In Afghanistan, rage at young lovers

Wednesday 31 July 2013

Herat, Aug 1 (Newswire): The two teenagers met inside an ice cream factory through darting glances before roll call, murmured hellos as supervisors looked away and, finally, a phone number folded up and tossed discreetly onto the workroom floor.

It was the beginning of an Afghan love story that flouted dominant traditions of arranged marriages and close family scrutiny, a romance between two teenagers of different ethnicities that tested a village's tolerance for more modern whims of the heart. The results were delivered with brutal speed.

This month, a group of men spotted the couple riding together in a car, yanked them into the road and began to interrogate the boy and girl. Why were they together? What right had they? An angry crowd of 300 surged around them, calling them adulterers and demanding that they be stoned to death or hanged.

When security forces swooped in and rescued the couple, the mob's anger exploded. They overwhelmed the local police, set fire to cars and stormed a police station six miles from the center of Herat, raising questions about the strength of law in a corner of western Afghanistan and in one of the first cities that has made the formal transition to Afghan-led security.

The riot, which lasted for hours, ended with one man dead, a police station charred and the two teenagers, Halima Mohammedi and her boyfriend, Rafi Mohammed, confined to juvenile prison. Officially, their fates lie in the hands of an unsteady legal system. But they face harsher judgments of family and community.

Ms. Mohammedi's uncle visited her in jail to say she had shamed the family, and promised that they would kill her once she was released. Her father, an illiterate laborer who works in Iran, sorrowfully concurred. He cried during two visits to the jail, saying almost nothing to his daughter. Blood, he said, was perhaps the only way out.

"What we would ask is that the government should kill both of them," said the father, Kher Mohammed.

The teenagers, embarrassed to talk about love, said plainly that they were ready for death. But they were baffled by why they should have to be killed.

Mr. Mohammed, who is 17, said: "I feel so bad. I just pray that God gives this girl back to me. I'm ready to lose my life. I just want her safe release."

Ms. Mohammedi, who believes she is 17, said: "We are all human. God created us from one dirt. Why can we not marry each other, or love each other?"

The case has resonated in Herat, in part because it stirred memories of a brutal stoning ordered by the Taliban last summer in northern Afghanistan.

A young couple in Kunduz was stoned to death by scores of people — including family members — after they eloped. The stoning marked a brutal application of Shariah law, captured on a video recording released online months later. Afghan officials promised to investigate after an international outcry, but no one has faced criminal charges.

The immediate response to the violence in Herat was heartening by comparison. Top clerics declined to condemn the couple. Police officers risked their lives to pull the two teenagers to safety and deposit them into the legal system, rather than the hands of angry relatives. And the police reported that five or six girls had fled the city with their boyfriends and fiancés in the weeks after the riot.

After discussing the case, the provincial council decided that Mr. Mohammed and Ms. Mohammedi deserved the government's protection because neither was engaged, and because each said they wanted to get married.

"They are not criminals, even if they have committed sexual activities," said Abdul Zahir, the council's leader.

But so far, their words have not freed either of the teenagers or lent them any long-term security.

Ms. Mohammedi was initially taken to the only women's shelter in this province of more than 1.5 million people, but the police transferred her quickly to the city's juvenile detention center, a sun-washed building where about 40 girls and 40 boys sleep in separate dormitories. The police said they had referred the teenagers' cases to prosecutors.

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Big majority want SAS troops brought home - poll

Wellington, Aug 1 (Newswire): Two out of three New Zealanders want the country's SAS soldiers in Afghanistan to come home when they finish their tour of duty in March, a Herald-DigiPoll survey has found.

Prime Minister John Key has repeatedly said he expects the 38 elite soldiers to return from Afghanistan in March - but he has not closed the door on extending the mission.

"The time for our men to be serving in Afghanistan in terms of the SAS has to come to an end because at one point, they're only a small unit, and they need to regroup and need to have some time back in New Zealand," Mr Key said in an interview on TVNZ's Q+A programme before going on holiday last week.

A spokeswoman for Mr Key said his position had not changed - that his "expectation" was that the SAS would return in March.

Almost a quarter - 23.1 per cent - of survey respondents thought the SAS should stay in Kabul beyond March.

But 63.3 per cent said they should be withdrawn as scheduled, and 13.6 per cent said they did not know.

The SAS troops are based in Kabul and have been training and mentoring the Crisis Response Unit, an Afghani force that responds to incidents including terrorist attacks.

In recent attacks, the fighting has escalated and the SAS has stepped in.

Last month the SAS intervened in a three-hour gunfight with Taleban insurgents who had stormed the home of Jan Mohammed Khan, a close adviser to President Hamid Karzai.

The previous month, it played an integral part in ending a night-long assault by nine insurgents on the Inter-Continental Hotel in Kabul.

The Labour and Green parties oppose the SAS deployment because they believe the troops are helping a corrupt regime that does not have the trust and confidence of its people.

The SAS did three six-month tours of duty in Afghanistan between 2001 until 2005.

They returned in 2009 and the latest posting was extended to March, although the number of soldiers involved was halved.

The SAS had wanted to stay on, and Mr Key has said some soldiers had since expressed a wish to continue beyond March.

But Mr Key has said the SAS were not US guns for hire.

"I made that decision to send the SAS back to Afghanistan. I made it with my eyes open, and I made it very clearly and deliberately, and it was because I believed that New Zealand had to demonstrate that it was taking its responsibilities seriously as it came to being global citizens."

New Zealand also has a provincial reconstruction team in Afghanistan, based in Bamiyan province.

It will be gradually withdrawn between now and 2014 as transition of power to local authorities takes place.

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Unintended star of ‘Restrepo’ returns to Afghanistan

Asmar, Aug 1 (Newswire): Sebastian Junger's best-selling book "War" reconstructs in visceral detail a day in 2007 when Taliban insurgents ambushed a U.S. platoon in the Korengal Valley of eastern Afghanistan.

In one scene, then-Pvt. Misha Pemble-Belkin runs through sheets of gunfire to aid Spc. Carl Vandenberge, who is bleeding out after a bullet has severed the brachial artery in his left arm.

Pemble-Belkin starts stuffing the wound with Kerlix bandages until he's knuckle-deep in Vandenberge's huge arm. Vandenberge is soaked with blood from his boots to his collar, and soon Pemble-Belkin is, too. When he cuts the sleeve off Vandenberge's uniform, two or three more cups of blood spill out.

"You could see it in his face that he's slowly dying," Pemble-Belkin said.

Pemble-Belkin's actions saved Vandenberge's life. However, death poached his comrades more than once during the platoon's 15-month tour in Kunar province.

The first was Pfc. Juan Restrepo, 20. His surname supplied the title of last year's Oscar-nominated documentary, co-directed by Junger, that parallels "War" in recounting the unit's Sisyphean slog up and down the walls of the Korengal.

"Restrepo" balances footage of firefights and post-deployment interviews with the soldiers, who named an observation post for their fallen friend, a medic. Describing the privations of war, Pemble-Belkin, his sleepy brown eyes holding steady on the camera and his voice a gentle whir, emerges as the film's conscience.

Audiences might have assumed he forever exiled himself from Afghanistan's untamed borderlands after his tour ended in 2008. Instead, as one year away turned into a second, time pried open his desire to return.

"I wanted to come back to Kunar," he said as the last orange embers in the July evening sky darkened above Combat Outpost Monti in Asmar. "I know the terrain, I know how the enemy fights, I know how to react to them. I know how to survive."

Asmar huddles beside the Kunar River less than 10 miles from Pakistan in a narrow valley trapped by the Hindu Kush mountains. Granite peaks topping 6,000 feet surround the base like enormous shark fins.

Pemble-Belkin, 25, arrived here in April as a sergeant and team leader with the 3rd Brigade Combat Team of the 25th Infantry Division. His rank and role have changed since he left the Korengal, 30 miles to the southwest, as a private and radio operator with the 503rd Infantry Regiment of the 173rd Airborne Division.

"You've got a lot more responsibility, a lot more weight on your shoulders when you're in charge of soldiers," he said. "If you mess up or if one of them messes up when you're outside the wire, they might take a round."

At 6-foot-1, with scythe-long arms and a shaved, marble-round head, Pemble-Belkin appears taller in person than on-screen, and his scarecrow frame of three years ago has thickened with muscle across his chest and shoulders.

Likewise, from his perspective, the country to which he deployed again looks different.

"It feels like the war is being won," he said. "All they show on the news back home are people dying. Yes, people are still dying, but at the same time, the fighting has died down."

His belief that progress has occurred helps explain his support for the ongoing withdrawal of U.S. troops from Afghanistan. As he put it, "I think this country is ready to deal with its own [expletive]."

The amount and intensity of combat his unit endured over 15 months in the Korengal might be unequaled in the annals of the Afghanistan war.

Three years later, while enemy contact in the Kunar River Valley is less sustained by comparison, the Taliban-led insurgency continues to roil the province. More than 10 soldiers in Pemble-Belkin's Company B platoon have been wounded over the first third of its tour, though none on his team.

"It isn't like it was last time with firefights — the attacks here are usually from farther out," he said. "But there are a lot of mortars and rockets, so you've got to be ready."

No small number of troops in Kunar and across eastern Afghanistan revere "Restrepo" and "War" as totems of their own experience. Pemble-Belkin's team has learned the benefits of being led by a man who appeared in the film and book.

"He can tell you exactly what to expect before a mission because he knows this area so well," said Spc. Steven Schwigert, 24, of Detroit. "He's always teaching us something — about the terrain, how (insurgents) maneuver."

Schwigert and Pfc. Kevin Amick first met Pemble-Belkin last year at Schofield Barracks in Hawaii, the company's U.S. base. "I was like, 'Hey, is that the guy from 'Restrepo?'?" said Amick, 21, of Baltimore.

"I didn't know what to expect, but he's the same as in the movie — cool, calm and collected," Amick added. "Even when we're getting shot at, he doesn't flip out."

Those attributes were clear to Junger during the eight months he spent reporting and filming in Kunar.

"He was very calm, competent and never complained," Junger said in an email. "He is completely un-macho but also very brave and a very good soldier. Other soldiers like him for the same reasons that civilians do."

After his first tour, Pemble-Belkin went home to Hillsboro, Ore., outside Portland, where his parents moved from Detroit when he was a toddler.

He had re-enlisted in Afghanistan and planned to stay with his friends in the 173rd Airborne. But with about half the unit leaving the Army after the punishing hitch in Kunar, he moved to Fort Polk, La., to join the 509th Airborne to train soldiers heading to Afghanistan.

In spring 2009, he packed a duffel bag and rode his motorcycle 2,400 miles from Oregon to Louisiana. He shivered through the Sierra Nevada in Northern California before thawing in the neon oasis of Las Vegas, then burned across the high desert of Arizona and New Mexico and the scrubland of Texas. The country's vastness offered an antidote to the captivity of the Korengal.

"We had limited computer access, we had limited telephone access," Pemble-Belkin said. "You got to the point where you thought the valley was the only thing in the world."

In a sense, he hauled that rugged, restive gulch with him to Fort Polk, playing the part of Taliban insurgent while leading training exercises. After more than a year of simulating scenarios of a war in which he had fought, he craved a second tour.

"I got tired of seeing units come through and then deploying. I felt like I wasn't doing anything anymore," he said. "I'd rather be back here, where the fight is, instead of sitting back there."

Pemble-Belkin received permission to join a company deploying to Kunar. He wound up with the 25th Infantry Division in Hawaii early last year, not long after "Restrepo" won the best documentary award at the Sundance Film Festival.

As buzz for the movie amplified, he attended promotional screenings with co-directors Junger and Tim Hetherington. Sharing his experiences with audiences proved cathartic.

Memories of friends claimed by the Korengal had trailed him home, triggering sporadic "night terrors" that jarred him awake. On other occasions, his wife, Amanda DeVos, found him sleeping under a makeshift fighting position he built from furniture and blankets in the middle of the night.

"Seeing the movie and talking about it actually helped me," Pemble-Belkin said. "It kind of gave me a chance to work through things."

If "Restrepo" has raised his visibility within the military, he passes mostly unrecognized through the civilian world — except in Hollywood, as he discovered in February when he accompanied Junger and Hetherington to the Oscars.

At the Vanity Fair after-party — "Restrepo" lost to "Inside Job" — the likes of Justin Timberlake, Josh Brolin and Kevin Spacey sought out Pemble-Belkin to discuss the film. Tom Hanks knifed through a crowd to reach him.

"I know who you are," Hanks said. "I just want to say thank you."

The two men had talked for several minutes when the actor remarked on the soldier's composure. "You don't seem nervous at all," Hanks said.

"Why would I be?" Pemble-Belkin replied. "You're just a person like me. I'm about to deploy to Afghanistan two months from now. I'm a little more nervous about that."

The thrill of walking the red carpet at the Oscars gave way to mourning only weeks later when Hetherington, a veteran war photojournalist, was killed while covering the revolution in Libya. "It was shocking," Pemble-Belkin said. "But the one thing you can say is that he died doing what he loved."

His decision to sign up for a second tour, as much as Hetherington's willingness to travel again and again to violent corners of the world, might baffle those unexposed to war. Junger, for one, is unsurprised.

"I think he returned because he missed the urgency and sense of importance of being in a combat environment," said Junger, who remains in contact with Pemble-Belkin. "I think you can miss those things and still have a 'sensitive' side."

So the erstwhile private known to his platoon mates in the Korengal as Butters — short for Peanut Butter, a nickname derived from the initials of his last name — is back in Afghanistan as Sgt. Pemble-Belkin.

"He provides confidence to his guys because he knows how to survive," said Capt. Michael Kolton, 28, of Fairfax Station, Va., who commands Company B out of Combat Outpost Monti. "Not just physically, but emotionally, spiritually, mentally. I think he saves lives in that platoon."

Other soldiers sometimes tease Pemble-Belkin about his big-screen fame, calling him a "war hero," a term strangers have used in earnest when they meet him. He resists the praise. For him, the legacy of "Restrepo" belongs to the soldier whose name inspired its title, his friend stolen by the Korengal.

"What matters about the movie is that he'll never be forgotten," Pemble-Belkin said. "I wish it could be that way for every single soldier who's been lost."

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US report finds security deteriorating in Iraq

Baghdad, Aug 1 (Newswire): Over the past year, security in Iraq has deteriorated and electricity shortages and corruption have continued unabated, according to a report by a special inspector appointed by Congress to oversee Iraq's reconstruction.

The report, released five months before the United States is scheduled to withdraw 47,000 troops from Iraq, paints a bleaker picture of the country's stability than assessments by diplomatic officials.

"Iraq remains an extraordinarily dangerous place to work," said Stuart W. Bowen Jr., who has run the Office of the Special Inspector General for Iraq Reconstruction since its creation in 2004.

"Buttressing this conclusion is the fact that June was the deadliest month for U.S. troops in more than two years," he added. "Shia militias — possibly armed and trained by Iran — were responsible for some of the lethal attacks."

In particular, Mr. Bowen said that Diyala Province, a region east of Baghdad that is one of the most violent battlegrounds for sectarian violence, remained unstable. He added that local officials were extremely pessimistic about security and the economy.

"In July meetings about the security situation the province's chief prosecutor remarked that every time he steps outside his house, it 'is a walk into the unknown,' " the report said.

There have been several significant attacks in Diyala in recent months. And on Saturday, at least nine civilians were wounded in two separate attacks in the province, local security officials said.

The report said that Iraqis had significantly increased their use of electricity over the past two years but that the supply had remained the same and significant power shortages continued. Investigators looking into corruption by the Iraqi government "remain stymied by political resistance and lack of capacity and have difficulty pursuing cases involving complex crimes and high-level officials," the report said.

It also offered a cautious view of State Department plans for Iraq's development, mentioning that the training of the Iraqi police force "will be challenging," in part because it will include only 200 advisers based at three sites across the country's 10 provinces.

Reiterating statements Mr. Bowen made earlier this year, the report said that State Department officials had thwarted his office's attempts to audit the program. A State Department spokesman in Washington declined comment; department officials have contended that Mr. Bowen's office does not have jurisdiction over their operations after Oct. 1.

Some Iraqi officials in Baghdad objected to the report's assessment of their country's security situation. "The report is exaggerated," said Hussain al-Asadi, a member of Parliament from Prime Minister Nuri Kamal al-Maliki's State of Law bloc. "There are failures and shortcomings in the government and the security forces, but it is not as bad as the report says it is."

He added, "Such reports have meaning inside America, but in Iraq it has no impact."

Also on Saturday, Mr. Maliki gave a speech before Parliament about shrinking the Iraqi government. Mr. Maliki had been under pressure to reduce the budget in response to protests in February calling for a more accountable government. After the speech, Parliament voted to eliminate 14 departments, including the ministers of state for marshes, tribal affairs and Parliament affairs.

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The man behind the anti-shariah movement

Nashville, Aug 1 (Newswire): Tennessee's latest woes include high unemployment, continuing foreclosures and a battle over collective-bargaining rights for teachers.

But when a Republican representative took the Statehouse floor during a recent hearing, he warned of a new threat to his constituents' way of life: Islamic law.

The representative, a former fighter pilot named Rick Womick, said he had been studying the holy Quran. He declared that Shariah, the Islamic code that guides Muslim beliefs and actions, is not just an expression of faith but a political and legal system that seeks world domination. "Folks," Mr. Womick, 53, said with a sudden pause, "this is not what I call 'Do unto others what you'd have them do unto you.' "

Similar warnings are being issued across the country as Republican presidential candidates, elected officials and activists mobilize against what they describe as the menace of Islamic law in the United States, the New York Times reported.

Since last year, more than two dozen states have considered measures to restrict judges from consulting Shariah, or foreign and religious laws more generally. The statutes have been enacted in three states so far.

Voters in Oklahoma overwhelmingly approved a constitutional amendment last November that bans the use of Islamic law in court. And in June, Tennessee passed an antiterrorism law that, in its original iteration, would have empowered the attorney general to designate Islamic groups suspected of terror activity as "Shariah organizations."

A confluence of factors has fueled the anti-Shariah movement, most notably the controversy over the proposed Islamic center near ground zero in New York, concerns about homegrown terrorism and the rise of the Tea Party. But the campaign's air of grass-roots spontaneity, which has been carefully promoted by advocates, shrouds its more deliberate origins.

In fact, it is the product of an orchestrated drive that began five years ago in Crown Heights, Brooklyn, in the office of a little-known lawyer, David Yerushalmi, a 56-year-old Hasidic Jew with a history of controversial statements about race, immigration and Islam. Despite his lack of formal training in Islamic law, Mr. Yerushalmi has come to exercise a striking influence over American public discourse about Shariah.

Working with a cadre of conservative public-policy institutes and former military and intelligence officials, Mr. Yerushalmi has written privately financed reports, filed lawsuits against the government and drafted the model legislation that recently swept through the country — all with the effect of casting Shariah as one of the greatest threats to American freedom since the cold war.

The message has caught on. Among those now echoing Mr. Yerushalmi's views are prominent Washington figures like R. James Woolsey, a former director of the C.I.A., and the Republican presidential candidates Newt Gingrich and Michele Bachmann, who this month signed a pledge to reject Islamic law, likening it to "totalitarian control."

Yet, for all its fervor, the movement is arguably directed at a problem more imagined than real. Even its leaders concede that American Muslims are not coalescing en masse to advance Islamic law. Instead, they say, Muslims could eventually gain the kind of foothold seen in Europe, where multicultural policies have allowed for what critics contend is an overaccommodation of Islamic law.

"Before the train gets too far down the tracks, it's time to put up the block," said Guy Rodgers, the executive director of ACT for America, one of the leading organizations promoting the legislation drafted by Mr. Yerushalmi.

The more tangible effect of the movement, opponents say, is the spread of an alarmist message about Islam — the same kind of rhetoric that appears to have influenced Anders Behring Breivik, the suspect in the deadly dual attacks in Norway on July 22. The anti-Shariah campaign, they say, appears to be an end in itself, aimed at keeping Muslims on the margins of American life.

"The fact is there is no Shariah takeover in America," said Salam Al-Marayati, the president of the Muslim Public Affairs Council, one of several Muslim organizations that have begun a counteroffensive. "It's purely a political wedge to create fear and hysteria."

Anti-Shariah organizers are pressing ahead with plans to introduce versions of Mr. Yerushalmi's legislation in half a dozen new states, while reviving measures that were tabled in others.

The legal impact of the movement is unclear. A federal judge blocked the Oklahoma amendment after a representative of the Council on American- Islamic Relations, a Muslim advocacy group, sued the state, claiming the law was an unconstitutional infringement on religious freedom.

The establishment clause of the Constitution forbids the government from favoring one religion over another or improperly entangling itself in religious matters. But many of the statutes are worded neutrally enough that they might withstand constitutional scrutiny while still limiting the way courts handle cases involving Muslims, other religious communities or foreign and international laws.

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Oslo massacre sparks multicultural debate in Europe

Berlin, Aug 1 (Newswire): Europeans are debating immigration and multiculturalism with new urgency after the massacre of 77 people in Oslo, victims of a mass murderer who says he wanted to ignite a crusade against Islam.

Anders Behring Breivik, who has confessed to the slayings but has pleaded not guilty to the crimes in court, said that multiculturalism is ruining Europe. German Chancellor Angela Merkel in October and British Prime Minister David Cameron in February said it had failed, a US media report said.

What's more, anti-immigration and anti-Islam political groups have made gains in parliaments across Europe, while countries like France and Belgium have banned Islamic attire such as burqas, headscarves and veils — moves that challenge the European ideal of liberal, tolerant society.

"There is a lack of open and honest debate on immigration issues, and it would be [wrong to dismiss] this man [Mr. Breivik] and his unhappiness with immigration pertaining only to someone on the margins of society," said Lilit Gevorgyan, an analyst in the London office of IHS Global Insight, an international economic analysis think tank.

"Society itself [must] face this issue and deconstruct the often scare-mongering arguments that the right wing bring," she said.

German political scientist Florian Hartleb notes that populist right-wing groups using anti-Islam rhetoric are making gains in European governments, including famously tolerant Scandinavia. He says "multiculturalism has [offered] a certain kind of vision" for Europe over the years.

"But there has been a very negative debate on this topic - especially combined with Islamism," says Mr. Hartleb, who specializes in populism at the Center for European Studies, the Brussels-based think tank of the center-right European People's Party. "This anti-Islam topic is a winning formula for right-wing groups."

Though multiculturalism has taken on a generally negative connotation in Europe, it's meaning differs according to the political perspective of the person using the term, analysts say.

"Left of the center or center-right governments like you have in [Great Britain] are all converging on the same point, which is that multiculturalism … has got out of hand," says British author Alana Lentin, who co-wrote "Crises of Multiculturalism: Racism in a Neoliberal Age.

"The liberal approach is that this has caused separation between different groups of people, which is negative and we need more integration — which is a code word for assimilation — and the rightist version of that is that we need a return to very strong national values, away from cultural diversity and so on."

Muslims are the focus of these debates. According to the Pew Foundation, Muslims number about 16 million in the European Union and account for about 2 percent to 4 percent of the populations of most Western European countries.

In countries such as France, Germany and Britain, they migrated from former colonies or came as "guest workers" since the 1960s to fill labor shortages in booming economies. Countries such as those in Scandinavia have taken in refugees from Iraq and other trouble spots. Recently, Italy and France have faced increasing immigration from Tunisia and Libya.

Many have accused Muslim immigrants of not doing enough to assimilate to their adopted countries. Flashpoints between immigrant and host communities have centered on wearing veils and building mosques, obvious symbols of a non-Christian culture in Europe.

But some say the drive for assimilation is unrealistic due to discrimination against immigrants and inequalities in education, housing and the labor market. "On the one hand, people were being told that they have to assimilated, while on the other hand, they were being told, well, 'You're never going to actually get the same rights as everyone else, no matter how hard you try,'" says Ms. Lentin.

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US growth tepid in spring quarter

Washington, Aug 1 (Newswire): The US economy inched ahead at a 1.3 percent annual growth rate last spring, held back by soaring gasoline prices and disruptions in manufacturing caused by the March earthquake/tsunami in Japan.

The tepid growth rate reported by the Commerce Department Friday morning follows an even more paltry performance of 0.4 percent growth in the first quarter — making the first half of the year the worst since the Great Recession.

Growth averaged a healthier 3 percent in 2010, but according to revisions published by the department, the downturn following the 2008 financial crisis was even deeper than previously thought, with the economy shrinking by a total of 5.1 percent rather than 4.1 percent.

Gas prices that touched record highs near $4 a gallon in May took a dramatic toll on consumer spending. Real spending, adjusted for gas-driven price inflation of over 3 percent, barely grew with a 0.1 percent gain in the spring quarter. That follows a more solid 2.1 percent gain in consumer spending in the first quarter.

The report comes as Congress and the White House remain deadlocked on a deal to raise the federal borrowing limit to avoid what the administration says would be a default on August 2.

 "There is absolutely no good news in this report and one would really hope that it will focus the minds of those in Washington on resolving the debt-ceiling issue as soon as possible," said David Semmens, economist at Standard Charter.

With lackluster growth prevailing in the first half of the year, analysts said the economy's performance likely only got worse during the summer quarter because the partisan standoff in Washington is further sapping confidence and spending by both consumers and businesses.

"What is worrisome is that each month in the quarter was weaker than the month before," said Chris Lowe, chief economist at FTN Financial. "We are looking at another slow quarter in the third quarter — but still positive, so no recession. At this point, growth is so close to zero that confidence is more important than it normally is and the distraction of the debt-ceiling fight could make a big difference. A government shutdown would have a big impact as well."

A 2.2 percent acceleration of federal spending contributed to growth in the spring quarter, which runs from April to June, but a pullback in government spending subtracted from growth in the winter, the department said.

Any shutdown of federal payments next month caused by Congress' failure to raise the debt ceiling would cause a sharp drop in federal spending and have a dramatic impact on the economy, analysts said. Under various budget plans circulating in Washington, further cuts in federal spending are likely to start detracting more from growth in any case, as Congress imposes stiff restraints on the government.

Cuts in state and local spending have been a significant drag on the economy since the recession and strongly pulled down growth during the spring, falling at a 3.4 percent rate for a second quarter in a row. The biggest drops in state and local spending since the recession reflected the end of federal support from the president's $800 billion stimulus plan.

A drop in motor vehicle production also held back growth during the spring, as the plants of Japanese automakers in the U.S. were unable to produce cars because of parts shortages caused by the earthquake in Japan. The decline in auto production subtracted 0.12 percentage points from growth in the spring after adding more than 1 percentage point in the winter.

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Some bankers never learn

New York, Aug 1 (Newswire): You'd think the mortgage bust would qualify as a teachable moment.

But some people refuse to learn from mistakes — a list that apparently includes certain mortgage bankers. Their industry is fighting a new rule that might prevent a repeat of the lending binge that helped drive our economy off a cliff.

In case you just arrived from another planet: America's mortgage mania was fueled by home loans with poisonous features that made them virtually impossible to repay. It was fun while it lasted, at least for the financial types who profited by making dubious loans and selling them to investors.

But the Dodd-Frank financial overhaul last year barred lenders from making home loans before determining that people could probably repay them.

Dodd-Frank also required regulators to define the characteristics of loans that would most likely be repaid. The idea was to ensure that banks had skin in the game when they bundled risky mortgages into securities.

The proposal was this: If a mortgage security contains only high-quality loans, the banks can sell the entire offering. If the investments included riskier mortgages, the underwriters must keep 5 percent of the issue on their own books.

Basically, Wall Street would have to eat a bit of its own cooking.

Earlier this year, the Federal Reserve, the Federal Deposit Insurance Corporation, the comptroller of the currency, the Securities and Exchange Commission, the Federal Housing Administration, the Federal Housing Finance Agency and the Department of Housing and Urban Development all agreed on what makes a mortgage most likely to perform well. They examined how different types of loans defaulted, and the attributes of the borrowers in question. Then they invited the public to comment on their proposal; that comment period ends tomorrow.

One attribute of safer loans, the regulators found, was that homeowners had made a down payment of at least 20 percent. Another was that their housing debt did not exceed 28 percent of their monthly income, and that their total debts did not exceed 36 percent.

In other words, regulators said, a relatively low-risk mortgage should look an awful lot like the ones that local banks made before the days of securitization on steroids. Regulators also said that the origination costs on low-risk mortgages should no more than 3 percent of the amount borrowed.

THE mortgage industry squawked. It would prefer that we return to the days of high-fee, anything-goes lending. That is not surprising. But what is surprising is that mortgage bankers are leaning on the same tired argument — that saner lending requirements will undermine the goal of expanding homeownership.

In a comment letter filed with regulators last week, David Stevens, the president of the Mortgage Bankers Association, warned that the requirements on down payments and debt-to-income ratios were "unnecessary and not worth the societal costs of excluding far too many qualified borrowers from the most affordable mortgage loans to achieve homeownership."

Mr. Stevens, who last March left his job as federal housing commissioner at the Department of Housing and Urban Development, didn't mention the enormous costs associated with reckless lending. We are still tallying the bills, but to date, taxpayers have funneled $154 billion to Fannie Mae and Freddie Mac. Investors have suffered even greater damage.

While we are discussing societal costs, let's not forget how minority borrowers and first-time homebuyers were the targets of predatory lenders who lured them into toxic loans loaded with fees.

A study issued last week on the widening wealth gap between minorities and white Americans points to the costs of predatory lending. Conducted by the Pew Research Center, a nonpartisan organization, the study noted that housing woes were the principal cause of precipitous declines in household net worth among both Hispanics and blacks from 2005 through 2009. The organization found that, adjusted for inflation, the median wealth of Hispanic households fell by two-thirds during that period. The wealth of black households declined 53 percent. The net worth of white households fell only 16 percent.

And yet, Mr. Stevens noted in his letter that the mortgage bankers were "working in harmony with a very wide coalition of consumer advocates, civil rights groups and other industry associations, to educate policy makers and legislators concerning this rule."

One wonders how people who have lost their homes because of abusive lending practices feel about their "advocates" forming an alliance with mortgage lenders on this issue.

Mr. Stevens also argues that restricting mortgage fees to 3 percent, as proposed, would hurt borrowers by reducing their access to credit. Noting that his association opposes excessive fees, he wrote that his group "knows of no data evidencing that points and fees have affected borrowers' ability to repay their loans."

He told a different story when he was at HUD overseeing the portfolio of loans insured by the F.H.A.

Testifying before Congress in May 2010, Mr. Stevens cited five years of F.H.A. data showing that loans in which the seller of the property helped defray a borrower's origination costs by more than 3 percent, known as a sellers' concession, experienced significantly greater default rates.

In 2008, for example, F.H.A.'s insurance claims on loans where sellers covered 3 percent to 6 percent of buyers' costs were 50 percent higher than claims on loans where concessions from sellers fell below 3 percent.

The higher concessions created "incentives to inflate appraised value," Mr. Stevens testified. In other words, high costs do have consequences.

Mr. Stevens, through a spokesman, declined to comment.

As the advocate of the mortgage banking industry, Mr. Stevens is entitled to express the industry's views. But it would be troubling if such arguments gained traction with regulators. In the years leading up to the crisis, the Mortgage Bankers Association and other financial trade groups persuaded regulators to postpone or water down rules that could have reined in subprime lending relatively early. We all know the consequences — and surely do not need to repeat past mistakes.

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Can Microsoft make you ‘bing’?

New York, Aug 1 (Newswire): Mike Nichols has a poster on his office wall. It shows the young Muhammad Ali glaring down at a fallen Sonny Liston, the bruising heavyweight who had seemed invincible — until Ali beat him, in 1964, in one of the biggest upsets in sports history, and then beat him again a year later.

"The triumphant underdog," Mr. Nichols says, nodding toward the wall.

The inspirational fight poster is fitting, because Mr. Nichols, a general manager at Microsoft, is a lieutenant in an underdog corporate army here. Its daunting mission is to take on the Google juggernaut.

Microsoft's assault on Google in Internet search and search advertising may be the steepest competitive challenge in business today. It is certainly among the most costly. Trying to go head-to-head with Google costs Microsoft upward of $5 billion a year, industry executives and analysts estimate.

As the overwhelming search leader, Google has advantages that tend to reinforce one another. It has the most people typing in searches — billions a day — and that generates more data for Google's algorithms to mine to improve its search results. All those users attract advertisers. And there is the huge behavioral advantage: "Google" is synonymous with search, the habitual choice.

Once it starts, this cycle of prosperity snowballs — more users, more data, and more ad dollars. Economists call the phenomenon "network effects"; business executives just call it momentum. In search, Google has it in spades, and Microsoft, against the odds, wants to reverse it.

Microsoft has gained some ground. Its Bing search site has steadily picked up traffic since its introduction two years ago, accounting for more than 14 percent of searches in the American market, according to comScore. Add the searches that Microsoft handles for Yahoo, in a partnership begun last year, and Microsoft's search technology fields 30 percent of the total.

Yet those gains have not come at the expense of Google. Its two-thirds share of the market in the United States — Google claims an even higher share in many foreign markets — has remained unchanged in the last two years. The share losers have been Yahoo and smaller search players.

The costs for Microsoft, meanwhile, keep mounting. In the latest fiscal year, ended in June, the online services division — mainly the search business — lost $2.56 billion. The unit's revenue rose 15 percent, to $2.53 billion, but the losses still exceeded the revenue.

Microsoft is a big, rich company. But investors are growing restless at the cost of its search campaign. In May, when David Einhorn, the hedge fund manager, called for Steven A. Ballmer, Microsoft's C.E.O., to be replaced, he pointed to the online unit as a particular sore spot.

Qi Lu, president of Microsoft's online services division, sees the situation this way: "To break through, we have to change the game. But this is a long-term journey."

MR. LU, 49, knows about long journeys — and persistence. His grandparents raised him in rural China, in a home without running water or electricity. A bright student, he won a scholarship to the doctoral program at Carnegie Mellon.

After stints at the Almaden Research Center of I.B.M. and at Yahoo, where he was in charge of its search and search ad technology, he joined Microsoft at the end of 2008. He was recruited by Mr. Ballmer, who assured him that Microsoft was committed to search and competing with Google for the long haul.

Paul Yiu came from Yahoo two years ago, impressed by Microsoft's approach to competing in search. A business and product manager, Mr. Yiu had spent most of his career in Silicon Valley, often working for Microsoft adversaries like Netscape and Oracle.

He explains that in the valley, with its job-hopping and start-up culture, there is a "renters' mentality": if things aren't working out, just move on. At Microsoft, he says, there is a "homeowners' mentality": a dedication to making things work.

"If you're in the expensive search game, you need to have a homeowners' mentality," Mr. Yiu says.

Microsoft's leadership knew years ago that becoming a real competitor to Google would take patience as well as dollars. In 2007, Mr. Ballmer met with Harry Shum, a computer scientist who led Microsoft's research lab in Beijing at the time. Mr. Ballmer, as Mr. Shum recalls, told him that the company wanted to make a concerted push in search and bring in leading technical experts and business managers.

"You spent 10 years in research, and now you'll spend the next 10 years in search," he remembers Mr. Ballmer saying to him.

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Coming soon: ‘Invasion of the walking debt’

Washington, Aug 1 (Newswire): America has always had an apocalyptic strain. Yet it also seems to believe that if, or when, The End comes, it will still come out on top.

During, say, zombie movies, the Americans identify with that tough guy on horseback — the survivor with the Stetson and the rifle. It's always the other guy, that poor sap sitting next to us, we think, who would become the half-eaten corpse.

Which, weirdly, just might explain the recent fascination with how bad things could become for the economy if the United States lost its triple-A credit rating.

Wall Street is worried that America's gilt-edged rating will slip away. Maybe not today. Maybe not tomorrow. But a reckoning, many economists say, will come, given the nation's staggering debts and dysfunctional politics. The possible repercussions include an even bigger budget deficit and higher borrowing costs for the government, businesses and consumers.

Just how far the shockwaves might travel is uncertain. So speculating about what an economic apocalypse might look like has become fashionable in both financial and political circles. Of course, for the millions of Americans who are out of work — some for years now — Armageddon is already here. Maybe a little hellfire — if homeowners' insurance will cover it — is what we need to fix the mess.

But there is nothing so bad that it can't get worse. And so last year, to great fanfare, "When Money Dies: Germany in the 1920s and the Nightmare of Deficit Spending, Devaluation and Hyperinflation," first published in 1975, was reissued and found a cult following inside the Beltway and among hedge funds.

In "Zone One," a forthcoming novel by the Pulitzer Prize finalist Colson Whitehead, a virus turns most of humanity into flesh-eating crazies; the narrator hunts stragglers around Wall Street. In "The Walking Dead," the hit television series set in a zombie-infested America, an image of Atlanta's abandoned financial district conjured an end-of-world vibe. Nothing says apocalypse, apparently, like a city without functioning A.T.M.'s.

But for all of our serious economic problems — persistent high unemployment, spreading home foreclosures, the risks that bad policy, bad luck or both will send the economy back into recession — the United States of 2011 is nowhere near as bad as, say, the Vienna of 1918.

"When Money Dies" charts the travails of people like Anna Eisenmenger, who bartered her dead husband's gold watch for potatoes, watched her malnourished grandson develop scurvy and saw neighbors attack mounted policemen so they could slaughter and eat the horses. Next to the Weimar Republic, higher interest rates on credit cards — a likely outcome of the current debt bickering — seem tolerable.

Indeed, Raghuram G. Rajan, an economist at the University of Chicago, argues that even if the United States were to default on its debt briefly, the world would mostly keep calm and carry on. Americans' lives probably wouldn't change markedly, he says. The more troubling and longer-lasting issue would be the United States' loss of credibility among investors and overseas sovereign wealth funds.

"A failure to compromise sends a signal to the world that U.S. politicians can't get their act together, and this nation might not be the best choice for guiding the international economy," Mr. Rajan says. "The real risk is that investors will start looking for another country as the world's financial standard-bearer."

Which raises the troubling possibility that what is happening now could stretch on for years. People could remain out of work, businesses could be starved of capital and politics could impede a lasting economic recovery.

At least killing zombies feels like a job.

Debt troubles have come and gone in this country, and not only on Capitol Hill. In the 1970s, New York City defaulted on its debt, and yes, the consequences were painful. Enrollment plummeted at City University campuses, which until then had offered free education. Seven thousand police officers were laid off. Crime skyrocketed. Services for the poor disappeared.

But in the wake of that crisis, the city started changing business regulations and tax structures, setting the stage for a building boom. As blue-collar manufacturing jobs evaporated, in came white-collar jobs in finance, real estate and so on.

Out of the ashes of default, the yuppies rose — and, eventually, the banking and hedge fund classes that helped give us the late, great bubble.

On second thought, maybe we're better off with the undead.

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Sure cure for the debt problem: Economic growth

New York, Aug 1 (Newswire): It seems remarkable now, with all the End Times talk of debt ceilings and default, but it was only 11 years ago that the owners of that electronic totem, the Durst family, simply pulled the plug.

The clock, a fixture since 1989, went dark after the federal government ended its 2000 fiscal year with a record $236.4 billion budget surplus.

Today, well — you know. We face the largest budget deficit the nation has ever known: $1.6 trillion, the equivalent of about 11 percent of our economy. And, whatever Washington does, many economists say the situation will grow only worse, particularly as Americans age and Medicare costs spiral higher.

But there is, in theory, a happy solution to our debt troubles. It's called economic growth. No need to raise taxes or cut programs. Just get the economy growing the way it used to.

Good luck with that. Growth is in short supply these days, as new, dismal numbers underscored on Friday. Revised data showed that the recession took an even bigger bite of the economy than we thought. And economists are sizing up the risks of another recession.

"The basic issue is that the U.S. is on an unsustainable fiscal track," says Dean Maki, the chief United States economist at Barclays Capital. "From that point, none of the choices are fun." The most obvious choices, Mr. Maki says, are to reduce spending (ouch), raise taxes (yuck), let inflation run (gasp) or default (thud).

We wouldn't need any of that if we could restore economic growth. If that happened, Americans would become richer and pay more taxes. Et voilà! — we'd pay down the debt painlessly.

Crazy as that might sound, particularly given Friday's figures, the possibility isn't some economic equivalent of that nice big farm where your childhood dog Skip was sent to run free. There are precedents.

Before its economy crashed, Ireland was a star of this sort of debt reduction. In the 1980s, Ireland's debt dwarfed its economy. Over the next two decades, though, that debt shrank to about a quarter of gross domestic product, largely because the economy went gangbusters.

"Ireland went from being, you know, the emerging market in a European context, to a very dynamic economy," says Carmen Reinhart, a senior fellow at the Peterson Institute for International Economics and co-author of "This Time Is Different," a history of debt crises.

The United States has done the same in the past, too. After World War II, gross federal debt reached 122 percent of G.D.P., the highest ratio on record. But over the next 40 years, it fell to about 33 percent. That wasn't because some blue-ribbon panel prescribed austerity; it was because the American economy became much, much richer.

The same happened during the prosperous 1990s, which began with deficits and ended with surpluses. Former President Bill Clinton is often credited for that turnabout, as he engineered higher tax rates. But most economists attribute the surplus years primarily to extraordinarily rapid growth.

It would be lovely to repeat that experience today, and send our federal debt off to that farm with Skip.

But the structure of America's federal spending is different now than it was in, say, the immediate postwar decades. Back then, growth helped to erase the debt. But remember that in the 1950s, the United States didn't have Medicare. The population was younger, and Americans didn't live as long.

Given the health spending obligations we face, and the debt overhang we're already dealing with, growth rates would have to acquire something like Ludicrous Speed, as in the movie "Spaceballs," to keep up. And, near term, even modest speed is unlikely.

Usually after a recession, growth snaps back quickly and the economy makes up for ground lost — and then some. That's not the case this time, at least so far. In the 60 years before the Great Recession, the economy expanded at an average annual rate of 3.5 percent. In the second quarter of this year, it grew at less than half of that pace, putting us further and further behind where we would be if the economy were functioning normally.

These doldrums won't last forever, but many predict that economic growth to come will be somewhat slower than it was before the recession, for many of the same reasons that our debt is growing so quickly — the aging of the population, for instance.

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A mobilization in Washington by Wall Street

Washington, Aug 1 (Newswire): Wall Street is no longer watching from the sidelines as the most polarizing political fight in years plays out on Capitol Hill. In the last few days, top executives have been in close contact with Washington in a last-ditch attempt to prod lawmakers toward a compromise by Tuesday, the administration's deadline to reach a deal.

Jamie Dimon, JPMorgan Chase's chief executive, raised concerns with Treasury Secretary Timothy F. Geithner about the standoff over the debt ceiling and its potential to disrupt the system through which JP Morgan and other big banks disburse federal payments. Mr. Geithner assured him that the Treasury and Federal Reserve had taken steps to keep the payment system functioning smoothly, according to individuals briefed on the call.

In addition, more than a dozen chief executives from the nation's biggest financial services firms wrote a joint letter to President Obama and members of Congress on Thursday warning of "very grave" consequences for the economy and the job market if an agreement wasn't reached.

It's not just chief executives who are now doing the talking, either.

Bankers have deluged Congressional staff members with research reports outlining the bleak consequences of a default, or even a downgrade of United States government debt by the major rating agencies. And in corporate America's version of grassroots mobilization, Allstate e-mailed 45,000 employees urging them to call their local members of Congress and demand a deal.

Hedge fund managers, normally among Wall Street's most secretive tribes, have been stepping out of the shadows, too.

Marc Lasry, a major Democratic fundraiser who manages the $14 billion Avenue Capital hedge fund, said he spoke to half a dozen members of Congress from both parties on Thursday and Friday with blunt warnings that failure to compromise on the debt ceiling risked permanently damaging the nation's financial standing.

"Over the last couple of weeks, everybody assumed it would get done," said Mr. Lasry. "It's only in the last couple of days that I've gotten worried it might not."

Not since 2008 have federal officials and bankers been so clearly aligned in their push for the same policies. Back then, the industry and regulators pressed Congress to pass legislation allowing the federal bank bailout at the height of the financial crisis.

"They both have the same interests at the end of the day," said Tom Block, a consultant and formerly the global head of government relations at JPMorgan Chase. "They both want the banking system to be safe and sound."

To be sure, with market turbulence almost certain to follow a default, Wall Streeters also want to safeguard bank profits and their own bonuses. Nevertheless, for much of the spring and early summer, while battle lines were being drawn by Republican and Democratic lawmakers, financial executives mostly stayed out of the fray.

According to lobbyists and executives, banks believed the two sides in Washington would ultimately find a way to make a deal. Plus, there were worries that being too outspoken might spook the financial markets. Most important, with the industry's image in tatters in the wake of the financial crisis and subsequent bailout, some bankers feared their involvement might actually be detrimental.

"Every time Wall Street raises its head, there are a lot of people ready to chop it off," said one senior banking industry official.

But as the deadline approached, anxiety began to take hold. A turning point came on July 11, when top officials from some of Wall Street's most powerful lobbying groups filed into an ornate conference room opposite Mr. Geithner's office on the third floor of the Treasury Building to make their case about the danger of inaction.

Several of the representatives, like Frank Keating of the American Bankers Association and John Engler of the Business Roundtable, were former governors with deep political connections. Others, including Robert S. Nichols of the Financial Services Forum and Leigh Ann Pusey of the American Insurance Association, are among the most powerful lobbyists in Washington.

"Everyone was on the same page," said Mr. Nichols. "We all said this had to get done and it was urgent."

Geithner told the group that anything they could do to get the debt ceiling lifted would be helpful, according to Mr. Nichols.

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Like Pantha Chowk, puppet govt unmoved by Parimpora traffic mess

Srinagar, Aug 1 (Newswire): Not only the City but even all roads leading to the held Srinagar seem to be in a mess.

If Pantha Chowk square, Valley's sole link to south Kashmir and Jammu faces chronic gridlocks, so is the plight at the other end of the suburb highway which connects to the north Kashmir and Muzaffarabad as traffic jams are a routine in the congested Parimpora-Shalteng stretch, Greater Kashmir reported.

The government's failure to get the road timely widened from the present single lane to four lane has been badly affecting the movement of vehicles, particularly in the peak hours when thousands of vehicles are seen struggling to make out.

Near Shalteng, the problem is that the single lane road provides a crossing towards Bandipora road and also towards the Baramulla highway, which furthers to frontier Uri, Kupwara and even Muzaffarabad.

Some three lakh vehicles ply on the highway everyday while the rush is most at the peak hours, the office opening and closing timings thereby furthering the congestion.

 The residents of Baramulla and other adjoining districts have often been complaining that their considerable time goes waste in the travel to Srinagar or back because of the jams enroute.

 "The problem is so chronic that one has to spare an hour for the gridlocks, which only prove detrimental for the development and prosperity of the people," said a Srinagar based lecturer working in Baramulla.

Patients being ferried to City hospitals, on the other hand, are the main sufferers of the problem.

 "One can imagine the plight of patient when the ambulance ferrying him or her gets stuck in a helpless situation," said a ambulance driver.

A Tata Sumo driver said given the Shalteng mess, the drivers tend to drive fast ahead simply to compensate the time loss. And this is what proves deadly.

 Scores of mishaps take place on the highway while officials says its mostly because of over speeding.

Interestingly, given the routine rush coupled with this year's inflow of tourist vehicles, heading towards Gulmarg and other resorts, the VIPs driving down the Parimpora highway have fallen prey to the congestion on the highway.

 A few weeks back the former puppet Chief Minister Mufti Muhammad Sayed and his party colleague Muhammad Dilawar Mir got held up for some two hours near Parimpora while in the latest Law and Parliamentary Affairs minister Ali Muhammad Sagar was seen tasting the Aam Aadmi's problem.

Despite the intervention of Divisional Commissioner Dr Asgar Hassan Samoon, who sought a gear up in the work, the concerned authorities seem to be sleeping over the issue.

Ironically instead of prioritizing the widening near the choked Shalteng chowk, more work is being done away from the site.

 This is evident from the fact that a pump station in the middle of the road is yet to be relocated from the site.

Observers said immediate widening of the road stretch near the bottleneck would provide relief from the traffic jams. And interestingly, as per officials, doing it shouldn't be that time consuming because the building structures on either sides of the highway have already been cleared.

 "All what is required is timely metalling of the to be widened portion followed by macadamization," said a traffic expert who has studied the problem in the area.

While the Traffic police has deployed some half a dozen cops for the traffic regulation, there "meager presence" helps, but little.
 "There's no denying the fact the traffic cops do there duty efficiently in the area but how can they make thousands of vehicles smoothly ply on the narrow road… This is humanly impossible an illogical," said a Srinagar based medico who goes to work in Tangmarg, everyday.

 And given this problem enroute even the SP City West, Dr Sunil Gupta is often seen himself trying get the traffic regulated.

 "The traffic jams here have at times been a cause of roadside brawls and we want to avoid such incidents," a senior police official said.

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Charri Mubarak taken to Srinagar temple

Srinagar, Aug 1 (Newswire): Charri Mubarak, the saffron-robed silver mace of Lord Shiva, was taken to the ancient Sharika Bhawani temple located in downtown occupied Srinagar as part of rituals connected with the annual Amarnath pilgrimage.

 Accompanied by a group of sadhus, the mace was carried this morning by its custodian Mahant Deependra Giri to the temple at Hari Parvat from its Dashnami Akhara abode in the heart of the city, Publicity Secretary of Mahadev Gir Dashnami Akhara Trust Ashok Giri said.
 
He said sadhus, who participated in the 'pujan' (prayers), prayed for everlasting peace in Jammu and Kashmir.

 The Charri was also taken to the historic Shankaracharya temple in the city yesterday for prayers on the occasion of 'Haryali-Amavasya', he said.

 As per an age old tradition, the 'Charri Mubarak' is being taken to various temples in the city and elsewhere before its scheduled departure for the 3,880 metre high cave shrine in the south Kashmir Himalayas.

 Rituals connected with the mace started with 'Bhoomi-Pujan' and 'Dhawajarohan' ceremonies at Pahalgam on July 15, marking the commencement of the yatra.

 The mace would be offered special prayers on 'Nag-Panchami' at its abode in the city on August 4 before it joins the annual pilgrimage which is scheduled to conclude with the arrival of the holy mace at the cave shrine on August 13.

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3 women commit suicide in IHK

Srinagar, Aug 1 (Newswire): Three women, including a teenage girl, ended their lives by at different places in the held Valley, police said.

 A 22-year old girl of Panzalpora, Baramulla in north Kashmir consumed some poisonous substance at her home and was shifted to SMHS, Srinagar for treatment, where she died, a police spokesman said.
 
He said another 60-year woman of Wagila, Baramulla consumed poison and was shifted to Srinagar for treatment, where she died.

 Another 16-year old girl of Yaripora, Kulgam in south Kashmir consumed some poisonous substance last night. She was rushed to the hospital where doctors declared her brought dead.

The spokesman said that police have registered separate cases and started investigations to ascertain the motive behind the women taking such an extreme step.

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Tuberculosis advance: existing drugs can potentially target the disease's ability to spread

Islamabad, Aug 1 (Newswire): Often causing no symptoms in carriers of the disease, worldwide tuberculosis (TB) infects eight to ten million people every year, kills two million, and it is highly contagious as it is spread through coughing and sneezing. Now, researchers in Canada have found that existing drugs can potentially target the disease's ability to spread.

"It's a global health disaster waiting to happen, even here in Canada, but this new paradigm in TB research may offer an immediate opportunity to improve vaccination and treatment initiatives," explains Dr. Maziar Divangahi of McGill University and of the Research Institute of the McGill University Health Centre.

The ability of TB bacteria to persist in individuals with apparently normal immune systems implies that they have developed strategies to avoid, evade, and even subvert immunity.

The bacteria mainly enter the body through inhalation into the respiratory tract. Alveolar macrophages, a type of white blood cell residing in our lungs, initially recognize the bacteria and engulf them. This process is one of our immune system's defense mechanisms. However, TB has evolved into a parasite that can survive and replicate inside the macrophages until they burst out, spreading the infection.

The way infected macrophages die is a determining factor in the development of immunity to TB. Macrophages can induce apoptosis, a type of cell death which keeps their membrane intact, trapping and reducing bacterial viability. However, TB bacteria induce another type of cell death called necrosis. Necrosis causes cell death by disrupting the cell membranes, which enables the bacteria to escape the cell. It may help to visualize a box with broken walls.

The key to the fate of the macrophages is the balance between two kinds of eicosanoids. Eicosanoids are molecules that contribute to the control of our immune system. The genetic code of TB bacteria enables it to tip this balance in favor of necrosis, and human genetic analysis revealed that modification in eicosanoids production is associated with susceptibility or resistance to TB. Fortunately, drugs that target the production of eicosanoids are already in use for treating other inflammatory diseases, such as rheumatoid arthritis.

"The next steps will be to see exactly how these drugs can be used to treat TB," said Divangahi.

The research received funding from the Fonds de la Recherche en Santé du Québec and was published in Nature Immunology. Divangahi is affiliated with the Departments of Medicine and Microbiology/Immunology of McGill's Faculty of Medicine, with the Research Institute of the McGill University Health Centre, and with the Meakins-Christie Laboratory.

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Mechanism uncovered behind salmonella virulence and drug susceptibility

Islamabad, Aug 1 (Newswire): Researchers have discovered a novel mechanism in Salmonella that affects its virulence and its susceptibility to antibiotics by changing its production of proteins in a previously unheard of manner. This allows Salmonella to selectively change its levels of certain proteins to respond to inhospitable conditions.

Although the mechanism had not been recognized before, the scientists were intrigued to find evidence of a similar mechanism in all five kingdoms of life -- animals, plants, fungi, protista, and monera.

The findings were published in Molecular Cell. The senior author of the study is Dr. Ferric C. Fang, professor of microbiology, laboratory medicine, and medicine at the University of Washington (UW). Fang also directs the Clinical Microbiology Laboratory at Harborview Medical Center in Seattle.

The lead author is William Wiley Navarre, who began the study as a postdoctoral fellow in the Fang lab and is now an assistant professor at the University of Toronto.

Salmonella enters the gut when people eat contaminated food, and can sometimes spread to other parts of the body. Illness outbreaks and grocery recalls related to Salmonella are often in the news. Babies, young children, the elderly, and people with cancer or HIV are especially prone to severe illness from Salmonella.

Salmonella is adaptable and can withstand many of the body's attempts to fight it. The bacteria live and multiply in a special compartment inside the cells of an infected person or animal. Salmonella can alter its physiology as it moves from a free-swimming life to its residence in a host cell. Salmonella's metabolism also changes over time to make use of the nutrients available in the host cell, and to survive damage from the build-up of oxidants and nitric oxide in the infected cell.

While screening mutant Salmonella that were resistant to a form of nitric oxide that normally stops the bacteria from dividing, Navarre, Fang and their research collaborators found mutations in two little-known genes. These are the closely linked poxA and yjeK genes. In a number of bacteria, these two genes are associated with a third gene that encodes the Bacterial Elongation Factor P, which is involved in protein production.

The researchers discovered that these three genes operate in a common pathway that is critical for the ability of the Salmonella bacteria to cause disease and resist several classes of antibiotics. Salmonella with mutations in either the poxA gene or the yjeK genes, the study noted, appear to be nearly identical and show similar changes in proteins involved in metabolism. Strains with mutations in both genes resemble the single mutant strains, an observation that suggests the two genes work in the same pathway.

The mutant strains exhibited many abnormalities under stressful conditions.

"The wide spectrum of compounds that dramatically inhibited the growth of these mutant strains suggest that the defect lies in a general stress response," the researchers noted. The mutant bacteria measurably differed from the wild-type Salmonella under 300 different conditions. In addition, their aberrant production of virulence factors reduces their ability to survive in the host.

The researchers' analysis also suggests that the way poxA and yjeK modify the bacterial protein elongation factor is essential in the production of proteins that allow the bacteria to use alternative energy sources when they are deprived of nutrients, as occurs after they enter host cells.

Unexpectedly the researchers found that the Salmonella with mutations in poxA and yjeK continued to respire inappropriately under nutrient-poor conditions in which wild-type Salmonella cease respiration.

Perhaps the mutant strains don't know when to quit. Wild-type Salmonella might enter a state of suspended animation to weather harsh conditions, whereas the mutants fail to respond properly to environmental stress. The fact that the mutants continue to respire when they are in dire straits might lead to the production of toxic oxygen-containing compounds.

"This might explain," the authors suggested, "why the mutants are broadly sensitive to a large number of unrelated compounds and cellular stresses."

The researchers also noticed a resemblance between the astounding manner in which the poxA gene modifies the bacterial elongation factor to regulate stress resistance, and the way a similarly acting factor is regulated in plant and animal cells.

During the manufacture of a protein, transfer RNA, also called tRNA, normally places an amino acid at the end of a growing chain of protein building blocks. A certain type of enzyme normally hands the tRNA the amino acid for it to place. However, in this study, researchers have shown for the first time that the poxA enzyme steps in and directly attaches an amino acid to the Elongation Factor P protein, rather than to the tRNA.

Fang said, "Sometimes it seems as if the most basic discoveries in biology have already been made. It was fun and unexpected to learn something new about a process as fundamental as protein synthesis."

"This is an interesting illustration of molecular evolution," Fang continued. "This essential, but previously unrecognized mechanism, for regulating the production of proteins appears to have been conserved over evolutionary time and continues to take place in cells belonging to all five kingdoms of life."

Future studies in his lab will address the specific reasons behind the defective stress response in poxA- and yjeK-deficient bacteria and the explanation for its different effects on the amounts of individual proteins. The lab will also look further into the roles of the normal poxA and yjeK proteins, the intriguing way in which the bacterial elongation protein is modified, the apparent universality of this protein-modifying mechanism in living cells and its conservation throughout the course of evolution.
This research was supported by grants from the National Institute of Allergy and Infectious Diseases at the National Institutes of Health. Navarre also received support from the Damon-Runyon Cancer Foundation and the Canadian Institutes of Health Research.

In addition to Navarre and Fang, the scientists on the study are Shicong Zou, Jinglin Lucy Xie, and Runjan Kumar, all from the Department of Molecular Genetics at the University of Toronto; Herve Roy and Michael Ibba from the Department of Microbiology at The Ohio State University; Alexei Savchenko, Alexander Singer, and Elena Edvokimova from the Banting and Best Institute for Medical Research in Toronto; and Lynne R. Prost from the UW Department of Microbiology.

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New cellular 'armor' developed to prevent infection by aids virus

Islamabad, Aug 1 (Newswire): Research by the Consejo Superior de Investigaciones Científicas (CSIC) and led by Mr Félix Goñi, director of the Biophysics Unit at the CSIC-University of the Basque Country Mixed Centre, has led to the development of a novel method of attack against the AIDS virus.

The method involves creating a prevention system, i.e. an 'armour' in the cells that are likely to be infected and thus impede the virus from accessing them and starting to act on their immunological system.

The study, which appears in the journal Chemistry & Biology, published by Cell Press, lays down the bases of possible future pharmaceutical drugs that will enable combating the AIDS virus at its initial phase. Participating in the research, apart from Mr Goñi, was a team from the National Biotechnology Centre (CSIC-Universidad Autónoma de Madrid) and another from the Institute of Applied Chemistry of Cataloniaa (CSIC, Barcelona).

The research is based on the regulation of the fluidity of the cell membranes and seeks to avoid the phenomenon known as the fusion of membranes, a consequence of contact between the cell membranes and the membrane of the virus itself.

The membrane is the "coating" of the cell cytoplasm and which protects it from the outside, and which has a structure similar to that of the membranes of the AIDS virus.

When both membranes come into contact, and due to the fact that the cell membrane is very "fragile," an orifice is created and fusion occurs -- and a route is opened for the AIDS virus to enter, connect to a specific "receptor" of the cell and commence its viral activity.

What the researchers are seeking with this study is to strengthen the membrane structure, making it more rigid, in order to avoid this fusion of membranes and, thus, the inoculation of the cell by the AIDS virus.

Practically all treatment for the AIDS virus currently being applied is based on halting the progress of the virus once it is inside the host cell. There is but one treatment, commercially known as Enfurvitide, which attempts to stop the virus actually entering the cell. The research published in Chemistry & Biology comes to the same conclusion, but by a totally different and novel route.

"For the cell membranes and the virus to come together and this orifice be opened to allow the entrance of the virus, the membranes have to have a certain degree of fluidity, of mobility. We discovered a procedure to make the cell membranes more rigid. This could well give rise to a new pharmaceutical drug which makes the membranes more rigid and impede the entrance of the AIDS virus. Instead of the membrane being flexible, a kind of armour is established which makes the cell impenetrable," explained Félix Goñi.

The research started three years ago and has employed various techniques in the field of chemistry and molecular biology.

At the Institute of Applied Chemistry of Catalonia (CSIC, Barcelona), Ms Gemma Fabriàs has synthesised the GT11 molecule by means of organic chemistry synthesis techniques.

Santos Mañes, from the National Biotechnology Centre, studied the viral infection of the cells, and from the Biophysics Unit at the CSIC-University of the Basque Country work has been undertaken at molecular level to demonstrate that there are changes in the rigidity of the membranes when the GT11 molecule is incorporated into them, and that when the membranes are more rigid the virus cannot fuse with the cell membrane and, thus, from penetrating the cell. A highly important role was also placed by Mr José Luis Nieva, from the Biophysics Unit, in studying this fusion of the membranes induced by the AIDS virus.

This scientific discovery by this consortium represents, in the opinion of Mr Goñi, "a completely new means for attacking the virus, and which makes this original."

"There is medication, and which is working very well, to avoid the propagation of the virus once it is inside the cell. But to impede this inoculation in the first place, only one product (Enfurvitide) exists, but this drug is based on a completely distinct principle.

The idea of modifying the rigidity of the membranes is completely new and also demonstrating that, by equipping these membranes with greater rigidity, the AIDS virus cannot penetrate," stated Mr Goñi. This same strategy may well serve for other viruses with membrane, such as, for example, the flu virus.

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Three Ft. Bragg Paratroopers die in Afghanistan

Kabul, July 31 (Newswire): Military officials say three members of the 82nd Airborne Division have died in Afghanistan.

The Department of Defense announced that 27-year-old Sgt. Eric E. Williams of Murrieta, Calif., died in Pul-E Alam. No further details were available in his death.

Officials also said 21-year-old Pfc. Julian L. Colvin of Birmingham, Ala., and 27-year-old Staff Sgt. Richard L. Berry of Scottsdale, Ariz., died on July 22 from injuries suffered from an improvised explosive device.

Williams was assigned to the 3rd Battalion, 82nd Combat Aviation Brigade. Colvin and Berry were assigned to 508th Special Troops Battalion, 4th Brigade Combat Team.

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Kabul demands list from diplomats in anti-graft fight

Kabul, July 31 (Newswire): Afghanistan has asked major Western backers and diplomats to furnish a list of contractors they use with close ties to top Afghan officials as part of efforts to crack down on rampant corruption worrying international donors.

Graft remains one of the biggest headaches for President Hamid Karzai and Afghanistan's international backers, who demanded at a conference in Tokyo this month that the government combat graft as the price of future aid worth $16bn.

Karzai in turn has accused the international community of helping to fuel corruption and has asked foreign donors to stop awarding massive reconstruction projects to contractors linked to senior officials in his government.

"As part of fighting corruption outside the government, we have asked the US and UK embassies, and Nato authorities, to give us a list of names of major contractors related to senior officials," a senior government official said on condition of anonymity.

"We have made plans to fight corruption at all levels, within and outside the government."

Afghanistan is ranked as one of the most corrupt countries by the Berlin-based anti-corruption watchdog, Transparency International.

Much of the money has been siphoned from billions of dollars worth of aid and reconstruction projects, some awarded to contractors with ties to Karzai's extended family, damaging the president's own popularity.

"The contractors often misuse the names of senior officials and use that influence to win tens of millions of dollars they earn from the projects," the official said.

Karzai called last month, just ahead of the major donors' meeting in Tokyo, for parliament to do more to tackle graft and said "corruption has reached its peak in Afghanistan".

While the call fell short of Western hopes for tough action and prosecutions, his remarks were seen as one of the strongest commitments to fight graft since US-led Afghan forces toppled the Taliban government in late 2001.
Karzai promised he would bring administrative reforms from top to bottom in his government, a vow which was welcomed by the international community.

Karzai's chief spokesman, Aimal Faizi, said the decree on administrative reforms would be signed by Karzai "very soon" but rejected reports that some Cabinet ministers and provincial governors under a graft cloud would soon be sacked.

"Each ministry and government administration will be given a timeframe to introduce reforms, better governance, and most importantly tackle graft," Faizi said.

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Thirteen Afghan police "defect" to Taliban

Heart, July 31 (Newswire): An Afghan police commander and 12 junior officers have defected to the Taliban after poisoning seven comrades, government officials in the western province of Farah said.

The commander, named only as Mirwais, was in charge of a checkpoint in the Bala Boluk district when he and his unit defected to the Taliban and handed over their equipment and weapons, including military vehicles.

"He was a police commander for a checkpoint in Shewan village. He joined the Taliban with a Humvee, a Ranger (SUV), radios and 20 guns," said Abdul Rahman Zwandai, a spokesman for the Farah governor.

The seven police were poisoned because they refused to join the rebellion, he said. All were taken to the Farah hospital and an investigation would be launched.

Farah, bordering Iran, is one of western Afghanistan's most insecure provinces, although the west is relatively secure compared to insurgent strongholds in the east and south.

The defection was the first time that police had joined the Taliban and taken so much equipment with them, Zwandai said, and will worry Western backers looking to hand security to Afghan forces by the end of 2014.

But national intelligence officials denied reports in some Afghan media that two members of the country's High Peace Council, which leads government efforts to reconcile with the Taliban, had also defected to the insurgency.

"I'm not sure anyone from the HPC would have joined the Taliban," said National Directorate of Security deputy spokesman Shafiqullah Tahiri.

Mohammad Hashim Grani, who heads the Peace Council in southeast Zabul province, said earlier this week that HPC members Mawlavi Mohammad Aziz and Mawlavi Mohammad Zeba were still backing the government, despite going missing amid Taliban claims they had defected.

"They are in villages to infiltrate the Taliban and meet more and more people," Grani said. "Very soon they will turn back."

Afghan President Hamid Karzai and Pakistani premier Raja Pervez Ashraf said this week during talks in Kabul that Peace Council head Salahuddin Rabbani would soon travel to Pakistan for talks on the stalled Afghan peace process.

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Jessica Redfield Journalism scholarship fund reaches $20,000 goal in less than 24 hours

New York, July 31 (Newswire): A journalism scholarship fund set up by the family of Jessica Ghawi, one of the 12 people killed in the Aurora, Colo., theater shooting during a screening of "Dark Knight Rises," has reached its goal of $20,000--a day after a campaign seeking donations was launched.

The Jessica Redfield Sports Journalism Scholarship Fund "will be seed money for the scholarship to help send another upcoming young sports talent to study journalism," according to a website for the campaign. "Help us creates futures from such a tragedy." The campaign has received more than $24,000 in donations from more than 200 contributors so far.

Ghawi, an aspiring sportscaster and native Texan, moved to Colorado a year ago to pursue a career in sports journalism. The 24-year-old hockey blogger, who wrote under the name Jessica Redfield, was one of the first victims publicly identified in the massacre. She was present during last month's shooting at a Toronto mall—and blogged about the experience.

"She wanted to be on the media," Jessica's brother Jordan Ghawi told CNN. "She wanted to be doing these reports—and she is, just not in the way she would have liked it. So it is ... really hard."

Jessica will be cremated in Colorado and flown to Texas, Jordan said, where a memorial service is planned in San Antonio.

early $2 million has been raised by a network of nonprofits that are helping those injured in the shooting.

While Warner Bros. and Legendary Pictures are among the contributors, most who gave have asked to remain anonymous, according to Colorado Gov. John Hickenlooper's office.

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Opposites attract: Republican Don Young endorses Democrat Mazie Hironi in Hawaii

Washington, July 31 (Newswire): Rep. Don Young is anything but conventional. Still, the Alaska Republican appeared to take that reputation to a new level by crossing oceans and party lines to make a very unusual endorsement.

Young announced his endorsement of Democratic Rep. Mazie Hirono in the Hawaii Democratic Senate primary.

"Here's what's important, Hawaii: If you're looking for a United States Senator who doesn't just talk about 'bipartisanship,' but actually knows how to work with both Republicans and Democrats to get things done, Mazie Hirono will be that Senator," Young said in a new campaign ad poking fun at the two candidates' opposing ideologies.

Lawmakers in Hawaii and Alaska have long been linked by their status as outsiders to the lower 48 states. In this instance, Young is siding with Hirono who is up against former Rep. Ed Case, who rankled scores of establishment politicians in Hawaii as well as in Washington in 2006 by attempting to oust longtime Hawaii Democratic Sen. Daniel Akaka, who is retiring this year.

In a press release, the Hirono campaign touted the joint efforts between Hirono and Young on native education programs and their plans to assist farmers in their respective states.

Hawaii is typically a Democratic-leaning state where Democratic primaries are often the deciding contests. But there's one Republican who turns that trend on its head: Republican former Gov. Linda Lingle, who is running in this year's Senate race. Lingle's presence gives Republicans their ultimate best shot at overtaking the seat this fall, making Young's decision to endorse Hirono all the more unusual.

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33 sickened by salmonella linked to ground beef: CDC

London, July 31 (Newswire): A salmonella outbreak that has sickened 33 people in seven states appears to be linked to recalled ground beef produced by Cargill Meat Solutions, according to the U.S. Centers for Disease Control and Prevention.

The numbers of illnesses reported in each state are: Maine (1), Massachusetts (3), New Hampshire (2), New York (14), Rhode Island (1), Virginia (2) and Vermont (10). Eleven people have been hospitalized, but no deaths have been reported.

The ages of the patients ranged from 12 years to 101 years, the CDC said, and illnesses arose between June 6 to June 26. According to the agency, it takes an average of two to three weeks between the time a person becomes ill and when the illness is reported, which means that illnesses that occurred after June 29 might not be reported yet.

Federal and state investigators were able to link illnesses in five patients with ground beef products produced by a single Cargill Meat Solutions facility.

On July 22, Cargill recalled nearly 30,000 pounds of fresh ground beef products. The products carry the establishment number "EST. 9400" inside the USDA mark of inspection. The use-by dates of the products have passed and they are no longer available in grocery stores. Officials are concerned, however, that some of the recalled products may still be in consumers' freezers.

Consumers should check their refrigerators and freezers for the recalled products, which were sold under different brand names and may not bear the "EST. 9400" on the labeling. The only grocery-store chain known to have sold the contaminated meat is Hannaford Supermarkets, which operates about 180 stores across the northeastern United States, according to The New York Times.

The U.S. Department of Agriculture's Food Safety and Inspection Service website has a list of stores that sold the recalled products.

Preliminary test results indicate that the salmonella strain involved in this outbreak is susceptible to commonly prescribed antibiotics, the CDC said.

The agency said the investigation is continuing and updates will be released to the public as information becomes available.

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'Medical center' star Chad Everett dies at 75

Los Angeles, July 31 (Newswire): Chad Everett, the blue-eyed star of the 1970s TV series "Medical Center" who went on to appear in such films and TV shows as "Mulholland Drive" and "Melrose Place," has died. He was 75.

Everett's daughter, Katherine Thorp, said he died at his home in Los Angeles after a year-and-a-half-long battle with lung cancer.

Everett played sensitive surgeon Joe Gannon for seven seasons on "Medical Center." The role earned him Golden Globe nominations in 1971 and 1973.

With a career spanning more than 40 years, Everett guest starred on such TV series as "The Love Boat," ''Murder, She Wrote" and "Without a Trace." Everett most recently appeared on the TV shows "Castle" and "Supernatural," where he appeared as an older version of Jensen Ackles' character Dean Winchester.

Everett's films credits included "The Jigsaw Murders," ''The Firechasers" and director Gus Van Sant's remake of "Psycho."

Everett was born Raymon Lee Cramton in South Bend, Ind., and graduated from Wayne State University in Detroit before moving to Los Angeles and becoming a contract player with MGM.

In perhaps his most memorable recent film role, Everett played a lothario who engages in a steamy audition with a young ingenue portrayed by Naomi Watts in director David Lynch's "Mulholland Drive".

Everett is survived by his two daughters, Katherine and Shannon, and six grandchildren. He was married to actress Shelby Grant for 45 years until her death last year.

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Anaheim hit by more protests over police shooting

Anaheim, July 31 (Newswire): Protesters broke windows of least a half-dozen storefronts in Anaheim and five people were arrested in the second major clash between police and demonstrators since an officer shot dead an apparently unarmed man.
Tom Tait, mayor of the southern California city, had called for a state and federal review of the shooting of the man, a suspected gang member.

Over 600 demonstrators gathered at City Hall, where officials were holding a regular meeting, police said.

Some threw patio chairs through the windows of a Starbucks, according to a witness. No one in the restaurant was injured, said Anaheim police spokesman Sergeant Bob Dunn.

In the same block-long strip mall, at least five other businesses also had windows smashed, according to a witness. Afterward, officers toting shotguns stood guard in front of the storefronts.

Five people were arrested in the protest and ensuing melee, and one person was injured and taken to hospital, Dunn said. Dozens of officers wielding night sticks faced off against the demonstrators, who at one point threw water bottles and rocks toward the line.

The tensions flared after police shot and killed a man.

Two officers had tried to approach three men in an alley, who fled, Dunn said earlier this week. The officers followed on foot and one caught up to one suspect, police said.

The officer shot the man, who police said they later identified as Manuel Diaz, a known gang member. Diaz was not found to have been carrying a gun, police said.

Police fired pepper pellets at angry residents near the scene of the shooting.

Late Anaheim officers tried to stop a car and killed a man who police said fled and opened fire on them during a foot chase.

He was the fifth person to die in an officer-involved shooting in Anaheim this year.

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Russia's Kamaz to cut up to 3,000 white-collar jobs

Moscow, July 31 (Newswire): Russian truckmaker Kamaz plans to cut between 1,500 and 3,000 so-called white-collar workers to increase its business efficiency, Kamaz's spokesman Oleg Afanasyev said.

"Our figures do not match international standards of 9 to 11 percent of people working in offices (out of the total number of employees) as Kamaz now has 17 percent," he said.

Kamaz, where German truckmaker Daimler (DAI.DE) has a minority stake, employs around 50,000 people in total.

The group swung to a net profit of 1.8 billion roubles ($55 million) in 2011 after a 889 million rouble net loss in the previous year.

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Analysis: Big banks' glory days feared to be gone for good

New York, July 31 (Newswire): The summer of 2012 may be remembered as the time when regulation, scandals and a protracted slow-growth economy finally caught up with big American banks.

Ever since the financial crisis, U.S. banks and their investors have held out hopes of a return to the good times, when lending profits steadily rose and commercial and investment banking flourished together. But analysts and investors are now questioning whether things have changed for good.

"My gut says all these megabanks are worth more separately than combined," said Bill Black, managing partner of Consector Capital, a hedge fund that focuses on bank trading. Smaller, more focused banks could attract investors, satisfy regulators and increase depressed stock prices, he said.

Seven of the 10 biggest U.S. banks beat analysts' average earnings expectations in the second quarter. But much of that came from cutting costs and dipping into money previously set aside to offset bad loans, rather than from growth in their main businesses, which is what investors want to see.

Revenue from lending, trading and advising corporate clients on mergers is still weak, and low interest rates continue to squeeze profits on loans and other investments. Banks and their already depressed stocks appear headed for a long, grim future.

Nancy Bush, who has been a bank analyst and investor for three decades, said she is ready to throw in the towel on banks of all sizes.

"What's left at this point, barring a really significant improvement to the economy and a miraculous ramp-up in lending?" Bush asked. "Why invest in these companies? Somebody, give me a reason to believe."

Toughing out a cyclical economic downturn with more job cuts is not a long-term answer, some banking experts say. Today's problems derive from structural changes in the financial sector, including increased regulation, and demand a radical restructuring.

"The bottom line is that they have to get smaller so they can manage better," said Roy Smith, a finance professor at New York University's Stern School of Business. "They have to give up the idea of being a universal bank holding company that jams together businesses that have nothing to do with each other."

Morgan Stanley is one financial Goliath that is signaling it gets the message. By the end of 2014 it plans to reduce its risk-weighted fixed-income trading assets by about 30 percent from third-quarter 2011 levels, bank officials said on their second-quarter conference call.

Government data shows loans on U.S. commercial banks' balance sheets last month grew by 5.3 percent from June 2011, the 10th consecutive month of growth. But low rates and intense competition for the highest-quality borrowers are cutting into the returns earned on mortgage, business and corporate loans, banks' most robust lending sectors.

Even if banks are making more loans to better borrowers, they are doing so less profitably.

"A protracted period of low interest rates puts a lot of pressure on balance sheets," said Consector's Black.

Bankers on their second-quarter calls also raised concerns by warning that the mortgage refinancing boom will likely have run its course by year end.

U.S. Bancorp, the seventh-largest U.S. commercial bank, posted about a 17 percent increase in quarterly profit, but cautioned that much of the growth came from mortgage refinancing that is ebbing.

If the economy were turning around, banks might have less to worry about. But Dick Bove, an analyst at Rochdale Securities, said he is feeling squeamish about the economy after reviewing second-quarter earnings calls from 22 bank executives.

"They are seeing very clearly that their clients do not want to hire people or get involved in many capital expenditures," he said. "If banks from all over the U.S. are saying exactly the same thing, and they did, they are telling you clearly that we are going into a recession."

One sign of trouble: loan growth is not keeping up with deposit growth.

In March 2010, banks loaned out about 99 percent of money collected from depositors. In March 2012, the figure plunged below 77 percent, the lowest ratio in more than a decade, according to the Federal Deposit Insurance Corp.

Bankers also said on their conference calls that their best clients are increasingly reluctant to invest in their businesses because of uncertainty about the U.S. presidential elections, the end-of-year tax-and-budget "fiscal cliff" battle and ongoing problems with the global economy.

For many banks, however, issues go deeper than just a slowing economy. Capital markets businesses, including trading stocks and bonds, are just not as profitable as they used to be. Trading volumes are in a long-term downtrend globally, and regulators are clamping down on banks' ability to bet their own money.

The big banks also must use more capital to support their riskier trading businesses at a time when the businesses provide sub-par returns. Major commercial banks with investment banking arms, along with standalone investment banks such as Goldman Sachs Group, will suffer, analysts said.

"Nine out of the 10 biggest capital-markets banks in the world can't earn their cost-of-equity capital," said NYU's Smith, a former partner at Goldman Sachs. "If you sit around and bet on these guys because they are undervalued, your patience is running out."

There are some banks, to be sure, that have stuck to their commercial bank knitting and won perennial plaudits - and strong valuations - from investors and analysts. They include Wells Fargo Corp, the fourth largest U.S. bank by assets, and U.S. Bancorp. These banks have strong credit controls, have generally avoided cut-rate pricing to gain market share, and have been gradually adding fee-based, rather than interest-centered, businesses.

Analysts, however, say their top institutional clients are increasingly reluctant to invest in any bank stocks. Last week prominent hedge fund manager Bill Ackman said his firm sold its big position in Citigroup, despite his general admiration for the bank's management, because the banking system has become too risky.

JPMorgan Chase & Co's almost $6 billion of derivative losses and the Libor interest-rate-fixing scandal in the last few months proved to be the "proverbial straw that broke this camel's back," Ackman wrote to his clients at Pershing Square Capital Management.

For months, JPMorgan Chief Executive Jamie Dimon had no idea of the size of the losses brewing inside his bank, signaling to many investors that major banks are too big and too complex to manage, investors said.

"If I don't think that even insiders have a great handle on what's going on, I'm certainly not comfortable about investing my capital there," said Consector Capital's Black.

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