives would be endangered.

Beijing argues that the North Koreans are not refugees but "economic migrants." lt likes to make an absurd
comparison with illegal Mexican immigrants in the United States, conveniently ignoring the fact that the
Mexican government does not imprison, torture or kill its citizens who are sent home from Texas or Arizona
-- much less deliberately starve them before they flee.

China has gotten away with its inhumane repatriation policy for years, with only international human rights
organizations criticizing it from time to time. But South Korea is finding its voice. ln Seoul this week, the
National Assembly passed a resolution urging China to stop sending North Korean refugees back to the
totalitarian state.

A member of a minority political party, Rep. Park Sun-young, is calling attention to China's repatriation policy
by staging a sit-in and hunger strike in front of the Chinese Embassy. The public, too, is waking up to the
fate of its North Korean brothers and sisters hiding in China.

The number of North Koreans hiding in China at any given time varies, depending on conditions at home
and the extent of the crackdown in China. There are at least tens of thousands of North Koreans there
today. And at the height of the severe food shortages in the late 1990s and early 2000s, there were as
many as half a million. More than half of the North Koreans who flee -- perhaps as many as 70% or 80% -
- are women, many of whom have been sold to Chinese men as "brides."

Now Pyongyang is stepping up its campaign to scare its citizens so that they won't attempt the journey.

Reports from South Korean and American activists who work in China near the border with North Korea are
chilling. After Kim Jong Eun took power last December, one of his first acts was to issue a shoot-to-kill order
to North Korean guards patrolling their side of the border. There are further reports that he ordered land
mines to be buried on riverbanks to stop people from fleeing. North Korean security agents are said to be
flooding into China, where they spy on the refugees and the people who help them, and report them to the
Chinese authorities.

According to the Venerable Pomnyun Sunim, a Buddhist monk and activist in South Korea, Kim Jong Eun
has exiled the relatives of fugitives to remote regions of the country. Knowing that their families will be
punished serves as a powerful disincentive to anyone who is thinking of fleeing. The Venerable Pomnyun
also says that Kim Jong Eun has intensified the crackdown on possession of illegal Chinese cellphones,
which allow North Koreans to communicate with the outside world and arrange passage on the underground
railroad.

lf China can be convinced to change its repatriation policy, it would save thousands of lives. As Seoul's new
outspokenness raises international awareness of this tragedy, other governments should raise their voices in
support.

---

Ms. Kirkpatrick, a former deputy editor of The Journal's editorial page, is a senior fellow of the Hudson
lnstitute. Her book, "Escape From North Korea: The Untold Story of Asia's Underground Railroad," will be
published in September.


Document J000000020120301e8310000l


Romney Takes the GOP Lead

By Karl Rove
805 words
1 March 2012
J
A13
English

Tuesday's primaries bent the GOP presidential contest solidly in Mitt Romney's direction. Trailing Rick
Santorum by 10 points in the lnside Michigan Politics/MRG poll two weeks ago, Mr. Romney battled back to
win his birthplace by three percentage points. He beat Mr. Santorum by 20 points in Arizona, sweeping all th
e state's 29 delegates.

Michigan was Mr. Santorum's best shot at delivering a fatal blow to Mr. Romney. He logged as many
campaign stops as Mr. Romney, and he benefited from a social-conservative majority in the western part of
state. His super PAC spent more than it had in any other contest. Ron Paul and Newt Gingrich left both
states largely to him -- Mr. Paul focusing on the upcoming caucus states (Washington, Alaska, ldaho, North
Dakota), and Mr. Gingrich trying to stop his slide in Georgia (his home state) where polls show Mr. Santorum
gaining.

Yet Mr. Santorum couldn't beat Mr. Romney mano-a-mano. Unforced errors played a role. Mr. Santorum's
crude dismissal of John F. Kennedy's famous 1960 speech advocating the strict separation of church and
state didn't come across well. Nor did his suggestion that wanting everyone to attend college is snobbish.
And his robocalls inviting Democrats to crash the GOP contest boomeranged.

More important, Mr. Romney found his voice on economic issues, laying out a bolder, crisper pro-growth
agenda in a Detroit Economic Club appearance last Friday. Most Michiganders (54%) said the economy
was the most important issue, and they split 45% for Mr. Romney to 29% for Mr. Santorum. The Economic
Club speech would have had even greater impact, but coverage focused on the odd visual of 1,200 people
seated on the gridiron of Detroit's Ford Field, a football stadium built for 65,000.

Mr. Romney's wins this week give him 163 delegates, according to The Wall Street Journal count. (The
Republican National Committee's official tally was not available as this op-ed went to press.) And Mr.
Romney hopes it gives him momentum in the state polls going into next Tuesday's 10 contests (Alaska,
Georgia, ldaho, Massachusetts, North Dakota, Ohio, Oklahoma, Tennessee, Vermont and Virginia). Already
he's regained the lead in Gallup's national tracking, finding himself the front-runner for the fourth time since
November.

While four candidates fight on to Super Tuesday, one or even two may not survive the coming week's
battles over 509 delegates.

The caucuses this Saturday in Washington (43 delegates), and next Tuesday in Alaska (27) and North
Dakota (28) seem tailor-made for Mr. Paul, though Mr. Romney is barnstorming in North Dakota today.

Mr. Romney appears likely to take virtually all the delegates in Massachusetts (41), Virginia (49) and
Vermont (17), as well as in the ldaho caucuses (32) Tuesday and the Wyoming caucuses (29) later next
week. He'll also pick up delegates in the three Southern primaries, where the delegates are awarded
proportionally, perhaps even winning a chunk of Tennessee's 58 delegates.

lf Mr. Gingrich fails to take Georgia (76 delegates) -- which he represented in Congress for two decades -
- he's done. Even if he wins a plurality, he must carry one or both of the other Southern states voting that
day -- Oklahoma (43 delegates) and Tennessee (58), since he failed to qualify for the Virginia primary -- or
risk being marginalized. Even with other Southern victories, he could look like a regional candidate.

Mr. Santorum is focused on Ohio, Tuesday's key battleground with 66 delegates. Mr. Romney can afford a
narrow loss there as long as he wins a solid plurality of all the Super Tuesday delegates. Mr. Santorum's
candidacy will realistically be at an end if he loses the Buckeye State, though he could linger for weeks.
Even a win leaves him on life support unless he can also best Mr. Romney in Tuesday's Southern contests,
coming in first or second with Mr. Romney trailing in second or third place.

While the GOP battle drags on, Team Obama has become downright cocky. But Mr. Obama's latest Gallup
job approval rating is 43%; no president has ever been re-elected with such low job approval. This week, the
Conference Board pegged consumer confidence at 75 points. By comparison, George W. Bush won re-
election narrowly with consumer confidence at 94.4 in late February 2004.

The GOP battle is so intense this time because the president and his policies are so unpopular. Even the
cheering from the media bleachers about an easy re-election has done little to change that so far.

---

Mr. Rove is the former senior adviser and deputy chief of staff to President George W. Bush.


Document J000000020120301e8310000k


Heard on the Street
Beijing JoIts Power Profits Back to Life

By Tom Orlik
311 words
1 March 2012
J
C12
English


China's growth for the past 30 years has been dirty. Heavy industry has pumped sulfur and carbon into the
atmosphere. But that is changing.

Beijing has set tough targets to reduce the consumption of energy per unit of economic output. The low-
hanging fruit from closing dirty industrial plants has been plucked. Making further progress will require
raising energy prices.

This is good news for long-suffering electricity providers like Huadian Power, Datang lnternational Power
and Huaneng Power. Generators are squeezed between market prices for coal, up 75% in the past seven
years, and regulated power prices, which have trailed. Profitability has suffered: Net margins at Huaneng fell
from 17.7% in 2004 to 2% in the first half of 2011.

ln November, however, electricity prices for industrial users were raised by about 5% -- the first increase in
two years. More are needed if China wants to meet its energy intensity targets. Moderating inflation provides
room for this.

Skeptics might argue that the environment has always been a secondary priority for Beijing. But even if
officials maintain a single-minded focus on growth, that could still be positive for generators.

Low margins provide little incentive to invest in new equipment. lnvestment in power generation grew just
1.8% year-to-year in 2011. lf China wants to limit the power cuts that bedevil industry in the summer, that
means redistributing profits along the electricity supply chain to boost investment. Nate Taplin, of GK
Dragonomics, says the last time that generators invested in anything like the required quantities, net
margins were close to double digits.

Whether China goes green, or just invests to avoid brownouts, profitability at China's power generators is set
to rise.


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Heard on the Street
ECB's Free Money May Carry a Cost

By Simon Nixon
485 words
1 March 2012
J
C12
English


Who could resist the lure of almost free money? Certainly not Europe's banks. The European Central Bank's
second Long-Term Refinancing Operation attracted even more demand than the first. Eight hundred banks
requested 529.5 billion euros ($712.75 billion) in three-year loans, compared with 523 banks taking 489
billion euros of loans last time. Strip out refinancing of existing ECB facilities, and the amount of net new
money being pumped into the European financial system is likely to have been 313 billion euros, up from
200 billion euros in December, broadly in line with expectations.

Even so, the size of the LTRO should be positive for markets, at least in the short term. The large number
of participating banks lays to rest concerns that ECB facilities might be stigmatized. Easier collateral rules
will have helped many banks without access to private markets to replace maturing funding. Smaller banks,
in particular, could use cheap loans to fund carry trades, boosting short-term profits and giving further
support to sovereign-bond markets. Some banks also are likely to have used the LTRO to fund cross-border
exposures where they have domestic deposit shortfalls as part of their contingency planning against a
possible euro breakup.

But the LTRO is no panacea for the euro zone's economic problems. True, the ECB loans averted a nasty
credit crunch, and easier financial conditions will provide some support to the real economy. But banks are
unlikely to use LTRO money to fund new loans to businesses and households, which typically have
maturities beyond three years; most banks will continue to deleverage to meet new capital rules. Any lasting
boost to the real economy will depend on banks and governments pushing ahead with restructuring and
reforms to boost productivity and competitiveness.

Ominously, there already are signs governments are taking advantage of easier financial conditions to
backpedal on reform. The Spanish banking-sector overhauls announced in January fell far short of the
radical plan that had been promised; some in Madrid are now talking of relaxing fiscal targets. ln France, the
front-runner in the presidential elections, Francois Hollande, has been talking of lowering the retirement age
to 60 from 62.

This is sure to alarm the ECB, which is anxious that the time bought by the LTRO be used well. After all,
these LTRO loans will need to be refinanced in three years. And with governments also making the most of
bank appetite for carry trades to issue shorter-dated bonds -- Spain has already issued 35% of its funding
needs for this year, 65% of it with maturities of five years and under, according to Morgan Stanley research
-- the euro zone could face the mother of all rollover risks in 2015.


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Sotheby's Profit FaIIs On Weaker Revenue

By Drew FitzGerald
287 words
1 March 2012
J
B13
English

Sotheby's fourth-quarter profit slumped 26% as the auctioneer generated less revenue and reported a
narrower margin from commissions.

Shares dropped 7.2% to $36.49 after hours Wednesday on the weaker-than-expected results. The stock
was off 20% over the past year through Wednesday's close.

Sotheby's earnings rose in early 2011 as the art market continued to pick up steam, though the company
has reported a revenue drop in the latest two quarters.

Bid prices for art have nevertheless climbed in recent years as emerging-market buyers exercise their new
spending power and yield-hungry investors search for new ways to gain an edge.

"We have now reached the point where the three geographic engines driving our auction business -- the
Americas, Europe and Asia -- are contributing to our success in roughly equal proportions," President and
Chief Executive Bill Ruprecht said.

Sotheby's recently said it auctioned off $4.9 billion of art last year, up 14.5% from the year before. Sales at
rival Christie's lnternational PLC rose 14% to $5.7 billion.

ln the latest quarter, Sotheby's reported a profit of $71.5 million, or $1.04 a share, down from $96.2 million,
or $1.38 a share, a year earlier.

Revenue fell 11% to $284.2 million, $274.9 million of which came from auction and related sales.

Analysts polled by Thomson Reuters were expecting a $1.25 per-share profit on $298 million in revenue.

The company blamed lower net auction sales, fewer single-owner sales and a significant decrease in
auction commission margin for the latest decline.


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LElSURE & ARTS
RevoIution in BerIin

By A.J. Goldmann
1,012 words
1 March 2012
J
D4
English

Berlin -- The 62nd installment of the Berlin lnternational Film Festival, which ran last month, might have well
been titled "Revolution!"

The Berlinale, as the event is known here, is considered the most political of the world's major festivals. As
chaos continues to grip the Middle East, insurrection and violent overthrow seemed appropriate thematic
choices for this year's lineup, which featured nearly 400 films, including many that dealt specifically with the
Arab Spring.

The main competition selection was abuzz with intrigue and revolt, including Paolo and Vittorio Taviani's
"Caesar Must Die," the film that won the Golden Bear, the festival's top prize. The movie is an ingenious
interpretation of "Julius Caesar" that stars real inmates at a high-security prison as Shakespeare's friends,
Romans and countrymen.

At every turn, the Berlinale dished up a healthy does of rebellion, from the festival's French opening entry,
"Farewell My Queen," a lush costume epic about Marie Antoinette and the women around her in the final
days of the ancien regime, to the restored version of Sergei Eisenstein's "October," which was given a gala
screening with a full orchestra.

While Eisenstein employed 10,000 extras in 1928 to craft what would become the definitive Soviet-approved
version of the storming of the Winter Palace, there is no need nowadays for filmmakers in Egypt, Yemen
and Syria to go to such lengths. And where historians have spent centuries trying to make sense of the
mechanisms of the French Revolution, journalists and documentarians in places like Tahrir Square have
ensured that we have immediate access to the revolution from multiple angles. Many of the films on offer
proved how much more there is to see than what can be broadcast on YouTube.

ln Sean McAllister's documentary "The Reluctant Revolutionary," Kais, a travel agent in Yemen, narrates his
country's unfinished revolution. We follow Kais as he goes from being deeply cynical and ambiguous about t
e protest movement against President Ali Abdullah Saleh to becoming a committed exponent for change. Th
e footage shot by Mr. McAllister of the Friday of Dignity Massacre last March, where 52 peaceful protesters
were gunned down, is more immediate and graphic than anything likely to be broadcast on CNN. At the end
of the film, Kais urges the journalist-filmmaker, who followed the travel agent with his camera from January
to April of 2011, to show his footage to the world. "Your eye is the biggest camera," he says.

Another documentary, "Words of Witness," captures the hope, yearning, anxiety and fear of people in a
country undergoing extreme political and social turmoil. Director Mai lskander follows Heba, a 22-year-old
journalist working for an English-language online newspaper in Egypt when the revolution explodes. Ms.
lskander and Heba go into Tahrir Square, interviewing the people who demanded the end of Hosni
Mubarak's regime. The film takes us through the revolution to the uncertainty that follows -- and continues -
- as the military starts to consolidate power. Raw and fascinating, "Words of Witness" also tells the story of
Heba and her family, who support the young woman's desire to be a journalist while fearing for her safety.
We see Heba filing her stories, sharing them on Facebook, uploading video and updating her Twitter
account.

ln addition to programming films, the Berlinale also presented a panel titled "Filmmakers and the Arab
Spring: lnsurgency, Poetry and Engagement." Among the participants was Mohammed Ali Atassi, a Syrian
journalist-turned-documentarian who works in Beirut. He explained that he became a filmmaker because he
felt that words weren't going far enough. Mr. Atassi's new film explores how activists use technology to
organize themselves and was shot in Syria, a country the director was unable to set foot in. lnstead, he
relied on others to feed him footage. "l got inside using new communication. l was traveling via the lnternet
and Skype," he explained.

Mr. Atassi said that new realities on the ground in Syria are creating a new type of filmmaking for directors
who are unable to sign their work, often made without funding or a script. "We need to get used to a new
situation. What is needed is more communication, solidarity and effort," Mr. Atassi said, stressing the impact
that smaller, more portable cameras and computer software editing suites have had so far.

"When there's such a big event like the Arab revolutions taking place nowadays," said Hania Mroue, a
Lebanese producer and festival director, "it's impossible for big festivals not to take this into consideration
and to have a special program or focus, which is amazing." At the same time, however, she was frank about
the potential downside. "lt means if my film is selected, l'm very happy. But it can be frustrating, because it
means that my film is not being selected for its quality but because there's a general trend -- for political
reasons and not artistic reasons."

The Egyptian Nora Younis was one of the subjects of "Reporting . . . A Revolution," Bassam Mortada's
group documentary of six young journalists who covered the Egyptian Revolution in January 2011. She
recounted how, along with many of her peers, she was uncertain what to film and how to cover the events
unfolding around her. Often she weighed her role as a journalist against her responsibility as a citizen.

Mr. Atassi emphasized that there is a line separating the filmmakers from freedom fighters who would
accept martyrdom. "A risk-taking filmmaker doesn't want to be a dead filmmaker," he said. For Ms. Younis,
however, the line between chronicler and participant was often blurred. "Even if you're a citizen with a
camera, you become a target for the police and the military," she said. But despite such risk she continued
to do her job. "To me, it was just important to keep the cameras rolling."

---

Mr. Goldmann writes about culture from Berlin and New York.


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GIobaI Finance: Banks May Face Charges From SEC

By Liz Moyer
530 words
29 February 2012
J
C3
English

Goldman Sachs Group lnc., J.P. Morgan Chase & Co. and Wells Fargo & Co. have been told that U.S.
securities regulators may sue them in civil court over allegedly shoddy disclosures of the risks of subprime
mortgage bonds tied to the financial crisis.

New York-based Goldman and San Francisco-based Wells Fargo said in regulatory filings Tuesday that they
received so-called Wells notices from the Securities and Exchange Commission indicating the agency's staff
has signed off on plans to file civil suits.

New York-based J.P. Morgan Chase, the biggest U.S. bank by assets, expects to disclose Wednesday that
it also has received a Wells notice, according to a person familiar with the actions by the SEC.

J.P. Morgan spokeswoman Jennifer Zuccarelli declined to comment, as did a representative for Wells Fargo.

A Goldman representative didn't immediately respond to requests for comments.

The notices mark a stepped-up regulatory effort to hold Wall Street accountable for its sale of bonds linked
to subprime mortgages from 2006-08.

At issue is whether the banks misrepresented the quality of loan pools they bundled and sold to investors.

The Wall Street Journal reported earlier this month that the SEC was looking into the matter.

ln its annual report that was filed with the SEC on Tuesday, Goldman said that it received on Feb. 24 a
Wells notice from the Securities and Exchange Commission that was related to disclosures in sales
materials for $1.3 billion worth of subprime-mortgage-backed bonds. The bonds at issue were sold in 2006.

Wells Fargo disclosed earlier Tuesday it had also received a Wells notice related to disclosures in its
mortgage-backed-securities offering materials. lt didn't say when it received the notice.

Wells Fargo said government agencies continue to investigate mortgage-related practices at the bank,
including whether it violated fair-lending or other laws related to mortgage origination and whether it properly
disclosed facts and risks associated with mortgage-backed securities in its offering documents for those
products.

ln its annual filing Tuesday, Wells Fargo said it "continues to provide information requested by the various
agencies in connection with certain investigations."

A Wells notice is the SEC's warning civil charges may be coming, giving the recipient time to provide
documents and state a case for why charges shouldn't be filed.

Regulators are examining the disclosures several Wall Street banks made in mortgage-backed-securities
offerings to see whether they misled investors about the underlying pool of assets.

Goldman, led by CEO Lloyd Blankfein, also said in its annual filing that it received government and
regulatory inquiries concerning certain transactions with MF Global Holdings Ltd. prior to its bankruptcy
filing. Goldman said it is cooperating with all such inquiries.

The firm faces litigation related to its offering materials on $214 million in MF Global convertible notes. The
suits, which seek class-action status, allege the offering materials failed to adequately describe MF Global's
exposure to European sovereign debt.

---

Dan Fitzpatrick contributed to this article.


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Mortgage-Bond DeaI Draws a Fine --- As Other Firms Are Targeted, State Street to Pay $5 MiIIion to
SettIe Massachusetts Charges

By Jean Eaglesham
740 words
29 February 2012
J
C2
English

Massachusetts's securities regulator is conducting a wide-ranging investigation into the Wall Street
mortgage-bond system that helped fuel the financial crisis.

Secretary of the Commonwealth William Galvin said his office is investigating "how banks misled buyers" in
multibillion-dollar deals.

"We're actively investigating a number of deals, a number of entities," Mr. Galvin said in an interview.

ln the first enforcement action to result from the probe, the state regulator Tuesday fined State Street Corp.
over its role as investment manager for a deal called Carina CDO Ltd.

Carina was a $1.56 billion collateralized debt obligation created in 2006, as Wall Street's CDO system was
at its height. CDOs are deals based on pools of subprime mortgages and other loans, slices of which are
sold to investors.

State Street failed to tell investors that lllinois-based hedge-fund firm Magnetar Capital LLC had helped to
set up Carina, while also betting against $142 million of the underlying assets, the Massachusetts regulator
said.

"The investigation established that State Street knew that Magnetar was shorting some or all of the portfolio
but allowed the hedge fund to participate in meetings to discuss portfolio composition" and to recommend
assets, it said.

When Carina collapsed in November 2007, with losses to investors of about $450 million, Magnetar was
"able to reap a windfall" from its net short position on the deal, the regulator said. A spokesman for
Magnetar declined to comment.

State Street, which agreed to pay penalties totaling $5 million to settle the civil securities fraud charges, said
in a statement that it neither admitted nor denied the Massachusetts regulator's findings.

Deutsche Bank AG structured the Carina deal. Mr. Galvin said Deutsche is one of a number of firms under
investigation by the Massachusetts regulator.

A spokesman for Deutsche declined to comment.

The Massachusetts enforcement action follows a blueprint already used by the Securities and Exchange
Commission for a handful of civil enforcement actions over similar mortgage-bond deals.

The Massachusetts settlement reveals new details about the influence exerted by Magnetar, alleging the
hedge fund helped to craft some 26 CDOs while betting against the underlying assets.

Deutsche Bank created Carina at the request of Magnetar, and involved the hedge fund in discussions with
State Street about which assets to select for the deal, according to the settlement agreement.

lt quotes an internal email sent by a State Street executive in June 2006 as Carina was being put together.

"lt seems a large U.S. hedge fund has asked DB [Deutsche Bank] to structure a deal," the email said.

"Smells like a lay-up to me but we need to respond very quickly," the message added.

Magnetar got the chance to affect the name of the deal, which was taken from a constellation in the
southern sky, according to the court filing.

lt quotes a State Street email from June 2006 saying the bank had asked a Magnetar executive "if he has a
preference for the name of the CDO. The owner of the firm is an astronomy buff . . . so [he] would like to
see the deal named after a constellation."

Officials of the hedge fund attended meetings with representatives of State Street and Deutsche at State
Street's Boston offices as the deal was being put together, according to the Massachusetts regulator. lt
quoted from an email sent by a State Street employee to a Magnetar executive in July 2006 promising to
"keep you posted on my progress" on Carina.

Magnetar hasn't been accused of wrongdoing by any regulator. lts role in a number of mortgage-bond deals
has been scrutinized by the SEC, according to people familiar with the matter.

The hedge fund has previously said it wasn't betting against the housing market and didn't "select" assets in
the CDOs in which it invested.

The SEC is investigating whether investors in a $1.6 billion mortgage-bond deal called Delphinus CDO
2007-1, created by Mizuho Financial Group lnc., were told about Magnetar's input into the deal, The Wall
Street Journal has previously reported. Mizuho said last month it had "been asked by the SEC to provide
related documents and information, and it's currently dealing with it."


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Technology
Yahoo Threatens Suit vs. Facebook

By John Letzing
560 words
29 February 2012
J
B5
English

Yahoo lnc.'s attempt to wring patent fees from Facebook lnc. reflects the increasing worth of social
networking sites, legal experts say, as well as an effort by Yahoo's recently installed leader Scott Thompson
to ferret out new revenue opportunities at the struggling lnternet company.

Earlier this week, Yahoo told Facebook that it is infringing on up to 20 patents related to the social aspects
of features such as privacy controls and advertising.

Yahoo is seeking licensing fees, and indicated it may file suit over the matter. Facebook says it is still
evaluating Yahoo's claims.

Julie Samuels, a staff attorney at the Electronic Frontier Foundation, said an increase in patent disputes
related to social networking is inevitable, given growing profits at social networks such as Facebook. The
Menlo Park, Calif., company has filed for an initial public offering that could value it at $100 billion, and it has
reported that it pulled in more than $3.7 billion in revenue last year.

Ms. Samuels said the shift to social-networking patents is an extension of a widening war over software
patents more generally.

Software patents, she said, tend to be "vague, overbroad, hard to understand and they just don't make a lot
of sense. So they're able to be used offensively time and again."

Yahoo, of Sunnyvale, Calif., holds a number of patents related to online social networking. One issued to th
e company in 2009, for example, covers a way for users to search the lnternet together and share results
with a larger community. Another issued last year describes a way to automatically recommend contacts to a
user so they can be invited "to join their social network," according to public filings.

However, Yahoo doesn't offer a specialized social service similar to Facebook or Google lnc.'s Google +.
Last year Yahoo folded its Buzz social service, which could enable users to rate and share news stories. But
current Yahoo services such as its Flickr photo service feature social aspects.

Herman Leung, an analyst who covers Yahoo for Susquehanna lnternational Group, said the dispute with F
a c e b o o k results from Yahoo trying to make money using available assets.

Yahoo has also sought to tap into social-networking demand by partnering with Facebook. Last year, Yahoo
announced a tie-up with Facebook that can send traffic to its sites from the social service.

That partnership was announced prior to the appointment of Mr. Thompson as Yahoo's CEO last month. He
was formerly president of eBay lnc.'s PayPal payments unit.

Mr. Thompson has said publicly that Yahoo needs to explore new ways to exploit its valuable assets, and to
seek out new revenue streams.

Facebook may feel compelled to settle the patent dispute with Yahoo before its lPO, according to Lance
Lieberman, an intellectual property attorney with Cozen O'Connor in New York.

While companies often submit themselves to a public valuation and investment while still dealing with
lawsuits filed by so-called patent trolls, "it's another thing to come up against a large company with a large
portfolio," Mr. Lieberman said.

ln a statement, Yahoo said it aims to enforce its claims against Facebook because it has a responsibility to
shareholders and employees to protect its intellectual property.


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WorId News: U.N. Presses Syria To CaII Cease-Fire

By Joe Lauria, lnti Landauro and Nour Malas
437 words
29 February 2012
J
A17
English

TheUnited Nations raised its estimated death toll in Syria to 7,500 people and called for an immediate
cease-fire, as conflicting reports emerged about efforts to rescue injured foreign journalists trapped in Homs.

French President Nicolas Sarkozy backed away from his earlier statement of relief that French journalist
Edith Bouvier had been evacuated from the besieged city. "l can't confirm right now that she is today in
safety in Lebanon," Mr. Sarkozy told reporters at a campaign rally in Montpellier. "Communications are very
difficult in Homs."

That came just hours after Mr. Sarkozy said Ms. Bouvier, who was on assignment for newspaper Le Figaro,
had been evacuated following negotiations. Earlier, the Sunday Times of London said that photographer
Paul Conroy had been evacuated to Lebanon.

He and Ms. Bouvier were injured last week in the attack that killed U.S.-born reporter Marie Colvin and
French photojournalist Remi Ochlik. Two other journalists, Javier Espinosa, who is Spanish, and William
Daniels, a Frenchman, are still in Homs after efforts to evacuate them failed, according to activists. Several
activists were killed in the effort to evacuate the journalists, one activist group said.

ln Geneva, Navi Pillay, the U.N. high commissioner for human rights, said Tuesday that the international
community has to take action to prevent Syrian security forces from continuing attacks against civilians.

"There must be an immediate humanitarian cease-fire to end the fighting and bombardments," Ms. Pillay
told a meeting.

Faysal Khabbaz, Syria's Geneva U.N. ambassador, acknowledged a less-than-perfect human-rights
situation. He blamed armed groups opposing the government for attacking hospitals. "We declare our
withdrawal from this sterile discussion," he said before storming out.

The U.N. Human Rights Council was to later discuss a resolution submitted by Qatar, Saudi Arabia, Kuwait
and Turkey -- all strong opponents of the Assad regime -- calling on Syria to allow aid agencies into the
country. Chinese officials, meanwhile, signaled on Tuesday that Beijing wouldn't oppose U.N. efforts to
extend humanitarian aid to Syria.

ln New York, the U.N. updated its estimate of the number of deaths in the Syrian conflict for the first time
since December.

Lynn Pascoe, undersecretary-general for political affairs, told the U.N. Security Council in New York that
"certainly well over 7,500 people" have been killed during the 11-month uprising against the regime of
President Bashar al-Assad. He cited credible reports but didn't elaborate.


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GM Buying 7% Stake In France's Peugeot

By Sharon Terlep and Dana Cimilluca
736 words
29 February 2012
J
B1
English

General Motors Co. plans to extend a $335 million lifeline to struggling French auto maker PSA Peugeot
Citroen as part of a tie-up that each hopes will aid turnarounds at their money-losing European car
operations.

GM is expected to take a roughly 7% stake in Peugeot as the Paris-based auto maker seeks to raise cash
through a share sale. Under the deal, expected to be disclosed as early as Wednesday, the two would
jointly buy supplies, build engines and, potentially, entire vehicles in Europe and elsewhere.

The proceeds from Peugeot's roughly 1 billion euros, or $1.34 billion, share sale would shore up the
company's finances and help pay for new projects. However, the deal won't attack the long-standing
problem of too many European factories and workers at the two companies, a person familiar with the plans
said.

GM views the alliance as an opportunity to access technology and, potentially, entire vehicles at lower costs
than if it were to develop them itself, said a person familiar with the arrangement. Europe would be the main
stage for the alliance, but both sides envision cooperation in other regions as well, that person said.

The talks are causing anxiety on both sides of the Atlantic. Mounting losses are forcing many of Europe's
biggest auto makers to advocate for the type of significant production cuts that were avoided during the
2008-2009 economic crisis that led U.S. auto makers to slash jobs and restructure.

Recently, GM and Peugeot have been arguing separately for the need to close excess factories in Europe.
But government and labor officials have opposed large-scale job cuts.

Peugeot's move to raise cash is seen as a sign the company is worse off than initially believed. "One can be
excused for getting the impression that things have become a lot worse than the company has been saying
over the last two weeks," Credit Suisse analyst Erich Hauser said.

France's stock market regulator on Tuesday called for Peugeot to disclose its discussions with other auto
makers.

Sergio Marchionne, chief executive of both ltaly's Fiat SpA and Chrysler Group LLC, said, in reference to th
e alliance on Tuesday: "l sincerely hope that it deals with the overcapacity issue; it has to."

Auto sales in Western Europe are down 14% since 2007. But, in that time, only GM and Fiat have closed a
factory, one apiece. Matching production to sales would require eliminating 1.5 million vehicles worth of
annual production capacity -- the equivalent of five assembly plants, estimates Morgan Stanley.

ThePeugeot family, which owns 30.3% of the auto maker's stock but holds 46.26% of the voting rights, will
participate in the rights issue, one of the people said, though it is unclear to what extent. The family won't
give up control of the French auto maker, this person added.

The move would be GM's most significant manufacturing alliance since its 2009 bankruptcy.

The auto maker has tried European partnerships in the past with mixed results. GM paid $2 billion to Fiat in
2005 to dissolve a failed alliance. lt has been more successful with targeted partnerships in the region,
including ones to build commercial vans with Fiat and an engine venture with BMW AG.

GM's operations in Europe are unprofitable, losing $747 million in 2011 and a cumulative $14 billion since
1999.

Peugeot recently reported its automotive division suffered a 497 million euros operating loss in the second
half of 2011. The firm burned through 1.65 billion euros in cash for all of 2011 amid slowing demand for new
cars and fierce competition in Europe.

Peugeot shares, which had risen as much as 9% Tuesday, erased much of the gain after news of the rights-
issue was published. The stock finished up 0.4% at 15.37 euros in Paris trading. GM shares were off 32
cents at $26.14 at 4 p.m. on the New York Stock Exchange.

lnvestors on Tuesday pressed for an explanation from GM as to how it would benefit, according to Wall
Street bankers who handle GM accounts.

The U.S. Treasury declined to comment on the plan.

---

Eyk Henning, David Pearson and Alessandro Torello contributed to this article.


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WorId News: PaneI Says Crisis Showed FaciIities' Terrorism Risks

By Yuka Hayashi
354 words
29 February 2012
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A15
English

TOKYO -- The Fukushima nuclear accident exposed the vulnerability of Japan's nuclear plants to potential
terrorist attacks, years after the U.S. and other nations beefed up protection of their facilities, according to a
report released Tuesday by a private independent panel that investigated the accident.

The 400-page paper also includes never-reported details about response efforts, including how botched
efforts to evacuate patients from area hospitals led to a number of deaths, and the story of a young woman
who stayed put to assist nuclear-plant workers as the crisis, and danger, escalated. The Wall Street Journal
reported on an advance copy of the panel's paper received ahead of a Tuesday news conference.

The March crisis, in addition to showing the susceptibility of Japanese reactors to accidents, revealed the
plant operator's lax implementation of security rules, such as closely monitoring the identities of workers
entering the facility at all times, according to the findings.

"The weaknesses and defects with the electrical and cooling systems were exposed," said Tetsuya Endo, a
member of the panel and a former chairman of the board of governors at the lnternational Atomic Energy
Agency. "For terrorists, these are among the easiest targets."

Highlighting the lax security procedures at Fukushima Daiichi after an earthquake and tsunami set off a
nuclear accident on March 11, the panel learned that at one point, the security personnel responsible for
checking people entering the plant had themselves evacuated, leaving their posts unmanned. Three months
later, officials noticed that 69 nuclear workers who were supposed to be on the premises during the initial
days of the accident were unaccounted for, setting off a frantic search. Many of them were later confirmed
safe, but the whereabouts of 10 of the people are still unknown.

A spokesman for Japan Atomic Energy Commission, a government entity responsible for nuclear security
policy, had no comment on the report's findings. A spokeswoman for Tokyo Electric Power Co., the plant's
operator, also had no comment.


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U.S. News: FDA Warns on Statin Drugs --- LabeIs on PopuIar ChoIesteroI Medicines Must Cite Risk of
Diabetes, Memory Loss

By Thomas M. Burton and Ron Winslow
780 words
29 February 2012
J
A3
English

TheFood and Drug Administration warned that patients taking cholesterol-fighting statins face a small
increase in the risk of higher blood-sugar levels and of being diagnosed with diabetes, raising concerns
about one of the country's most widely prescribed groups of drugs.

The federal safety agency said Tuesday it plans to require drug makers to add the diabetes-risk language to
the "warnings and precautions" section of the labels on statin drugs.

Statins include top-selling brand names such as Lipitor, Crestor, Zocor and a dozen or so other branded and
generic versions under various names. The drugs are prescribed to more than 20 million Americans a year,
at a cost of more than $14 billion in 2011, according to the research firm lMS Health.

The warning isn't expected to prompt doctors to stop prescribing statins for patients with multiple risk factors
for heart attack. Cardiologists said for many patients, the benefits of statins still outweigh these risks.

The diabetes issue is "real" but "not a huge effect," said Robert Califf, vice chancellor for clinical research
and a cardiologist at Duke University Medical Center. "lnforming people is a good thing, but for the vast
majority of people who really need to be on a statin, this shouldn't change what they do."

But some physicians cautioned that the risk wasn't insignificant and that patients at lower risk for heart
problems might want to reassess whether they should remain on statins.

"The diabetes issue is a really big deal. We're overcooking the statin use," said Eric J. Topol, a prominent
cardiologist and chief academic officer of Scripps Health in LaJolla, Calif.

ln addition, the FDA said la bels for statin drugs now will contain information about patients experiencing
memory loss and confusion, though this side effect was classified as an "adverse reaction" rather than one
of the warnings and precautions, a more serious category.

Amy Egan, the FDA's deputy director for safety of metabolic and endocrinological products, said "these
cognitive changes can be quite dramatic" and "sustained" but that they disappear when statin therapy is
stopped. Dr. Egan said the agency cannot identify a specific drug or age group of people who might be
prone to such cases. She said patients should notify their doctors if these symptoms occur.

At the same time, the FDA announced that drug makers could remove a label warning that liver enzymes
need to be monitored during statin therapy. lt cited the fact that "serious liver injury with statins is rare and
unpredictable" and that periodic monitoring "does not appear to be effective in detecting or preventing this
rare side effect."

AstraZeneca PLC, which makes Crestor, the only major statin still sold exclusively as a brand-name drug,
said "the cognitive issues are generally nonserious and reversible upon discontinuation" of a statin. lt said
reports about increased blood sugar were already included on Crestor labels.

ln addition to the pure statins, products that contain statins include Advicor, Simcor and Vytorin. Merck &
Co., which makes Zocor and Vytorin, said information for those drugs was "updated" in October in a way that
reflects the contents of the FDA's Tuesday safety advisory.

The FDA's action follows analyses of large numbers of statin studies in recent years. ln one, published in th
e Lancet in 2010, researchers looked at 13 studies including 91,140 patients. The researchers concluded
that statin therapy "is associated with a slightly increased risk of development of [Type 2] diabetes, but the
risk is low both in absolute terms and when compared to the reduction in coronary events."

Cardiologists differed on how to weigh the findings, especially for the millions of people given the drugs for t
prevention of a first heart attack or stroke.

Steven E. Nissen, chairman of cardiovascular medicine at the Cleveland Clinic, said, "There is no question
that statins slightly increase the risk of a diabetes diagnosis and of slightly higher blood sugar, but l think this
has no impact on the risk-benefit assessment. l know l can lower the [relative] risk of death, stroke and heart
attack by about 30%" in patients at high risk of such cardiovascular events.

Dr. Topol said research suggests that for every 200 people who take a statin, 1 will develop diabetes. By
comparison, 1 to 2 out of 100 patients at risk for a heart attack will avoid one, he said. "That's a very narrow
margin of benefit," he said.


Document J000000020120229e82t0001j


Corporate News: McDonaId's Pushes for More Gains in China --- In Nod to Concerns About Food
Safety, the Fast-Food Restaurant Chain's Coming Ad Campaign Stresses Menu QuaIity

By Laurie Burkitt
862 words
29 February 2012
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English

SHANGHAl -- McDonald's Corp. is launching an ad campaign in China that taps rising worries over food
safety and quality in an attempt to win market share from its dominant rival, Yum Brands lnc.'s KFC.

The fast-food giant is planning to air a series of television commercials this summer to portray itself as the
fast-food brand in China with the best quality. The ads will feature "100% fresh beef" on the chopping block,
farmers picking tomatoes from the vine and chickens eating high-quality feed, according to a company
spokeswoman.

Ads will air on Chinese TV networks ahead of and during the Summer Olympics in London, of which McDon
ald's is an official sponsor and expects to make an impression on a high number of Chinese viewers. "We're
not out to have the most stores in China, but we want to have the highest quality," Kenneth Chan, chief
executive of McDonald's China, said in an interview Tuesday.

A spokeswoman declined to disclose spending.

TheMcDonald's ad blitz comes as the company looks for growth in a market dominated by Yum Brands,
which runs 3,700 KFC and 626 Pizza Hut outlets there.

McDonald's operates more than 1,400 stores in China and is boosting its investment by 50% this year from a
year earlier to open 250 stores, Mr. Chan said. Last year, the company opened about 200 stores. McDonald'
s aims to have 2,000 outlets in China by the end of 2013, he said.

A Yum Brands spokeswoman declined to comment.

China's dining landscape is becoming increasingly competitive as fast-food chains and casual-dining outlets
expand across the country. Sales within China's food-service industry jumped to 625 billion yuan ($99
billion) in 2011, up 14% from a year earlier, according to market-research firm Euromonitor lnternational.

Chinese consumers typically feel that Western food chains use safe ingredients, said Ben Cavender, a
senior analyst at China Market Research Group. However, Chinese consumers are wary of food quality in th
e country after repeated spates of sometimes deadly food-additive scandals and upheavals in which some
restaurants were found to cook with oil collected from gutters.

Still, the ad campaign comes as the industry faces increasing scrutiny in China. McDonald's itself earlier this
month said it had never used beef treated with ammonium hydroxide in China, as reports that the company
had withdrawn the additive in the U.S. reached the mainland. KFC last year defended its use of powdered
soy milk rather than fresh milk after facing online and media criticism, saying the powdered product met
quality demands that the company couldn't match with fresh soy milk.

McDonald's has increasingly sharpened its television advertising to stay competitive in a key growth market,
industry experts say. lt launched a TV ad last year to spotlight its chicken products, which analysts say have
been overshadowed by the chain's hamburger marketing.

Yum had the advantage of being one of the first restaurant chains to move into and expand across China,
which has given the company better access to prime locations, has enabled it to move further into the
country's smaller cities and has protected it from a rising number of rivals, said Torsten Stocker, a partner at
U.S.-based consulting firm Monitor Group.

China accounts for less than 3% of McDonald's profit, executives said last year. That is around $300 million
in earnings before interest and taxes for McDonald's compared with Yum Brand's reported $900 million of
Ebit, according to Michael Kelter, an analyst at Goldman Sachs. McDonald's doesn't disclose separate
financial data for China.

Yum holds a 5.2% share of China's food-service market, compared with McDonald's 2%, according to
Euromonitor.

While Yum currently has the lead in China's food industry, the market isn't yet set in stone, Mr. Kelter said.
"China today is essentially the U.S. of the 1950s, which means there are decades to come of compounding
growth as the restaurant market matures," he said.

Mr. Chan said McDonald's, which franchises its stores in the U.S. market but is more company-owned and
operated in China, is looking for franchise partners in China so that it can pick up the pace of its expansion
in the country. lt now has 12 franchises in China.

To boost spending for its current customers, McDonald's is remodeling 120 stores this year, equipping them
with wireless lnternet so diners will linger, bring their computers, and order more, Mr. Chan said. The
company is also targeting on-the-go consumers by adding 100 new dessert kiosks this year and 40% of its
new stores will be drive-thrus.

Fourth-quarter sales at McDonald's rose 9.8% from a year earlier to $6.82 billion. Profit rose 11% to $1.38
billion from $1.24 billion.


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What's News

426 words
29 February 2012
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The Dow industrials closed above 13000 for the first time since the financial crisis. The blue-chip index has
staged a 22% rebound since early October, and its 6.4% gain for 2012 marks the strongest start to a year
since 1998.

---

Criminal authorities are probing whether a top Goldman manager passed inside information about tech
stocks tothe firm's hedge-fund clients.

---

Home prices hit new lows in December, but economists saya drop in the number of homes for sale could
help stabilize prices in some markets.

---

U.S. banks posted their biggest quarterly increase in lending in four years, offering a sign that the economic
rebound is picking up steam.

---

lreland's government called a referendum on the EU budget-discipline treaty. A rejection could cost Dublin
access to future bailouts.

The ECB won't accept Greece's bonds as collateral after the country's downgrade to a default rating, but it
said the move is temporary.

---

Employers are trying to stop a U.S. effort calling for federal contractors to hire a minimum number of
disabled workers or face possible penalties.

---

GM plans to extend a $335 million lifeline to Peugeot as part of a tie-up the firms hope will aid turnarounds
at their European car operations.

---

Goldman, J.P. Morgan and Wells Fargo were told they may face SEC charges over allegedly shoddy
disclosures of the risks of subprime mortgage bonds.

State Street agreed to pay $5 million to Massachusetts, as the state's investigation into Wall Street's
mortgage-bond system widens.

The New York Fed sold the last distressed mortgage bonds from an entity that aided the bailout of American
lnternational Group.

---

The U.S. shut down the gambling website Bodog and indicted the company's founder and three others
associated with the business.

---

The Air Force is setting aside a contract awarded to Sierra Nevada and partner Embraer to supply planes to
Afghanistan's military.

---

Yahoo's attempt to wring patent fees from Facebook reflects the increasing worth of social-networking
technology, legal experts say.

---

Directors of some pension funds that invested with Japan's AlJ say they were attracted by promises of high,
or at least sustainable, returns.

---

First Solar posted a loss amid a major write-down, costs associated with replacing defective solar panels
and lower sales prices.

---

Apple invited reporters to a March 7 media event that is expected to mark the unveiling of the latest iPad
tablet.


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Romney Regains Momentum --- HoIds Off Santorum In Michigan, Wins Arizona With Ease

By Neil King Jr. and Patrick O'Connor
1,216 words
29 February 2012
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Mitt Romney won primary elections in Michigan and Arizona on Tuesday, reasserting his dominance in a
Republican presidential nominating race and holding off a challenge from a surging Rick Santorum.

The win in Michigan was particularly important for Mr. Romney. A loss in the state where he was born and
where his father was a popular governor would have amplified concerns that he was unable to connect with
voters in the Midwest, a crucial battleground in the general election this fall.

Coming just days after many conservatives were questioning his strength as a candidate, the wins will give t
former Massachusetts governor a new gust of momentum heading into March races, including the 10 states
voting next week on Super Tuesday, and should reassure donors and party officials.

With 97% of precincts reporting, Mr. Romney was leading in Michigan with 41% of the vote, compared to
38% for Mr. Santorum. Texas Rep. Ron Paul had 12% and former House Speaker Newt Gingrich 7%.

Mr. Romney won by a far easier margin in Arizona, taking 47% of the vote to Mr. Santorum's 26%, with 83%
of precincts reporting. The Arizona victory was Mr. Romney's easiest win of the season, giving him 29
delegates from a state where no other candidate made more than a token effort.

The delegate count in Michigan was more complicated, and Mr. Romney's share of the state's 30 delegates
was unclear since most will be apportioned to the winners in the state's 14 new congressional districts once
all results are in.

The two victories will widen Mr. Romney's delegate edge over his rivals, but he remains far from gaining a
decisive advantage on that front.

An upbeat Mr. Santorum conceded his losses in a phone call to Mr. Romney but remained optimistic about
his chances in the weeks ahead.

"A month ago, they didn't know who we are -- but they do now," Mr. Santorum told supporters at a rally in
Grand Rapids, Mich. He now heads to Ohio, where he plans to focus much of his campaigning in the week
ahead.

"We didn't win by a lot, but we won by enough, and that's all that counts," Mr. Romney told supporters in
Michigan. He spent the bulk of his speech drawing contrasts with President Barack Obama on taxes, health
care and other issues, assuring those conservatives who have resisted his campaign: "ln this campaign, l'm
offering a very real choice."

Mr. Romney's performance in Michigan was watched for factors beyond his ability to win his native state.
With Ohio and other industrialized, Midwestern states in play in the fall election, any GOP nominee will need
to be competitive in the region. And Mr. Santorum's claim to socially conservative voters and other
conservatives presented a threat to Mr. Romney's ability to show he could unify the party.

ln Michigan, Mr. Romney showed some success in winning the party's base.

Election-day surveys showed him narrowly topping Mr. Santorum among self-described conservative voters,
but losing substantially among "very conservative" voters. Similarly, Mr. Romney won among voters who
"somewhat support" the tea party but not among strong supporters of the tea party, exit polls released by
media outlets showed.

Theresa Judge, a 27-year-old hospital pharmacist, said she voted for Mr. Santorum because "he's strongly
conservative" and because his years in Washington showed "he has an idea of what goes on in Washington
and how it works there."

All the GOP candidates said they opposed the government's auto industry bailout, but Mr. Romney was
most vocal in his opposition. More Republican primary voters agreed with him than disagreed, exit polls
showed. And some who disagreed sided with Mr. Romney, anyway.

Dennis Gusick, who owns a distribution business that serves automotive customers, said he voted for Mr.
Romney despite the former governor's opposition to the federal aid given to General Motors Co. and
Chrysler Group LLC. Mr. Romney's position that the companies could have been restructured during the
financial crisis without federal help "is contrived," Mr. Gusick said. "No one else could have provided the
debtor-in-possession financing" to allow the companies to emerge from bankruptcy, he said.

Exit polls from Arizona, similar to those in Michigan, showed an electorate driven largely by economic
concerns and a desire to back a candidate seen as the strongest challenger to President Barack Obama.
Mr. Romney, a Mormon, was also able to rely on support from the Arizona's sizable Mormon population, as
well as the backing of Arizona Gov. Jan Brewer.

For all the attention paid to social issues in the run-up to the primaries, exit poll results from both states
showed that a majority of voters ranked the economy as the most important issue in the race, far above
abortion and immigration. Mr. Romney has staked his campaign on his business acumen and promise to
revive the troubled economy.

ln all, Mr. Romney appeared to benefit from a favorable electorate, with a heavy turnout of older, more
affluent and more highly educated voters. Those groups have backed Mr. Romney disproportionately
throughout the GOP nominating process.

As voters headed to the polls Tuesday in Michigan, the Romney and Santorum camps exchanged barbs
over automated phone calls generated by Mr. Santorum's campaign asking Democrats to cast ballots for him
in the GOP primary, which is legal under Michigan law. Mr. Romney accused his opponent of resorting to
"dirty tricks" in a bid to overcome what some polls suggested was a Romney advantage in early voting in
Michigan.

ln the end, Democrats accounted for 9% of the Michigan primary electorate, exit polls released by various
media outlets showed. That was a small rise from the 7% recorded in 2008. About half of Democratic voters
backed Mr. Santorum, compared to about one in five for Mr. Romney.

Mr. Santorum had hoped to use a Michigan win to solidify his claim to being his party's main conservative
alternative to Mr. Romney. At the same time, both he and his aides have portrayed even a close second in t
h e state as a victory, considering Mr. Romney's deep roots in the state and his 9-point margin of victory
there in 2008.

ln Michigan, Mr. Romney and a group of outside allies sought to flex their financial muscle by airing a
barrage of ads against Mr. Santorum. The campaign and a super PAC backing him spent a combined $4.2
million or more in the state, almost twice what Mr. Santorum and his allies spent on Michigan ads, according
to numbers tallied by a Democratic media buyer.

Arizona's status as a "winner-take-all state," awarding all its delegates to the first-place finisher, prompted
Mr. Romney's more modestly funded rivals to look elsewhere. Mr. Santorum turned to Michigan, where
candidates could win delegates without winning the statewide vote. Arizona went all but uncontested by
them as the Romney campaign spent weeks turning out early voters in a state where roughly half of the
ballots were cast before election day.


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World-Wide
What's News
WorId-Wide

415 words
29 February 2012
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English

lran's cash conduit was disrupted by the U.S. Treasury.

Noor lslamic Bank, which is partly owned by Dubai, agreed in December to shut what Washington believes
was Teheran's single-largest channel for repatriating foreign-currency oil receipts. The U.S. move was part
of an international press aimed at disrupting lran's global financial ties.

Teheran is goading lranians to vote in Friday's parliamentary elections as it faces calls for boycotts.

---

Romney narrowly won the Michigan primary. With 97% of precincts reporting, the GOP candidate had 41%
of the vote to Santorum's 38%, with Paul and Gingrich far behind. Romney scored an easier victory in
Arizona.

---

The death toll rose to three from Monday's shooting at an Ohio high school, making it the deadliest such
incident in the U.S. in seven years.

---

The U.N. raised the death toll in Syria to 7,500 and called for a cease-fire, amid conflicting reports about
efforts to rescue two foreign journalists.

---

The FDA warned that patients taking statin drugs face a small increase in the risk of higher blood-sugar
levels and diabetes.

---

Obama issued an order giving civilian investigators broad power to handle terrorism arrests despite a law
that favors military custody.

---

The U.S. secured approval from several Central Asian countries to move military cargo from Afghanistan.

---

The Fukushima accident exposed the vulnerability of Japan's nuclear plants to terror attacks, a report said.

---

Supreme Court justices questioned if foreign bodies could be sued in the U.S. for breaking international law.

---

Sen. Olympia Snowe of Maine, an increasingly rare GOP centrist, said she wouldn't seek re-election.

---

Chavez underwent surgery to remove a pelvic lesion. The Venezuelan leader was said to be in good
condition.

---

Riots erupted in China's Xinjiang, killing at least 12, in what appeared to be the worst violence since last
summer.

---

Gunmen in north Pakistan stopped a convoy of buses and killed 16 Shiite passengers in a sectarian attack.

---

A Dallas-area doctor was arrested and charged with bilking Medicare of $350 million over a five-year period.

---

Partial remains of some Sept. 11 victims were cremated and deposited in a landfill, a Pentagon report said.

---

Three Egyptian judges recused themselves from a case against NGO workers, raising hopes for a
resolution.

---

Virginia's governor repealed a law limiting handgun purchases to one per month.


Document J000000020120229e82t0003u


EIection 2012: Contest Shifts to Super Tuesday's High Gear --- RepubIican DeIegates Up for Grabs in
10 States Next Week; Resurgent Romney BattIes to Overtake Santorum Lead in Ohio

By Patrick O'Connor and Janet Hook
851 words
29 February 2012
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Mitt Romney was bloodied, but he survived and now heads to next week's Super Tuesday.

He easily won Arizona, and his down-to-the-wire victory over Rick Santorum in Michigan gives the former
Massachusetts governor reason to exhale. Still, the front-runner has much to prove in the 10 Republican
nominating contests next Tuesday.

He leaves Michigan -- the state where he was born and where his father served as governor -- still struggling
to shake doubts about his ability to excite conservative Republicans or connect with voters on a personal
level. He lost ground in some parts of the state he won four years ago.

From the beginning, Mr. Romney and his top advisers have boasted that their campaign is built for a long,
grinding march in which the candidate slowly amasses more delegates than his rivals. But his spending in th
e early contests, coupled with his reliance on a relatively small pool of well-heeled Republican donors, has
spawned new questions about his ability to raise the money necessary for an extended fight.

The next major hurdle comes in just a week, when states from Alaska to Massachusetts cast ballots. That
will immediately present Mr. Romney with another big challenge: Ohio, one of the day's biggest prizes and a
state always crucial in presidential politics. lt also happens to be packed with the kind of blue-collar,
evangelical voters who have resisted Mr. Romney, and who made Michigan a tougher win than expected for
him.

Of course, by prevailing on Tuesday night, Mr. Romney also increases the stakes for his opponents. Mike
DuHaime, a Republican strategist who managed Rudy Giuliani's White House bid in 2008 and remains
unaligned this year, said Mr. Romney's win "creates a great deal of pressure on the other candidates to
show strongly next week, or the pressure will mount for them to drop out so as not to unnecessarily drag out
the process."

This Tuesday's contests seem to have established two clear realities: Mr. Romney and Mr. Santorum now
are the two leading candidates, and they are drawing distinctly different constituencies to their campaigns.

ln Michigan, Mr. Romney once again enjoyed his biggest advantage among older, wealthy and college-
educated voters. Mr. Santorum, in contrast, claimed a big edge among self-described "very conservative"
Republicans, voters aligned with the tea party and evangelical Christians. The former Pennsylvania senator,
who touts his coal-country background and proposal to spur manufacturing, also tallied a big edge among
union households.

Mr. Romney enters the sprint to Super Tuesday with some clear advantages. He has a lock on Virginia,
because Texas Rep. Ron Paul is the only other candidate who qualified to be on the ballot and he lags well
behind. Two New England states -- Massachusetts, his home state, and neighboring Vermont -- ar
e considered slam-dunks. He is favored in ldaho, where a large population of fellow Mormons is thought to
give him an edge.

At the same time, though, he faces problems in Super Tuesday's Southern states, with their relatively
conservative electorates. They offer opportunities to Mr. Santorum and former House Speaker Newt
Gingrich, whose home state of Georgia has 76 delegates, representing the biggest possible haul of the day.

Still, Mr. Romney is competing in Georgia as well. A political action committee supporting him, Restore Our
Future, has invested more than $1 million in television and radio advertising there, outspending both Messrs.
Gingrich and Santorum, according to a survey of media outlets by a Democratic ad buyer. None of the
campaigns would confirm the data.

But Ohio, more than any other state, portends a head-to-head match between Messrs. Romney and
Santorum, offering something of a rematch of Michigan.

And right now, Mr. Romney starts out behind. Most public-opinion surveys give Mr. Santorum, a solid edge
in the Buckeye State. Despite being outspent, Mr. Santorum enjoys an 11 percentage-point lead, 37% to
26%, according to a poll released Tuesday by the lnstitute for Policy Research at the University of
Cincinnati.

Dale Fellows, chairman of Ohio's Lake County GOP, said Mr. Santorum's support was growing in Ohio even
before results of the Michigan primary were known.

"The groundswell is enormous," said Mr. Fellows, who is supporting Mr. Santorum. "And the people
supporting Rick Santorum are solidly behind him. The other candidates' numbers aren't solid."

Sen. Rob Portman, chairman of the Ohio Romney campaign, said he believed Mr. Romney would overtake
Mr. Santorum after voters focus on his economic policies and message.

ln Ohio, the Romney campaign and the super PAC supporting him already have spent almost $3 million on
TV ads, according to the ad buyer's survey, plus about $444,000 on radio ads.

Mr. Santorum and the super PAC supporting him have spent only around $528,000 on TV ads.


Document J000000020120229e82t0003t


EIection 2012: Santorum Looks For SiIver Lining

By Colleen McCain Nelson
675 words
29 February 2012
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GRAND RAPlDS, Mich. -- After falling short in the Michigan and Arizona primaries on Tuesday, Rick
Santorum's campaign is faced with the question: Does close count?

The former Pennsylvania senator forced Mitt Romney to play defense on his home turf of Michigan, turning
what was presumed to be an easy Romney win into a down-to-the-wire slugfest. Mr. Santorum gained
traction in both Michigan and Arizona, connecting with tea-party activists, evangelicals and blue-collar
conservatives.

But in the win column, he came up empty. Mr. Romney collected all 29 delegates in winner-take-all Arizona
and triumphed in the popular vote in Michigan, which will divide its 30 delegates proportionally.

Now, Mr. Santorum must hope that keeping it close in Michigan still will provide a jolt of momentum -- not to
mention an infusion of cash and volunteers -- as he pivots to Saturday's caucuses in Washington state and t
e 10 Super Tuesday contests that loom less than a week away.

Hogan Gidley, an adviser to Mr. Santorum, said the candidate's strong showing in Michigan changed the
dynamic of this race before voters even went to the polls. More than 100,000 donors contributed to the
Santorum campaign this month, Mr. Gidley said. And the campaign expects to be competitive in all of the
Super Tuesday states.

"At the beginning of this thing, the Romney campaign wouldn't have thought in a million years that they
would have to spend any time or any money in Michigan," Mr. Gidley said.

Mr. Santorum himself stressed the way he had beaten expectations: "The people of Michigan looked into th
e hearts of the candidates, and all l have to say is, l love you back," he said Tuesday night.

While Mr. Santorum's campaign has expanded beyond the shoestring operation that consisted of little more
than a candidate and his pickup truck in lowa, he still can't match Mr. Romney's resources and
infrastructure. Political experts said that may prove problematic as he tries to compete in 10 states
simultaneously.

"The advantages of money and organization become particularly pronounced on Super Tuesday," said Whit
Ayres, a GOP pollster who worked for Jon Huntsman Jr.'s campaign. "He's going to have to pick and choose
battles."

Mr. Gidley said the Santorum team would study each state's electorate and weigh factors such as which
primaries award delegates proportionally as the campaign decides where to spend its time and money. Ohio
and Tennessee appear to be at the top of the list. Mr. Santorum crossed over the Michigan border Tuesday
to hold a rally in Perrysburg, Ohio. He also will campaign Wednesday in Knoxville, Tenn.

Ohio and Tennessee are two of the biggest Super Tuesday contests in terms of delegates, and recent polls
suggest that both have the potential to be winners for Mr. Santorum.

Oklahoma also represents an "enticing" prospect for Mr. Santorum, said Stuart Roy, political adviser to the
Red White and Blue Fund, a Super Pac supporting Mr. Santorum.

Still, the latest batch of polls indicate that Super Tuesday states could be divided among as many as three
candidates -- with former House Speaker Newt Gingrich contending in his home state of Georgia, Mr.
Santorum poised to do well in Southern states such as Tennessee and Oklahoma, while Mr. Romney's
strength lies in Massachusetts, Vermont and Virginia (where Mr. Santorum and Mr. Gingrich aren't even on t
ballot).

"This is going to be a fight to the death," said Paul Beck, a distinguished professor of social and behavioral
sciences at Ohio State University.

Mr. Gidley, the Santorum campaign adviser, said he's counting on message trumping infrastructure. Mr.
Santorum underscored that point this week in Michigan. "We will win this election because we will motivate t
h e American people and excite them about a vision that's fundamentally different than Barack Obama's --
not because we have a better manager," Mr. Santorum said.


Document J000000020120229e82t0003s


U.S. Acts to Cut Iran Cash PipeIine

By Jay Solomon
1,314 words
29 February 2012
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The U.S. Treasury Department disrupted a Dubai-based banking operation that Washington believes had
become Tehran's primary conduit for evading international sanctions and processing its oil sales, according
to people briefed on the operation.

The effort was particularly sensitive because the targeted institution in the United Arab Emirates is partly
owned by the local government of Dubai, a close U.S. ally. The chairman of the bank, called theNoor
lslamic Bank, is the son of Dubai's ruler.

ln mid-December, Noor agreed to close off what the people briefed on the operation characterized as lran's
single-largest channel for repatriating foreign-currency oil receipts -- facilitating as much as 60% of lran's
foreign oil sales by late last year, they estimated.

That figure couldn't be corroborated. But last year, lran is estimated to have earned more than $80 billion
from oil exports -- transactions that came under increasing pressure over the course of 2011 as U.S.
sanctions also closed Tehran's banking channels in lndia, East Asia and Europe.

The U.S. move is part of an international press aimed at disrupting lran's global financial ties as Washington
and its allies seek to stymie what they believe is Tehran's pursuit of nuclear arms. lran says its nuclear
program is for peaceful purposes.

The West's standoff with lran, the world's No. 5 oil producer, helped send crude-oil prices to $109 a barrel in
recent days on theNew York Mercantile Exchange, a nine-month high, and pushed gasoline prices above $4
in many places in the U.S. ln recent weeks, Europe has announced it would embargo lranian oil and the
Belgian-based bank clearing network known as Swift said it was barring blacklisted lranian firms from using
its services. lran has threatened to close the Strait of Hormuz, a major oil-shipping lane.

The U.S. targeted Noor lslamic Bank because it had been returning oil profits to Tehran via entities that
have been sanctioned by the U.S. and European Union, including banks Saderat and Melli, these people
said.

ln the week after Noor cut off these transactions, the lranian rial's value fell by around 12% in relation to the
dollar in currency markets, from 13,700 rial to the dollar to more than 15,000, according to traders. Trade in
bazaars dried up. Many lranians rushed to foreign currency or gold in black-market deals, and the rial has
continued to fall.

At the time, the U.S. said the lranian currency's fall was evidence that tough, all-encompassing economic
sanctions were squeezing Tehran's finances. The drop was also attributed to the U.S. government's move to
sanction lran's central bank in late December.

But the press to shut down Noor's lran transactions, which the U.S. government hasn't publicly disclosed,
was a main trigger, according to the people familiar with the operation.

"Noor was one of the most important channels that lran was using to get its oil revenues," said a person
briefed on Treasury's action. "lt was a huge node."

A spokesman for Noor lslamic Bank said: "As a U.A.E. bank, we comply with all U.A.E. Central Bank
directives and regulations. We are in close contact with our trading partners in those countries that have
imposed sanctions and we do not foresee any difficulties going ahead." Representatives for the bank and its
controlling family declined further comment.

The U.S. Treasury has been attempting to place pressure on lran's economy and currency since
negotiations over lran's nuclear program broke down in 2006. The latest groundwork was laid in 2010, when
President Barack Obama signed legislation that bars foreign banks and companies from doing business with
lranian entities blacklisted by Washington.

No foreign banks have yet been subject to these sanctions.

Noor emerged as a major center for lran's oil business only last year, as more and more global banks began
cutting off their financial ties to Tehran, said the people familiar with the matter.

lndia has consistently been one of lran's largest crude-oil buyers. But early last year, New Delhi, under
pressure from the U.S. Treasury, shut down its primary financing facility used to pay lran for its oil exports. T
h e U.S. believed the facility, the Asian Clearing Union, was helping blacklisted lranian banks evade
American sanctions.

Last May, the EU imposed sanctions on a Hamburg-based, lranian-owned trade-finance bank, European-
lranian Trade Bank AG, which was another major vehicle through which Tehran processed its oil sales. The
U.S. Treasury alleged the bank was also involved in helping acquire equipment for lran's nuclear program, a
charge it denied.

Last winter and summer, lndian officials openly talked about using Noor lslamic Bank to process its oil
purchases from lran as these other avenues shut down.

"We are exploring if lndian oil firms can open accounts in banks like Dubai-based Noor lslamic Bank, so they
can undertake a direct transfer of money for oil they buy from lran," a senior lndian official told the Press
Trust of lndia last April.

Noor brought U.S. focus onto the U.A.E., a federation of seven monarchies including Dubai and Abu Dhabi,
which has emerged as perhaps the most important front line in the West's financial campaign against lran.

The Persian Gulf sheikdom is located just 35 miles from lran across the Strait of Hormuz, and is home to
hundreds of thousands of lranian nationals and persons of lranian origin. Dubai has traditionally facilitated
trade and imports for lran, much as Hong Kong historically did for China.

ln recent years, though, the U.A.E.'s ruling Al-Nahyan family in Abu Dhabi has sided with the U.S. in
seeking to cut off lran's ability to access the global financial system. The U.A.E. government has tightened t
h e issuances of visas for lranian nationals seeking to visit Dubai and other emirates, according to Emirati
officials. And the U.A.E.'s central bank has limited the letters of credit being issued by Emirati banks for
lranian businesses.

Still, the U.A.E. is seen balancing Abu Dhabi's desire to contain lran and its nuclear program, with the
economic benefits that Dubai and its ruling Al-Maktoum family have derived from trade with lran.

Abu Dhabi's leverage over Dubai in this debate has been strengthened by its bailout of Dubai in 2009 in the
wake of the global financial crisis.

Toward the end of last year, Noor lslamic Bank -- whose chairman is Sheikh Ahmed bin Mohammed bin
Rashid Al-Maktoum, the Dubai ruler's son -- risked the distinction of becoming the first foreign entity
sanctioned under Mr. Obama's 2010 legislation.

Around that time, U.S. Treasury officials detected lran moving its energy transactions into Noor lslamic
Bank, according to people briefed on the action. Treasury officials raised their concerns about Noor's
activities, both directly with the bank as well as with Dubai and Abu Dhabi monetary authorities, these
people said.

The Treasury in recent years has not only reached out to Emirati financial officials, but also regularly sent
staff to brief the Emirates' private bankers and warn about the risks of doing business with lran, these
people said.

The bank's management complied in mid-December with the U.S. demands to cut its business dealings with
the sanctioned lranian entities, according to these officials.

"The U.A.E. government took the concerns very seriously and was helpful in resolving" theNoor lslamic
Bank case, said the official briefed on the operation.

---

Asa Fitch and Nicolas Parasie in Dubai contributed to this article.


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WorId News: Greece FeeIs CoIIateraI Damage From Bank

By Brian Blackstone and Todd Buell
508 words
29 February 2012
J
A10
English

FRANKFURT -- The European Central Bank said it would no longer accept Greece's bonds as collateral for
loans after the country was downgraded to a default rating, but added that the move was a temporary one
that could be reversed once the new bailout package goes into effect.

Until then, the ECB said it would be up to national central banks to decide whether to accept the bonds as
collateral for their own emergency lending facilities. Greek banks, which would collapse without the support,
will still be able to access loans directly from the Greek central bank, albeit at higher interest rates.

Greece's Parliament on Tuesday approved a law implementing steep budget and pension cuts on the first
day of a two-day legislative sprint to push through overhauls its international creditors demand.

The ECB suspension is in effect only until governments come through with 35 billion euros ($46.9 billion) in
promised credit guarantees to protect the bank from any losses on Greek collateral. Euro-zone governments
agreed to provide those funds as part of the planned 130 billion euro rescue package for Athens. Once
Greece completes a private-sector debt exchange and emerges from a default rating, the ECB will have to
make a separate decision on whether the new bonds are eligible without the credit guarantees.

Debt guaranteed by Greece will become eligible again "upon activation of the collateral enhancement
scheme. . .together with a number of other measures aimed at assisting Greece in its adjustment program,"
ECB said.

The ruling affects all euro-zone banks using Greek government bonds as collateral for ECB loans. Greek
bonds that have already been posted as backing for ECB loans will have to be replaced with other assets.

The move is likely to have little impact on most European banks. Even those with relatively high amounts of
Greek sovereign debt still have a large cache of other usable collateral.

For example, BNP Paribas SA, which held 1 billion euros in Greek bonds at the end of last year, had 105
billion euros in total assets that are eligible for the ECB loan program. Commerzbank AG, which had an 800
million euro exposure to Greece at the end of last year, held 76.2 billion euros in ECB-eligible assets at the
end of September, according to a Moody's credit report.

Greek banks borrowed 73.4 billion euros from the ECB as of the end of November, the latest month for
which data are available, and some 42.8 billion euros from the Bank of Greece's emergency facility. The
combined amount equals more than half of Greece's gross domestic product.

The ECB has wide discretion in setting its lending terms and didn't have to take Tuesday's action so soon.
But officials worried that accepting defaulted Greek bonds could damage its credibility.

---

Sara Schaefer Munoz and Stelios Bouras contributed to this article.


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WorId News: Irish Put EU Treaty Up for a Vote --- Rejection of Budget Pact CouId Cost DubIin Access
to Future BaiIouts, Though Referendum Won't HaIt ImpIementation

By Eamon Quinn
724 words
29 February 2012
J
A10
English

DUBLlN -- The lrish government called a referendum on the new European Union budget-discipline treaty, a
vote that would have little impact on the pact's implementation but could cost lreland access to future
bailouts.

lrish Prime Minister Enda Kenny told Parliament he made the decision after advice from his attorney
general, Maire Whelan, who indicated the lrish constitution "on balance" requires it.

The timing of the vote isn't clear, but it could be held as soon as a few weeks from now. An opinion poll last
month suggested a large majority of lrish voters wanted a vote, but only a small majority would approve the
treaty.

A rejection by lrish voters -- who have said no to EU referendums in the past -- wouldn't kill the fiscal
compact, which requires the approval of only 12 of the 17 euro-zone countries to come into force.

The rest of the euro zone had hoped to avoid such a vote, which could signal to investors that the plan to
bring more fiscal unity to Europe isn't well received by the people it is supposed to benefit.

But rejecting the treaty could have major ramifications for lreland.

The government's existing loans from the temporary European Financial Stability Facility wouldn't be
affected if voters rejected the compact, and the government insists it will be able to meet its borrowing
needs from the bond market after that facility expires next year.

But refusal to participate in the fiscal compact would deny the lrish government access to financial help from
the bloc's new and permanent bailout fund, the European Stability Mechanism, if another bailout were to be
necessary.

Rejection also could have broader implications for lreland's membership of the euro zone. Government
ministers have repeatedly said a rejection of the fiscal compact would be a rejection of euro-zone
membership.

That might be exaggerating the case in order to frighten voters into backing the pact, but the rhetoric places
lreland in an awkward position if the treaty is rejected.

"The process will continue in many other countries as planned and one must also remember that it will take t
commitment of 12 countries for this to be brought into effect, so this is, of course, an important issue for the
EU, but it is very much an important issue for lreland," said Nicolai Wammen, Danish minister for European
affairs.

The government coalition had tried to head off a vote, given that austerity measures tied to the country's
bailout from the EU, the lnternational Monetary Fund and the European Central Bank have made EU
institutions unpopular with the lrish.

The coalition government now faces a difficult campaign, despite having the support of the largest
opposition party, Fianna Fail.

"Ratification of this treaty will be another important step in the rebuilding of lreland's economy and of our
reputation," Mr. Kenny told lawmakers.

"lt will give the lrish people the opportunity to reaffirm lreland's commitment to membership of the euro,
which remains the fundamental pillar of our economic and jobs strategy," he said.

Joe Higgins, a lawmaker with the Socialist Party, said he would look for the lrish people to reject the treaty
on the basis that it will bring in austerity in lreland and across Europe "in perpetuity."

"Opponents will cast it as a vote for the bailout, austerity and a vote for the European Central Bank, which
are all unpopular," said Ben Tonra, a professor of international relations at University College Dublin.

The lrish government will now aim to strengthen its hand with voters by seeking a deal with its bailout
lenders to lessen the country's debt burden.

lt has held talks with its bailout lenders on rescheduling about 31 billion euros ($41.5 billion) in promissory
notes pumped into failed banks, such as Anglo lrish Bank Corp., and will now seek to clinch a deal on the
notes before any public vote.

Despite the possibility that treaty rejection would deprive the government future access to bailouts, prices of
lrish government bonds were little moved.

---

Matthew Dalton in Brussels contributed to this article.


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U.S. News: Home Prices Hit New Depths

By Nick Timiraos
777 words
29 February 2012
J
A2
English

Home prices fell to fresh lows in December, but economists say that a drop in the number of homes listed
for sale could help stabilize prices in parts of the country this year.

Home prices fell by 4% last year, according to theStandard & Poor's/Case-Shiller index that tracks 20 metro
areas. Prices dropped 1.1% in the three-month period ended in December, compared with the same period
ended in November. That was slightly better than November's reading, when prices were down 1.3% from
October.

Tuesday's report is the latest evidence that the housing market still faces a cloudy outlook after a six-year
downturn. The inventory of homes for sale has contracted, reducing competition among sellers, according to
The Wall Street Journal's quarterly survey of housing-market conditions in 28 metro areas.

But a large potential backlog of foreclosed properties hangs over many markets. Other headwinds including
tight mortgage-lending standards that show few signs of easing. "These are times of continued, great
uncertainty about home prices," said Robert Shiller, the Yale University economist who co-founded the
index that bears his name. "We might be on the verge of a home recovery, but then, maybe not."

Others are becoming somewhat optimistic. Thomas Lawler, an independent housing economist in Leesburg,
Va., said the S&P/Case-Shiller index should hit a bottom this spring. He said many analysts have
overlooked positive developments, including a dearth of new construction and the falling share of homes
selling out of foreclosure.

"You don't hear very many people talk about the actual housing stock, and how slow it's growing," he said,
while conceding that it is "absolutely true that organic demand has yet to show any material rebound."

Even when prices stop falling, they aren't likely to rise for years, leaving millions of homeowners stuck in
properties worth less than what they owe. Stan Humphries, chief economist at real-estate website Zillow,
predicts another 3.7% decline in home prices for the coming year and said home prices will then bounce
along a bottom for two to four years.

ln most of the country, home prices aren't falling at anywhere near their jaw-dropping pace of 2008. But only
two markets showed an increase in home prices during the fourth quarter. ln Phoenix, prices were up by
0.8%, while Miami reported a smaller gain of 0.2%. Detroit was the only city to post a year-over-year gain,
rising by 0.5%. Home prices in Atlanta fell by 12.8% last year, while Chicago posted a 6.5% decline.

One surprising development in many markets is that the supply of homes for sale has fallen to a five-year
low. While that normally would signal health, real-estate agents say a paucity of homes is holding back
sales.

"Do you really want to take one of your biggest assets and sell it at the lowest value on record?" said Clark
Wood, who leased out his four-bedroom home in Las Vegas late last year rather than sell it after he moved
to Rockland, Calif., to take a better job.

Mr. Wood, 49, says he doesn't plan to sell the house until values recover, even if that means carrying two
properties for five years or longer. The house is worth slightly more than the $260,000 he paid for it in 1998,
and he has a small mortgage that he can cover with the rental income.

At the current sales rate, it would take about four months to sell the supply of homes on the market in
Denver, Washington, D.C., and Orange County, Calif. That level is lower, at less than three months, in
Phoenix and San Francisco, and has dropped to just 1.9 months in Sacramento, Calif., according to figures
compiled by John Burns Real Estate Consulting.

"The TV and the papers make it seem like there's a ton of houses out there, but it's been a shock to us,"
said Andy Rysdam, 24, who is looking to buy his first home in Phoenix. He said he isn't worried about buying
and then seeing prices tumble "because it doesn't seem like they can go much lower."

But several markets still face supply-demand imbalances that could keep pressure on prices. New York's
Long lsland had a 13-month supply of homes at the end of the fourth quarter. Nashville and Charlotte, N.C.,
had a 12-month supply.


Document J000000020120229e82t0003c


REVlEW & OUTLOOK (Editorial)
Romney's Rebound

744 words
29 February 2012
J
A20
English

For all of his struggles as a campaigner, Mitt Romney doesn't lack for resilience. That character trait is
essential in a President, and Mr. Romney proved again Tuesday that he has it by winning primaries in
Arizona and in an especially rough contest against Rick Santorum in Michigan. Mr. Romney never makes it
look easy, but as Hillary Clinton knows from 2008, victory beats the alternative.

While narrow, Mr. Romney's triumph in Michigan was important in showing he could win his native state and
in the Midwest. He won in part by hammering away at Mr. Santorum's voting record on spending and union
issues as a two-term Senator.

But Mr. Romney also improved his case for his own candidacy, stressing a reform agenda as much as his
business biography. ln the final days in particular, he pressed his new plan for a 20% across-the-board
income tax cut, as well as Medicare reform. He stressed his ability to revive the economy, which remains th
e dominant issue even among conservatives, despite the prominence of social issues in the last week.

Mr. Romney still lost among tea partiers and the most conservative voters, and he's never going to look like
a natural populist. He's lousy at faking sincerity. But in Mr. Santorum he is facing his most formidable
conservative rival, a candidate with genuine populist skills and resonance. Mr. Romney's comeback in
Michigan speaks well of his determination, as well as his appeal across a large swath of Republican and
independent voters. He also won despite some strategic Democratic voting for Mr. Santorum.

As for the former Pennsylvania Senator, one lesson is to do less swinging from the lip. We don't hold with
those, on the left and right, who say Mr. Santorum isn't "electable" in November because of his views on
social issues. His views are no different than Mr. Romney's on those issues, and in opposing gay marriage
he's no different than President Obama.

The problem is tone and, well, political maturity. lt simply isn't Presidential to say that reading John F.
Kennedy's speech on the separation of church and state made him "throw up." Many listeners won't get past
the crudeness to hear his argument, which is overstated in any case.

JFK in 1960 wasn't saying that religious values shouldn't ever inform government. He said that his own faith
and the institutions of the Catholic Church would not dictate his decisions as President. This was important
to say in a country that was Protestant-dominated with large pockets of anti-Catholic sentiment and had
never elected a Catholic President.

Religion is now far more under siege than it was then in American public life, and millions would welcome a
President who will speak up for religious values and freedom. The key is to defend those values against
government attack, not to sound as if he wants to impose his values on other Americans.

Mr. Santorum should consider a serious speech of his own on the subject, of the sort Kennedy delivered,
rather than always speaking off the cuff in TV interviews or at town halls. lt's nice to hear an unscripted
candidate, but a serious subject like the role of religion in modern public life deserves more thoughtful
treatment. Mr. Obama showed how such treatment can help politically when he delivered his speech on race
in the 2008 primaries. To get elected, Mr. Santorum needs to reassure non-religious voters as much as he
needs to speak on behalf of the faithful.

The race moves on to Super Tuesday next week, and if past is prologue it is far from over. The media are
already predicting that no Republican can defeat Mr. Obama, despite his low approval rating and 8.3%
unemployment, and many GOP hand-wringers seem to agree. But most of the American public hasn't begun
to pay close attention, much less decided to re-elect this President.

The candidates can help themselves if they stop playing the game of who-is-the-real-conservative? They
are all conservatives of one stripe or another. GOP voters want to hear a critique of Mr. Obama, but above
all they want to hear an agenda and vision for a better future that can rally a majority to defeat him.


Document J000000020120229e82t00038


The Other GM BaiIout

428 words
29 February 2012
J
A20
English

President Obama appeared at a United Auto Workers tent revival meeting Tuesday, and he made several
notable claims. Critics of the Detroit bailout of 2008-09 are motivated, apparently, by their antipathy to
American workers. The alternative to a government rescue was letting the entire auto industry "die." But one
particular claim stood out. Mr. Obama said the bailouts succeeded not "because of anything the government
did."

The lacuna in this account is the $81.8 billion that taxpayers surrendered to General Motors and Chrysler,
and we detailed the many other costs in a February 25 editorial "Halftime in Detroit." As it happens,
however, we missed one big thing the government did that deserves more attention: GM's tax gift courtesy
of the U.S. Treasury.

Corporations in the red, as GM was for years, are allowed to carry forward net operating losses that reduce
their future tax liability when they are making money. GM had accumulated about $45 billion in such profit-
shielding chits by 2008, with a book value of about $18 billion. When companies enter bankruptcy, carry-
forwards disappear or are greatly limited under lRS section 382, which kicks in when ownership changes by
more than 50 percentage points.

The point is to prevent companies from buying assets solely for tax arbitrage or tax avoidance. But starting
in 2009, Treasury began to issue regulatory "notices" that suspend this law when it comes to Treasury-
owned stock. The provisions also apply to AlG and Citigroup.

So when GM entered bankruptcy in June 2009, the government swapped the debt the auto maker owed it
as a creditor for 61% of "new GM," while handing another chunk to the United Auto Workers. But new GM
also inherited the accumulated net operating losses that would have turned into a pumpkin in normal
bankruptcy.

ln a 2011 working paper, J. Mark Ramseyer of Harvard and Eric Rasmusen of lndiana University argue that
by manipulating corporate tax rules by fiat, "Treasury gave the firm (and its owners, including the UAW) $18
billion more in assets." Thus a Democratic Administration gave "a massive tax benefit to one of the party's
biggest supporters." The other problem is that the move put Ford and GM's other competitors at a
disadvantage, as bailouts always do.

Mr. Obama crowed yesterday about GM's "highest profits in its 100-year history." We'd be interested to hear
how its effective tax rate compares with Warren Buffett's secretary's.


Document J000000020120229e82t00036


WorId News: EU Sanctions Impede Tehran's OiI Shipments to Asia

By Benoit Faucon
425 words
29 February 2012
J
A16
English

LONDON -- European Union sanctions are impeding the shipment of oil to Asia from lran, in a threat to
Tehran's hopes to find new buyers for its top export.

Some Asian shippers say they have stopped sailing to lran because of difficulty maintaining insurance
coverage by associations that are subject to EU laws.

Bengt Hermelin, chief executive of Singapore-based tanker company Samco Shipholding Pte., said Tuesday
that the impact of sanctions on insuring ships "will prevent owners, including Samco, from calling lran."

The EU in January escalated sanctions with an embargo on oil imports to take effect July 1, and a ban on
new shipping and insurance for lranian crude cargoes.

lran responded by declaring it didn't need to sell to the EU -- its No. 1 market -- because it could find buyer
s elsewhere. ln Asia -- where lran sells over half of its 2.2 million barrels of daily exports -- top buyers Chin
a and lndia rejected oil sanctions, but Japan and South Korea are looking into ways to reduce dependency
on lranian crude.

The lnternational Group of P&l Clubs, which pools resources for tanker insurance clubs for 90% of global oil
tonnage and is dominant in Asia, is based in London and subject to EU laws.

Frontline Ltd. and Teekay Tankers Ltd., two of the world's largest tanker owners, have headquarters in
Bermuda, a U.K. dependency that often applies U.K. laws. Both companies said they were stopping lranian
oil purchases.

Japan's Mitsui O.S.K. Lines, the country's largest tanker owner, said it would be unable to ship lranian oil if it
can't insure the cargoes. The Japan Ship Owners' Mutual Protection & lndemnity Association, which covers
Mitsui's tankers, said its coverage of lranian oil voyages would be limited by EU sanctions because its
reinsurance program is based in London.

Shipping Corp. of lndia is also concerned sailings to lran could be affected, officials said.

The lndian government said is looking to circumvent the problem, possibly with sovereign guarantees to
local shipping companies, shipping secretary K. Mohandas said Tuesday.

Meanwhile, the use of locally insured lranian vessels to ship crude is rising in Asia, said Abdolsamad
Taghol, general manager of planning at NlTC, lran's largest oil-tanker company. But NlTC couldn't cover all
oil exports, based on its capacity and the typical length of Asian voyages, an oil-shipping expert said.


Document J000000020120229e82t00033


U.S. News: Terror Cases to Stay In CiviIian ControI --- Obama Exercises Waiver From Law Requiring
MiIitary Custody

By Evan Perez and Julian E. Barnes
692 words
29 February 2012
J
A7
English

President Barack Obama issued an order Tuesday giving civilian investigators broad power to handle the
cases of U.S. terrorism suspects despite a law passed late last year favoring military custody.

The decision is likely to raise hackles among lawmakers who included the provision in the National Defense
Authorization Act, and it could provide an election-year issue for Republicans.

Mr. Obama signed the bill under protest Dec. 31 and attached a statement saying he intended to disregard
portions interfering with his presidential powers.

The law requires military detention for non-U.S. citizens accused of planning or carrying out an attack for al
Qaeda and associated groups. At the White House's insistence, it included discretion for the president to
waive the requirement if necessary to avoid disrupting terrorism probes led by the Federal Bureau of
lnvestigation.

Tuesday's order takes advantage of that discretion to the fullest, preserving for the FBl and other civilian
authorities the leading role in handling terrorism arrests in the U.S. Military detention would be an option in
limited cases, largely at the discretion of the attorney general and federal investigators.

Republican proponents of the military-detention provision said they would hold a Senate hearing, because
they believe the president's order might violate the spirit of the law. Sens. John McCain of Arizona, Lindsey
Graham of South Carolina and Kelly Ayotte of New Hampshire issued a statement saying they were
"concerned that some of these regulations may contradict the intent of the detainee provisions" in the
defense bill.

Mr. Obama has also come under fire from civil libertarians who said the law could pave the way for the
indefinite military detention without trial of U.S. citizens on U.S. soil. Such criticism came both from right-
leaning tea-party supporters and groups on the left.

Jameel Jaffer, deputy legal director for the American Civil Liberties Union, said the president should have
vetoed the law, as signing it "turns the practice of indefinite military detention into a permanent part of
American law."

ln his directive, Mr. Obama said his interpretation of the law was that Americans can't be indefinitely
detained without trial.

Under the order, the investigators would follow current procedure unless the president's national-security
team orders military custody.

Mr. Obama ordered a blanket waiver from the military-custody requirement for suspects in broad categories
of terrorism cases, including all permanent U.S. residents arrested in the U.S., those detained by state and
local police, and those turned over by foreign governments on condition of civilian custody. He would give th
e attorney general wide power to keep suspects in civilian custody if their transfer could threaten national
security.

An administration official said the president's order "preserves maximum flexibility" for counterterrorism
investigators.

The Defense Department welcomed Tuesday's move. George Little, the Pentagon press secretary, said the
law explicitly provides for broad waiver authority, "including the option of waiving appropriate categories of
cases, at any time when doing so is in U.S. national security interests."

The law applies to suspects detained in the U.S. and doesn't affect suspects caught overseas by the
military. ln recent years, lawmakers have used spending bills to place limits on the president's handling of
terrorism suspects. Most of those restrictions related to detainees at the U.S. prison in Guantanamo Bay,
Cuba.

The defense-authorization bill also created a waiver provision for transferring detainees out of Guantanamo.
Under the old rules, the Defense Department could only transfer detainees if it certified that former
detainees would never return to the battlefield, a standard Pentagon officials said was impossible to meet.

But the new law included a provision to allow the defense secretary to waive the certification provision if the
U.S. takes steps to reduce the risk former detainees will take up arms. Defense officials say they believe the
new provisions could open the way for transfers to resume.


Document J000000020120229e82t00032


City News: Fund Manager in GOP Race

By Andrew Grossman
502 words
29 February 2012
J
A25
English

Joseph Carvin, a full-time hedge-fund manager and part-time local leader who's trying to dissolve the town
he runs, has decided to seek the Republican nomination for Sen. Kirsten Gillibrand's seat, he said in an
interview Thursday.

Mr. Carvin, the 57-year-old supervisor of the Westchester County town of Rye, is the third entrant in the
June 26 Republican primary. Ms. Gillibrand, a Democrat, has been finishing out Hillary Clinton's term since
she was appointed secretary of state.

Wendy Long, a conservative lawyer, and Nassau County Comptroller George Maragos have previously said
they will run in the Republican primary.

Mr. Carvin plans to put $1 million into his campaign right away and said he expects to be able to tap a
network of donors in New York and Washington to raise between $5 million and $10 million.

Mr. Carvin said he is in talks to hire E. O'Brien Murray as his campaign manager. Mr. Murray last year ran
Republican Bob Turner's campaign for the Brooklyn and Queens congressional seat vacated by Rep.
Anthony Weiner, winning in an upset.

A spokesman for Ms. Gillibrand said via email: "Senator Gillibrand looks forward to contrasting her vision for
growing the economy and her strong record of fighting for New York values against whomever the
Republicans ultimately choose to run against her."

Mr. Carvin works in two worlds. ln one, he and colleagues in London manage Altima Partners LLP, a hedge
fund that invests in emerging markets with a focus on land and agriculture.

ln another, less lucrative venture, Mr. Carvin is trying to eliminate the local government he runs as
supervisor: the town of Rye, which is distinct from the city of Rye and the village of Rye Brook. He argues
that the town provides a layer of unnecessary government when most services that residents receive are
provided by other government entities, such as Westchester County, school districts and villages.

Mr. Carvin brings to policy problems the wonky approach of a hedge-fund manager with a degree in public
administration from Harvard and one in business from New York University.

ln the interview, Mr. Carvin said he's running because he's worried about the U.S. debt and deficits.

Mr. Carvin is relatively moderate politically. He said he supports increasing revenue to close deficits as long
as overall tax rates go down. He's in favor of abortion rights and a path to residency for immigrants currently
in the U.S. illegally -- positions that are anathema to much of the Republican base nationally.

He voted for Barack Obama, but says he's now disappointed in the president.

But Mr. Carvin also said he's "terribly concerned" about Mr. Obama's health-care reform legislation, supports
a means test for Social Security and calls Ms. Gillibrand a "classic politician" who hasn't taken steps to
reduce the budget deficit.


Document J000000020120229e82t0002w


GoogIe Web Grows in City

By Emily Glazer
1,104 words
29 February 2012
J
A23
English

Google lnc. has dramatically expanded its presence in Manhattan in the past year, adding roughly 750
people to its outpost in 2011 in the most prominent example of a technology company shifting its focus
toward New York.

After acquiring four New York companies and going on a hiring spree for its media and advertising arms, Go
ogl e now has about 2,750 employees in New York City, a 38% increase from 2010, the company told The
Wall Street Journal. That's faster growth than for the company overall, which expanded 33% from 2010 to
2011.

"Many of the most talented and creative engineers and scientists in our field of computer science want to be
here . . . there's a critical mass in the city," says Alfred Spector, the vice president of research and special
initiatives based in Google's New York office.

Google's expansion in New York -- once seen as too expensive for tech start-ups -- has helped fuel
a perception that the city is in the midst of a technology industry boom. lt comes as Facebook, Hewlett-
Packard and other companies expand their New York presences, and Cornell University moves forward with
an engineering campus on Roosevelt lsland.

"lncreasingly every part of the economy really is the tech sector, and the tech sector really is every part of t
h e economy," said Seth Pinsky, president of the city's Economic Development Corp. "There is no industry
in which New York is a world leader where technology doesn't play an important role and won't play an
important role going forward."

Google has cemented its status in New York since 2000, when a one-person ad-sales team began working
out of a Starbucks on West 86th Street. Two years later, it had moved to an office in Times Square with
around 70 employees before moving to its Chelsea offices at 111 Eighth Ave. in 2006.

ln December 2010, it purchased that immense brick building for $1.9 billion.

Although Google's engineering efforts are still driven out of its Mountain View, Calif., headquarters, the New
York office is now a powerhouse for both its engineering and advertising work force.

Of the new hires in Manhattan, about half are from acquisitions, 20% are new sales hires, 20% are
engineering hires and 10% are hired to human resources or administrative roles, Google spokesman Jordan
Newman said.

"This is one of the major laboratories where we do advertising technology as well as advertising sales and
marketing," Mr. Spector said.

Mr. Newman said Google doesn't make hiring projections but said the company is "actively hiring in New
York, with a focus on sales and engineering."

Google moved to Chelsea because the neighborhood -- with its cafes and night life -- was more suited to it
s young employees, Mr. Newman said. lts offices have a classic New York feel with exposed brick walls, and
the building gives it room to grow.

The company has begun taking some of the local public-relations steps of a business here to stay, giving
large sums to area universities and donating space to community organizations. lt has also made a practice
of recruiting employees from local colleges.

Google donates space on a weekly basis to local organizations that have a connection to technology in New
York, Google or one of the community organizations it partners with, Mr. Newman said.

The New York office has paid off for advertising executives, they say. The company regularly hosts "office
hours" to see agency clients in person and strengthen those relationships, says Brad Bender, a director of
product management based in New York.

"Silicon Alley is a wonderful combination of technologists coupled with Madison Avenue," Mr. Bender says.
"lt creates a wonderful feedback loop that we can feed off of."

Rob Davis, executive director of the advanced video practice at advertising, marketing and public-relations
agency Ogilvy & Mather says Google's New York expansion has had a direct impact on business. One of its
largest consumer packaged-goods clients has pursued a sponsorship of YouTube's premium channels
rooted in an in-person New York meeting. "lt was a chance for me to bring creatives, strategists and
planners together, which you normally can't do," he says. "The cost of flying them all to California -- forget
about it. We wouldn't have the face-to-face time."

After that first meeting, four of Ogilvy's clients also now partner with Google third-party company thismoment
lnc., a social concept management system that pulls in Facebook and Twitter experiences with YouTube,
and vice versa.

The growth in New York comes even as Google faces some obstacles, like privacy issues and lack of
engagement with Google+. The company's stock price, though, has risen nearly 3% in the past year.

The New York office has specifically been a hub for creation around Google Docs. ln 2011, it rolled out a Go
ogl e Docs Android app, new presentations, comment availability, offline viewing, spark lines in
spreadsheets, sharing forms on Google+ and image capabilities.

The focus on new technology is king. With roughly 1,400 software engineers, Google has one of the highest
tallies of such workers out of all New York-based technology companies.

New York is one of the two important sites in speech recognition, such as voice search on Android phones,
and natural language processing. Engineers are also plugging away at local search, such as using a map on
a mobile device to find something where the location is relevant, like a restaurant, Mr. Spector says. To
boost those focuses, Google also acquired restaurant reviewer Zagat and licensing and royalty service
provider Rights Flow in 2011.

Google's New York office also plays a role is creating a platform for online ads, especially display ads.
Various reports cite the industry running between $10 billion and $30 billion but Mr. Bender said it can be
"much, much bigger than that," estimating $200 billion.

For instance, Google works with agencies that represent companies like Ford and lntercontinental Hotels. G
o o gl e wouldn't share specific details of such deals but says it can more easily work with these companies
or their advertising agencies in the evolution of new tools and technologies.

Ogilvy's Mr. Davis said the in-person meetings build a stronger bond than a phone call. "lt's much more
casual when you're all in the same space," he said. "You're all sitting in a room and it's 'Oh, hey, look at this,
l've got something on my machine.'"


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WorId News: MerkeI Backs Off PIans to Stump for Sarkozy

By William Boston in Berlin and Gabriele Parussini in Paris
753 words
29 February 2012
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Angela Merkel and Nicolas Sarkozy have quietly laid to rest plans for the German leader to actively
campaign for Mr. Sarkozy's re-election after news of her participation prompted criticism by the French
president's opponents that he had become dependent on Berlin.

Fearing a swing to the left in France that could derail an austerity cure for the euro zone, Ms. Merkel's
Christian Democratic Union party announced in January that the chancellor would make several campaign
appearances with Mr. Sarkozy.

But it now looks like Ms. Merkel's support for the French leader may be backfiring, and some analysts warn
she also risks damaging her relationship with the Socialist challenger and front-runner Francois Hollande.
Mr. Sarkozy has gained some ground in public opinion polls since declaring his candidacy Feb. 15, but Mr.
Hollande holds a commanding lead in the presidential race.

Franco-German ties comprise the most important bilateral relationship in the European Union, often seen as
the motor driving the 27-nation bloc. As the euro-zone debt crisis deepened, Ms. Merkel and Mr. Sarkozy
overcame initial differences and over the past two years have worked together so closely that the tandem is
popularly known as "Merkozy." However, with a victory by Mr. Hollande looking possible in the presidential
elections that begin April 22, a question is whether Merkozy will be able to morph into "Merlande."

Mr. Hollande has criticized Ms. Merkel's demands that euro-zone countries with unsustainable debt burdens
must drastically tighten their belts and slash wages. lnstead, Mr. Hollande calls for growth-boosting policies
at the EU level. He has also vowed to rebalance France's relationship with Germany. Mr. Sarkozy,
meanwhile, presents his relationship with Ms. Merkel as crucial in fighting the euro-zone crisis.

But Ms. Merkel may have unintentionally weakened Mr. Sarkozy's re-election bid. As the French president
was suffering in the polls last fall, at least one senior official from his Union for a Popular Movement party
met with senior officials in Ms. Merkel's Christian Democratic Union party to discuss the chancellor's support
for Mr. Sarkozy's re-election, according to people familiar with the matter.

They discussed joint campaign appearances with Ms. Merkel and Mr. Sarkozy in the spring, the people
said. Ms. Merkel agreed and in January, CDU Secretary-General Hermann Grohe announced the plan in a
speech in Paris in which he attacked Mr. Hollande and praised the Merkel-Sarkozy team.

"We can be proud of their joint demonstration of leadership," Mr. Grohe said. "With courage and conviction
they have laid the groundwork so that Europe can emerge stronger from the crisis."

The fallout came quickly. The French press branded Mr. Sarkozy as Ms. Merkel's lapdog. Since then, the
chancellor showed her support for Mr. Sarkozy in a joint interview in Paris on French television Feb. 6, but
any plans for her playing a broader role in his campaign appear to have faded.

ln Berlin, a CDU official said no dates have been agreed for the chancellor to appear in a French campaign
event, and UMP officials in Paris said none were planned.

Ms. Merkel declined to say in the interview whether she would meet Mr. Hollande before the elections. She
has criticized his proposal to review details of the European fiscal pact that forms the core of her crisis-
busting strategy. "Europe couldn't work if everything that has been agreed upon were to be renegotiated
when the government changes," she said last month.

Judging by the history of Europe's most indispensable partnership, there are reasons to expect Ms. Merkel
and Mr. Hollande would find a way to work together if he were elected.

Close Franco-German relations have a long history, perhaps most famously in the relationship of German
Chancellor Helmut Kohl and French President Francois Mitterrand despite their contrasting ideologies.

"Merkel doesn't want Hollande because his recipes for the European crisis contradict Merkel's policy
course," said Gerd Langguth, a political scientist from Bonn University. "But as soon as someone becomes
president, we have a new situation. At that point, realpolitik overtakes political theory."

One major unknown is whether Mr. Hollande would attempt to break free of Ms. Merkel's dominance and
steer a more independent course, even at the risk of creating fresh turbulence in the euro zone.


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WorId News: Iraq Armored Cars Raise Ire

By Sam Dagher in Beirut and Ali A. Nabhan in Baghdad
869 words
29 February 2012
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English

lraq's legislature approved the largest budget in the country's history last week, at $100 billion, but it is a
single item in an addendum that has lraqis fuming: a provision to purchase armored vehicles for members of
parliament.

Most lraqis have little faith in their politicians and routinely accuse them of being corrupt and fueling the
sectarian and ethnic polarization that plagues the country. For many, the idea of lawmakers earmarking
millions of dollars for their own protection, at a time when ordinary citizens bear the brunt of the violence, is
going too far.

The day the budget was passed, 70 lraqis were killed and close to 400 were wounded in a barrage of
explosions and shootings for which an lraq-based al Qaeda affiliate later claimed responsibility.

Anger over what lraqis are referring to as the scandal of the musafahat -- "the armored objects" -- is building
up in teahouses, newspaper columns, blogs and social-media websites.

Even the country's most revered religious authority has weighed in on the matter. ln a sermon on Friday, a
senior representative of Grand Ayatollah Ali al-Sistani, the country's most senior Shiite cleric, lambasted
what he described as politicians' lopsided priorities.

The representative, Ahmed al-Safi, suggested parliamentarians consider donating the $50 million allocated
for armored vehicles toward provision of clean drinking water for some of the hundreds of villages currently
lacking it. The sermons usually reflect the views of the reclusive Mr. Sistani.

The use of armored cars by senior lraqi government officials and foreign diplomats is nothing new. Officials
are escorted by convoys of heavily armed guards that are often the cause of traffic jams and road closures.

But what appears to have incensed lraqis the most is what they view as the insensitivity of the lawmakers in
moving to guarantee better protection for themselves while hundreds of average citizens have been killed
and wounded in attacks since the withdrawal from the country of the last U.S. military forces in December.

Making matters worse is the fact most lraqis now see their politicians as the cause of recent violence,
through political feuding and bickering that have considerably fanned sectarian tensions.

"Today we must all say 'No' with one voice after the musafahat scandal," wrote columnist Ali Hussein in the
al-Mada daily newspaper on Sunday. "The blood of the martyrs who have fallen for the sake of a new lraq is
worth much more than an expired product labeled misleadingly and falsely 'elected lawmakers.'"

ln the popular Kitabat blog, a critical posting was cheekily headlined "lraq: Musafahat and Mufakhakhat,"
with the second rhyming word meaning car bombs in Arabic.

Populist Shiite cleric Moqtada al-Sadr jumped on the bandwagon with a statement of condemnation on
Sunday, even though he heads a political movement significantly represented in parliament.

Mr. Sadr called the budget allocation a "stain of shame" on the legislature that would be removed only with t
reversal of the vote approving the armored cars.

"Whoever rides in these armored cars is a traitor to his people and nation and even disobedient to God,"
said Mr. Sadr in the statement posted on his website.

ln a vote on Thursday, 248 of 325 members of parliament approved the passage of the 2012 budget, which
depends almost exclusively on income from oil exports of 2.6 million barrels a day.

The budget, which projects a $12.6 billion deficit, allocates about $31.7 billion for investment, mainly in
infrastructure, and $14.6 billion for security forces, among other items.

Before passing the budget, parliamentarians approved an addendum concerning their body's operating
budget and containing the armored-cars provision.

That decision angered many lraqis at a time when parliament factions that make up the coalition
government headed by Prime Minister Nouri al-Maliki have failed for weeks to agree on an agenda for a
planned national conference to settle differences that have undermined public security.

lraqi authorities have already been on high alert this month because it is the anniversary of brief protests
that ignited last year in Baghdad and elsewhere in lraq in tandem with the start of the so-called Arab Spring
uprisings across the Mideast.

Almost two dozen people were killed and hundreds wounded in the lraqi security forces' crackdown against
protests last year, in which lraqis mainly were demanding accountability in governance and an end to
corruption.

On Thursday, the day of the budget's passage, a range of government and civilian targets were hit in
attacks that spanned six provinces. Well over half of the day's casualties were in the capital.

The owner of a Baghdad kiosk not far from the scene of one of Thursday's bombings contrasted the image
of lawmakers voting for their armored vehicles with that of a father he saw hysterically searching for his dead
son.

lraqi officials have become completely disconnected from the people, he said.

"They told us in the last elections that our vote is gold," he said. "Where is the gold? My vote has become
rust."


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Corporate News: Canadian CongIomerate Opens Inquiry Into Payments

By Satish Sarangarajan and Paul Vieira
474 words
29 February 2012
J
B3
English

SNC-Lavalin Group lnc. said it is investigating the incorrect accounting of 35 million Canadian dollars
(US$35 million) in payments it made, which the engineering-and-construction conglomerate said will reduce
its fourth-quarter earnings.

Tuesday's announcement sent the company's shares down C$9.94, or 21%, to finish at C$38.43 in Toronto.

ln recent months, the Montreal-based company has been responding to Canadian media reports about its
business in Libya under the regime of former leader Moammar Gadhafi. SNC earlier this month said two
senior executives connected to work in Libya had left the company, though it hasn't said why.

SNC on Tuesday didn't say whether the payments being investigated were related to its work in Libya. A
company spokeswoman declined to provide further details.

SNC said it is "working toward" releasing results by the end of next month, though it didn't rule out reporting
its results later this week as had been planned.

The company said it was working with external auditors and legal advisers over the accounting treatment of
C$35 million.

The company said the payments initially had been documented as part of construction projects "to which
they did not relate." The company said it would account for the payments as a fourth-quarter charge.

As a result of the charge and other items, SNC said it would fall short of its earnings forecast for the quarter.
The company said it would also recognize a loss of C$23 million from unspecified exposure to Libyan
projects. lt also cited "unfavorable" cost-forecast revisions on other projects for the shortfall.

SNC said net income for last year will be about 18%, or C$80 million, lower than it had projected because of
the charges.

The company said its board began an investigation, led by its audit committee, of the payments "and certain
other contracts."

Earlier this month, SNC said it hired mediation expert Cynthia Vanier last summer to conduct a fact-finding
mission about conditions in Libya amid a revolt against the Gadhafi regime.

Mexican authorities subsequently said Ms. Vanier was detained in Mexico as part of an investigation into an
alleged plot to extricate one of Col. Gadhafi's sons from Libya.

Her lawyer, Paul Copeland, said his client faces three charges related to human smuggling and possessing
false documents. He said she denies all the charges, including any allegations that she was involved in
trying to smuggle Col. Gadhafi's son out of Libya.

SNC has said it had no role in any "extraction mission or any other action that would contravene local or
international laws or regulations."

---

Ben Dummett and Carolyn King contributed to this article.


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Corporate News: New CEO Takes the WheeI at Hybrid Maker Fisker

By Mike Ramsey and Neal E. Boudette
220 words
29 February 2012
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English

Fisker Automotive lnc., a luxury, plug-in hybrid sports car maker, named former Chrysler executive Tom
LaSorda as its chief executive.

Mr. LaSorda first joined the Anaheim, Calif., company in December as vice chairman. He left Chrysler,
where he was a co-president, in 2009 when Fiat SpA took control of the company following its government-
orchestrated bankruptcy.

"He brings exactly to Fisker Automotive what we need," said Henrik Fisker, its co-founder, who becomes
executive chairman and will focus on brand building and design.

Earlier this month, Fisker disclosed that the U.S. Energy Department had halted its efforts to draw more
cash from a $529 million loan granted under an Obama administration program to spur development of
electric and plug-in hybrid vehicles.

The Energy Department said it had frozen the Fisker loan because the company had missed certain
deadlines in its plan to build a plug-in gas-electric hybrid in Delaware.

Mr. LaSorda said he hopes to resolve the roadblock with the Energy Department but is reforming its
business strategy to move forward without it. The company intends to be profitable on a net income basis in
2013, he said.


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WorId News: Chavez Surgery Revives SpecuIation

By Kejal Vyas and Ezequiel Minaya
464 words
29 February 2012
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English

CARACAS -- Venezuelan President Hugo Chavez, who is running for re-election, was in good condition after
undergoing surgery overnight in Cuba to remove a pelvic lesion near where surgeons had removed a
cancerous tumor last year, Vice President Elias Jaua said Tuesday.

Doctors "totally extracted the diagnosed pelvic lesion and, in addition, removed tissue surrounding the
lesion," Mr. Jaua said at the beginning of an annual address before Venezuela's National Assembly.

Mr. Chavez didn't have any complications in nearby organs and the medical team "obtained a satisfactory
result," Mr. Jaua said. Doctors will soon determine a postsurgical treatment plan, he added.

Despite the reassuring nature of the announcement, which Mr. Jaua read from a statement, speculation
over the president's health is likely to remain rampant as government officials decline to identify the type or
stage of Mr. Chavez's cancer. He receives much of his treatment in secret in Cuba.

The 57-year-old socialist leader had claimed for months to be cancer-free after having what he called a
"baseball-size" tumor removed in June 2011. Then in a shocking admission last week, Mr. Chavez said that
chances are he had a potentially malignant growth slightly less than an inch long in the same area and
would need another surgical intervention.

The news has rattled Venezuela ahead of a presidential election set for October. Mr. Chavez, a former tank
commander, recently said he would "pulverize" his opponent at the ballot box, 39-year-old state Governor
Henrique Capriles Radonski, whom he recently took to calling "el Majunche," or "the bum," in Venezuelan
vernacular.

ln bidding for a third six-year term, Mr. Chavez faces what analysts say is his toughest electoral fight yet.
Venezuela is plagued by the world's fastest inflation rate, high levels of violent street crime, frequent
electricity blackouts and basic foodstuff shortages.

Though he has captured the hearts of many poor Venezuelans with lavish populist spending and his folksy
charisma, doubts are running deep that Mr. Chavez can maintain his traditionally rigorous campaigning
style. Many also wonder who would run in his stead if he isn't up to the task.

A Capriles campaign official said the uncertainty generated by Mr. Chavez's sickness presents "more of a
risk than an opportunity," because it might generate sympathy for the ailing president and make him, rather
than his statist policies and their impact, the center of attention.

Before his departure for Cuba, Mr. Chavez sullenly contemplated the future for his self-styled "21st-century
Socialist revolution" in his absence, a startling change for a leader who has frequently said he wants to stay
in power until 2031.


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Afghans Don't Hate America

By Max Boot
877 words
29 February 2012
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English

Violent Afghan protests over the burning of Qurans have strengthened the hand of those in Washington who
argue for a faster reduction of U.S. troops. Especially galling was an incident of violence within Afghanistan's
lnterior Ministry, in which a disaffected driver shot and killed two American advisers.

Many Americans seem to be saying that if the Afghan people don't want us there, why should we stay?
That's dubious logic because we are not in Afghanistan as a favor to the Afghan people. We are there to
protect our own self-interest in not having their territory once again become a haven for al Qaeda.

lt's also a fallacy to assume that most Afghans are anti-American. The protests, which tapered off Tuesday,
have involved a few thousand people out of a population of 30 million. The attacks on Americans have been
carried out by a handful of assailants. President Hamid Karzai has accepted President Obama's apology
over the Quran-burning incident, condemned the violence and called for restraint. His security forces have
policed the protests and suffered heavier casualties than our own.

While no doubt most people in Afghanistan are outraged over the desecration of their holy book, they are
not anti-American. The most recent survey of Afghan views, conducted by ABC/BBC/ARD in November
2010, found that 62% of Afghans support the U.S. military presence while only 11% support the Taliban.
That's considerably higher than the share of Americans who back the mission -- 35%. Another poll,
conducted by the Asia Foundation last year, found that only 21% of Afghans blame foreign troops for the
war waged by the Taliban and other insurgents. Most Afghans think the Taliban are fighting to gain power,
make money, or for other selfish motives.

One can always question opinion polls in a country where illiteracy and insecurity are rampant. But Afghans
also demonstrate with their actions where their sympathies lie. More than 350,000 Afghan men have joined t
security forces and more would sign up if there were money to pay them. Estimates of the insurgency's
strength are generally under 30,000 men. That's far below the number of mujahedeen -- an estimated
100,000 out of a smaller population -- who took up arms against the Soviet Union in the 1980s.

There is considerable resentment of the United States in Afghanistan, as you would expect from any proud
people who are compelled to deal with a foreign military presence. But the biggest reason Afghans are wary
is because the NATO mission has not delivered what they most want -- freedom from fear. ln the Asia
Foundation poll, 46% said the country was moving in the right direction but pervasive insecurity was their
greatest concern.

The U.S. and its allies have been taking important steps to address insecurity, especially in Kandahar and
Helmand provinces where most surge troops have gone. Commanders had hoped to pivot the focus of
operations this year to eastern Afghanistan, where insecurity continues to lap at the outskirts of Kabul. But
that plan has been put in serious jeopardy by President Obama's decision to bring home 32,000 troops by
September.

Further troops cuts are rumored for announcement in May -- as are cuts in the Afghan Security Forces. The
U.S. is pushing to reduce the size of the Afghan army and police to just 230,000 by 2014 from 352,000
today to save a few billion dollars out of a federal budget of nearly $4 trillion.

Contrary to popular impression, the Afghan Security Forces are not a hotbed of anti-Americanism. Major
Fernando Lujan, a Dari-speaking Special Forces officer, spent 14 months in Afghanistan, mostly embedded
as the lone American in Afghan units, and came away impressed by their fighting spirit.

What the Afghan forces lack is logistics, equipment and intelligence. Most have to drive over lED-strewn
roads in unarmored pickup trucks. The support they need to fight effectively is provided by NATO units, but
Afghan fighting quality will suffer if we start withdrawing. So will their morale, because they'll feel abandoned
to face an insurgency that retains Pakistan support.

The woes of the Afghan forces will surely multiply if, as currently envisioned, 120,000 troops and cops are
demobilized with little prospect of a civilian job. Many could join the insurgency or the drug traffickers simply
to make a living. This could be the reverse of the surge in lraq, when 100,000 formerly hostile Sunnis joined
with coalition forces to fight insurgents.

All of the problems today in the Afghan Security Forces -- including Taliban infiltrators -- will be aggravated b
y a rapid American drawdown. That will make it impossible to secure even our most basic interests and will
likely consign Afghanistan to another civil war. We saw how the last such conflict played out in the 1990s
with the rise of the Taliban and al Qaeda. Why risk a repeat?

---

Mr. Boot is a senior fellow at the Council on Foreign Relations and author of "lnvisible Armies: An Epic
History of Guerrilla Warfare from Ancient Times to the Present," due out next January.


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Harvard's Latest AssauIt on IsraeI

By Ruth Wisse
687 words
29 February 2012
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English

ln 1948, when the Arab League declared war on lsrael, no one imagined that six decades later American
universities would become its overseas agency. Yet campus incitement against lsrael has been growing
from California to the New York lsland. A conference at Harvard next week called "lsrael/Palestine and the
One-State Solution" is but the latest aggression in an escalating campaign against the Jewish state.

The sequence is by now familiar: Arab student groups and self-styled progressives organize a conference or
event like "lsraeli Apartheid Week," targeting lsrael as the main problem of the Middle East. They frame the
goals of these events in buzzwords of "expanding the range of academic debate." But since the roster of
speakers and subjects makes their hostile agenda indisputable, university spokespersons scramble to
dissociate their institutions from the events they are sponsoring. Jewish students and alums debate whether
to ignore or protest the aggression, and newspapers fueling the story give equal credence to lsrael's
attackers and defenders.

A featured speaker at Harvard's conference is Ali Abunimah, creator of the website Electronic lntifada, who
opposes the existence of a "Jewish State" as racist by virtue of being Jewish. A regular on this circuit, he
also keynoted a recent University of Pennsylvania conference urging "Boycott, Divestment, and Sanctions"
(BDS) of, from and against lsrael. Ostensibly dedicated to protecting Palestinian Arabs from lsraeli
oppression, BDS has by now achieved the status of an international "movement," some of whose branches
exclude lsraeli academics from their journals and conferences.

But the economic war on lsrael did not start with BDS. ln 1945, before the founding of lsrael, the Arab
League declared a boycott of "Jewish products and manufactured goods." Ever since, the Damascus-based
Central Boycott Office has tried to enforce a triple-tiered boycott prohibiting importation of lsraeli-origin
goods and services, trade with any entity that does business in lsrael, and engagement with any company or
individual that does business with firms on the Arab League blacklist. Although the U.S. Congress took
measures to counteract this boycott, and the Damascus Bureau may be temporarily preoccupied on other
fronts, the boycott momentum has been picked up by Arab students and academics.

Freedom of speech grants all Americans the right to prosecute the verbal war against lsrael. But let's
differentiate toleration from abetting. Harvard may tolerate smoking, but its medical school wouldn't sponsor
a conference touting the benefits of cigarettes because doctors have learned that smoking is hazardous to
health. The avowed mission of the Harvard Kennedy School of Government, host of the upcoming
conference, "is to strengthen democratic governance around the world by preparing people for public
leadership and by helping to solve problems of public policy." How farcical that instead of seeking to
strengthen democratic governance, its students hijack its forum for "studying" how to destroy the hardiest
democracy in the Middle East.

The pattern of anti-lsrael attack, administrative embarrassment, Jewish confusion, and media exploitation of
the story will continue until all parties realize that the war against lsrael is fundamentally different from
biases to which it is often compared. Once Americans acknowledged the evils of their discrimination against
African-Americans, they abjured their racism and tried through affirmative action to compensate for past
injustice. Arab and Muslim leaders have done the opposite. Having attempted to deny Jews their right to
their one country, they accused Jews of denying Arabs their 22nd. After losing wars on the battlefield, they
prosecuted the war by other means.

Students who are inculcated with hatred of lsrael may want to express their national, religious or political
identity by urging its annihilation. But universities that condone their efforts are triple offenders -- against their
mission, against the Jewish people, and perhaps most especially against the maligners themselves.
Smoking is less fatal to smokers than anti-Jewish politics is to its users. Remember Hitler's bunker.

---

Ms. Wisse, a professor of Yiddish and comparative literature at Harvard, is the author of "Jews and Power"
(Schocken, 2007).


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WorId News: Iran Warns Voters to Show Up for EIection --- Facing CaIIs for Boycotts, a Pressured
Tehran Sees Turnout in Friday's ParIiamentary PoII as a Key Test for Legitimacy

By Farnaz Fassihi
604 words
29 February 2012
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A16
English

BElRUT -- lran's government is goading citizens to vote and warning them not to protest the results of
parliamentary elections on Friday, as the turnout emerges as a test of the regime's legitimacy.

Many ordinary lranians and now-outlawed reformist political parties say they will boycott the vote to protest t
status quo. Risking reprisals, student activists from eight major universities issued a statement on Tuesday
saying the election is a "staged circus" by the regime.

The opposition Green Movement said that it, too, would avoid the polls because it says the process isn't
democratic.

lran's government is countering that with a get-out-the-vote campaign, hoping that a strong turnout will show
it still has popular support despite internal opposition and growing international sanctions against Tehran's
nuclear program.

lranian officials also have taken credit for the lslamic uprisings across the Arab world and they want to
display their brand of lslamic democracy as a model. Voter apathy would undermine these claims.

"Participating in the election is the most important duty for people," President Mahmoud Ahmadinejad said
in a speech Tuesday at a public housing opening ceremony in Tehran.

Friday's parliament vote will mark the first time lran is holding an election since its tumultuous 2009
presidential election when millions of protesters across lran contested the re-election of Mr. Ahmadinejad
amid allegations of fraud. The government cracked down violently against the protesters.

The parliamentary race is largely between conservative factions, some who support Mr. Ahmadinejad and
others who are loyal to Supreme Leader Ayatollah Ali Khamenei. The two rivals have had tense relations
since last year over Mr. Ahmadinejad's policies that Mr. Khamenei views as a challenge to his power.

The 290-seat parliament has the power to create laws, hold government officials accountable and impeach t
president, but it can be overruled by an appointed council of clerics.

lt is unclear how many eligible voters there are among lran's 75 million population, but officials have said in
recent days they expected a 65% turnout. However, a poll conducted by municipalities on behalf of Mr.
Khamenei that was leaked to the media estimated a 10% expected turnout in the capital of Tehran.

For the past few weeks, lran's top officials have encouraged voters to participate -- lran has no law that
requires its citizens to vote -- and have warned that the election must not be disputed and that protests over
the results won't be tolerated.

An Amnesty lnternational report issued Monday also said lran's government has "dramatically escalated"
repression of dissent, including engineering a wave of arrests.

ln his Tuesday speech, Mr. Ahmadinejad called voting a "civic duty" and said lran's democracy was an
example in a region where free elections and democracy were rare.

Mr. Khamenei's office issued a statement in which he said that voting was a Muslim duty.

State-television and radio and well-known clerics and security commanders have joined the chorus to turn
out the vote.

Some lranian officials said a large turnout would deliver a blow to the country's "enemies," including the
U.S. and EU.

Analysts say they expect a low turnout because of the oppositions' bitter experience in the 2009 election,
when the public actively participated in the presidential race and campaigned for candidates, but were
ultimately disillusioned by the result.


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U.S. News: GOP's Snowe Is Retiring From Senate

By Naftali Bendavid
482 words
29 February 2012
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A6
English

Sen. Olympia Snowe of Maine, who for 33 years in Congress has personified an increasingly unfashionable
Republican centrism, said she won't seek re-election, taking a final shot at the Senate's partisanship.

"l do find it frustrating . . . that an atmosphere of polarization and 'my way or the highway' ideologies has
become pervasive in campaigns and in our governing institutions," she said Tuesday.

The decision, which took members of both parties by surprise, transforms this year's battle for the Senate.
Democrats hold a 53-47 advantage in the chamber. But because they have to defend 23 seats to the
Republicans' 10, most analysts have said the GOP has a good shot at retaking the Senate.

That becomes harder because Maine is a Democratic-leaning state. President Barack Obama won it by 17
percentage points in 2008, and Democrats say they are in a strong position to replace Ms. Snowe with a
Democrat. The filing deadline for congressional candidates is March 15, so the GOP has little time to recruit
a strong candidate.

Tuesday's announcement also reflects the dwindling number of centrists of both parties in the Senate. Sen.
Scott Brown (R., Mass.), a fellow centrist, faces a tough race for re-election. On the other side of the aisle,
Sens. Ben Nelson (D., Neb.) and Joe Lieberman of Connecticut, an independent who usually votes with the
Democrats, are both retiring.

Ms. Snowe fills the role of a centrist as much as anyone in the chamber. ln early 2009, she was one of three
Republicans who voted for Mr. Obama's stimulus law.

That year, she also voted for Mr. Obama's health-care overhaul at the committee level, declaring, "When
history calls, history calls." She later voted against the bill on the floor.

Ms. Snowe, 65 years old, was first elected to the state legislature in 1973, taking the place of her husband,
who had died in an auto accident.

ln her latest Senate election, in 2006, she won with 74% of the vote. But she said politics had become more
bitter recently. "l do not realistically expect the partisanship of recent years in the Senate to change over the
short term," Ms. Snowe said in her statement Tuesday.

Maine's governor, Republican Paul LePage, was elected in 2010 with a surge of tea-party support. But Ms.
Snowe had largely defused a tea-party challenge, and neither party regarded her as vulnerable.

Democrats welcomed the development. "Maine is now a top pickup opportunity for Senate Democrats," said
Guy Cecil, executive director of the Democratic Senatorial Campaign Committee.

Sen. John Cornyn (R., Texas), who is coordinating the Republican Senate primaries, said "this will be a key
battleground" but added, "l am confident it will remain in Republican hands."


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WorId News: Russian Candidate Embraces 'EIite' --- Skeptics CaII PresidentiaI Bid Phony, but Nets
Owner Says He's the BiIIionaire for the Job

By Alan Cullison in Moscow and David Gauthier-Villars in Paris
792 words
29 February 2012
J
A15
English

Two weeks after declaring he would run for Russia's presidency, Mikhail Prokhorov decided to stick with a
holiday tradition: He flew to the French Alps.

While his supporters scoured Russia's provinces for the two million signatures he needed to qualify as a
candidate, the billionaire metals tycoon and New Jersey Nets owner landed by helicopter in Courchevel and
was feted with friends at his $33 million chalet, with sustenance from a famed Flemish chef, Wout Bru.

After spending New Year's Eve in Moscow, his aides said in a statement, he needed to "gather his thoughts"
for a tough campaign for the March 4 election.

Mr. Prokhorov said his annual New Year trips to Courchevel only burnish his credentials as a candidate of
refinement. "Where should Russia's next president come from? A village? The forest?" he said in an
interview with The Wall Street Journal at an upscale restaurant in Moscow. "The president needs to come
from the elite."

Mr. Prokhorov says he is serious about his candidacy. ln the smoke-and-mirrors world of Russian politics,
his contention is a hard sell.

Prime Minister Vladimir Putin, since coming to power as president 12 years ago, has assembled a political
system critics say imitates competition but risks few of its uncertainties. ln elections, observers say, the
Kremlin allows only opposition candidates who are certain to lose -- though the Kremlin denies this.

ln Sunday's election, Mr. Prokhorov will be the only new face alongside a cast of challengers who have run
and lost repeatedly in the past. Kremlin critics say Mr. Prokhorov only intends to help Mr. Putin win the
presidency while maintaining an illusion of competition.

Mr. Prokhorov will be lucky to get out of the single digits, polls and analysts suggest.

Since he began campaigning in January, he has traveled to Russia's hinterlands, but has stumbled on gaffes
and been met with disbelief.

ln a televised debate with Communist leader Gennady Zyuganov last month, Mr. Prokhorov sarcastically
advised a Communist lawmaker to sit a bit closer because his vision seemed to be impaired. The man was
indeed blind, and Mr. Prokhorov apologized.

Assailed by rivals for his decision to remain single, Mr. Prokhorov, 46 years old, has responded with a raft of
assurances that he loves women. "How will l become president without a first lady?" went an oft-repeated
tweet last month attributed to Mr. Prokhorov. "l'll let out a secret: l had my first lady when l was 17."

His campaign platform calls for opening up Russian politics, fighting corruption and weaning the country of
dependency on oil exports. lf elected, he has promised new parliamentary elections and to free jailed oil
tycoon Mikhail Khodorkovsky, the last Russian oligarch to openly challenge Kremlin authority.

Mr. Prokhorov showed little interest in politics until last year, when he took the helm of a pro-business party
with the Kremlin's blessing but rapidly ran afoul of his handlers and saw the party taken away. Running now
as an independent, he said he wants to form a new party after the elections to run in future votes after the
Kremlin delivers on pledges to ease harsh electoral rules.

Mr. Prokhorov said he was able to gather the signatures -- as well as vacation in Courchevel -- because of hi
s experienced business cadre in Russia's regions. lt would have been impossible "if l didn't have 100,000
workers, and managers who work for me," he told a Russian newspaper.

ln a country with an average wage of $700 a month, Mr. Prokhorov embodies what millions of Russians hate
-- a young oligarch who made his fortune in shady privatizations while millions toiled in penury in the post-
Soviet collapse.

He has since become famous mostly for splashy expenditures on parties, his purchase of a sports team far
from Russia, and his arrest in Courchevel in 2007 on prostitution charges, which were later dropped. The
arrest cemented his reputation as a playboy, as he told French police, "The parties, the girls, are my
philosophy of life," according to prosecutor Xavier Richaud.

ln the interview, Mr. Prokhorov said bad publicity was the price he had to pay for showing initiative in the
chaotic years after the Soviet collapse, when it was possible to snap up huge state enterprises.

"l consider myself a complicated and controversial figure," he said, adding that anyone with an impeccable
reputation in Russia "hasn't been part of the elite for the past 20 years."


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U.S. News: MiIitary Sent 9/11 Remains To a LandfiII, Report Says

By Julian E. Barnes
570 words
29 February 2012
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A7
English

WASHlNGTON -- Problems with the handling of human remains at a Delaware military base date back at
least to 2001, when portions of unidentified bodies sent there after the Sept. 11 terrorist attacks were
cremated and sent to a landfill, according to a Defense Department report Tuesday.

Detailing previously undisclosed errors at the Dover Air Force Base mortuary, investigators found a 2002
memo that indicated portions of bodies of people killed in the Shanksville, Pa., plane crash and the
Pentagon attack couldn't be identified, were cremated at a civilian crematory and then given to a biomedical
waste-disposal contractor that deposited the remains in a dump.

ln 2008, the Air Force halted the practice of disposing in landfills the small portions of unidentified remains
or partial remains that family members had declined. The service now buries such remains at sea.

But the new details, coming after recent revelations that portions of soldiers' bodies had been discarded in
landfills, is certain to rekindle public consternation.

Pentagon officials were caught off guard Tuesday by the revelations. The mishandling of Sept. 11 remains
wasn't mentioned in the report's executive summary but only briefly discussed in the body of the report and
an appendix.

John Abizaid, the retired Army general who led a panel investigating the Dover mortuary, briefed reporters
but avoided providing details of the errors, saying he was assigned to recommend changes to prevent future
mistakes, not to investigate past shortcomings.

Rep. Rush Holt (D., N.J.), who first raised questions about partial military remains being placed in landfills,
said the revelation that Sept 11. victims' remains were disposed of in landfills confirms the practice has been
long standing. "The Pentagon must provide absolute clarity and accountability as to what human remains
were dishonored in this manner, and it must take far more aggressive steps to ensure this never happens
again," he said in a statement.

Air Force Secretary Michael Donley said he didn't know if a fuller investigation of errors at Dover was
necessary. "We certainly have expressed our regret for the additional grief caused to families whose
remains were handled in a less than ideal or by some measures inappropriate standard, prior to 2008," he
said.

Lisa Linden, a spokeswoman for the Families of Flight 93, cast doubt on the report. She said the bodies of
people killed on the jet that crashed in Shanksville were handled by the county coroner. She said she didn't
believe the coroner gave any remains to the military for identification.

The Somerset County coroner, Wallace Miller, said no remains were sent to Dover. He said he sent some
DNA samples to the Armed Forces lnstitute of Pathology for testing, but those samples were returned. "l
have no idea what they are talking about," he said of the report.

A time line included in the defense report indicates other problems at the mortuary. An investigation in 2005
determined that human remains were misrouted, a mistake that constituted a "dereliction of duty," the report
said. ln 2006, portions of human remains from a crash of a Navy training plane that killed four people were
cremated and deposited in a landfill, rather than being placed in a group burial as they should have been, th
e time line said.


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WorId News: Japan StruggIes With Tainted Reactor Water --- The Key to CooIing Damaged NucIear
PIants Now Poses Major Radioactive Worry, Storage ChaIIenge

By Phred Dvorak
919 words
29 February 2012
J
A15
English

OKUMA, Japan -- Nearly a year after the March 11 earthquake and tsunami sparked triple meltdowns at
reactors here, the taming of Fukushima Daiichi has become in large part a quest to control water.

Foreign journalists on a tour of the Fukushima Daiichi compound Tuesday saw fields of squat, gray water-
storage tanks; miles of orange, black and gray hoses; an artificial turf-covered barge full of contaminated
water; and white-suited workers huddled in a field preparing space for a new water container.

Water is crucial to the continued safety and stability of the Fukushima Daiichi plant, even after reactor
temperatures fell at the end of last year to a level at which little radioactivity is being emitted. Plant operator
Co. is still injecting hundreds of thousands of gallons into the reactors every day to keep them from
overheating again. Because that water and groundwater -- now contaminated -- is leaking out of the reactors
at an estimated 10,000 tons a month, cleaning it up and storing the excess is a constant challenge.

When the temperature drops, as it was expected to do Tuesday, there is the added problem that the water
might freeze, bursting out of hoses, tanks and pipes.

Tepco says workers have been installing heaters near key equipment and wrapping pipes with insulation,
starting with the most important ones that could cause the worst spills. Still, the company said frozen pipes
likely caused 28 leaks in January and February. ln one of the worst incidents, more than eight tons of
radioactive water leaked from a pipe in reactor No. 4 in early February. Tepco said the water had a low level
of radiation, and drained into the basement without leaving the building.

"We've been taking steps to prevent freezing, starting with critical facilities like those for storing water from t
h e reactors,"" Takeshi Takahashi, Fukushima Daiichi's new plant manager, told reporters Tuesday at the
plant's command center. Like much of the staff there, Mr. Takahashi, a serious-looking man with dark circles
under his eyes, was living at the center.

The water problem isn't one that will go away soon: Tepco has to keep bathing the nuclear reactors in
cooling water until the fuel is removed. Until Tepco can plug the leaks and cracks in reactor piping and
buildings, contaminated water will keep welling out. Officials estimate it will take six years to plug the leaks
and 25 to remove the fuel.

The heart of Fukushima Daiichi's waterworks is atop a hill in the middle of the compound, in the back of a
blue truck. There, three pumps send water coursing through thick, black, insulated hoses and into the three
damaged reactors below. Next to that truck is a white one with three more pumps -- emergency backup.

A third truck holds the emergency diesel generators that are supposed to power the pumps if the electricity
goes down, as it did on March 11 of last year. At that time, the generators on the lower floors of the reactor
buildings were destroyed by the tsunami. This time, they are set high enough on the hill so that they might
remain dry if another big wave comes, said a Tepco official. On the far side of the reactors, pumps suck
contaminated liquid out of the reactor building basements and send it through a series of white, block
buildings where oil, cesium and salt are removed.

One facility for removing cesium was made by Kurion lnc. of lrvine, Calif., featuring equipment so big it could
be transported only by a special Russian aircraft, Tepco said. Another was made by France's Areva SA,
which came up with an intricate system of pipes and valves that took 50 welders more than a month to build,
Tepco said. The Areva system isn't being used now.

A third cesium-removal facility was made by Toshiba Corp. Tepco says that one is the main
decontamination system in use. Toshiba and support companies deploy 140 workers to operate and monitor
the water-processing system, and 20 more to oversee pumping and circulation, through a 2.5-mile line of
pressure-resistant hoses. Tepco has two sets of backup lines in place as well, in case the main line gets
blocked and needs to be flushed.

Some of this cleaned-up water goes back up to the truck at the top of the hill, to get rerouted through the
reactors.

But much of it gets stored in the squat, gray tanks that have replaced the trees that once grew throughout th
e sprawling Fukushima Daiichi compound. The tanks store water that has a high saline content, which can
damage equipment, explains one Tepco official. Water at other stages of processing are stored in containers
of other shapes and colors. Tepco has the capacity to store 165,000 tons of contaminated water, said
Katsuhiko lwaki, deputy manager of the Fukushima Daiichi stabilization center. About 125,000 tons of water
already is being stored. The company plans to expand capacity to about 205,000 tons, he said.

Fukushima Daiichi also has one floating container for contaminated water. "There's Megafloat,"" said Mr.
lwaki, pointing to the big, flat covered barge quietly anchored in the sea by the side of reactor No. 1.

---

Mitsuru Obe contributed to this article.


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WorId News: New PIayers in Myanmar's Markets --- LocaI Entrepreneurs Gain Ground, HeIp Drive
Reform; A Prawn Exporter Thinks of Running for Office

By a WSJ Staff Reporter
824 words
29 February 2012
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A18
English

YANGON -- For decades, much of Myanmar's wealth was tied up in the hands of the country's military and
its cronies. Now, entrepreneurs like Yan Aung Kyaw have emerged as beneficiaries as well as drivers of
reform.

The 39-year-old Yangon businessman, who got a business degree in 2002, long felt stifled by the
government's handing of monopolies to the well-connected, but lately he has seen more investment
opportunities. He exports giant frozen prawns to a high-end supermarket chain in Hong Kong, is scouting for
land for rubber plantations, and is trying to land small-scale mining licenses. He is even thinking of running
for office to push for more liberalization.

He says it has become easier because the government has loosened rules on what companies can import
and export. Until mid-2011, businesses had to submit the lists of what they wanted to trade, and the council
handling the requests met only once a week, he says.

"lf you missed the meeting, you had to wait," says Mr. Yan Aung Kyaw. Now, he says, approvals takes only
a few days.

Western leaders say the stranglehold over Myanmar's economy -- long considered one of the most
backward in Asia -- by state enterprises and a small business elite that control assets related to timber,
jewels and land helped to empower the military regime while leaving much of the country mired in poverty.

But small-scale businesses have emerged, and in some cases thrived in recent years, mostly by selling to
local needs or making inroads in markets the government cared little about.

Even before an elected government took power last year, Myanmar started quietly allowing more-
independent business players to expand into agriculture, tourism and other parts of the economy. As their
influence grows, they add to pressure on the government to open up more sectors, provide more credit and
fix the country's complicated currency-exchange system.

Since Myanmar's first election in 20 years, the new military-backed government has eased restrictions on th
e lnternet, legalized the main opposition party, and freed hundreds of political prisoners. The U.S. said in
January it would restore full diplomatic relations with Myanmar, and has indicated it may consider easing
sanctions if a planned parliamentary by-election in April is seen to be free and fair.

"These businesses aren't the big-ticket suppliers of cash to the regime -- their interests are for a growing
economy," said Sean Turnell, a professor at Macquarie University in Australia and a Myanmar expert.
"Everyone has been surprised at the vibrancy and prominence of some of the business groups. That's really
a new thing."

lt is difficult to say which businesses succeed because of preferential treatment by the government and
which have excelled by market criteria. But locals and analysts say the ice is cracking in the business
sector.

One example of below-the-radar growth: the decidedly unflashy business of beans. For this predominantly
agricultural nation, the sharp growth since 2002 of exports of lentils and chickpeas to its neighbor lndia
proved a lucrative market, now valued at nearly $800 million annually, enriching small-time growers and
traders.

lt was initially developed under the noses of the military, according to lkuko Okamoto, a Japanese academic
who has studied the beans and pulses market. Myanmar now vies with Canada as the world's largest
exporter of dried beans.

Other small-scale businesses also are finding space to grow, in many cases through trade associations
whose membership rolls have expanded dramatically. Chief among them is the Union of Myanmar
Federation of Chambers of Commerce and lndustry. Once known as an opaque, government-linked
organization, the group now includes thousands of midsize operators whose interests lie in more reform.

A former head of the group, Win Myint, was appointed commerce minister last year.

Now "it's very easy to call the minister for meeting," says U Myint Soe, chairman of the Myanmar's Garment
Manufacturers' Association and an owner of four factories, with 1,150 workers, that supply uniforms to South
Korea and Japan. "There has been a big change in the business climate," he says. "We will make more
money."

Myanmar's garment industry has struggled under U.S. sanctions. But there are signs of a renaissance.
Apparel exports to Japan and South Korea have more than tripled, to $530 million in 2011 from $162 million
in 2008, according to data tracker Global Trade lnformation Services.

"We're exposing all our problems now. The government sector knows what's going on," says U Moe Kyaw,
also known by his English name, Peter Thein, a U.K.-born businessman serving various roles in business
associations. "We really have a voice."


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U.S. News: Senate Set to Vote On Contraception

By Naftali Bendavid
556 words
29 February 2012
J
A9
English

The heated battle over insurance coverage for contraception is shifting to Capitol Hill, with the Senate due to
vote Thursday on a measure to let employers opt out of covering any health treatment they find morally
objectionable.

The "conscience exemption" provision, offered by Sen. Roy Blunt (R., Mo.), would allow employers to omit
health-insurance coverage for services that violate their religious or moral convictions. The proposal was
prompted by a new rule from the Obama administration that requires health plans to cover contraception
without charging employees a co-payment.

ln a letter to Republican colleagues Tuesday, Mr. Blunt called the regulation "an egregious violation of
religious freedom" that flouts the country's founding principles. Sen. Dick Durbin (D., lll.) replied on the
Senate floor Tuesday that under Mr. Blunt's measure, an employer could decline to cover anything from
vaccines to mental-health treatment.

"The Blunt amendment will have a harmful effect on all people," Mr. Durbin said.

The amendment is unlikely to be approved, but it holds potential peril for lawmakers on both sides in an
election year. Republicans risk running afoul of independent voters and women, while Democrats could
alienate Catholics.

The contraception rule is part of Mr. Obama's 2010 health law, which requires health plans to provide certain
preventive health services at no out-of-pocket cost to employees. Churches may qualify for an exemption
from the requirement to cover contraception, but affiliated organizations, like Catholic universities or
hospitals, aren't expected to qualify.

After a furor over the requirement, the White House said it would rewrite the rule so employees of such
institutions would get the coverage, but it could be paid for by the insurer rather than the employer. This
failed to satisfy Catholic bishops, who said they still would be in the position of providing access to
procedures they find morally objectionable, and conservatives, who say the mandate still violates religious
freedom.

Democrats argue that access to contraception is a basic right and that Mr. Obama's revision on the rule
balances religious freedom with women's rights.

"What the president does not appear to understand is that just because you come up with an accounting
gimmick and pretend like religious institutions are wrong, does not mean that you've satisfied the
fundamental constitutional freedoms that all Americans are guaranteed," Mr. Blunt said.

The dispute is part of a recent eruption of social issues into this campaign season, which had been focused
on the economy. Republicans depict Mr. Obama's rule as emblematic of his fondness for government
control, while Democrats describe Republicans as mired in the past.

Mr. Durbin said the language of Mr. Blunt's measure is far too vague.

"Under the Blunt amendment, if an employer objects morally to vaccinations, then their insurance policy
wouldn't have to cover potentially lifesaving vaccination," Mr. Durbin said.

At a recent House hearing on the contraception rule, the witnesses consisted of five men from religious
organizations. Democrats said the absence of women reflected Republicans' indifference to women's health.
Republicans deny that but acknowledged privately the hearing was a misstep.

At a House Judiciary Committee hearing Tuesday about the contraception rule, three of the four witnesses
were women.


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U.S. News: Judges Set New Lines For Texas EIections

By Nathan Koppel
306 words
29 February 2012
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A6
English

AUSTlN, Texas -- A federal court in San Antonio redrew Texas' congressional districts Tuesday, increasing t
likelihood the state can hold primary elections May 29.

The special three-judge tribunal's revised electoral map is likely to temporarily resolve a redistricting battle
that arose after Texas gained four U.S. House seats, for a total of 36 representatives, thanks to population
growth over the past decade.

The Republican and Democratic parties may gain two additional House seats apiece under the court-drawn
map, lawyers said. Republicans hold 23 of Texas' 32 House seats.

The Republican-controlled Texas legislature last year drew a new congressional map that would have
solidified GOP control of the state's House delegation. Minority groups filed suit last year, claiming the
legislature's map violated the Voting Rights Act, which prohibits dilution of minority voting power.

The San Antonio court decided last year that the legislature's map didn't adequately reflect minority
population growth in the state, and the judges drew an interim map that was more favorable to Hispanics. T
h e U.S. Supreme Court vacated that map, concluding the tribunal didn't pay enough deference to the
legislature's map.

Though the new map is likely to be used for the 2012 election, the state's long-term redistricting plans are
still being considered by another federal court.

Reaction to the new map split along party lines, with Republicans praising the revised districts as closer to
those drawn by the legislature, and Democrats contending the new plan shortchanges minority voters.

While the San Antonio court hasn't set a primary date, it has indicated May 29 is likely, lawyers said. The
state originally planned to hold primary elections in March.


Document J000000020120229e82t00019


WorId News: U.S. Secures New Afghan Exit Routes

By Nathan Hodge
298 words
29 February 2012
J
A17
English

WASHlNGTON -- The U.S. secured approval from several countries in Central Asia to move military cargo
out of Afghanistan, the military's top logistics officer said, allowing for a withdrawal without relying mainly on
Pakistan.

Air Force Gen. William Fraser told lawmakers the U.S. had secured approval to move equipment through
Tajikistan, Kyrgyzstan and Kazakhstan and was exploring routes to move out armored vehicles as well as
nonlethal supplies.

"We now have two-way approval to move equipment back out of Afghanistan," Gen. Fraser told members of
the Senate Armed Services Committee on Tuesday, referring to agreements to bring cargo both into
Afghanistan and out through Central Asia.

Russia and Uzbekistan also endorsed reverse transit routes, Gen. Fraser told lawmakers.

Military logistics in Afghanistan have been complicated by rocky relations between the U.S. and Pakistan.
Planners were forced to reroute cargo into Afghanistan late last year when Pakistan closed border crossings
to U.S. and allied supply convoys after a U.S. airstrike killed Pakistani troops.

Much of the traffic shifted to the so-called Northern Distribution Network, a system of overland supply lines
that begins at Baltic and Black sea ports and winds across Central Asia. But that network primarily moves
cargo in one direction, into Afghanistan.

Gen. Fraser, who heads the arm of the military that oversees logistics, said that moving equipment out of
landlocked Afghanistan is a daunting task, and that reopening overland supply lines across Pakistan would
be crucial to withdrawal.

"We need the Pakistan [ground lines of communication] open, because of the large numbers that we're
talking about that we need to bring out in a timely manner," he said.


Document J000000020120229e82t00018


WorId News: Egyptian Judges Step Aside In TriaI of Foreign Workers

By Matt Bradley
601 words
29 February 2012
J
A17
English

CAlRO -- The three judges assigned to a case against dozens of foreign and Egyptian civil-society workers
recused themselves on Tuesday, raising hopes that diplomacy may resolve a highly politicized trial that has
threatened the U.S.'s security relationship with Egypt.

ln late January, Egyptian prosecutors charged 43 civil-society workers, including at least 16 U.S. citizens,
with operating unregistered organizations and distributing foreign funds without permission. lf convicted, they
could face a financial penalty and up to five years in prison.

The judges cited "embarrassment" over the trial, the Egyptian state news agency reported, but offered few
other clues as to why they stepped aside. The announcement came just two days into the trial, amid a flurry
of American diplomatic efforts to arrange a neat exit from a growing diplomatic row.

Sarwat Abdel Shahid, who represents the National Democratic lnstitute, a U.S.-based NGO that is largely
funded by Congress, and a U.S.-based organization devoted to journalism training, said the judges likely
feared being used by Egypt's interim military-led government to play to anti-American public sentiment.

"l think the judges felt that . . . who is controlling the country now wanted to use them to put influence on the
United States," he said.

The Ministry of Judiciary didn't respond to a request to comment Tuesday.

The court of appeals will assign new judges to the case, but the pause could add a few weeks to the trial,
offering Egyptian government agencies a chance to formally recognize the NGOs and avoid penalties for
their foreign and Egyptian employees.

The judges' recusal came hours after Secretary of State Hillary Clinton told a Senate foreign-affairs
subcommittee that U.S. diplomats were "moving toward a resolution" on the case, the Associated Press
reported.

Assistant Secretary of State for Near Eastern Affairs Jeffrey Feltman met with Egypt's ambassador to the
U.S. on Monday as part of the State Department's "ongoing engagement" with the Egyptian government to
resolve the dispute.

Mrs. Clinton has appealed to Egypt's minister of foreign affairs several times over the past week to resolve t
h e matter.

Mrs. Clinton and American lawmakers have warned the Egyptian government over the past several months
that prosecution of employees for U.S.-based NGOs could jeopardize the $1.3 billion in military aid
Washington has given Egypt's military each year since 1987.

But Egypt's interim government has consistently maintained that the case lies beyond diplomatic
interference in the hands of the country's independent judiciary.

On Sunday, the three judges decided to adjourn proceedings until April 26 to allow attorneys to review court
documents.

But Mr. Abdel Shahid said the trial's chaotic atmosphere may have done more than U.S. diplomatic pressure
to persuade the judges to step away.

Prosecutors on Sunday submitted requests to call a staunchly anti-American independent member of
Parliament and newspaper owner, as well as the host of a popular nationalist talk show, as witnesses.

Protesters interrupted the proceedings to shout insults at the accused while cameramen climbed over
benches to snap photos.

"l think the politics behind the case made the judges decide not to continue," said Mr. Abdel Shahid.

At least seven of the charged Americans still live in Egypt, where they are forbidden by law from leaving the
country. At least three have taken refuge at the U.S. Embassy.

None of the foreign defendants showed up for Sunday's hearing.


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WorId News: RebeIs Sign Truce In South Sudan

By Nicholas Bariyo and Jenny Gross
584 words
29 February 2012
J
A15
English

The government of South Sudan signed a peace deal with one of the country's largest rebel groups, the
South Sudan Democratic Movement, a South Sudan official said on Tuesday, a move that could help
stabilize the East African nation.

The pact was signed on Monday after days of negotiations in oil-rich Jonglei state, which borders Ethiopia,
said Philip Aguer, a spokesman for the South Sudan army. "They [the rebels] have declared a cease-fire
and as far as we are concerned, it's a major step toward the restoration of peace in Jonglei," he said by
telephone from Juba, the South Sudanese capital.

A rebel spokesman couldn't be reached to comment.

The cease-fire highlights the growing unity in the country, which has been plagued by clashes between rival
groups in Jonglei state in recent months.

South Sudan is an important regional oil producer. lt sells its crude to refiners in China and Malaysia,
although a recent dispute with neighbor Sudan over oil-export transit fees has led to a shutdown of its
output, helping propel oil prices to near nine-month highs in recent days.

Analysts are unsure how long South Sudan, which gets 98% of its revenue from oil, will be able to pay its
soldiers and how long the united front will last.

Luke Patey, a researcher on Sudan for the Danish lnstitute of lnternational Studies, said the cease-fire
doesn't significantly change the outlook for South Sudan, because ethnic fighting, rather than political
factions, poses more of a threat to the country's stability.

South Sudanese troops have been battling the SSDM rebels since the country gained independence from
Sudan last year.

SSDM leader George Athor was killed in December. Following Mr. Athor's death, many rebel fighters have
surrendered to government forces, Mr. Aguer said.

Pagan Amum, the chief negotiator for South Sudan and head of the ruling party, the Sudan People's
Liberation Movement, said the cease-fire will help stabilize the nation. "This will bring the end of rebellions
and will constitute the end of the destabilization of the larger part of South Sudan," he said.

"We, the government of South Sudan, will succeed in reconciling [with] the people in the state as well as
proceed with peaceful disarmament of civilians, now that the external element has been removed," Mr.
Amum said.

The pact was significant, he said, because the rebel group was one of the conduits through which Sudan
had sent arms to South Sudan.

Under the deal, more than 1,000 rebel fighters will be integrated into the South Sudanese army and given
political representation in the national assembly as well as at the state level.

Given the long history of tension between rebel groups in South Sudan, Mr. Patey of the Danish lnstitute
said, the coalitions are fragile and subject to splitting, particularly when oil money is running dry and the
SPLM can't afford to pay security forces at the same levels.

South Sudan is imposing austerity measures to counter the loss of oil revenue following the shutdown of its
output of around 350,000 barrels a day.

"lt's a positive, definitely, that [South Sudan President] Salva Kiir has brought in one of the larger factions
under the SPLM," Mr. Patey said. "But there are still different groups out there that need to be railed in."


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Heard on the Street
GM Limited To a French Connection

By Justin Lahart
327 words
29 February 2012
J
C14
English


With General Motors limited in what it can do about its woeful European operations, taking a stake in
France's No. 2 car maker might not be such a bad idea.

Word that GM is considering buying into an alliance with PSA Peugeot Citroen has drawn a collective yawn
from investors. The deal seems unlikely to address the overcapacity problems dogging GM's money-losing
European business, Opel-Vauxhall.

On paper, the best option for GM would be to ditch Opel. Morgan Stanley analyst Adam Jonas values the
unit at the decidedly unprincely sum of a negative $7.6 billion, suggesting it is knocking about $5 off GM's
share price. GM's stock currently trades about $7 below its initial public offering price of $33.

ln practice, though, jettisoning Opel would be hard to do. With GM's move toward selling smaller, less thirsty
vehicles in the U.S., it needs Opel's technology. Pushing Opel into bankruptcy while carving that out
wouldn't play well with European authorities. And even if Europe's car market wasn't in the middle of today's
deep funk, no company would buy Opel absent its technology.

The alternative of reducing capacity and shifting more manufacturing operations from Western to Eastern
Europe would benefit not just Opel, but all of Europe's auto makers. lt just so happens to also be a political
nonstarter.

With those options off the table, an alliance with Peugeot has potential. Sharing technology and R&D, and
jointly developing new vehicles should help GM lower its European unit costs. The two also could double up
on supply chains and piggyback each other into untapped markets.

None of which would take the albatross that is Opel from GM's neck, but it would make the burden a little
lighter.


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The Conservative Case for Foreign Aid

By John Kerry
990 words
29 February 2012
J
A21
English

Cutting foreign aid has always been a guaranteed applause line on the political stump. There are no global
Grover Norquists pushing a pledge not to slash the State Department budget, nor are there millions of
AARP seniors rallying to protect America's investments overseas. President Reagan once summed it up
succinctly: "Foreign aid suffers from a lack of domestic constituency, in large part because the results of the
programs are often not immediately visible and self-evident." And today, with the national debt approaching
$14.7 trillion, Americans rightly demand fiscal responsibility.

Yet efforts in Congress to cut billions from the president's proposed budget for the State Department and th
e U.S. Agency for lnternational Development (USAlD) are short-sighted. While it is true that our economic
strength at home determines our strength in the world, it's also vital to deal with our current fiscal challenge
intelligently. After all, we can't be strong at home if we aren't strong in the world.

President Reagan wisely reminded us when talking about security assistance programs that these efforts
are "an essential complement to our defense effort" and "directly enhance the security of the United States."
Reagan knew that diplomacy and development policy neutralize threats before they become crises; manage
crises if threats escalate; and assure security and stability after conflicts are resolved, all at a fraction of the
cost of military deployment. As former Secretary of Defense Robert Gates once pointed out, if you took the
entire Foreign Service roster of American diplomatic personnel, you could barely staff one aircraft carrier.

President Obama's new request for international-affairs work comprises a mere 1.5% of his budget. ls there
a cost to taxpayers? Of course. But all of our foreign aid programs and foreign policy initiatives -- from
sending diplomats to Afghanistan to helping reverse the HlV/AlDS epidemic in Africa -- cost less than
one-tenth of our annual military expenditures.

There's nothing fiscally conservative about starving our foreign policy budget of a billion dollars today only to
spend a trillion dollars years later in armed conflict. Every day, the State Department leads operations that
strengthen our security. Diplomats and development experts support counterterrorism efforts in countries
like Yemen, Somalia, Pakistan and Afghanistan. Programs to destroy caches of small arms, shoulder-fired
missiles and mines deprive our enemies of the tools they might use to attack us, our allies and our partners.
Teaching foreign military officers American values and skills creates additional defense capacity so that we
can fight together, with burdens shared equitably.

Training foreign law-enforcement and counterterrorism officials in American investigative techniques
increases their capability and our security. Crucially, implementing stricter export controls, training
international weapons inspectors, and securing our borders allows us to guard against that most pernicious
of threats: terrorism by weapons of mass destruction.

Our global presence does something else: lt creates jobs. Through our contributions to international financial
institutions like the World Bank, we don't just lift the economies of low-income countries but we open
markets for American businesses. That's one reason why Secretary of State Hillary Clinton has elevated
economic statecraft to a top priority, recognizing the connections between promoting our businesses abroad
and creating jobs at home. We've got a tax code that spans more than 72,000 pages and a federal budget of
$3.8 trillion -- surely we can find enough tax loopholes to close and wasteful spending to cut in order to
preserve the $57 billion required for our global investment.

The stakes are enormous. ln the coming years, we will have great opportunities to build and redefine our
relationships around the world, particularly in the Middle East. The long-term outcome of the Arab
Awakening will depend on vigilance and engagement, which is why this year's proposed budget requests
additional funding for the region.

We have begun to make a difference in Tunisia, where USAlD quickly funded the nongovernmental
organizations and new political parties born in the wake of President Ben Ali's departure. We need to
continue to help the people of the Middle East and North Africa achieve their legitimate political and
economic aspirations. We can either pay now to help brave people build a better, democratic future or we
will certainly pay later in American blood and treasure.

We know the difference we can make. Paired with forward-thinking diplomacy, development programs can
help turn old enemies (like Vietnam) into new friends, and turn friends (like South Korea) into partners that
share the burdens of leadership.

Today, the U.S. and Vietnam are forging a genuine partnership in the world's most vital strategic region. Our
investment in Korea's future through programs like the Asia Foundation, which promotes a peaceful,
prosperous and open Asia-Pacific region, is now being repaid many times through the U.S.-Korea Free
Trade Agreement and a new global assistance partnership. Most recently, our diplomatic overtures to Burma
have been met with democratic reforms.

ln addition to these strategic efforts, foreign assistance programs that vaccinate children against polio,
engage at-risk youth in Central America, give young girls in Afghanistan the opportunity to go to school, or
provide HlV/AlDS treatments to millions in sub-Saharan Africa do more than just ease suffering and increase
opportunity around the world. They also promote core U.S. national security interests by stabilizing regions
that could otherwise become incubators for radicalism.

At this time of budget crisis, a U.S. senator trying to defend foreign aid might well be advised to seek the
counsel of a political consultant if not a mental health professional. But energetic global leadership is a
strategic imperative for America, not a favor we do for other countries.

---

Mr. Kerry, a Democratic senator from Massachusetts, is chairman of the Senate Foreign Relations
Committee.


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Bookshelf
The Man In the MiddIe

By lan Brunskill
1,042 words
29 February 2012
J
A19
English

Walther Rathenau

By Shulamit Volkov

(Yale, 240 pages, $25)

lndustrialist, thinker, politician, Walther Rathenau has fascinated and puzzled biographers ever since he was
shot dead outside his Berlin home in June 1922. At the time of his assassination he was foreign minister of t
Weimar Republic, the fragile democracy that had emerged from the ruins of imperial Germany after wartime
defeat and revolution in the streets. Rathenau was an intellectual, moderate if often unorthodox in his
political views, and he was a Jew. That such a man could have come to occupy a great office of state in
Germany showed the social and political aspirations of the new republic. That he was murderously
prevented from keeping his position showed, no less, that such aspirations were doomed. Shulamit Volkov,
professor emerita of European history at Tel Aviv University, has written an illuminating, thoroughly
researched and sympathetic account of this intriguing, enigmatic life.

Born in 1867 in Berlin, Walther Rathenau was in his teens when his father, Emil, an engineer who had
acquired the European patent for Edison's electric light bulb, began to build up the Allgemeine Elekrizitaets-
gesellschaft (AEG) into one of Germany's leading industrial conglomerates. Walther's early instincts and
talents were literary and artistic -- he wrote poems and plays and was an accomplished draftsman -- but h
e diligently pursued university studies in science, mathematics and technical subjects before embarking on
an apprenticeship. He soon showed his aptitude for business and industry. Over the course of little more
than a decade, he became a board member not only at AEG but also at more than 80 other German
companies and 20 foreign concerns.

lt made him rich. lt brought access to power and a degree of influence. Rathenau knew the leading writers
and artists of the day, from Hugo von Hofmannsthal and Stefan Zweig to Edvard Munch. He frequented
political circles that, in the prewar years, brought him into contact with the kaiser himself. During World War
l, he organized the supply of raw materials for the German military and after the war went on to serve in
government. But all this accomplishment won him few friends, Ms. Volkov notes, and he was never entirely
comfortable with himself.

Rathenau was a man not merely of parts but of paradox. Gregarious almost to a fault, he was at heart
profoundly solitary and seemingly shy of intimacy with either sex. He was a successful practical industrialist,
yet he wanted above all to be admired as a writer and thinker, for his reflections and polemics on spiritual or
cultural values and matters of the soul. ln the myriad essays, pamphlets and books that he somehow found
time to publish -- works that his father unkindly but perhaps with some justice said were "far easier to write
than to read" -- he was apt to veer between progressive and conservative points of view, from patriotism to
internationalism, from a materialist's enthusiasm for modernity to reactionary nostalgia for an idealized past.

This striking multiplicity of interests, activities and opinions aroused suspicion as well as admiration. Thomas
Mann wrote in his diary of a "strange saint -- half true, half false, half pure, half turbid." Rathenau's obituary in
the London Times described him (a little unfairly) as "a man whose versatility probably exceeded his ability."
The novelist Robert Musil, who detested him, went further, caricaturing Rathenau in his epic "The Man
Without Qualities" as the dubious industrialist and writer Paul Arnheim, a man with too many qualities for his
own and others' good. A more sympathetic view came from one of Rathenau's earliest biographers, his
sometime friend Count Harry Kessler, who thought it would take a Dostoevsky to do full justice to this
complex personality.

Rathenau was distant in his personal relationships, Ms. Volkov says, but "he was sometimes breathtakingly
open in public." ln a speech on his birthday, she says, he confessed that since his youth "he had been aware
of being handed by nature two contradictory talents: that of observing and that of acting, and it was this
double-sidedness that made him so enigmatic to others and that so often led to their hostility."

Ms. Volkov's "Walter Rathenau: Weimar's Fallen Statesman" is published in Yale's series of Jewish Lives.
For the author (as for too many of Rathenau's contemporaries and to a significant degree for Rathenau
himself), it is her subject's Jewishness that defined and governed his being. His attitude toward his faith was
complex. Rathenau was a firm believer in assimilation, insisting that German Jews were Germans first and
Jews second. Yet while never particularly observant, and always indifferent or actively hostile to Zionism, he
refused to countenance the idea of conversion to Christianity, a step then common in the circles in which he
moved and one that might have smoothed his social and professional path.

Whatever its role in his life, Rathenau's Jewishness was a factor in his death. His assassination, by
extremists of the Weimar Republic's right-wing underground, followed a long string of political murders. The
earlier victims had clearly been targeted for their left-wing or pacifist political beliefs. Rathenau, however,
was essentially a moderate conservative. The explanation, as the future German President Theodor Heuss
expressed it, was stark: Rathenau was murdered simply "weil er Jude war," because he was a Jew.

His death, not least for that reason, marked a turning point in the turbulent life of Weimar, the moment at
which it became clear that escalating political brutalization would destroy the republic itself. Crowds took to t
streets, protesting Rathenau's murder and urging support for democracy. The chancellor, Joseph Wirth,
denounced the elected politicians who lent a veneer of respectability to the beliefs of Rathenau's murderers.
Thomas Mann, long inclined to an apolitical conservatism, came with Rathenau's death to see that he would
have to join those standing up for liberal values if his beloved German culture was to survive. Walther
Rathenau in death had attained the significance, the place in German hearts, that in life had eluded him.

---

Mr. Brunskill is a senior editor at the Times of London.


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Money-Market Funds Aren't What You Think

By Sallie Krawcheck
888 words
29 February 2012
J
A21
English

The Securities and Exchange Commission is reportedly finishing a proposal to increase regulation on
money-market funds, the $2.7 trillion industry that provides corporations with an important short-term
funding source and individuals and institutions with an alternative to traditional bank deposits.

The SEC's aim is to reduce the risk of a meltdown in the event of another 2008-style panic. lts proposal is
said to include mandating capital backing for money funds and ending their convention of reporting assets at
a fixed $1 net asset value -- instead having it "float" to represent the funds' underlying value, as with other
mutual funds.

The industry opposes additional regulation, arguing that earlier SEC actions are sufficient. But meaningful
risk -- and significant misunderstanding of this risk -- remains in this business, and additional reforms ca
n help.

Consider the perspective of the investor. Here's what individual investors in money funds know: They know
that on their brokerage statements, their money funds are always valued at 100 cents on the dollar, in good
times and bad -- giving them a sometimes-false sense of stability and safety. They know that money funds
are reported in the "cash" section of their statements -- again strongly implying safety. And some know that,
even during periods of significant market instability, money-fund providers have gone to painful lengths to
return that 100 cents on the dollar -- not to "break the buck."

From hundreds of conversations l have had with money-fund investors, here is what they generally don't
know (despite -- or perhaps because of -- being bombarded with pages upon pages of legal disclosures):

They don't know that, notwithstanding SEC actions since 2008, their funds may not be fully safe. They don't
know that as recently as last summer, the largest money funds averaged 45% of their investments in
European bank paper, with one major player at just under 70%. They don't know that, were the investments
to falter, half of the top 10 money-fund providers are not large and presumably well-capitalized banks but
instead asset managers that don't have anything like banks' capital resources.

Nor do money-fund investors know that the largest money-fund managers have been gaining share in the
industry over time, therefore concentrating and potentially heightening the risk of a failure. And they don't
know that, while these firms will likely go to extreme lengths to avoid "breaking the buck," the $1 net asset
value represents an implicit, rather than explicit, guarantee. Even then, there is no certainty that firms will be
successful in raising capital in a downturn since, by definition, they will be trying to do so during a market
dislocation.

And here's what the industry should recognize as it considers whether to support regulation: ln the court of
public opinion -- not to mention among arbitrators -- implicit guarantees like not breaking the buck can
become viewed as explicit regardless of what written legal disclosures may say.

For a cautionary example, one need only look to Auction Rate Securities, a debt instrument once marketed
as a cash alternative by the broker-dealers. Certainly there are differences, but like money funds, ARS
looked like cash, acted like cash, and were talked about by the industry as cash -- and when they lost value
in 2008, clients, arbitrators and some regulators demanded that the broker-dealers reimburse clients. And
so Wall Street firms did, to the tune of what looked to be billions of dollars in settlements.

ln short, if the industry wants to keep the guarantee as a "can-do" rather than a "must-do," then a floating
net asset value would go a very long way toward signaling that the investment principle is not guaranteed.

And if the industry wants to improve the safety of the business and of that guarantee, additional capital
likewise goes a long way. Nothing in financial services is as dangerous as a guarantee without capital
backing it. Think of the mortgage insurers and their guarantees of mortgage insurance, with very thin capital
layers backing enormous promises. Think also of the billions of dollars in disputed losses around this. Better
to provide that cushion for potential losses now, during a period of relative calm, than during or on the other
side of the next market downturn, when it'll be a much more expensive proposition.

l often hear that an underlying industry concern is that this additional capital will reduce the profitability of th
e business. But the right amount of capital doesn't so much reduce a business's profitability as reveal its real
profitability.

Then there's the further argument that additional regulations may shrink the industry. So be it. lf industry
growth is built on clients misunderstanding its underpinnings, and if industry profitability is built on inherent
under-capitalization, then better to provide real transparency. This will allow investors to make informed
choices and allow market forces and innovation to work their magic -- perhaps producing new, more
favorable cash solutions for investors and funding sources for corporations.

---

Ms. Krawcheck, who until last year was president of global wealth and investment management at Bank of
America, has also held senior positions at Citigroup and Sanford C. Bernstein & Co.


Document J000000020120229e82t0000c


Obama's Keystone Jujitsu

374 words
28 February 2012
J
A16
English

President Obama claims that voters aren't stupid about gas prices, but then they'd have to be to understand
his energy policy. Try to parse the latest turn -- make that backward triple somersault with two twists -- in the
Keystone XL pipeline saga.

Yesterday TransCanada announced that it plans to break up the $7.6 billion project into several stand-alone
parts, beginning immediately with a leg connecting Cushing, Oklahoma with the Gulf Coast. The original
plan was to connect U.S. refiners with Alberta's oil sands crude and other Canadian and U.S. energy
resources, but to mollify the environmental lobby Mr. Obama's State Department refused to issue the cross-
border permits last month.

Now, apparently, it's time to mollify the Administration's union supporters that favored the thousands of jobs
that the shovel-ready Keystone would have thrown off -- not to mention the many not-so-stupid voters
who've noticed Mr. Obama's antijobs politics. The White House immediately put out a statement claiming
that "The President welcomes today's news" and even that "we support the company's interest in
proceeding with this project."

ln other words, Mr. Obama is simultaneously opposing and supporting the Keystone XL. The only problem
is that he hasn't had a change of heart on the important part. The new side-project will help alleviate some
of the bottlenecks around Cushing, but it doesn't do anything to get oil from Canada to the U.S., which is th
e main point of the pipeline.

The White House has also been encouraging TransCanada to reapply before the November election for a
new permit from State that it may never receive if Mr. Obama wins the election, in another bid to have it both
ways. Perhaps TransCanada should call Mr. Obama's bluff. Split the Keystone into two sections, each
running a mile or so up to the 49th parallel, and then let State decide on the short interconnection. lt isn't
any crazier than the status quo.

(See related letter: "Letters to the Editor: Let's Connect All The Big Dots, Please" -- WSJ March 1, 2012)


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Japan Is Pressured To LegaIize GambIing

By Yoree Koh
971 words
28 February 2012
J
B1
English

TOKYO -- The Japanese government is moving toward opening the country to casino gambling for the first
time, driven by American gambling interests, the success of other Asian casino centers, and a search for
new growth industries to end a long economic slump.

ln a rare sign of cooperation amid the country's fractious politics, a group of 150 lawmakers from the ruling
party and five opposition parties have embraced legislation that could begin the process of legalizing
gambling within two years. Leaders of the group say they plan to submit the bill before the current
parliamentary session is scheduled to end in June. Passage would pave the way for casinos in the world's
third-largest economy within five years, according to some estimates.

Casino gambling would "help promote tourism, encourage business, create jobs, and boost local
development," Takeshi lwaya, a lawmaker from the biggest opposition party, the Liberal Democratic Party,
said in an interview. "Neighboring areas are contemplating similar plans, so if we don't hurry, we may risk
missing out on a big opportunity."

Estimates of potential revenues for a Japanese casino industry range from $10 billion to $44 billion. Even th
e low end would make Japan a more lucrative market than Las Vegas.

American casino companies, facing a bleak outlook for growth in the U.S., also see big opportunities. Sheld
on Adelson, chief executive of Las Vegas Sands Corp. a vocal supporter of the campaign for at least five
years, will give a speech in Tokyo Tuesday titled "The Economic Benefits of lntegrated Resort
Development." Mr. Adelson touted Japan's casino campaign in a call with analysts earlier this month, and he
follows a string of other casino executives to travel to Japan in recent years.

Las Vegas casino mogul Steve Wynn has also embraced the campaign, though his impact may be muddied
by his messy breakup with his erstwhile Japanese business partner Kazuo Okada.

Although experts say the legislation holds the most promise in overcoming parliamentary objections than
ever before, proponents concede a backlog of heftier issues could derail approval.

Gambling is technically illegal in Japan, but the government does allow betting on bicycle, motorboat,
motorcycle and horse racing. Pachinko, a popular vertical pinball-like game, is similar to the slot machines
lining the casino palaces of Vegas. Mr. Okada earned his fortune as a pachinko manufacturer.

Japanese lawmakers have been weighing measures to legalize casinos for 10 years, but the campaign so
far has stalled. Advocates have been fighting concerns that introducing casinos legalized gambling would
create a generation of addicts or spur a new crime wave -- potentially providing new power to Japan's
still-influential organized crime syndicates. lt didn't help when the chairman of a Japanese paper company
was arrested last year for allegedly skimming money from the company to cover casino gambling debts from
overseas trips.

That case "has spread the notion of how risky casinos are," said a lawmaker from the Communist Party --
one of the few that doesn't back casinos -- during a December parliamentary debate.

Public opinion surveys in Japan have registered strong support. Two newspaper polls in 2011 showed more
than 60% of those surveyed were in favor of allowing casinos. A December poll conducted by Toyo Keizai, a
leading business magazine, produced a different result: Just 40% supported them.

Supportive lawmakers and experts have noted the success of the nascent casino scene in Singapore.
lnternational tourism has been on the rise to the city-state since two casino resorts -- Marina Bay Sands run
by Las Vegas Sands, and Genting Singapore PLC-operated Resorts World Sentosa -- opened in 2010.
Singapore took in 22.2 billion Singapore dollars (US17.6 billion) in tourism receipts in 2011, up 17% from
2010, while total international visitor arrivals climbed 13% to 13.2 million. At the same time, strict safeguards
are believed to have kept crime at bay.

"Casinos in the old Las Vegas may have been run by the Mafia but that's not the case today," Sakihito
Ozawa, executive secretary of the ruling Democratic Party of Japan's pro-casino group said in an interview.
"Casinos now are first-class resorts with shopping centers and show businesses -- wouldn't it be nice if Japan
had something like that too?"

The gambling debate comes at a critical time for Japan. The earthquake, tsunami and nuclear accident last
March exacerbated the country's decades-long slump, as the number of tourists plunged, and the
government incurred steep reconstruction costs to rebuild the battered northeast region. Some pro-casino
lobbyists have argued that casino revenue would bring a fresh stream of much-needed funds into
government coffers without having to raise taxes.

Regional governments are already jockeying in anticipation of a change. Okinawa, Osaka and Chiba
prefectures have carved out a portion of their budgets to study potential casino-building plans. The maverick
mayor of Osaka, a rising star in Japanese politics, Toru Hashimoto, has been a fervent supporter of the
measure to bring casinos to Japan.

ln a strategic shift from the past, the current bill is intentionally thin on specifics -- such as the number of
casinos that might be built. Passage would commit the government to submit a more detailed bill to flesh out
policies required to legalize gambling within two years. These policies would be set by a new government
office, chaired by the prime minister.

"The bill is gaining strength perhaps more so than in the past" said Mr. lwaya, the LDP lawmaker. "But the
outlook of this parliament remains uncertain," he said referencing the possibility of a snap election amid
Prime Minister Yoshihiko Noda's falling public approval rating and a bitter battle between ruling and
opposition parties over sales taxes.


Document J000000020120228e82s00027


Heard on the Street
BofA Left In New York State of Mind

By David Reilly
323 words
28 February 2012
J
C10
English


Brian Moynihan is catching some breaks.

For nearly two years, Bank of America and its chief executive have been dogged by legal issues related to
shoddy mortgages sold to investors by Countrywide Financial, which the bank bought in 2008. On Monday,
fresh off a heaping of praise for Mr. Moynihan from Warren Buffett, BofA got good news on a proposed $8.5
billion settlement with some of those investors.

A federal appeals court ruled the settlement between the bank and 530 investment trusts that bought
securities backed by mortgages should be ruled on by a state court in New York, where it was originally
filed. ln doing so, the appeals court overturned on procedural grounds a ruling that objections to the deal
should be heard in federal court.

The state-court venue is seen as being far more favorable to BofA because the settlement was structured
under a provision of New York state law that calls for an expedited proceeding, wouldn't allow for investors
to opt out, and would curtail objections to the terms.

The decision could provide another tailwind for BofA's stock, which is up about 40% from lows seen late last
year. Granted, investors had largely anticipated this outcome, as Credit Suisse analyst Moshe Orenbuch
wrote last week. And there could be further twists and turns with the proceeding in a New York court.

Still, BofA faces a clearer path toward finalizing the settlement, for which it took provisions in 2011. And
BofA has just entered into, and so quantified for investors at a cost of $11.8 billion, the national mortgage
foreclosure settlement between banks and the government. That, too, has already been largely accounted
for.

The more loose legal ends like these that BofA ties off, the better for investors.


Document J000000020120228e82s0001c


Funding Stays Tight as ECB Readies Loans

By Sara Schaefer Munoz and David Enrich
875 words
28 February 2012
J
C1
English

LONDON -- European bank-funding markets have partly thawed, thanks to the warming effect of hundreds
of billions of euros of cheap European Central Bank loans flooding the industry. Now the question is
whether another round of ECB loans this week can have the same effect on the funding channels that
remain icy.

The ECB in late December issued 489 billion euros ($658 billion) of three-year loans to more than 500
banks. The loans, with a 1% interest rate, defused the risk of a bank running out of money because it was
unable to refinance maturing debts.

The ECB's next batch of loans will be doled out Wednesday, with analysts and investors expecting banks to
borrow anywhere from 300 billion euros to 1 trillion euros.

The hope is that the virtually unlimited supply of liquidity will inspire enough confidence in the industry that
banks will be able to stand on their own without the ECB's crutch.

So far, though, that hasn't happened.

European banks appear largely unwilling to lend to one another even on a short-term basis, except in small
amounts, according to bankers and industry observers. And some of the easing that has occurred in corners
of the bank-funding market, such as "covered bonds," has been buoyed by European banks snapping up
one another's bonds in order to pledge them as collateral to get more ECB loans. Covered bonds are
backed by assets on a bank's balance sheet.

"The situation for banks in Europe remains still very difficult, because we have to remember that the normal
wholesale funding is not yet there," said Alberto Nagel, chief executive of ltaly's Mediobanca SpA. "So, it's
too soon to say that we are coming toward a normal environment."

To be sure, the ECB loans have helped repair confidence in the industry, prompting some institutions to
tiptoe back into bank-funding markets.

For example, after ceasing lending to European banks last year, Citigroup lnc. has resumed lending on a
limited basis to a small number of big, relatively strong European institutions, according to a person familiar
with the matter. Citigroup felt the banks were safe customers, this person said.

U.S. money-market funds, after pulling out of the short-term bank markets last year, also have been
cautiously re-entering, according to a Fitch Ratings survey last week, albeit to mostly French banks.

Some stronger banks have been able to secure loans from other lenders, at least for one-month durations,
executives said.

The interest rates banks charge one another to lend money also have dropped significantly. The average
rate euro-zone banks impose on three-month loans to each other, as tracked by the Euribor index, has
dropped to just under 1% from about 1.6% late last year.

But bank executives said interbank loans remain scarce and expensive. The duration is "very, very short in
anything but the strongest names," lain Mackay, chief financial officer of HSBC Holdings PLC, said Monday.
"A sustained recovery in interbank lending would be an overstatement. . . . There's a feeling that many
banks on the Continent still have restructuring to do."

ECB President Mario Draghi said in an interview with The Wall Street Journal last week that "for the
interbank markets to function we need a return of full confidence in the counterparty."

There have been positive signs in other bank-funding channels in the wake of the ECB loan program. At
least 15 large European banks have managed to issue at least small quantities of relatively long-term senior
unsecured debt, according to data provider Dealogic. Such bonds had been a ubiquitous source of bank
funding until the market closed down last summer as investors shunned European banks.

Covered bonds have enjoyed a renaissance this year. But that doesn't necessarily reflect newfound
confidence in the banking industry.

lnstead, the increased demand for such bonds is largely coming from other European banks, according to
bankers and other industry officials.

Banks are clamoring for assets that they can pledge as collateral with the ECB in exchange for new three-
year loans. Bonds issued by other European banks fit the bill. Plus, banks can pocket a tidy profit because t
h e interest rates on the bonds exceed the 1% interest rate the banks have to pay the ECB for the loans.

"Anecdotal evidence shows more banks being involved in recent covered-bond deals," said Olivia Frieser, a
credit analyst with BNP Paribas in London. "lt can be more attractive than some sovereigns."

A covered-bond trader at a European bank said as much as 65% of recently issued bonds by banks in
southern Europe were purchased by lenders in the issuer's home country, the trader said. "Banks have
been creating liquidity for each other," he said.

Spanish bank Banco Sabadell SA this month issued a 1.2 billion euros covered bond in which 42% of the
buyers were other lenders, according to the bank.

ln similar transactions, including a Sabadell bond last year, banks usually buy about 30%, according to a
senior bond executive.

---

Christopher Bjork contributed to this article.


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Corporate News: China Sets Curbs On OfficiaI Cars

By Norihiko Shirouzu
598 words
28 February 2012
J
B9
English

BElJlNG -- China plans to force government officials to stop buying foreign brands like Volkswagen and Toy
ota and buy only locally branded cars, in its latest effort to bolster the local industry amid slowing growth and
toughening competition.

The "buy China" effort is likely to have a mostly symbolic impact, according to industry experts, because
government purchases make up a small part of a passenger-car market that totaled 14.5 million vehicles last
year. lts impact could also be muted depending on the final rule as well as enforcement.

But it adds to the rising number of regulatory restrictions facing foreign auto makers, adding to what some
foreign auto executives say is a worrying environment.

Previous measures include an increasingly restrictive approval process for expansions and a shift away from
efforts to draw foreign capital to the industry.

China's Ministry of lndustry and lnformation Technology on Friday posted a list of 412 vehicles that are likely
to be approved for purchase by government agencies this year. The list didn't include any foreign models. T
h e ministry said the guideline is open for public comment until March 9.

There was no explanation from MllT on its website as to why foreign-brand vehicles are excluded. Ministry
officials declined to comment.

Currently, government officials and agencies are allowed to purchase any brand as long as vehicles are
produced in China and meet certain pricing and other requirements. That makes a wide variety of brands,
from consumer brands like Toyota Motor Corp. to high end brands like Volkswagen AG's Audi, available for
purchase by officials.

China spends between 70 billion and 80 billion yuan (roughly $11.1 billion to $12.7 billion) a year on
government-vehicle purchases, accounting for less than 5% of the country's overall annual passenger-car
demand, said Yale Zhang, head of Shanghai-based consulting firm Automotive Foresight. Government's
share of such purchases has shrunk as sales to private buyers have surged in recent years.

"For foreign companies, they would lose small volume," Mr. Zhang said. "lt's not really a huge deal for them."

Domestic auto makers have borne the brunt of slowdown in growth in China's car market, as the
government weans consumers off incentives meant to spur economic growth.

Passenger- and commercial-vehicles sales in China totaled 18.51 million vehicles in 2011, up 2.5% from the
previous year. Sales rose 32% in 2010 and 46% in 2009.

The new restrictions could put a spotlight on the driving habits of senior officials. High-end brands like Audi
and Daimler AG's Mercedes-Benz that bear the white license plates that denote public officialdom are visual
reminders of China's wealth gap and feed into perceptions of corruption.

Audi parent Volkswagen said on Monday that "the economic consequences of these new regulations are
limited.

"The majority of theVolkswagen Group China's sales are conducted with private costumers," the company
said. "The amount of the so-called fleet sales with government vehicles has been at a lower single-digit
percentage range for years."

The impact will depend on the final rule, as well as how strictly it is implemented. A senior attorney at a
foreign auto maker said he has seen similar "buy-China-car" attempts in the past. "Even if a list like this
becomes a real policy, it's unlikely it is going to be enforced aggressively," he said.

---

Kersten Zhang and Yoli Zhang contributed to this article.


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Corporate News: Lead-PoIIution Fight in China --- Shanghai Authorities Won't AIIow Johnson
ControIs to Resume Battery Output

By James T. Areddy
702 words
28 February 2012
J
B2
English

SHANGHAl -- Authorities here directly linked lead pollution that they said had sickened local children to
emissions from a Johnson Controls lnc. battery plant and indicated the facility would not be permitted to
process lead in the future.

The move comes amid rising worries in China over pollution. Last September, townspeople in Haining
demonstrated, sometimes violently, over pollution they blamed on a solar panel factory. ln January, Beijing
began offering additional data on air quality amid a public outcry over the city's air pollution.

lt also raises issues of land use -- a persistent problem in the fast-growing country. Zoning in China's urban
areas was traditionally weak and even today housing blocks stand next to factories. China's richer cities like
Shanghai are increasingly eager to push polluting industries elsewhere, sentiment Johnson Controls said it
detected in its negotiations with local authorities.

At the same time, some business groups complain that foreign companies can get unfairly caught up in
public campaigns. Observers worried last year when the southwestern city of Chongqing took action over a
price-labeling issue at Wal-Mart Stores lnc. outlets that led to a temporary closing of 13 stores.

On Sunday, the Shanghai Municipal Environmental Protection Bureau said theJohnson Controls plant in an
area of the city called Kangqiao had a role in lead pollution that sickened 49 children. "There is an obvious
link between the excessive lead in those children's blood in the Kangqiao area and the lead emission by Jo
hn so n Controls," according to a summary of its findings published on an official government website.

Milwaukee, Wis.-based Johnson Controls rejected claims its plant can be tied to illness in local children.
"Based on all available facts, Johnson Controls disagrees with any interpretation linking our plant's operation
to elevated lead exposure," the firm said in a statement.

The Shanghai bureau declined to make its full findings available or to answer questions about it.

The government said it discovered excessive lead-exposure in the 49 children -- a higher number than
previously reported -- during routine back-to-school testing in September. lt said three children remain
hospitalized. The metal is widely known to cause developmental problems in children, and its use is
regulated in China.

The bureau's summary reiterates a local government assertion last year that Johnson Controls had used
more lead in its manufacturing than was allowed by a local quota. Johnson Controls executives agreed but
said emissions levels from the plant have been below local and national limits, and that in past years local
officials focused on emissions levels, not the quota.

On Monday, a Johnson Controls executive said the plant, whichhas been closed since September over the
lead concerns, likely won't reopen as a manufacturing facility.

Alex Molinaroli, president of Johnson Controls's battery division, said Shanghai authorities have indicated
they won't permit processing lead there but may allow the company to perform late stage activity, such as
charging batteries for the first time. As recently as November, Mr. Molinaroli described closure of the plant
as "voluntary" and temporary through the end of last year.

The company is importing batteries from its plants elsewhere to satisfy its customers in China, a strategy
that executives said is break-even at best. The Shanghai plant's annual capacity is 2.6 million batteries, less
than a Jiangsu Province plant that can produce 8 million units and a plant being built in Chongqing with a
capacity for 6 million batteries annually.

Mr. Molinaroli said Johnson Controls can find no scientific basis for the decisions in Shanghai. But, citing th
e company's large business in China, he added, "we're trying to not be emotional about this."

TheJohnson Controls Shanghai plant was the only prominent one among a number of factories closed after
authorities revealed the lead poisoning. ln its report, the bureau also cited lead pollution in the Kangqiao
area from two other small companies that it said share the blame and have been closed.

---

Yang Jie contributed to this article.


Document J000000020120228e82s00035


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Auto Maker; Two WiII Share Purchases, Car Designs

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