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Lack of Consumer Confidence a Concern for U.S. Economy

We already knew the Tea Party and their Republican members in Congress were willing to play a game of chicken with America’s economy, bringing us to the brink of disaster until a debt ceiling hike was finally agreed to Tuesday. Less obvious but increasingly apparent is that the protracted struggle to avoid default — coupled with the continued talk of a double-dip recession — has left a new dent on consumer sentiment about the economy. Fresh data from the Bureau of Economic Analysis on consumer spending look good at first until we dig deeper:

Personal income increased $18.7 billion, or 0.1 percent, and disposable personal income (DPI) increased $16.3 billion, or 0.1 percent, in June, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) decreased $21.9 billion, or 0.2 percent.

Real disposable income increased 0.3 percent in June, in contrast to a decrease of less than 0.1 percent in May.

Personal saving — DPI less personal outlays — was $620.6 billion in June, compared with $581.7 billion in May. Personal saving as a percentage of disposable personal income was 5.4 percent in June, compared with 5.0 percent in May.

Increases in personal income and disposable income are great — but not when consumer spending (PCE) is dropping off at the sharpest level since September 2009. The fact that there is no additional fiscal stimulus on the horizon is unfortunate, as government is an entity that can step in and push things along when consumers grow hesitant.

Weak Growth And Manufacturing Numbers Point To A Sluggish Economy

As Washington begins its slow walk away from a partisan debt-ceiling fight, a trove of recent economic data points to a painfully sluggish economy, and signals that the last-minute nature of the deal allowed for a softening of already-weak confidence in growth.

First, the U.S. Bureau of Economic Analysis released revisions to its past assessments of GDP. Their new figures indicate that the U.S. economy grew by just 1.3% in the second quarter and by a measly 0.4% in the first quarter of this year — a significant downward trend. To make matters worse, the report estimated that the recession of 2007-09 was much deeper than previously projected, with the economy having shrunk 3.5% (as opposed to 2.6%) in 2009 alone.

The manufacturing data released today were no reason for celebration either. The Institute for Supply Management (ISM) July index took the wind out of the sales of an early morning Wall Street rally, investors having rejoiced at the prospect of a deal in Washington to avert U.S. default. From the report:

ISM’s New Orders Index registered 49.2 percent in July, which is a decrease of 2.4 percentage points when compared to the 51.6 percent reported in June. This is the first month of contraction in the New Orders Index since June of 2009, when it registered 48.9 percent. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

ISM’s Employment Index registered 53.5 percent in July, which is 6.4 percentage points lower than the 59.9 percent reported in June. While this month represents the 22nd consecutive month of growth in manufacturing employment, the July reading is also the lowest reading since December 2009, when the index registered 53.2 percent. An Employment Index above 50.1 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Compounding the slow growth and the lackluster manufacturing numbers is lingering uncertainty about the United States’ credit rating. Today’s market downturn was fueled in part by a flight from dollar holdings to so-called safe-haven currencies like the Swiss franc. In fact, the U.S. dollar reached record lows compared to the franc on Monday, and there’s no indication the deal on a future “Super Congress” to tackle runaway spending and a massively flawed tax system will affect market perceptions of U.S. solvency.

FAA Partial Shutdown A Sign Of Things To Come

The Federal Aviation Administration (FAA) was recently forced to partially close and send employees home without pay because House Republicans, concerned about spending and the federal budget, didn’t want to extend $16.5 million in subsidies to the agency. The shutdown is costing government $30 million a day in much needed revenue from airline taxes; in other words, shutting down government costs significantly more than trying to make it work. It might be a preview of what will happen if the House GOP gets its way (underfunded, poorly functioning government) or if it doesn’t (government shutdown and chaos). As Congress fights over how to raise the debt ceiling, it might be worthwhile to wonder which programs will get cut and which will not.

The drastic steps — which affect 4,000 “non-essential” employees (basically, everyone except the air-traffic controllers) — came on Friday after House Republicans refused to extend the authority of the $16 billion agency unless House Democrats agreed to remove a small subsidy intended for rural aviation that helps hundreds of small towns, farms, and other rural areas.

This means that, while flights can get off the ground, billions of dollars in airport construction projects has come to a halt, also costing workers their jobs.

At first, some believed that the freeze on tax collections would translate into lower ticket prices. Instead, airlines — which have struggled recently — have kept prices steady , effectively collecting 7.5% more in profits for themselves.

Considering the impact of the closure of a single federal agency is so widespread, imagine what would happen in the event of a U.S. default. If multiple agencies partially shutdown, it could cut a giant hole in the national debt the size of a massive government program. The Republican recalcitrance over the debt ceiling threatens thousands of American jobs by jeopardizing government agencies and slowing projects throughout the country. The FAA’s current state is a dismal warning of what might come next.

To Republicans’ Consternation, Chrysler Turns Profits

Reuters reports that Chrysler’s sales have outpaced European carmaker — and Chrysler parent company — Fiat’s sales in recent months. According to the analysis, Chrysler June earnings ($155 million) were only slightly less than Fiat’s three month total (Fiat earned $175 million from April through June).

These impressive numbers have enabled the once-troubled American company to pay back its debt to the United States government well ahead of schedule; Chrysler was not expected to pay back its debt until 2017. Furthermore, the 2008 deal was supposed to cost American taxpayers $40 billion but will now only cost them $1.3 billion , a relatively low cost considering the high stakes of the deal and the tens of thousands of jobs saved.

These numbers must come as a surprise to the many Republican politicians who came out strongly in opposition to the government bailout in 2008. For example, Richard Shelby, an Alabama Republican, referred to the intervention as merely “delaying [the auto industry’s] funeral.”

Similarly, other Republicans thought that the 2008 bailout would stymie innovation and do no more than prolong the decline of the American auto industry. In an editorial for The New York Times, Republican 2012 presidential frontrunner Mitt Romney declared that if the bailout went through, we could “kiss the American automotive industry goodbye.” He went on to say that if the bailout passed, it would fail to reverse “the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses.”

The most recent reports seem to prove the former exec whose candidacy is predicated on a history of turning around failing businesses wrong, as Chrysler has come out more successful than its European buyer. Instead of costing American taxpayers tens of billions of dollars, the overall auto rescue effort has saved millions of jobs and preserved an icon of American manufacturing.

U.S. Money Improperly Used in Afghanistan

While debt-ceiling debates rage on in Washington, the Government Acountability Office (GAO) may have found a genuine source of government waste — aid to Afghanistan by the Department of Defense (DOD). Reports indicate that the distribution of direct aid by the United States government in Afghanistan might be profoundly wasteful and that, in some cases, the Department of Defense violated protocol in how it awarded funds.

Apparently U.S. contributions to Afghan organizations increased from more than $665 million in fiscal year 2009 to around $2 billion in fiscal 2010; as the GAO put it, “The United States more than tripled its awards and contributions of USAID and DOD direct assistance funds to the Afghan government.”

The trends go beyond increases in expenditures. The GAO also pointed out some large inefficiencies in the distribution of money to organizations in Afghanistan. USAID and DOD — the two major direct contributors to Afghan reconstruction examined by the report — are usually regulated by the World Bank and the United Nations Development Program. The GAO report, however, indicates that these and similar distributors of direct assistance have “not consistently complied with its multilateral trust fund risk assessment policies in awarding funds.”

The violations seem to be related to risk assessments of recipient organizations. The report states that in the case of one violation in March 2010, “USAID did not conduct a risk assessment before awarding an additional $1.3 billion to the World Bank” for Afghan organizations. It seems that distributors of U.S. money in Afghanistan broke protocol by failing to adequately assess the risk of giving money to some organizations.

This report comes on the same day the Wall Street Journalreported that U.S. financial auditors were dissatisfied with the level of cooperation by the Afghan government in multiple investigations. U.S. agencies are concerned by the lack of aggressive prosecution of suspected Afghan money launderers who may have allowed “billions of dollars to slip out of sight.

As Congress nitpicks for specific spending cuts, they might want to make sure that U.S. funds are being distributed abroad with at least a whiff of accountability.

Massive Heat Wave Even Effects Cold States

MINNEAPOLIS (AP) — In the land of giant ice castles, where auto makers test their vehicles against extreme cold and people play hockey year-round, it’s not uncommon to hear some griping about the weather.

The Upper Midwest is accustomed to extreme temperatures. Just not in the current direction.

Parts of the region are suffering through the worst heat wave in more than a decade, leaving residents who usually eagerly await a too-short summer longing for a taste of December. The heat index topped 119 degrees Tuesday in Minneapolis. And it felt like 105 degrees in Madison, Wis.

Even at the Minnesota Zoo, known for displaying northern-latitude animals, workers say the heat can make some animals — like people — “really crabby.” But they’re keeping thick-furred tigers happy with “bloodsicles.”

“It’s kind of gross, but they like it,” said Diana Weinhardt, who supervises the Northern Trails exhibit. She spent 15 years at the zoo in Houston, and admitted the heat was even rough on her.

“This is very, very Texas-esque weather and it’s hard, especially if you’re not used to it. In Texas we all kind of grew hardened to it, but here — ugh.”

In Minneapolis, some employees of The Olsen Fish Company — which bills itself as the world’s largest producer of the Scandinavian delicacy lutefisk — have refused to go outside on break. Instead, they’re hanging out in the 44-degree room where pickled herring is processed, company president Chris Dorff said.

When they do venture outside, they get plenty of space on the commuter train home because “when you work in a herring and lutefisk facility, you have this, this odor,” Dorff said.

Lutefisk is dried cod soaked in lye, rinsed and boiled, and mix those scents with a little sun and sweat, and “we all leave a little more odiferous, that’s for sure,” he said.

Generations of Bachman’s Floral Gifts and Gardens employees have worked to protect the company’s plants from the winter, but this week they’re trying to keep the Christmas crop of poinsettias from baking. Their greenhouses south of Minneapolis run 10 to 15 degrees warmer than the outside air, and the heat has threatened to wilt both workers and the young plants trying to grow roots.

“They are just trying to survive, I guess, like we are,” said Jack Geyan, Bachman’s production manager who admits the heat is making him nostalgic for winter. “Some guys in the nursery asked me if I would rather have 30 below or this temperature. And I said, ‘well, 30 below is a little cold, but maybe 20 below.'”

University of Minnesota meteorologist Mark Seeley said the number of days with temperatures in the high 90s or 100s hasn’t really increased, but the amount of days with soaring humidity have.

“We have had far more dew point-driven heat waves in recent decades than any time in the past,” he said.

It’s been at least 12 years since Minnesota has seen such heat indexes, day after day, like those this week.

The brutal heat in Wisconsin forced Josh Martinez, operations manager of All-State Roofing in Madison, to pull in his crews this week. “It’s a whole lot better and safer for us just to not do a job,” he said. “We figure it’s better to be safe than sorry.”

In Minnesota, where hockey players venture to indoor rinks when the lakes thaw, one indoor rink struggling to keep its ice intact fired up cooling equipment for the first time in a decade — and is expecting a $10,000 spike in this month’s utility bill.

“There’s equipment that we haven’t run in 10 years, we actually turned it on, just so we could stay ahead of the heat,” said Andy Baltgalvis, manager of the Bloomington Ice Garden south of Minneapolis.

It hasn’t just been people struggling in the heat.

The Minnesota Zoo, in a suburb south of Minneapolis, prides itself on displaying caribou, musk oxen, moose and other northern animals who have been kept cool this week with extra water and fans.

Zookeepers do what they can for animals with thick fur. The Amur tigers from north Asia at being treated to the frozen runoff from meat fed to the zoo’s carnivores. Weinhardt said it’s a hot-weather tool that seems to work.

“Just like us, some animals can get really crabby in hot weather,” Weinhardt said.

Fly reported from Milwaukee.

Copyright 2011 The Associated Press.

As Atlantis Lands, Space Shuttle Era Comes to a Close

CAPE CANAVERAL, Fla. (AP) — Atlantis and four astronauts returned from the International Space Station in triumph Thursday, bringing an end to NASA’s 30-year shuttle journey with one last, rousing touchdown that drew cheers and tears.

A record crowd of 2,000 gathered near the landing strip, thousands more packed Kennedy Space Center and countless others watched from afar as NASA’s longest-running spaceflight program came to a close.

“After serving the world for over 30 years, the space shuttle’s earned its place in history. And it’s come to a final stop,” commander Christopher Ferguson radioed after Atlantis glided through the ghostly twilight and landed on the runway.

“Job well done, America,” replied Mission Control.

With the shuttle’s end, it will be another three to five years at best before Americans are launched again from U.S. soil, with private companies gearing up to seize the Earth-to-orbit-and-back baton from NASA.

The long-term future for American space exploration is just as hazy, a huge concern for many at NASA and all those losing their jobs because of the shuttle’s end. Asteroids and Mars are the destinations of choice, yet NASA has yet to settle on a rocket design to get astronauts there.

Thursday, though, belonged to Atlantis and its crew: Ferguson, co-pilot Douglas Hurley, Rex Walheim and Sandra Magnus, who completed a successful space station resupply mission.

Atlantis’ main landing gears touched down at 5:57 a.m. sharp, with “wheels stop” less than a minute later.

“The space shuttle has changed the way we view the world and it’s changed the way we view our universe,” Ferguson radioed from Atlantis. “There’s a lot of emotion today, but one thing’s indisputable. America’s not going to stop exploring.

“Thank you Columbia, Challenger, Discovery, Endeavour and our ship Atlantis. Thank you for protecting us and bringing this program to such a fitting end.”

The astronauts’ families and friends, as well as shuttle managers and NASA brass, were near the runway to welcome Atlantis home. Difficult to see in the darkness, Atlantis was greeted with cheers, whistles and shouts. Soon, the sun was up and provided, finally, a splendid view. Within an hour, Ferguson and his crew were out on the runway and swarmed by well-wishers.

“The things that we’ve done have set us up for exploration of the future,” said NASA Administrator Charles Bolden Jr., a former shuttle commander. “But I don’t want to talk about that right now. I just want to salute this crew, welcome them home.”

Nine-hundred miles away, flight director Tony Ceccacci, who presided over Atlantis’ safe return, choked up while signing off from shuttle Mission Control in Houston.

“The work done in this room, in this building, will never again be duplicated,” he told his team of flight controllers.

At those words, dozens of past and present flight controllers quickly streamed into the room, embracing one another, wiping their eyes and snapping pictures.

NASA’s five space shuttles launched, saved and revitalized the Hubble Space Telescope; built the space station, the world’s largest orbiting structure; and opened the final frontier to women, minorities, schoolteachers, even a prince. The first American to orbit the Earth, John Glenn, became the oldest person ever in space, thanks to the shuttle. He was 77 at the time; he turned 90 this week.

Born with Columbia in 1981, it was NASA’s longest-running space exploration program.

“I haven’t cried yet, but it is extremely emotional,” said Karl Ronstrom, a photographer who helps with an astronaut scholarship fund. He witnessed the first shuttle launch as a teenager and watched the last shuttle landing as a middle-aged man.

It was truly a homecoming for Atlantis, which first soared in 1985. The next-to-youngest in NASA’s fleet will remain at Kennedy Space Center as a museum display.

This grand finale came 50 years to the day that Gus Grissom became the second American in space, just a half-year ahead of Glenn.

Atlantis — the last of NASA’s three surviving shuttles to retire — performed as admirably during descent as it did throughout the 13-day flight. A full year’s worth of food and other supplies were dropped off at the space station, just in case the upcoming commercial deliveries get delayed. The international partners — Russia, Europe, Japan — will carry the load in the meantime.

It was the 135th mission for the space shuttle fleet, which altogether flew 542 million miles and circled Earth more than 21,150 times over the past three decades. The five shuttles carried 355 people from 16 countries and, altogether, spent 1,333 days in space — almost four years.

Two of the shuttles — Challenger and Columbia — were destroyed, one at launch, the other during the ride home. Fourteen lives were lost. Yet each time, the shuttle program persevered and came back to fly again.

The decision to cease shuttle flight was made seven years ago, barely a year after the Columbia tragedy. President Barack Obama nixed President George W. Bush’s lunar goals, however, opting instead for astronaut expeditions to an asteroid and Mars.

Last-ditch appeals to keep shuttles flying by such NASA legends as Apollo 11’s Neil Armstrong and Mission Control founder Christopher Kraft landed flat.

It comes down to money.

NASA is sacrificing the shuttles, according to the program manager, so it can get out of low-Earth orbit and get to points beyond. The first stop under Obama’s plan is an asteroid by 2025; next comes Mars in the mid-2030s.

Private companies have been tapped to take over cargo hauls and astronaut rides to the space station, which is expected to carry on for at least another decade. The first commercial supply run is expected late this year, with Space Exploration Technologies Corp. launching its own rocket and spacecraft from Cape Canaveral.

None of these private spacecraft, however, will have the hauling capability of NASA’s shuttles; their payload bays stretch 60 feet long and 15 feet across, and hoisted megaton observatories like Hubble. Much of the nearly 1 million pounds of space station was carried to orbit by space shuttles.

Astronaut trips by the commercial competitors will take years to achieve.

SpaceX maintains it can get people to the space station within three years of getting the all-clear from NASA. Station managers expect it to be more like five years. Some skeptics say it could be 10 years before Americans are launched again from U.S. soil.

An American flag that flew on the first shuttle flight and returned to orbit aboard Atlantis on July 8, is now at the space station. The first company to get astronauts there will claim the flag as a prize.

Until then, NASA astronauts will continue to hitch rides to the space station on Russian Soyuz spacecraft — for tens of millions of dollars per seat.

After months of decommissioning, Atlantis will be placed on public display at the Kennedy Space Center Visitors Complex. Discovery, the first to retire in March, will head to a Smithsonian hangar in Virginia. Endeavour, which returned from the space station on June 1, will go to the California Science Center in Los Angeles.

Ferguson said the space shuttles will long continue to inspire.

“I want that picture of a young 6-year-old boy looking up at a space shuttle in a museum and saying, ‘Daddy, I want to do something like that when I grow up.’ ”

AP writers Mike Schneider at Cape Canaveral and Seth Borenstein in Houston contributed to this report

Online:

NASA: http://www.nasa.gov/shuttle

Copyright 2011 The Associated Press.

Authorities Knew Of Weakness, But Could Not Shutdown Oil Pipeline In Yellowstone

WASHINGTON (AP) — Federal inspectors found a problem in an oil pipeline a month before it ruptured in a Montana river, but it was not significant enough to force a shutdown, the government’s top pipeline regulator said Wednesday.

Cynthia Quarterman, administrator of the U.S. Pipeline and Hazardous Materials Safety Administration, told a Senate committee that the problem in the Exxon Mobil pipeline was discovered in early June, nearly a month before the pipeline ruptured on July 1, spilling an estimated 42,000 gallons of crude into the Yellowstone River.

Quarterman declined to offer specifics about what she called an “anomaly” but said officials believed it was not significant enough to require repairs. It wasn’t clear whether the problem detected in June had any role in the rupture.

“Unfortunately, I don’t think that our pipeline inspector thought he had the authority to shut down the pipeline,” she told a Senate Environment subcommittee.

Agency officials said a review of pipeline records conducted in June revealed that the half-inch thick steel pipeline had about 20 percent external corrosion, based on inspections in 2004 and 2009. The review was part of a larger examination of pipeline records in response to high water flows throughout the Mountain West because of an unusually high spring snow melt.

The rupture in the 12-inch diameter pipeline, which had been buried below the riverbed, occurred as the Yellowstone River flooded following heavy rains. Debris, including trees, was floating in the river at the time of the accident.

Sen. Max Baucus, D-Mont., said he was disappointed in the federal response.

“To be honest, ma’am, it sounds like you’re not on top of this,” he told Quarterman.

Baucus also scolded Gary Pruessing, president of Exxon Mobil Pipeline Co, saying that the oil executive appeared to waver on initial promises to make land owners near the spill “whole” following the spill and cleanup.

The company takes full responsibility for the incident and the cleanup, “and we pledge to satisfy all legitimate claims,” Pruessing said.

Baucus said there was plenty of blame to go around.

“The company made a mistake. It was wrong about the integrity of the pipeline,” he said. The pipeline agency also was wrong, Baucus added: “It made a mistake about the integrity of the pipeline.”

The cause of the spill remains under investigation, but early signs indicate that the pipeline was completely severed in the accident, according to the Montana Department of Environmental Quality. The findings suggest that the pipeline was undercut by the river and broke, rather than springing a leak due to corrosion in the line.

It will probably be August or September before water levels in the river are low enough to raise the section of damaged pipe responsible for the spill, Quarterman said.

It could take another two months after that before investigators identify a cause, and Quarterman said her agency won’t know for certain how large the leak was until it examines records at the oil company’s control room in Houston.

Officials in Laurel, Mont., near the site of the spill, raised questions last year about erosion along the riverbank threatening Exxon Mobil’s Silvertip pipeline. The company in December surveyed the pipe’s depth and said it was at least 5 to 8 feet beneath the riverbed.

The line was temporarily shut down in May after Laurel officials again raised concerns that it could be at risk as the Yellowstone started to rise. The company restarted the line a day later, following a review of its safety record.

“At the time this incident occurred, we did not have any outstanding issues from a regulatory standpoint on this pipeline,” Pruessing said.

Copyright 2011 The Associated Press.

Serbia Arrests Last War Criminal

BELGRADE, Serbia (AP) — The last fugitive sought by the U.N. Balkan war crimes tribunal was arrested by Serbian authorities Wednesday, answering intense international demands for his capture and boosting the country’s hopes of becoming a candidate for European Union membership.

Former Croatian Serb leader Goran Hadzic was taken into custody as he met a man delivering him money in a forest in a mountainous region of northern Serbia where many of his relatives live, authorities said. He had dramatically changed his appearance and was armed but did not resist, they said.

Hours later, Hadzic was brought in for questioning at the war crimes court in the capital Belgrade, a key step toward his extradition to the tribunal in The Hague, Netherlands. His lawyer said Hadzic will not appeal the process, paving the way for a quick extradition, possibly within the next few days.

State TV footage showed Hadzic entering the courtroom escorted by guards. He walked slowly, slightly hunched, wearing a gray shirt, short hair and a mustache. His black beard had been shaved.

An unknown figure before the 1991-1995 ethnic war for control of Croatia, Hadzic suddenly rose to prominence through his links to Serbian leader Slobodan Milosevic’s secret police. Put in charge of the self-styled Serb ministate in eastern Croatia, he was seen as a pawn of criminal gangs that collaborated heavily with the secret police and made huge profits from smuggled cars, gasoline and cigarettes.

The Hague tribunal indicted him in 2004 on charges of war crimes and crimes against humanity including the murder, torture, deportation and forcible transfer of Croats and other non-Serbs from the territories he controlled.

Less than two months after the capture of Bosnian Serb Gen. Ratko Mladic, Serbia’s Western-leaning president announced live on national television that “Serbia has concluded its most difficult chapter in the cooperation with the Hague Tribunal.”

“It was our moral duty,” President Boris Tadic said. “We have done this for the sake of citizens of Serbia, we have done this for the sake of the victims amongst other nations, we have done this for the sake of reconciliation, we have done this for the sake of establishing credibility of all societies, not only Serbian society.”

In his indictment Hadzic is accused of responsibility for the 1991 leveling of Vukovar, said to be the first European city entirely destroyed since World War II.

In one of the worst massacres in the Croatian conflict, Serb forces seized at least 264 non-Serbs from Vukovar Hospital after a three-month siege of the city, took them to a nearby pig farm, tortured, shot and buried them in an unmarked mass grave.

A month before about 20 kilometers (12.43 miles) southwest of Vukovar, about 50 Croats who had been detained for forced labor were made to walk through a minefield to render it safe for the Serbs, according to the indictment.

“Upon reaching the minefield, the detainees were forced to enter the minefield and sweep their feet in front of them to clear the field of mines,” it said.

Hadzic worked with paramilitary forces that became notorious for their brutality, including the “Tigers,” led by Zeljko Raznatovic, known as Arkan. In that same month of October 1991, Arkan’s men captured 28 civilians from a police facility in Dalj, tortured them and threw their bodies in the Danube. Arkan was assassinated in a Belgrade hotel in 2000.

Serge Brammertz, chief prosecutor of the Yugoslav war crimes tribunal, said the arrests of Mladic and Hadzic “mark a long-awaited step forward in Serbia’s cooperation.”

EU leaders immediately welcomed the arrest and saluted “the determination and commitment” of Tadic’s government.

“This is a further important step for Serbia in realizing its European perspective and equally crucial for international justice,” said a joint statement by EU president Herman Van Rompuy, European Commission chief Jose Manuel Barrios and foreign policy chief Catherine Ashton.

A tribunal statement said Hadzic will be transferred to The Hague as soon as judicial procedures are completed in Serbia. That normally takes several days.

He will then be brought before a judge to hear a reading of the 14 charges against him. He may enter a plea or delay for a month.

Tribunal president O-Gon Kwon said the arrest was a milestone in the history of the court, which has indicted 161 leaders from the former Yugoslavia since it was created in 1993 at the height of the fighting.

The tribunal has been under U.N. pressure to wind up its cases and close its doors.

Serbian security police found out that Hadzic was meeting a money courier and arrested him Wednesday morning outside the village of Krusedol, Serbian war crimes prosecutor Vladimir Vukcevic told reports.

Until this week, Tadic said, Serbian officials did not know where Goran Hadzic was, despite suspicions that he had been sheltered by former allies.

In the past, Hadzic had narrowly escaped arrest, apparently due to tips from within the Serbian security authorities. Serbia’s post-war authorities have for years faced accusations that they are not doing enough to hunt down the war crimes suspects.

Serbia, widely viewed as the main culprit for the wars in the Balkans, has been working to reintegrate into the international community following years of sanctions and pariah status in the 1990s.

Milosevic was extradited to the Hague tribunal in 2001 and died there in 2006, while on trial for genocide.

Along with Mladic, Serbia has also arrested war crimes fugitives Radovan Karadzic. Both are currently facing war crimes charges in the Hague.

Dusan Stojanovic and Slobodan Lekic contributed.

Copyright 2011 The Associated Press

Alabama Residents Still Paying Taxes for Confederate Veterans’ Benefits

MOUNTAIN CREEK, Ala. (AP) — The last of the more than 60,000 Confederate veterans who came home to Alabama after the Civil War died generations ago, yet residents are still paying a tax that supported the neediest among them.

Despite fire-and-brimstone opposition to taxes among many in a state that still has “Heart of Dixie” on its license plates, officials never stopped collecting a property tax that once funded the Alabama Confederate Soldiers’ Home, which closed 72 years ago. The tax now pays for Confederate Memorial Park, which sits on the same 102-acre tract where elderly veterans used to stroll.

The tax once brought in millions for Confederate pensions, but lawmakers sliced up the levy and sent money elsewhere as the men and their wives died. No one has seriously challenged the continued use of the money for a memorial to the “Lost Cause,” in part because few realize it exists; one long-serving black legislator who thought the tax had been done away with said he wants to eliminate state funding for the park.

These days, 150 years after the Civil War started, officials say the old tax typically brings in more than $400,000 annually for the park, where Confederate flags flapped on a recent steamy afternoon. That’s not much compared to Alabama’s total operating budget of $1.8 billion, but it’s sufficient to give the park plenty of money to operate and even enough for investments, all at a time when other historic sites are struggling just to keep the grass cut for lack of state funding.

“It’s a beautifully maintained park. It’s one of the best because of the funding source,” said Clara Nobles of the Alabama Historical Commission, which oversees Confederate Memorial Park.

Longtime park director Bill Rambo is more succinct.

“Everyone is jealous of us,” he said.

Tax experts say they know of no other state that still collects a tax so directly connected to the Civil War, although some federal excise taxes on tobacco and alcohol first were enacted during the war to help fund the Union.

“Broadly speaking, almost all taxes have their start in a war of some sort,” said Joseph J. Thorndike, director of a tax history project at Tax Analysts, a nonprofit organization that studies taxation.

Alabama’s tax structure was enshrined in its 1901 Constitution, passed after Reconstruction at a time when historians say state legislators’ main goal was to keep power in the hands of wealthy white landowners by disenfranchising blacks and poor whites.

The Constitution allowed a state property tax of up to 6.5 mills, which now amounts to $39 annually on a home worth $100,000. Of that tax, 3 mills went to schools; 2.5 mills went to the operating budget; and 1 mill went to pensions for Confederate veterans and widows.

The state used the pension tax to fund the veterans home once it assumed control of the operation in 1903. The last Confederate veteran living at the home died in 1934, and its hospital was converted into apartments for widows. It closed in 1939, and the five women who lived there were moved to Montgomery.

Legislators whittled away at the Confederate tax through the decades, and millions of dollars that once went to the home and pensions now go to fund veteran services, the state welfare agency and other needs. But the park still gets 1 percent of one mill, and its budget for this year came to $542,469, which includes money carried over from previous years plus certificates of deposit.

All that money has created a manicured, modern park that’s the envy of other Alabama historic sites, which are funded primarily by grants, donations and friends groups. Legislators created the park in 1964 during a period that marked both the 100th anniversary of the Civil War and the height of the civil rights movement in the Deep South.

Nothing is left of the veterans home but a few foundations and two cemeteries with 313 graves, but a museum with Civil War artifacts and modern displays opened at the park in 2007. Rebel flags fly all around the historic site, which Rambo said draws more than 10,000 visitors annually despite being hidden in the country nine miles and three turns off Interstate 65 in the central part of the state.

While the park flourishes quietly, other historic attractions around the state are fighting for survival.

Workers at Helen Keller’s privately run home in northwest Alabama fear losing letters written by the famed activist because of a lack of state funding for preservation of artifacts. On the Gulf Coast at Dauphin Island, preservationists say the state-owned Fort Gaines is in danger of being undermined by waves after nearly 160 years standing guard at the entry to Mobile Bay.

The old Confederate pension tax that funds the park has never been seriously threatened, Rambo said. Backers were upset this year when Gov. Robert Bentley’s budget plan eliminated state funding for historic sites because of tight revenues, he said, but the park’s earmarked funding survived.

“Once I informed the public what was going on the support just rose up,” said Rambo, the director since 1989. Two heritage groups, the Sons of Confederate Veterans and United Daughters of the Confederacy, led the charge, but ordinary citizens complained too, he said.

“Some were people who don’t belong to those organizations who really like the park and come out here for picnics and all and were really upset,” he said.

State Rep. Alvin Holmes, a black Democrat who’s been in the Legislature since 1974, said he thought funding for the park had been slashed.

“We should not be spending one nickel for that,” said Holmes, of Montgomery. “I’m going to try to get rid of it.”

Holmes may have a hard time gaining support with Republicans in control of Legislature and the governor’s office.

In the meantime, a contractor recently measured the museum for a new paint job, and plans calls for using invested money to construct replicas of some of the 22 buildings that stood on the site when it was home to hundreds of Confederate veterans and their wives.

Copyright 2011 The Associated Press.

Minnesota Government Shutdown Over

ST. PAUL, Minn. (AP) — Minnesota Gov. Mark Dayton signed a new budget Wednesday, ending the nation’s longest state government shutdown in the past decade.

Dayton’s signature came just hours after lawmakers gave their own approval to the deal after meeting in special session that started Tuesday afternoon and lasted until early Wednesday morning. All sides formalized an agreement that Dayton struck with leading Republicans late last week.

The two sides argued bitterly over taxes and spending for months. When government shut down July 1, it closed state parks and rest stops, laid off 22,000 state employees, stopped road projects and much more.

The end to the shutdown began when Dayton moved last week to accept a borrowing plan offered by the GOP shortly before the stoppage began.

After signing the budget, Dayton said he was “not entirely happy” with it.

“It’s not what I wanted, but it’s the best option that was available and would be for any time,” he said. Dayton said the budget “gets Minnesota back to work.”

Details were still emerging Wednesday about how quickly state operations would restart.

A day earlier, Tina Smith, Dayton’s chief of staff, told reporters that state employees would get 24-hour notice before reporting back to their jobs.

Jim Schowalter, the state’s budget commissioner, added that it will take longer to restart some state agencies than others since some have continued partial operations during the shutdown. He predicted it would take weeks for agencies to work through paperwork backlogs, clean up parks and other sites and return to normal operations.

“There is a backload of work,” Schowalter said. “There is a backload of issues that are going to have to be addressed.”

His division had earlier estimated that the state was losing millions of dollars, including lost revenue from lottery sales, tax audits and state park fees, money spent preparing to shut down and the cost of unemployment and health benefits for laid-off workers. The full cost wasn’t expected to be known for some time.

The budget was widely panned for setting up a new problem down the road. It borrows money from schools and from future payments on a legal settlement with tobacco companies to erase a $5 billion deficit through mid-2013. Republicans and Democrats have been at odds for years over how to address persistent deficits, with GOP leaders pushing for deeper spending cuts and Democrats arguing for new taxes.

It includes slightly more than $1.3 billion in new revenue from delaying $700 million in state aid checks to schools and borrowing $640 million against future payments from the tobacco settlement. The budget also continues a previous delay in school payments worth $1.4 billion and eliminates the rest of the shortfall through cuts in projected spending.

Minnesota became a national example of political dysfunction, mirroring in miniature the partisan standoff in Washington over raising the debt ceiling. State leaders are more accustomed to being recognized for efficiency and innovation.

Associated Press writer Patrick Condon contributed to this report.

Copyright 2011 The Associated Press.

Last Space Shuttle Set to Return to Earth Thursday

CAPE CANAVERAL, Fla. (AP) — On the eve of NASA’s historic, wheel-stopping end to the shuttle program, the four astronauts making the final journey and the flight controllers who will guide them home said Wednesday they’re starting to feel a rush of emotions.

“You know what? I really do feel like it’s coming near the end,” said the commander of the homeward-bound space shuttle Atlantis, Christopher Ferguson.

“It’s going to be tough,” Ferguson said in a series of TV interviews 24 hours before Thursday’s planned touchdown. “It’s going to be an emotional moment for a lot of people who have dedicated their lives to the shuttle program for 30 years. But we’re going to try to keep it upbeat. We’re going to try to keep it light, and we’re going to try to make it a celebration of the tremendous crowning achievements that have occurred over the last 30 years.”

Flight director Tony Ceccacci, who will preside over Atlantis’ return to Earth, refrained from publicly sharing his sentiments — until Wednesday.

“You guys must know that we do have a motto in the Mission Control Center that flight controllers don’t cry,” Ceccacci told reporters. “So we’re going to make sure we keep that.”

Among the space shuttle highlights noted Wednesday by the four-member crew as well as flight controllers: the 180 satellites deployed into orbit by the entire fleet and the construction of the International Space Station, a nearly 1 million-pound science outpost that took 12½ years and 37 shuttle flights to build.

Atlantis departed the space station Tuesday, after restocking it with a year’s worth of supplies.

The very last satellite to be released from a space shuttle popped out of a can Wednesday: a little 8-pound box covered with experimental solar cells.

As soon as the mini-satellite was on its way, astronaut Rex Walheim read a poem that he wrote to mark the occasion. It was the first of many tributes planned over the next few days; on Wednesday evening, the Empire State Building in New York was going to light up in red, white and blue in honor of the space shuttle program.

Walheim read: “One more satellite takes its place in the sky, / the last of many that the shuttle let fly. / Magellan, Galileo, Hubble and more / have sailed beyond her payload bay doors. / They’ve filled science books and still more to come. / The shuttle’s legacy will live on when her flying is done.”

Flight controllers applauded back in Houston.

On this last full day of this last mission, Ferguson told the controllers, “I’d love to have each and every one of you to stand up and take a bow, a round of applause. Then there would be no one to applaud and there would be nobody to watching the vehicle … but believe me, our hearts go out to you.”

Ferguson and his crew checked their critical flight systems for Thursday’s planned 5:56 a.m. landing at Kennedy Space Center, not quite an hour before sunrise. Everything worked perfectly. To top it off, excellent weather was forecast to wind up the 135th flight of the space shuttle era.

Asked by a TV interviewer what he would tell all those watching Atlantis’ return, Ferguson echoed what he told the lead team of flight controllers that signed off for the very last time Tuesday.

“Take a good look at it (Atlantis) and make a memory because you’re never going to see anything like this again,” he said. “It’s been an incredible ride.”

Space station astronaut Michael Fossum posted on Twitter a photo of the shuttle docked to the station 250 miles above the blue planet, which he snapped during last week’s spacewalk. He noted in the tweet: “When will such beautiful ship dock again to ISS?”

NASA already is shifting gears.

It’s working with private companies eager to take over cargo runs and astronaut flights to the space station. The first supply trip is expected to take place by the end of this year. Astronaut trips will take more time to put together, at least three to five years.

The long-term destination is true outer space: sending astronauts to an asteroid by 2025 and to Mars the following decade. That’s the plan put forth by President Barack Obama. His predecessor wanted moon as the prize.

Throughout their 13-day mission and again Wednesday, the Atlantis astronauts stressed the need for a decades-long space exploration plan that does not change with each incoming president.

Ceccacci, whose Mission Control experience dates back to the first shuttle flight in 1981, said it’s “tough” to think about all the experience that will be walking out the door following this mission. Thousands of layoffs are looming at the various NASA centers.

“We know there’s going to be a rough spot for a while,” he said. “But we hope that when we do get a good plan, a good direction, a good mission, that we can come back in here and do what we’ve been doing for the past 30 years for the shuttle and the years before that with Mercury, Gemini and Apollo.”

Ceccacci plans to read a speech to his flight control team, once Atlantis and its crew are safely back on Earth, but there will be none of the flag-waving, cigar-smoking celebrations seen during the moon-landing days. Smoking is no longer permitted in the control center, he reminded journalists.

Rather, Ceccacci said he will gather flight controllers around to watch Ferguson, co-pilot Douglas Hurley, Rex Walheim and Sandra Magnus walk around the last shuttle one last time on the runway — so the controllers can “soak it in … and congratulate each other on a job well done.”

Atlantis is the last of the shuttles to be retired. It will remain at Kennedy Space Center, eventually going on public display at the visitors complex. Discovery is bound for the Smithsonian Institution in suburban Washington, and Endeavour for the California Science Center in Los Angeles.

Online:

NASA: http://www.nasa.gov/shuttle

Copyright 2011 The Associated Press.

Washington State Plans to Build “Quick Charge” Stations

Washington State has announced a plan to construct miles of “quick charge” stations for electric cars. Part of a larger West Coast Green Highway, the state’s effort would contribute to a large scale 1,200 mile electric roadway that would go through Canada, Washington, Oregon, and California. The plan, which would vastly improve Washington State’s infrastructure for electric, is likely to attract the attention of environmental advocates and auto industry executives alike.

The idea is that building “quick charge” stations along highways will extend their otherwise limited range. With more charge charging stations, drivers in Washington State will be able to take their electric cars further and to a wider variety of places.

And by no means is Washington the only state to undertake efforts to improve electric car infrastructure. The federal government has launched widespread building initiatives alongside private companies. This move—known as the EV Project —is meant to build thousands of charging stations along hundreds of miles of highway in 7 states .

But it seems that electric car owners are not the only people who will benefit from improved charging infrastructure. The EV project seems ready to push American-made hybrid and electric cars to a wider market. For example, EV collects data about the condition of U.S. electric car infrastructure based on the performance of a fleet of a thousand American hybrid/electric cars. The project promotes electric in general, then, but also specifically American electric cars like the Chevy Volt and the Nissan LEAF.

Expect politicians, auto industry executives, and environmental advocates to monitor the success of these programs. Success or failure of this federal initiative is a likely source of political ammunition in a campaign set to center around the use of federal expenditures to stimulate the economy, a key component of the stimulus law signed by Barack Obama early in 2009.

Clemens Trial Ruled a Mistrial

WASHINGTON (AP) — The judge declared a mistrial in baseball star Roger Clemens’ perjury trial over inadmissible evidence shown to jurors.

U.S. District Judge Reggie Walton said Clemens could not be assured a fair trial after prosecutors showed jurors evidence against his orders in the second day of testimony.

Walton scheduled a Sept. 2 hearing to determine whether to hold a new trial.

Copyright 2011 The Associated Press.

Bernanke Will Stimulate if Necessary

In testimony before the House Financial Services Committee Wednesday, Fed Chairman Ben Bernanke indicated that the central bank would commit to another round of stimulus if economic growth continues to stall.

The Fed Chief acknowledged that economic numbers from the first half of 2011 were less than impressive. Attributing the dismal 9.2% unemployment rate from the June jobs report to a
“slowdown in aggregate demand… centered in the household sector,” Bernanke concluded that the “willingness of consumers to spend will be an important determinant of the pace of recovery in the oncoming quarters.” Essentially, the pace of the recovery hinges on consumer confidence.

Bernanke made clear that the Fed — as they did in 2008 — has the capacity to pump money into the economy even after the interest rate hits zero. “Even with the federal funds rate close to zero,” he said. “We have a number of ways in which we could act to ease financial conditions further.”

But while Bernanke’s 2012 and 2013 growth and unemployment numbers remained relatively optimistic for a faster recovery, he acknowledged that the slowdown of the first half of this year might have lingering effects.

This all means that if slow growth continues, the Chairman may not hesitate in “deploying additional stimulus if conditions warrant.”

Of course, progressives have been urging Bernanke to use the tools at his disposal for years now in order to boost the employment rate and pace of economic growth (the recent policy known as QE2 was seen as something of a success, but worried investors who are terrified of the prospect of inflation).

If he took a hard stance on boosting employment instead of combating barely-existent inflation, both the Democrats’ electoral prospects–and the job prospects of millions of Americans–would increase markedly. But how badly does Bernanke, a moderate Republican, want this?

U.S. Embassy in Syria Attacked

BEIRUT (AP) — Syrian government supporters smashed windows at the U.S. Embassy in Damascus on Monday, raised a Syrian flag and scrawled graffiti calling the American ambassador a “dog” in anger over the envoy’s visit last week to an opposition stronghold, witnesses said.

French Embassy security guards in the capital fired in the air to hold back supporters of President Bashar Assad’s regime who were also protesting the French ambassador’s visit to the same city, Hama, in central Syria. Protesters smashed embassy windows and shattered the windshield of a diplomatic SUV outside the compound. The French flag was removed and replaced with a Syrian one.

“God, Syria and Bashar. The nation that gave birth to Bashar Assad will not kneel,” read graffiti written outside the embassy. One witness said three protesters were injured when guards beat them with clubs. The witness asked not to be identified because of the sensitivity of the situation.

There was no immediate word on casualties among protesters at the American Embassy demonstration.

A U.S. official said the Obama administration will formally protest the attack and may seek compensation for damage caused when a mob breached the wall of the compound before being dispersed by Marine guards.

The official said the State Department would summon a senior Syrian diplomat on Monday to condemn the assault and demand that Syria uphold obligations to protect foreign diplomatic missions. The official said no buildings were entered and there were no injuries to embassy personnel. But the official said the attackers damaged the chancery building.

The official, who spoke on condition of anonymity because he was not authorized to discuss the matter publicly, said Syrian security forces were slow to respond to the attack.

The Syrian regime called the French and American ambassadors’ visits to Hama last week interference in the country’s internal affairs and accused the envoys of undermining Syria’s stability.

The protests erupted after U.S. Ambassador Robert Ford harshly criticized the Syrian government’s crackdown on a popular uprising.

Some 1,600 civilians and 350 members of security forces have been killed since demonstrations began, activists say. Syria blames what it calls “armed gangs” and Muslim extremists for the violence.

Hiam al-Hassan, a witness, said about 300 people had gathered outside the French Embassy while hundreds others were at the American diplomatic compound.

“Syrians demonstrated peacefully in front of the French embassy but they were faced with bullets,” said al-Hassan.

On Sunday, Ford attacked the Syrian government for allowing pro-government protests while beating up anti-regime demonstrators. The pro-Assad protests in Syria are known as “mnhebak,” or “we love you.”

“I have not seen the police assault a “mnhebak” demonstration yet,” Ford wrote on the embassy’s Facebook page. “On July 9, a “mnhebak” group threw rocks at our embassy, causing some damage. They resorted to violence, unlike the people in Hama, who have stayed peaceful.”

“And how ironic that the Syrian Government lets an anti-U.S. demonstration proceed freely while their security thugs beat down olive branch-carrying peaceful protesters elsewhere,” he said. “I saw no signs of armed gangs anywhere not at any of the civilian street barricades we passed,” Ford added.

Monday’s protests coincided with government-organized talks in Damascus on possible political reforms after four months of unrest.

However the talks did not stop Syrian forces from pressing their crackdown on the opposition.

Before the embassy attacks, Syrian troops stormed the country’s third-largest city with armored personnel carriers and heavy machine guns, a rights activist. At least two people were killed and 20 wounded in the attacks in Homs, activists said.

The clashes in Homs in central Syria suggest the Assad regime will not ease its four-month-old crackdown on the opposition despite proposing some political changes.

Vice President Farouk al-Sharaa called Sunday for a transition to democracy in a country ruled for four decades by the authoritarian Assad family dynasty. But the talks, which wrap up Monday, are boycotted by the main anti-government factions and are unlikely to produce any breakthroughs to immediately end the bloodshed.

The two days of meetings, however, were seen as a major concession by Assad’s regime after the most serious challenge to its rule.

In Homs, an activist in the city told The Associated Press clashes occurred after security forces on Sunday killed the son of an anti-regime tribal leader. The unrest lasted until 5 a.m. (0200 GMT) Monday.

Street lights were turned off then troops started entering neighborhoods, shooting with heavy machine guns atop Russian-made armored personnel carriers, said the activist, who spoke on condition of anonymity for fear of government reprisals.

He said some people cowered in their bathrooms during the height of the assault. At least one person was killed and 20 wounded, the activist said.

Rami Abdul-Rahman, the London-based director of the Syrian Observatory for Human Rights, also said forces pushed into parts of Homs.

Copyright 2011 The Associated Press.

Dismal Jobs Report Points to Slowing Recovery

As the early August debt-ceiling deadline looms, the release of two dismal economic reports can only fan the flames of partisan debate. Both the BLS and the U.S. Department of Commerce release data that points to yet another economic slowdown. The increase in the unemployment rate, the widespread shedding of government jobs, and the increase in retail inventories—specifically automobile inventories—promise to add new flavor to Washington’s raging budget debate.

In their June jobs Report, the BLS indicated that the United States non-farm unemployment rate increased from 9.1% in May to 9.2% in June. This 0.1% increase represented the third consecutive month of rising unemployment and can be blamed primarily on the creation of a meager 18,000 jobs. To better understand the economic and political implications of this increase we should take a more focused look at the BLS numbers.

More interesting than the straightforward increase in unemployment is how these numbers varied over different sectors of the economy and segments of the population. The number of people unemployed for less than five weeks increased by an astonishing 412,000, while the number of people jobless for more than 27 weeks increased by 89,000 people. Both of these numbers indicate that employers have stopped hiring. In June, many more people were being laid off, and even fewer were getting rehired.

The most dismal sign is an overall drop in the percentage of people working. According to the report, the percentage of the population working or looking for work decreased from 58.4% in May to 58.2% in June. A true measure of the number of jobs available, this overall decline in people working shows a truly stagnant economy.

Public workers seemed to suffer the most from the economic slowdown as various federal, state and local government agencies combined to cut 39,000 jobs. A result of widespread efforts to balance state and local budgets, the loss of government jobs promises to become a big issue in the ongoing debate over federal budget deficit. With Republicans and Democrats fighting to save trillions in revenue, policymakers must wonder if further cuts to government programs is really a good thing for a stumbling economic recovery.