Dead and dying coral reefs in Gulf of Mexico blamed on April oil spill

News that large swaths of dying coral reefs have been found southwest of the wrecked oil rig responsible for the largest offshore spill in U.S. history should come as no surprise to anyone. Logic dictates that the effects of the colossal April 20 blowout and spill will be far-reaching and catastrophic, the protests of oil and fishing interests in the Gulf of Mexico notwithstanding. Scientists studying the spill's aftermath said the damage to the reefs was almost certainly due to exposure to toxic chemicals like oil, according to the New York Times. “I think that we have a smoking gun,” said Charles Fisher, a marine biologist from Pennsylvania State University heading a U.S. government-sponsored scientific mission to the Gulf. “The circumstantial evidence is very strong that it’s linked to the spill.” The damaged coral was found Tuesday by the government expedition, which launched a submersible robot to view the coral and obtain samples. Scientists expect to return to the Gulf floor in December using a Navy submersible that can carry three people to depths of 15,000 feet, the newspaper said. An estimated 5 million barrels of crude flowed into the Gulf for months after the Deepwater Horizon oil rig exploded in April, killing 11 workers.

Blackwater still swirling in aftermath of Iraq invasion

Word from Washington that the Justice Department decided Monday not to charge a Blackwater Worldwide employee with murder for a killing in Baghdad that he admitted appears to spell the end of U.S. efforts to address the some of the excesses that have come, sadly, to characterize the 2003 invasion of Iraq. The decision followed a line of failures in high-profile cases brought against employees of companies that were armed contractors for the U.S. State Department in Iraq, a still-questionable arrangement with dire constitutional implications that still have not been adequately examined. The most notable prosecution that failed, of course, resulted in the acquittal of five former Blackwater guards who opened fire on civilians in Baghdad's Nisour Square in 2007, killing 17, according to the New York Times. The Justice Department decision came in a case involving Andrew Moonen of Seattle, who killed a guard protecting Iraq's vice president on Christmas Eve in 2006. The case was complicated by a blanket grant of immunity to State Department contractors, like Blackwater, but not to Defense Department contractors, immunity granted to Andrew Moonen, the Blackwater employee, by a U.S. Embassy official and by Moonen's claim of self-defense. The Justice Department has investigated the case for four years, and already paid damages to Moonen's family. But the murky legal environment that finally prompted Justice to drop the case is no accident. The government of George W. Bush went to war on dubious evidence and corrupted longstanding legal and constitutional principles along the way. The only real surprises here are that is has taken so long for these cases to be dismissed and the subsequent Obama administration's refusal to investigate misconduct by his predecessor. It will take decades to repair the damage to the legal system of the United States, and may take even longer for the country to regain its moral footing unless such an investigation is undertaken. The issue is not whether anyone will have to prison, although it may come to that. The future of the United States is on the line here -- the sooner the reckoning begins, the better for everyone.

Obama government retreats to Bush-era state secrets dishonesty

Just how important is it that the United States, with the world's most powerful military and the world's most enduring democracy, engage in conduct overseas that would be patently illegal within its own borders? That question arose again yesterday, as it has repeatedly in the rather disturbingly slow dismantling of widely discredited George W. Bush-era policies, when the Obama administration invoked the state secrets doctrine in an effort to convince a federal judge in Washington to dismiss a lawsuit accusing the military of trying to kill a U.S. citizen in Yemen. According to the New York Times, the New Mexico-born citizen, Anwar Al-Awlaki, is living in Yemen and is associated with al-Qaida, the radical Islamic terrorist group blamed for the Sept. 11, 2001, terrorist attacks on New York and Washington, D.C. that killed thousands. His father, Nasser al-Awlaki, filed the lawsuit seeking an injunction to block the U.S. government from killing the son, the Times said. U.S. government lawyers completed a legal brief Friday contending the lawsuit should be dismissed because litigating the could result in the disclosure of confidential information -- the so-called state secrets -- and other grounds. The doctrine was invoked successfully numerous times during the last administration to short-circuit claims against the government for allegedly illegal activities in the war on terror. No one seriously questions whether the government has the right to keep secrets when disclosures would put innocent lives at risk. But that does not give the government the right to maintain secrecy when it wants merely to escape consequences for illegal activity. What we saw during the last administration, when the federal government eviscerated long-established constitutional principles to advance a dubious political agenda, should give everyone pause. There has to be a serious accounting. The Obama administration's most serious mistake so far was its refusal to review the previous government and to bring alleged lawbreakers to trial. Everything that happens now, including the Al-Awlaki case, is built upon that miscalculation. This time, the Times said, Obama-appointed Attorney General Eric Holder personally approved invoking the state-secrets defense. “It strains credulity to argue that our laws require the government to disclose to an active, operational terrorist any information about how, when and where we fight terrorism,” said Matthew Miller, a Justice Department spokesman. That's logical, but only in the abstract, and it's a bad mistake to invoke it merely to justify other bad mistakes. If this is going to continue to be a government of laws, those laws are going to have to be enforced -- even if it means some well-known government officials will have to stand trial.

Not everything goes -- U.S. tobacco companies to pay $30 million for bribing officials

News that two U.S. tobacco companies had agreed to settle charges that they bribed their way into overseas sales contracts is a timely reminder that laws against excessive avarice are an unfortunate necessity of a capitalist economic system. Competition works -- the best products and the best companies will prevail over lesser competitors -- but only when everybody is playing by the same rules. The two companies, Universal Corp. of Richmond, Va., and Alliance One International of Morrisville, N.C., are going to be paying nearly $30 million for violating this most-basic of capitalist principles, according to the New York Times. The two companies, which supply tobacco leaves to cigarette and cigar makers, agreed to pay to avoid a civil trial and criminal charges that they bribed officials in eight countries. Universal was accused of bribing government officials in Thailand, Malawi and Mozambique, and Alliance One with bribing officials in Thailand, China, Greece, Indonesia and Kyrgyzstan. Universal issued a statement saying that it had reported the misconduct to authorities and had cooperated with the investigation, the Times said. “We have absolutely no tolerance for this type of activity,” the chief executive, George C. Freeman III, said in the statement, the Times said. Universal said the U.S. Justice Department agreed not to prosecute the company any further if it follows the terms of the agreement for the next three years. Alliance One could not be reached for comment, the Times said.

Appeals court does what oil industry wants in Louisiana

If you know what you're doing in the legal world and you have plenty of resources, you can pretty much always find a judge, or judges, willing to do whatever you want. So it was no surprise Thursday when a federal appeals court in New Orleans enjoined the Obama administration from implementing a six-month moratorium on deep-water oil drilling in the Gulf of Mexico. The three-judge panel upheld a judge's ruling last month that struck down the moratorium as too broad and unfair to the fishing industry, and agreed that it should not even be enforced during the months it will take for the U.S. Supreme Court to hear the case, according to the New York Times. Lawyers for the U.S. Department of the Interior had argued that the catastrophic BP oil rig explosion and massive leak made the moratorium necessary; industry representatives contended the suspension of drilling was crippling economically and should not be enforceable while their lawsuit challenging it was pending. Of course, ordinary people may find it impossible to imagine a situation where immediate and drastic government intervention is more appropriate -- a highly technical operation on a mass scale gone awry, causing incalculable and continuing environmental damage. Ordinary people might think that such a situation is precisely why the government is necessary. But the oil industry is not ordinary people; apparently, neither is Louisiana Gov. Bobby Jindal, who opposed the stay on economic reasons even though the leak has rendered the Louisiana coast virtually unusable and, apparently, destroyed the Gulf fishing industry. Then again, the appeals court ruled that the Interior Department had not proven that it would suffer irreparable injury if drilling operations were not halted like the administration was demanding. It's hard to argue against that proposition, even though the sea bottom drilling operation that blew up and killed a dozen workers has so far resisted all efforts at repair. After all, there are 3,000 drilling platforms in the Gulf, and only one of them has ever exploded and caused a catastrophic oil spill.

New British leader reluctantly endorses Afghanistan war

Maybe David Cameron's endorsement of the U.S. and NATO mission in Afghanistan would have been more convincing had the British prime minister not been forced to re-route his helicopter because of threats from insurgent forces. Or maybe, just maybe, it would have been more convincing had it been an actual endorsement and not a bad facsimile of one. Cameron's remarks, delivered at a Kabul news conference with Afghani President Hamid Karzai, were apparently intended to reassure the war-ravaged country's leaders that the British were not planning to withdraw its 10,000 troops from the U.S.-NATO force fighting the Taliban. “This is the year when we have to make progress — progress for the sake of the Afghan people, but progress also on behalf of people back at home who want this to work,” Cameron said, according to the New York Times. "What we want — and in our national security interest — is to hand power over to an Afghanistan that is able to take control of its own security." Well, sure, but that's hardly the same thing as saying that Britain, like the United States, is committed to supporting NATO forces battling the Taliban until the government in Kabul is strong enough, and trustworthy enough, to stand on its own. The fact that Cameron left that part out is what's noteworthy. He didn't say it because Britain apparently doesn't think about Afghanistan in those terms. The British are fulfilling the commitment former British Prime Minister Tony Blair must have made to former U.S. President George Bush, but that's it. England is pulling out of the international force next year, success or failure notwithstanding. That probably doesn't come as news to current U.S. President Barack Obama, who recently increased the number of U.S. troops in Afghanistan and who probably talks honestly with whomever lives at 10 Downing St., but may be a source of consternation for the soldiers who are doing the actual fighting and risking their actual lives. Then again, Cameron's trip to a military base in Afghanistan's Helmand Province had to be called off because of intelligence reports of threats against his helicopter. Maybe Western leaders, U.S. officials included, will eventually have the good sense to be embarrassed about having to sneak in and out of countries being occupied at a cost of billions of dollars and thousands of lives -- for the benefit, of course, of the people who already lived there long before Western soldiers arrived.

New GM venture raises uncomfortable questions

Is anyone else uncomfortable about Friday's announcement by post-bankruptcy General Motors, still the largest U.S. automaker, that it would create new venture capital firm to invest in new technologies? The new GM, now 61 percent owned by the U.S. government, said it would put $100 million into a new company to help startup companies working on renewable fuels, advanced materials and other automobile-related ventures. The announcement, reported by the New York Times, came amid an almost unbelievable run of good fortune for the company, which was able to shed a list of troubled subsidiaries in its short trip to bankruptcy court. GM reported its first quarterly profit in three years while its chief rival, the usually unimpeachable Toyota Motor Co. -- is still preoccupied with the discovery of manufacturing defects that caused the recall of millions of cars worldwide and resulted in millions of dollars in fines, so far. “We are constantly looking for ways to deliver the best technology for our customers,” Stephen Girsky, a G.M. executive, said in a written statement. “Our goal is to nurture these innovative technologies to help bring them to market, and to ensure our customers have access to the best technology available.” Spokeswoman Sherrie Childers-Arb told the Times that the new subsidiary, General Motors Ventures, had already identified companies to invest in. But will it be the new, nimble, embarrassed and chastised GM that will be buying into startups with promising ideas, or the old GM that wants to buy new companies to block their products from gaining market share? That's what happened, we still can recall, to the early electric car and, even earlier, to transit systems across the country.

China puts the brakes on torture of suspects, witnesses

News that China had issued new rules discouraging the use of torture to encourage suspects to confess or witnesses to testify in court is a great development for the criminal justice system there, but should be a giant stop sign for western governments trying to open trade routes to the world's most populous country. Sure, the new regulations announced Sunday bring China more in line with western ideas of justice and human rights, and are welcome, but they are long overdue. China executes more people -- 1,700 a year is Amnesty International's estimate -- than the rest of the world's countries combined, according to the New York Times. Mistreatment of suspects and, sometimes, of reluctant witnesses is common in China, the Times said. What that says about Western companies and governments doing business with China is not good, since they are supporting a terrible system. Apparently, the central government's previous attempts to liberalize the system have met with mixed results, the Times said. So, the latest pronouncement by top Chinese law enforcement and judicial bodies, while positive on the surface, will only mean improvement if enforced nationwide. The new regulations, which bar the use of confessions obtained by torture and require police officers to testify in court if a defendant alleges mistreatment, were issued a few weeks after a farmer was released from prison after 10 years after he was convicted using a confession obtained through torture. The case came to light after the alleged victim turned up alive, and caused an uproar in the normally closed society -- a huge concern for the government in Beijing, which puts a premium on social order. “Judicial practice in recent years shows that slack and improper methods have been used to gather, examine and exclude evidence in various cases, especially those involving the death penalty,” the central government said in a statement, the Times said. Legal observers in China were optimistic over the new rules. “They have come just in time because the necessity is so great,” said Zhang Xingshui, a Chinese defense lawyer. “It is a good cure for loopholes, because legal workers are often under so much pressure to get cases closed no matter what it takes.” A professor at the government-owned Chinese People's Public Security University in Beijing told the Times that the provision requiring police to testify in court was revolutionary for China. “This may be common practice for police in the West or in Hong Kong, but it is a new thing for Chinese policemen to testify in court,” Cui Min said. “We have to cultivate a new mindset, one that accepts the idea of possibly setting free a criminal over wrongfully convicting an innocent man.” Of course, it would have been a lot better if Western countries had insisted on major reforms in China before opening their markets and integrating Beijing into the world economic system. But China appears to have fully embraced the idea that there is more to be gained from peaceful relations with the rest of the world than from aggressive isolation, even if it means liberalizing how the Communist Party runs the country. And that is very good news.

Obama's proposals for NASA fail to gain much altitude on Capitol Hill

Plans hatched in the Bush era for a new NASA moon landing may not have seemed terribly logical, since U.S. astronauts already visited there in the 1960s and 1970s. But changing those plans to advance human space travel in the future is turning out to be a lot harder than it should be. What else would explain the chilly reception the Obama-appointed head of the United States space agency -- Gen. Charles F. Bolden Jr. -- faced, even from Democrats, when he went before Congress on Wednesday to explain the new administration's proposed 2011 budget? Obama has proposed boosting NASA's budget by $6 billion over five years and directing the extra funds toward aeronautic and climate research, and science missions using robotic ships, not astronauts, according to the New York Times. But U.S. Rep. Bart Gordon of Tennessee told Bolden that Obama's proposed spending was nowhere near enough to achieve the president's loftier goals, and it makes no sense to cancel the existing program to return to the moon without the money to do anything else. Obama proposed in a speech last month that NASA gear up to put astronauts on an asteroid by 2025 and on Mars by 2035, and to cancel the existing Constellation program and open travel to the moon and the international space station to private companies instead. “So far we have not seen any hard analysis from the administration that would give us confidence that it can be done for the amount budgeted,” Gordon said. Gordon said the administration's projections were far less than a NASA panel had estimated human travel to an asteroid and Mars would cost. “It does no good to cancel a program that the administration characterizes as ‘unexecutable’ if that program is simply replaced with a new plan that can’t be executed either,” he said. Rep. Gabrielle Giffords of Arizona, also a Democrat, said she was "very dubious" that NASA would continue to work on the Constellation program while Obama's proposals were pending, the Times said. But Obama also proposed that the Constellation program's proposed Orion crew capsule that was going to return astronauts to the moon be redeveloped into a "lifeboat" for space station astronauts. Bolden said at the hearing that NASA estimates the capsule will take five years and $4.5 billion to develop, the Times said.

Arrest of Indian leader sparks concern over U.S. ally Peru

Word from Lima that Indian leader Alberto Pizango had been taken into custody upon his return to Peru raises new worries about the future of one of South America's staunchest U.S. allies. Pizango was arrested at the airport after 11 months of exile in Nicaragua, where he fled to avoid sedition charges stemming from anti-development protests in the Amazon that turned violent, according to the Associated Press in an article published in the New York Times. More than 30 police officers and demonstrators were killed last June during protests against government decrees allowing exploration of potential oil and gas resources in the Peruvian rainforest, the Indians' ancestral lands. Violence broke out after authorities tore down roadblocks set up by the demonstrators in Bagua to block access to the rainforest, and Pizango was charged with fomenting the violence. Nicaragua's president, Daniel Ortega, granted Pizango political asylum. But Pizango said he had been away from Peru long enough. "I think that I have waited too long and will make this enormous sacrifice that has cost me and is costing me so much," Pizango said before he left Nicaragua. Groups of Pizango supporters rallied at the airport as his plane came in, backing his contention that the government should have consulted native groups before allowing the planned exploration. Opponents of Pizango also protested at the airport, urging the government to press charges against the Indian leader. Government officials claim potential discoveries could generate enough money to end poverty in Peru but, hopefully, not at the cost of the country's vibrant democracy.

Toyota makes it look easy -- automaker races back in the black

Well, maybe that's why it pays to hire a good accountant. Toyota Motor Corp. announced Monday that it is profitable again despite being accused of safety lapses, paying millions of dollars in fines and being forced to recall millions of cars around the world. Toyota, the world's largest automaker, reported a profit of $1.2 billion in the first quarter of 2010 after losing millions of dollars in 2008 and 2009. “After taking over amid a storm, I wanted to do anything to avoid a third straight year in the red,” said Akio Toyoda, Toyota's president, according to the New York Times. Toyoda said the automaker had made "tough and anguishing decisions" to return to profitability, including cost-cutting and layoffs in Japan and in other countries where Toyota cars and trucks are manufactured. The company said it expected to make more than $3 billion this year as its worldwide sales surged, particularly in the United States and China. The rebound surely is good news for slumping U.S. automakers General Motors, Ford and Chrysler, if it reflects worldwide trends. GM and Chrysler borrowed billions of dollars from the U.S. and Canada to stay afloat during the global recession. But Toyota's good news could not completely obscure problems looming in the near future for the automaker. The U.S. National Highway Traffic Safety Administration announced this week that it was investigating the company's handling of a steering defect in its popular Tacoma truck after denying it for a year. “We’re still in a storm — there’s been no change on that front,” Toyoda said. “But from the storm, we’ve begun to see glimpses of sunny but faraway skies. I feel that we’re starting to approach safer waters.” Toyota still faces lawsuits from car buyers claiming injuries causes by acceleration problems and a series of shareholder suits. U.S. regulators also are considering imposing additional fines on the automaker, which paid a $16.4 million fine -- the largest permitted under U.S. law -- to the Transportation Department in April.

Obama administration resorts to Bush path on detainees

News from Washington that the Obama administration is proposing exempting terrorism suspects from constitutional protections guaranteed to U.S. citizens raises troubling questions about the president's commitment to undoing the worst abuses of the last administration. There is nothing in the Bill of Rights to suggest that it is negotiable, or that it only was intended to apply to some of the people some of the time. Yet that is undeniably the basis of Attorney General Eric Holder's proposal that terrorism suspects -- in this case, the Pakistani immigrant who stands accused of trying to set off a bomb in New York's Times Square on May 1 -- no longer be allowed the protection of the so-called Miranda rule, according to the New York Times. The Miranda rule, which bars authorities from questioning suspects until they are advised of their right against self-incrimination -- comes from a landmark 1966 U.S. Supreme Court decision interpreting the Fifth Amendment to the U.S. Constitution. The Fifth Amendment prohibits the government from forcing citizens to testify against themselves, and the Supreme Court held in Miranda that police must advise suspects of this right before questioning begins to give full effect to its protection. But the Fifth Amendment is not the government's protection to give: it was made part of the basic law of the United States to prevent the government from accumulating too much power. As we well recall, Obama was elected in 2008 because the Bush administration developed the nasty habit of selectively enforcing rights that the United States previously knew to apply to everybody. Yet there was Holder on the NBC-TV show Meet the Press on Sunday, touting "big news" and recommending new limits on people's constitutional rights. “We’re now dealing with international terrorists,” Holder said, “and I think that we have to think about perhaps modifying the rules that interrogators have and somehow coming up with something that is flexible and is more consistent with the threat that we now face.” Holder also indicated for the first time that the United States now believes that bombing suspect Faisal Shahzad, who was arrested as he boarded a plane to leave the United States, had been trained by the Pakistani Taliban. Anthony Romero of the American Civil Liberties Union told the Times that Congress did not have the authority to limit the Miranda ruling since it merely interprets the U.S. Constitution. “What’s troubling is that this is coming from the Obama administration,” Romero said. “The irony is that this administration supposedly stands for the rule of law and the restoration of America’s legal standing, and now they are trying to negotiate away fundamental Fifth Amendment rights that have been the cornerstone of our democracy.”

High court gets it wrong in church-state case

There was a time in this country when most people understood what the U.S. Constitution said, even on controversial and evolving legal situations like the separation of church and state. States and municipalities did whatever they wanted, pretty much, whether constitutional or not, like they still do sometimes, but the U.S. Supreme Court always had the last and most reasonable word. Of course it wasn't always so -- there have, as we all know, been some amazing doozies over the years. But that was then, before the likes of Byron White and William Rehnquist were on the court. Now, with Chief Justice John Roberts and Associate Justices Antonin Scalia, Samuel Alito and Clarence Thomas in four of the panel's nine seats, the high court can no longer be relied on for sound reasoning in the face of the kind of blatant partisanship that comes from highly paid advocates. Each yearly term of the current panel reveals further examples of this, from the utterly regrettable Bush v. Gore decision in 2000 (the constitutional way to determine who won a presidential election is to stop counting the votes!) to the shockingly unrealistic Citizens United decision (Congress is constitutionally barred from placing reasonable limits on campaign contributions!) earlier this year. So, it came as little more than rueful surprise to see the court rule 5-4 Wednesday that a Christian religious cross erected on national parkland as a war memorial in California's Mojave Desert did not violate the First Amendment, as the New York Times reported. It wasn't just that the cross itself was on public land, or that the government had tried to relieve itself of responsibility by selling the tiny bit of land under the Sunrise Rock cross to a veterans' group, but that U.S. officials refused to allow representatives of other religions to place their own memorials there! The First Amendment's prohibition on laws "respecting an establishment of religion" has come to bar the United States from favoring any religions over others. It is a tribute to the soundness of this reasoning that such disputes rarely reach the high court, even with the loud and often overbearing religious leaders that populate the country. Yet favoring is clearly what the government did at Sunrise Rock. "The Constitution does not oblige government to avoid any public acknowledgment of religion's role in society," Justice Anthony Kennedy wrote for the court majority. "Here one Latin cross in the desert evokes far more than religion. It evokes thousands of small crosses in foreign fields marking the graves of Americans who fell in battles, battles whose tragedies are compounded if the fallen are forgotten." But in dissent, Justice John Paul Stevens, the only war veteran on the court, said "I certainly agree that the nation should memorialize the service of those who fought and died in World War I, but it cannot lawfully do so by continued endorsement of a starkly sectarian message." The case is entitled Salazar v. Buono, No. 08-472.

Democracy in the new Iraq -- loser could prevail in parliamentary elections

News from Baghdad that Prime Minister Nouri al-Maliki has formed a coalition government to rule his U.S.-supported country for the next four years sounds like good news. For the continuation of Maliki's role as prime minister of Iraq, it could be. But since Maliki finished second in the March election to the secular and Sunni coalition led by Ayad Allawi, the prospect of four more years of a Shiite-dominated government despite the election results could be problematic for the fragile Iraqi society, according to the New York Times. An unpopular government also could complicate the planned withdrawal of 100,000 U.S. soldiers by the end of August, particularly if the current parliamentary standoff continues and is accompanied by an escalation of violence. But if Maliki's State of Law coalition holds and it results in Allawi's Iraqiya party being completely excluded from power in the next government, despite its narrow victory in the election, there is almost certain to be political resentment in addition to the simmering Shiite-Sunni religious friction that seems to almost always be present. Minority Sunnis held power in Iraq during the brutal reign of Saddam Hussein but the majority Shiites have been in power since the 2003 U.S. invasion. "No doubt this could lead to a resurgence in violence and provide a fodder for extremism," said Sheik Abdul-Rahman Munshid al-Assi, leader of a Sunni political council in the disputed region of Kirkuk, the Times said. "There must be participation in the government by any means. Otherwise, we will return to square one." There is only one Sunni politician in Maliki's coalition, the Times said. "The fear is this alliance will have a sectarian color," said Vice President Tariq al-Hashimi, a Sunni allied with Allawi. "That is how Iraqis and the world will see it, whether we like it or not. This development will be a tragic step backward." One hopeful sign -- the Shiite coalition invited Allawi's Iraqiya group to join a national unity government. But the details of such a government -- surely the most important factor -- have not been made clear, the Times said.

Let the prosecutions begin -- Justice Department open criminal probe of Goldman Sachs

Word comes from New York that federal prosecutors have finally started the practically unconscionably delayed investigation into whether Goldman Sachs and other Wall Street traders should be held criminally liable for crashing the nation's housing market in 2006 and kicking off the global recession. Unnamed sources told the New York Times that the U.S. Securities and Exchange Commission, which last month filed a civil lawsuit accusing Goldman Sachs of fraud, referred its findings to the U.S. Justice Department. Goldman Sachs has denied the allegation in the fraud suit, which accuses the firm of defrauding investors in its Abacus 2007 AC1 collateralized debt obligations. According to the SEC, investors in the Abacus deals were not told that Goldman Sachs was simultaneously allowing other people to bet that the mortgage market would fall. When the market collapsed, Abacus investors lost millions but other investors enjoyed a windfall. One trader, hedge fund manager John Paulson earned more than $1 billion when value of bonds he helped select for Abacus investors crashed, the SEC alleged. Paulson has not been charged with any wrongdoing, the Times said. Of course, getting investigated is not the same as being charged, just as being charged is not the same as being guilty. In fact, two hedge fund managers at Bear Stearns were acquitted of criminal charges last year.

South Korea wants international response to ship sinking

News from Seoul is that South Korea wants to wait for the international community act before it responds to a suspected attack on one of its ships by its arch enemy. Preliminary results from a South Korean military intelligence report put the blame on North Korea, its reclusive and impoverished Communist neighbor, according to a Reuters international news service report in the New York Times. The two countries have technically been at war since North Korea invaded South Korea in 1950; a 1953 armistice ended most fighting but ushered in a cold peace that has persisted since then despite occasional moves by both sides to ease tensions. North Korea's testing of nuclear weapons beginning in 2006 has heightened tensions again between the two countries and the United States, which has 28,000 soldiers in South Korea. The South Korean patrol ship, the Cheonan, sank last month with 46 aboard after an explosion, which Seoul blames on a North Korean torpedo. Pyongyang denies any responsibility for the sinking. South Korean President Lee Myung-bak told a group of visiting journalists on Friday that his country would wait until an international investigation of the incident was completed. "Just as the investigation is being conducted with international cooperation, we'll try to cooperate with the international community in taking necessary measures when the results are out," Lee said. The last pieces of the sunken ship are expected to be raised to the surface this week, Reuters said. But even if investigators determine that North Korea was responsible for the sinking, South Korea's options appear limited. A military attack on its neighbor would further heighten tensions and possibly get Russia and China involved, a replay of what happened during the Korean War. Plus, Lee faces tough local elections in June that got even tougher when citizens accused his government of being caught unprepared in the attack on the Cheonan. Lee infuriated the north earlier in the week by criticizing Pyongyang for spending money on a huge celebration to mark the birthday of Kim Il-sung, considered the founder of North Korea. Kim died in 1994.

Toyota agrees to pay $16 million fine to U.S. regulators

So, what's up with Toyota? News that the Japanese automaker had agreed to pay a $16.4 million fine to U.S. regulators over sticky gas pedals in millions of its cars is Toyota Motor Corp. appears almost outrageously integral and honest, but that only makes things even weirder. Can anyone remember another time when a large, multinational corporation did the selfless thing in favor of its customers? Then again, can anyone remember another high-profile industrial company that so quickly ruined a sterling reputation it had earned over the years with high-quality products? Maybe Toyota's decision to pay the fine and focus instead on fixing millions of its cars and compensating victims really is an act of corporate contrition, and not a calculated attempt to limit future liability like we've all come to expect from U.S. companies. Then again, Toyota's present liabilities are bad enough. Legal experts say Toyota already could be facing $10 billion in damage claims, according to the New York Times. The U.S. fine was imposed to punish Toyota for failing to inform federal safety regulators for months about the sticky accelerator problem, even though it already had enough reports about the problem from car owners in Europe and Canada to have started fixing vehicles there, the Times said. "We did not try to hide the defect to avoid dealing with a safety problem," Toyota said in a written statement, even though that appears to be exactly what happened. Toyota said it had made a "good faith" effort to fix the problems but agreed to pay the penalty anyway to avoid a long legal fight. U.S. Transportation Secretary Ray LaHood said Toyota had put consumers at risk by failing to report the defective accelerator pedal problem and that U.S. officials would continue with their investigation, the Times said.

Goldman Sachs charges could be first of many

News that the U.S. Securities and Exchange Commission had filed civil charges against Wall Street trading giant Goldman Sachs and one of its officers is a signal that the Obama administration is continuing to pursue its investigation of the financial collapse that thrust the country, and the world, into the worst economic crisis since the 1930s. The lawsuit, which accuses the bank of devising and selling an investment product that was secretly designed to fail, could be the first of a series of government actions to punish companies and executives who behaved boorishly and prevent them from doing so again. It should, of course, be clear to everyone by now that this crisis was not caused by some uncontrollable and unexplainable economic forces but by human greed and regulatory inattention, and that the former is likely impossible to remedy but the latter is not. So it is at least reassuring that the White House is still pressing the case for tighter regulation of Wall Street. Of course, Goldman Sachs denies that it did anything wrong in designing and promoting a line of investment products to bet against the housing market, including one called "Abacus" that lost more than $1 billion, according to the New York Times. In a written statement, Goldman Sachs called the accusations “completely unfounded" and pledged to “vigorously contest them and defend the firm and its reputation.” But Robert Khuzami, director of the SEC enforcement division, said in his own statement that Goldman Sachs designed the investment products to fail and even allowed a hedge fund manager who stood to earn billions of dollars if they failed to help choose what to invest in. "Goldman (Sachs) wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio,” Khuzami said. That client, a prominent hedge fund manager identified in the lawsuit as John Paulson, made nearly $4 billion in 2007, the Times said. The SEC suit also named Fabrice Tourre, a Goldman Sachs vice president who helped create and sell the investment products, the Times said. Then again, the lawsuit filed by the SEC is a civil complaint, meaning that if it is successful, and there really is no way at this point of knowing whether the government is correct, the defendants can only be forced to pay back their ill-gotten gains and possible monetary penalties. What everybody in the country is waiting for -- Wall Street excepted, no doubt -- is when the criminal complaints that carry the likelihood of prison time will be filed.

General Motors claims profit -- but only if discounts its expenses

Maybe it was naive to have assumed that General Motors, the top U.S. automaker, would have been required to stop playing games and be upfront about its finances as a condition of being saved from the junkyard by billions of dollars from U.S. taxpayers. Well, at least the naivete was short-lived. Today's release of its first detailed financial statement since emerging from bankruptcy protection shows that GM has not forgotten the sleight-of-hand that enabled it to pretend to be solvent for years despite epic mismanagement that caused what was then the world's largest automaker into bankruptcy. Focusing on what it called "positive cash flow of $1 billion since its bankruptcy," GM -- now known as General Motors Co., instead of General Motors Corp. -- said it wasn't counting the more than $4 billion it has to spend to settle with the United Auto Workers union to pay with retiree health benefits, according to the New York Times. If this is an example of what the company called its "fresh start" accounting principles since bankruptcy, it looks like there was nothing learned from its near-collapse as well as nothing to be learned from its official reports. Maybe what GM is doing is standard practice for bailed-out businesses, but it's no more reassuring -- especially since the company is now more than 60 percent owned by the U.S. government. “We don’t need to make that much improvement to get to profitability,” GM Chief Financial Officer Christopher Liddell told analysts and reports in a conference call, the Times said. “It’s getting close to break-even if you get rid of those one-off items that happened in the fourth quarter.” Well, any company would post a profit if it left losses off its balance sheet, right? But would that paint an accurate picture of its financial health? Still, many analysts said GM was considerably healthier than a year ago. “It would be a really impressive achievement if they were able to make a profit,” Rebecca Lindland of IHS Global Insight told the Times. “They’ve been able to do an awful lot, and all of those things should lead to a profitable picture.” GM said it would finish repaying $8.3 billion in loans from the U.S. and Canadian governments by June. The other U.S. automaker that took billions in bailout cash from the government, Chrysler Corp., is expected to release its first financial statement since its bankruptcy later this month, the Times said. Narayanan Jayaraman, a finance professor from Georgia Tech's College of Management, told the Times that he thought GM's prospects were better than Chrysler's. “Between G.M. and Chrysler, if I had to place a bet, I would place it heavily on G.M.,” Jayaraman said. “They seem to be doing the right things. They have some headwinds, so help from the economy would be good, but even in the absence of that they can do well.” He said the government could begin selling the millions of dollars in GM shares no earlier than 2011, after GM has "two or three quarters of profitability." GM's bankruptcy wiped out $83 billion in liabilities, the Times said.

How do you solve a problem like Hamid Karzai?

In case anyone still was thinking that the U.S.-backed president of Afghanistan, Hamid Karzai, who is suspected of stealing re-election last summer, was the best person to head his war-ravaged country, his comments Thursday slamming Western governments that keep him in power cost could change a lot of minds. Karzai, under fire for alleged corruption in his government as well as election fraud, blamed Western governments and the United Nations for the election fraud and Western news organizations for putting too much "pressure" on him. "There is no doubt the fraud was very widespread," Karzai said in a televised speech from Kabul, according to the New York Times, "but this fraud was not committed by Afghans, it was committed by foreigners." Karzai criticized by name United Nations special representative Peter Galbraith and European Union election monitor Philippe Morillon, who helped reveal the election fraud, the Times said. "This fraud was committed by Galbraith, this fraud was committed by Morillon and this fraud was committed by embassies," Karzai said in his speech, delivered several days after U.S. President Barack Obama visited Afghanistan to advise Karzai about cracking down on election fraud and corruption. "In this situation there is a thin curtain between invasion and cooperation-assistance,” Karzai said, warning that if foreign forces assisting his government were seen as invaders, the insurgency "could become a national resistance." Well, if this sounds crazy, it probably is. Western countries have committed thousands of soldiers and billions of dollars to oust Taliban insurgents from Kabul and to keep Afghanistan's government from being overrun, yet Karzai speaks as if their sacrifice is not the reason he's still in office. The question now, even as the United States commits tens of thousands of more soldiers to the battle, is whether the president is listening.