Sunday, January 20, 2008

Louis J Sheehan Esquire 301015

Apparent gaps in White House e-mail archives coincide with dates in late 2003 and early 2004 when the administration was struggling to deal with the CIA leak investigation and the possibility of a congressional probe into Iraq intelligence failures.

The gaps - 473 days over a period of 20 months - are cited in a chart prepared by White House computer technicians and shared in September with the House Reform and Government Oversight Committee, which has been looking into reports of missing e-mail.

Among the times for which e-mail may not have been archived from Vice President Dick Cheney's office are four days in early October 2003, just as a federal probe was beginning into the leak of Valerie Plame's CIA identity, an inquiry that eventually ensnared Cheney's chief of staff.

Contents of the chart - which the White House now disputes - were disclosed Thursday by Rep. Henry Waxman, a California Democrat who chairs the House committee, as he announced plans for a Feb. 15 hearing.

Waxman said he decided to release details from the White House-prepared chart after presidential spokesman Tony Fratto declared "we have absolutely no reason to believe that any e-mails are missing."

Among the periods of time for which the chart indicates e-mail is missing is a five-day span starting on Jan. 29, 2004, when the White House was dealing with the possibility of an election-year probe by Congress into Iraq intelligence failures.

Not archived by the office of the vice president is e-mail for Jan. 29-31, 2004, according to chart information released by Waxman. In addition, all e-mail from the White House Office in the Executive Office of the President was listed as missing for one of those days.

The chart indicates that e-mail also was not archived by the White House on the following Monday - Feb. 2, 2004 - the day President Bush took a big step in averting what could have been a politically troublesome congressional inquiry. He ordered an independent investigation into intelligence failures in Iraq.

The president conferred that day with former chief weapons inspector David Kay, declaring, "I want to know all the facts."

The commission named by Bush reached a harsh verdict about the U.S. intelligence community's performance, but the panel stopped short of addressing the White House's use of the intelligence data to support the idea of war with Iraq.

The White House says computer back-up tapes should contain substantially all e-mails between 2003 and 2005. However, the White House recycled backup tapes until sometime in October 2003, taping over existing data. That could mean some e-mail is gone forever if it is also missing from archives.

An example might be any missing e-mail from Cheney's office in the early days of the CIA leak probe. The White House has not said when in October 2003 it halted the recycling of backup tapes.

E-mails in early October 2003 could reveal key discussions between White House personnel in the week after the Justice Department opened a criminal investigation into the leak of Plame's CIA identity. The White House denied that Cheney chief of staff I. Lewis "Scooter" Libby or top presidential adviser Karl Rove were involved in the leak, an assertion that turned out to be false.

"Can it be a mere coincidence that some of the missing e-mail correspond to a key period during the Valerie Plame investigation?" asked Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington. "Given everything else we know, that is nearly impossible to believe."

Her organization is one of two private advocacy groups suing the White House in the e-mail controversy.

At issue on Oct. 1, 2003, was the push by congressional Democrats for Attorney General John Ashcroft to step aside and appoint an independent prosecutor to investigate the White House.

Ashcroft eventually recused himself, and at the end of 2003 U.S. Attorney Patrick Fitzgerald was appointed by a Justice Department official to head the probe. Two years later, Libby was indicted, and he was later convicted of obstructing the investigation. His 30-month prison sentence was commuted by Bush. Rove was questioned by a federal grand jury five times but was never charged.

In January 2006, shortly after Libby was indicted, a letter from Fitzgerald to Libby's lawyers was the first public disclosure that the White House was having a problem with its e-mail system.

Fitzgerald wrote: "We have learned that not all e-mail of the Office of Vice President and the Executive Office of the President for certain time periods in 2003 was preserved through the normal archiving process on the White House computer system."

The White House says the e-mail matter arose in October 2005 in connection with the Justice Department's CIA leak probe, in which Fitzgerald later that month obtained a grand jury indictment against Libby for perjury, obstruction and lying to the FBI.

In the wake of Hurricane Katrina, we are again reminded why consumers have a healthy distrust of insurance companies. After years of religiously paying premiums for the peace of mind of knowing they were covered, hundreds of thousands of policyholders found they had been paying money for nothing.

Insurance companies have employed hardball tactics like delaying or denying the payment of legitimate claims, altering policies, lowballing, aggressively fighting valid claims and even alleging fraud long before Katrina. And for good reason: every dollar saved on paying claims is a dollar that increases profits and drives up stock value. With insurance company CEOs receiving annual compensation greater than the gross national product of many nations, it's easy to see why profits might get put ahead of the interests of policy holders.

After Katrina, the international consulting firm McKinsey & Co. was retained by many insurance companies to stem the anticipated tide of claims payments. McKinsey had introduced a strategy of "deny, delay and defend" under which insurers offer some customers less than full value of their claims and deny payment and aggressively litigate other claims. A policyholder is then forced to sue to recover what is owed and must incur both the cost of litigation and further delays in obtaining payment.

Many policyholders simply accept what is offered to avoid having to hire counsel and bring suit, and because of the costs involved, those who bring suit net out much less than the policy provides for. The strategy works very well, at least for stockholders of insurance companies. Despite the historic losses caused by Katrina, the property casualty insurance industry (those who sell coverage on homes and cars) is reaping huge profits. Property casualty insurers reported their highest profits ever, $64 billion, in 2006. This trumps the previous record profit of $44 billion they made in 2005, even after accounting for Katrina claims. Experts predict that 2007 looks like another stellar year for the industry.

The insurance industry has awakened to the fact that its reputation has been seriously damaged by Katrina. "I know that we cannot wave a magic wand and convince the vast majority of the public to love us," says David Sampson, president of the Property Casualty Insurers Association of America.

The company has hired Frank Luntz, a Republican pollster and accomplished wordsmith, best known for labeling President Bush's pro-logging industry policy "the Healthy Forests Initiative."

But a battery of public relations consultants will not solve the public's mistrust of the insurance industry if the end result is just word games, smoke and mirrors. Here's a thought: why not try paying legitimate claims on time? When a tragedy occurs, why not send in a quick response team with check-writing authority right away instead of spending days in the board room dreaming up ways to avoid or delay paying policyholders? How about throwing McKinsey's "deny, delay and defend" strategy into Lake Pontchartrain and focusing instead on improving business practices? And rather than spending a fortune to lobby against laws that would protect consumers, why not actively work to reduce the preventable losses your policyholders regularly sustain?

Acting in good faith isn't just good public relations or a sound business practice for insurance companies: they have a fiduciary duty to promptly pay the legitimate claims of their policyholders.

Many states are busy trying to enact new laws that will force insurance companies to act more responsibly. In November, voters in Washington state approved a ballot measure allowing policyholders to sue for restitution if an insurance company "unreasonably" denies a legitimate claim. The law is similar to one in Pennsylvania that holds insurance companies accountable for misconduct. This gives policyholders some protection against "deny, delay, and defend" tactics. That may explain why the insurance industry spent $11.5 million to try to defeat the measure in Washington -- breaking a state record for spending on a referendum.

Fortunately, voters saw through the insurance companies' clever ads and approved the measure. More states should follow Pennsylvania's and Washington's example.

Rule No. 1 for how to succeed in any business is to play by the rules and treat customers honestly and fairly. Only by treating their policyholders as well as they do their shareholders can insurance companies hope to win back the public's trust.

In 1941, Rasha Shuster and her two sisters escaped from their hometown just before the Germans slaughtered the 12,000 Jews who lived there. A peasant sheltered the girls for three weeks. Then his neighbor betrayed them. The local police killed Rasha's sisters, but she heard the gunshots and ran for her life. After weeks of wandering in the forests and finding only temporary shelter, she was taken in by a middle-aged, truly destitute peasant living alone in a shack. She hid there for 21⁄2 years. Later, she recalled: "When I asked him why he was doing this and risking his life . . . he answered that it was because I was not guilty of anything."

The town where Rasha Shuster lived and where thousands of Jews died wasn't in Germany or Poland or anywhere else in the Europe so often described in Holocaust narratives. Shuster was from Stoklishki, Lithuania, and the police -- eager to do the Nazis' bidding by shooting her sisters -- were fellow Lithuanians. Her first-person account is found in "The Unknown Black Book," an extraordinary collection of eye-witness reports, diary entries and other accounts of the mass murder of Jews far from the gates of Auschwitz and Treblinka. Of the six million Jews murdered in the Holocaust, more than 2.5 million died in territories controlled by the Soviet Union before the war. Most of the victims were slaughtered in open-air massacres.

"The Unknown Black Book" is the first publication of materials excluded for political reasons from "The Black Book," a collection of survivors' testimony that was compiled toward the end of the war but then ran afoul of the Stalinist regime -- even after it was heavily censored -- and fell into political limbo for decades. The project traces its roots to February 1942, when the Soviet government established the Jewish Anti-Fascist Committee (JAC) in an effort to drum up international support as the Red Army struggled to withstand the onslaught of the German Wehrmacht.

Headed by the Yiddish actor Solomon Mikhoels and staffed by other well-known actors, writers and poets, the JAC did its job for a year, publishing articles, making radio broadcasts and hosting visitors in Moscow. But when the fortunes of war changed after the Soviet victory at Stalingrad in 1943, the regime began to have second thoughts about the JAC.

As Soviet forces advanced to the west, revealing the Nazis' systematic extermination of Jews, the JAC felt duty-bound to collect and present the evidence of genocide. The committee started gathering eyewitness testimony about the atrocities and planned to publish a collection of the accounts. The JAC had thought its "Black Book" effort, led by well-known Soviet Jewish writers Ilya Ehrenburg and Vasily Grossman, would both serve the Soviet cause and record the Jews' terrible fate under German rule. But when it became apparent that any accounting of the genocide would include descriptions of the often enthusiastic cooperation between Soviet citizens and Nazi occupiers, the government balked, accusing the JAC of focusing on "the vile activity of traitors among the Ukrainians, Lithuanians, and others."

Publication of "The Black Book" was deemed "inexpedient." In January 1948, Solomon Mikhoels was assassinated on Stalin's orders, heralding the beginning of an anti-Semitic campaign that ended only with Stalin's death in 1953. The secret police soon arrested the leaders and staff of the JAC on charges of "bourgeois nationalism." Following mock trials, 13 of them were executed in 1952.

For several decades thereafter only a few experts knew about the existence of the Russian "Black Book." Incomplete versions of it began appearing in the 1980s; in 1993, the first complete version of "The Black Book" was published in Lithuania with newly discovered material from Russian archives and with government-censored sections restored. That same year, "The Unknown Black Book" was published in Russia. Now we have a translation by Christopher Morris and Joshua Rubenstein, edited by Mr. Rubenstein, the Northeast regional director of Amnesty International USA, and Ilya Altman, co-chairman of the Russian Research and Educational Holocaust Center in Moscow.

It is impossible to convey the full impact of these testimonies in a short review. But a few examples may provide an inkling of the nature of the material. Sara Gleykh described the destruction of the Jewish population of Mariupol, a city in the Ukraine. The Germans arrived there on Oct. 8, 1941, and immediately instituted anti-Jewish measures. On Oct. 18, Sara's family was ordered to leave their apartment for resettlement: Neighbors, told that they could "take whatever they wanted," Sara recalled, "all rushed into the apartment" and "quarreled over things before my eyes, snatching things out of each other's hands and dragging off pillows, pots and pans, quilts." That day, the 9,000 Jews of the city were murdered. Sara, who lost her entire family, climbed out of the mass grave and eventually reached the Soviet lines.

In Minsk, Tsetsilia Shapiro, a 26-year-old doctor, found herself enclosed in the city's ghetto -- guarded mostly by Belorussian policemen -- with a newborn baby and a 5-year-old boy. When she begged a former colleague and professor of medicine to help her find work in the countryside, he responded: "We don't send kikes to work. We exterminate them if they don't understand that they're supposed to drop dead from hunger." When the Germans began murdering the Jews with gas vans, as extra entertainment "young women had their hair tied to the axles of the vehicles in such a way that they were dragged alive through the city" while "the killing by gas of those who were inside the mobile vans was being carried out." Shapiro escaped with false papers to Gomel, where the chief of police, a former Red Army officer, sent her to a German racial "specialist." Fortunately, he determined that she was "undoubtedly" of Aryan descent.

Shapiro's son survived in an orphanage, protected from German inspections by not having been circumcised. Another witness from Minsk, Tamar Gershakovich, maintained that "many Russians and Belorussians, risking not only their own lives but the lives of their families, hid Jewish children in their homes." But accounts from Lithuania paint a grim picture of local participation in murder and robbery. The Lithuanian underground fighter Dr. Viktor Kutroga described how Lithuanian "partisans" -- meaning civilian collaborators -- "burst into Jewish apartments, killed men, women, and children, and looted the property of those murdered" as soon as the Germans marched into Kovno on June 23, 1941. On Sept. 1, he wrote: "The mass extermination of Jews in the provinces by members of Lithuanian 'partisan' units under the leadership of the Germans has begun. . . . The Jews have been made to dig their own graves. Then they have to bring their sick and their children and remove their outer clothes. After that, they are shot in groups. . . . All of this is happening in broad daylight, often in front of thousands of witnesses. . . . The slightly wounded were finished off with bayonets or else buried alive; the small children were treated the same way. Often, the 'partisans' simply killed children with shovels."

Dr. Kutroga pointed out that many Lithuanian intellectuals and clergymen, and even some German soldiers, were appalled by these actions. But in many accounts we find that those who ultimately saved Jews were wretchedly poor peasants. Major Z. G. Ostrovsky, who collected testimonies in Lithuania, wrote: "There were hundreds of reported cases of Lithuanian peasants hiding Jews who had fled from the ghetto."

But those were exceptions. Reysa Miselevich, from the region of Zhmud in northwestern Lithuania, escaped the destruction of the entire Jewish population there in July 1941, when they were incarcerated in improvised camps guarded by Lithuanians. Conditions were appalling, and young women were regularly raped. Toward the end of the month all the male Jews, numbering some 5,000, were first subjected to prolonged torture and humiliation and then murdered. "The earth on top of the pits was heaving the entire time, since many had been buried alive. For an entire week after this, blood burst from the pits like a fountain," Reysa said. Several weeks later the older women and the children, about 4,000 altogether, were also massacred in a single day. The last remaining Jews, 400 young women, were killed on Christmas Day, 1941. All of the murders were carried out by Lithuanian policemen.

These accounts do not provide any simple explanation for such gratuitous yet systematic and relentless violence. Sometimes it seems as if the Jews' countrymen were prepared to murder them wholesale simply out of greed for their possessions. But that hardly explains such dark evil, just as attempts to portray the Holocaust as a bureaucratic undertaking planned and executed by detached civil servants and automaton-like killers are inadequate.

"The Unknown Black Book" reveals the sheer barbarity on the individual level -- the tortures and rapes, the looting and destruction, and, not least, the glee and humor, as well as the hatred and contempt, expressed by the killers. It makes for very disturbing reading. But these accounts from those who saw what happened convey what we cannot learn from official documents about the nature of this vast criminal enterprise, in which hundreds of thousands were transformed into monsters -- mostly returning home after the war as "ordinary" men -- and millions of others became helpless, dehumanized, mutilated and finally forgotten victims.

This is a repeat scenario in our house: It's around 8:30 p.m., my 3-year-old daughter is finally settled in bed, and just as I'm tip-toeing out of the room, she rummages in the covers, bolts upright and asks the dreaded question: "Where's George?"

While my husband and I hunt down her beloved stuffed monkey, my daughter begins to sob, and my narrow window of evening downtime evaporates.

For working parents who've been gone all day, it's difficult to know where a cherished item was last seen. (Most recently, we found George on a chair in the darkened living room, placed there apparently to admire the Christmas tree.) Some parents will go to extreme lengths to find their children's beloved animals, pillows and blankets -- from digging through Dumpsters to bidding for similar ones on eBay.

Readers, what do you do about lost or misplaced items? By hunting for them or replacing them, are we indulging our kids, or saving our sanity?

The 1970s can conjure up some pretty frightening memories -- lava lamps, pet rocks, John Denver songs, blue eye shadow.

But these days, economists worry that an even scarier relic of the disco era might be rearing its ugly head -- stagflation, a not-so-groovy term used by economists to describe an economy plagued by recession, rampant inflation and high unemployment.

It's the worst of all worlds; a toxic combination that vexed Federal Reserve policymakers more than 30 years ago and now threatens to put a squeeze on Federal Reserve Chairman Ben Bernanke: Lower interest rates risk higher inflation, higher rates a long recession.

"The stagflation scenario is more than a likely possibility," said Emanuel Balarie, CEO of Jabez Capital Management, a California firm that specializes in commodities and alternative investments.

Additional interest-rate cuts will only be a temporary solution, he said.

"The recent rise in unemployment is just the tip of a much bigger economic iceberg," he said. "We are heading toward a housing-led recession. On the inflation front, the record commodity prices clearly point to an economic scenario where inflation will be rampant."

The word "stagflation" -- a combination of the words "stagnant" and "inflation" -- was coined by economists during the 1970s. Ultimately, former Fed Chief Paul Volcker performed shock therapy on the economy, jacking up short-term interest rates to 21 percent to squelch an inflation rate that peaked at 13.5 percent in 1981.

While no one is predicting the American consumer will have to endure a similar economic disaster, central bankers are increasingly worried the economy might be headed into deep trouble.

The stock market is off to its worst start since 2000 as the housing slump and turmoil in the credit markets continue to weigh on the economy. Home sales have fallen to the lowest in 12 years, the jobless rate jumped to a two-year high of 5 percent in December and government data last week showed manufacturing slowing in December to its weakest level since April 2003.

At the same time, prices are going up, thanks to the latest surge in oil prices.

In November, the core rate of inflation increased 0.3 percent, bringing the year-over-year inflation rate to 2.3 percent -- outside the Fed's desired "comfort zone" of 1 percent to 2 percent, said Rich Yamarone, chief economist at Argus Research.

But that number doesn't tell the whole picture. Yamarone said many companies in consumer products, food and air travel have been announcing price increases because of a combination of higher costs and continuing high demand for their products.

For example, Yum! Brands, which owns the KFC and Taco Bell restaurant chains, recently detailed significant increases in costs that included price hikes of 16 percent to 20 percent for chicken and 10 percent to 14 percent for cheese.

"Nothing influences consumer inflation expectations like the price of food, particularly milk," Yamarone said. "Keep in mind that retail food prices have risen 4.8 percent over the last year, the largest increase in 17 years."

Stuart Hoffman, chief economist at PNC Financial Services Group, described the economy as "a cat on a hot tin roof that has already used up eight of its nine lives."

"One more fall from the hot roof and this economy cat is not likely to land on its feet once again," he said.

That puts the Fed between the "proverbial rock and a hard place," said Bob Doll, vice chairman and director of the BlackRock investment management firm. "If they lower rates too much, they may crease excess liquidity, which could lead to higher inflation. Not lowering rates enough, however, puts central bankers at risk of not being responsive to recessionary threats."

Most economists expect Fed policymakers to cut the short-term rate they control to 4 percent at their Jan. 28-29 meeting. It would be the fourth consecutive quarter-point cut in less than six months.

Goldman Sachs last week said it expects the economy to drop into recession this year, forcing the Fed to cut its benchmark lending rate to 2.5 percent by the third quarter of this year.

The possibility of a stagflation threat to the economy is being hotly debated. Former Fed Chief Alan Greenspan first raised the possibility last month.

"I am most concerned about it," Greenspan said in a recent television interview. "Over the past 20 years, we have had a most remarkable period. Vast geopolitical shifts, including the end of the Cold War, have contributed to a remarkable period of disinflation. But that period is now coming to an end."

Charles Plosser, head of the Philadelphia Federal Reserve, has also touched on the subject of stagflation.

"Although I am expecting slow economic growth for several quarters, we should not rely on slow growth to reduce inflation," he warned in a speech. "Indeed, the 1970s should be a sufficient reminder that slow growth and falling inflation do not necessarily go hand in hand."

Relaxing at his 40,000-square-foot mansion, Palazzo di Amore, Jeff Greene reflects on a stellar 12-month run. He snatched the estate out of receivership for $35 million in a bidding war. He got married in a spectacular wedding here with boxer Mike Tyson as his best man. And he is up more than half a billion dollars on a bet that the housing market would crater.

He may have lost a friend in the process: John Paulson, a hedge-fund manager who devised what proved to be a wildly profitable strategy for betting against risky mortgages.
[Jeff Greene]

It was the spring of 2006, and Mr. Paulson, seeking investors for a new fund, gave Mr. Greene a peek at his plan. Mr. Greene didn't wait for the fund to open. He beat his friend to the punch by doing the same complex mortgage-market trade on his own.

"He never told me: 'Don't do it,'" Mr. Greene says. Mr. Paulson won't discuss the matter.

If Mr. Paulson is the pensive, low-key mastermind of the lucrative bearish bet, 53-year-old Mr. Greene is the strategy's most flamboyant exemplar. A Los Angeles real-estate investor who made and lost a bundle 15 years ago, bounced back, bought himself three airplanes and a yacht, and entertains celebrities in his multiple homes, Mr. Greene has hired a P.R. firm to raise his profile and help him move into new business spheres.

"Jeff lives on the edge. He made a fortune, lost a fortune and made it back," says Fred Sands, a Los Angeles real-estate developer who got to know him through late-night parties Mr. Greene threw at his Malibu and Hollywood Hills homes. The latter pad is known for its pillow-lined penthouse den, the Moroccan room. His soirees attracted an eclectic crowd, from Paris Hilton to Mr. Tyson.

For the artwork in Mr. Greene's new Beverly Hills mansion, money is one motif. A dark metal rendering of a dollar bill hangs over the bar.

Eroticism is another. In the east wing are two huge erotic paintings that Mr. Greene waited to hang until after his September wedding there.

Mr. Greene grew up middle class in Worcester, Mass. After a 21⁄2-year run through Johns Hopkins University, he saved up $100,000 in three years managing telemarketing centers, which he used to make his first property investment: a three-family house in the Boston area. He lived in it while getting a Harvard M.B.A., acquiring 17 more homes while at the business school.

Moving to California, he dabbled in politics, trying unsuccessfully to get nominated as a Republican candidate for Congress. He bought and developed low-slung apartment buildings in the Los Angeles area, using loads of borrowed money. "My early windfall was a result of the excesses of the S&L era," Mr. Greene says. He says he had pushed his net worth to $35 million before the savings-and-loan crisis all but wiped him out in the early 1990s.

"I went through a very tough time. I didn't know how I would get out of it," he says. But by the late 1990s, as the California economy recovered, he was on his way to an even bigger fortune, eventually including 7,000 apartments. Louis J Sheehan Esquire

He bought three jets, most recently a Gulfstream. Though he paid just $2 million for an older model, "I certainly could afford" a $50 million one, he says. He adds, in a telephone interview from his 145-foot yacht: "I tend to be pretty conservative in the way I spend money."

The September wedding at his estate was Mr. Greene's first, and he pulled out all the stops. Guests sat beside a long reflecting pool, wandered marbled halls snacking on hors d'oeuvres, dined around the fountain in the motor court and boogied on a revolving dance floor in the 24-car garage. In late December, the party moved to Mr. Greene's yacht off the Caribbean island of St. Barts.

Sitting in the mansion's study during an interview, Mr. Greene marvels at a fireplace framed by lions that he says were carved by Peruvian woodworkers. Outside, the Pacific shimmers in the distance as contractors work on a pool and a 15,000-square-foot recreation center, to have a screening room and two bowling lanes.

A vineyard covers six of the estate's 27 acres. His wine will bear a label using the name that he and his 32-year-old bride, Mei Sze Chan, chose for their sprawling nest. "Palazzo di Amore," Mr. Greene says -- "it's a bit cheesy, but that's what it means to us."

Yet two years ago, an undercurrent of concern about the economy had begun to trouble him. Recalling the pain of losing his first fortune, he consulted a range of smart people in search of a way to hedge his bets. One was Mr. Paulson, whom he'd met decades earlier in New York's Hamptons, the same playground of the affluent where he later met Ms. Chan.

Mr. Paulson was convinced the market for risky "subprime" home loans would implode. He outlined a sophisticated securities trade he was crafting for a new hedge fund. It involved derivatives -- contracts whose value shifts with some other asset's value -- and would need an investment bank's participation. The bank would have to be convinced that a mere individual, as opposed to an institution, qualified to be a counterparty in such a transaction. Mr. Greene says he asked Mr. Paulson, "Can I do this trade myself?" and was told, "You'll never get approved."

Banks did turn Mr. Greene down at first. But after he produced enough paperwork, Merrill Lynch & Co. and J.P. Morgan Chase & Co. agreed. He was the first individual either bank had approved for this type of trade, involving what's called an asset-backed credit-default swap, say people familiar with the matter.

Mr. Greene dived into the riskiest type of the trade by betting on derivatives backed by a single pool of subprime mortgages. He says he analyzed lots of mortgage bundles before placing his bets. But, belying the financial sophistication he aims to project, he adds: "A lot of this stuff is anyone's guess."

Mr. Greene says his positions rose only a little until the spring of 2007, when troubles at a lender rattled the market. In recent months, he has cashed out some positions, locking in $72 million in profit, according to financial records. As of early this month, his positions at Merrill Lynch and J.P. Morgan were up about $466 million combined. Because the market for the riskiest derivatives is thin, Mr. Greene says, he is waiting for better pricing before he sells more.

His hedge-fund friend, Mr. Paulson, didn't want other investors duplicating his trades. "When I mentioned to him that I had already done some of this on my own, he kind of was surprised and seemed to be upset," Mr. Greene says, adding that Mr. Paulson didn't allow him into his new fund.

Mr. Greene says he wishes he could have invested in the fund as well as doing his own trades. He also holds out hope for their friendship. Mr. Paulson, he says, "did send me a nice card on my wedding."

When local high school graduates seek to fur ther their education at Harrisburg Area Community College, more than half are not ready to perform at the college level.

Testifying before the State Board of Education last week, HACC President Edna V. Baehre said 55.4 percent of entering freshman require remedial instruction in reading. More than half of the new HACC students also need remedial help in math and a third require assistance with their writing skills.

Despite an Education Week report last week that ranked Pennsylvania 10th in quality of education, this dismal picture is repeated around the state. Joan L. Benso, president and CEO of Pennsylvania Partnerships for Children, noted at the hearing that 20 percent more chil dren gradu ated in 2006 in 461 of the state's 501 school dis tricts than scored "profi cient" in statewide tests.

What more evidence is required to make the case that educational fraud is being perpetrated on a huge number of students, parents and taxpayers in the commonwealth?

And this is not a new phenomenon. Overcrowded prisons and companies increasingly seeking better educated employees from abroad are the stark real-world consequences of educational failure. That Pennsylvania is perceived to be in the top 10 states in education only suggests an even more abysmal state of affairs in 40 other states.

The federal No Child Left Behind program, which has been both widely praised and criticized, represented a recognition of the problem, and sought to bring accountability to the classroom. But a more effective program would make students accountable for their educational effort and accomplishments, or lack thereof.

Toward that end, the state board is expected to adopt recommendations from the Governor's Commission on College and Career Success that would require high school students, in order to receive a diploma, to achieve proficiency on at least six of nine end-of-course examinations. These Graduation Competency Assessments would be given in English, math, science and social studies.

Schools would have the option of administering the GCAs, require passage of the Pennsylvania System of School Assessment (PSSA) test in 11th grade or the 12th grade re-test, or administer a locally determined test comparable to the GCAs, subject to state approval.

This approach offers a critical difference from proposals for a single, all-encompassing graduation test that we have criticized. Under GCAs, students would have to prove proficiency in material they've just been taught. Remedial instruction for students who failed would be mandated. And there would be ample opportunities to retake the test.

Students who passed each GCA would be awarded Certificates of Proficiency in that subject, recognition that is important in conveying to students the significance of learning the material and doing well.
There is a danger of too much testing. But the GCAs can be used to replace teacher-composed final exams, and one hopes that they would eventually supplant the PSSA tests required by No Child Left Behind.

The experience in other states suggests that GCAs, which are similar to New York's long-standing Regents exams, could prove to be a turning point in education in Pennsylvania. Yet at least one vital piece of the education puzzle remains to be addressed.

Pennsylvania needs to swallow hard and put up the dollars necessary to ensure that every school district has the resources necessary to achieve educational success. Ultimately, that translates into greater economic success for Pennsylvania and its citizens.

And far fewer people crowding our prisons.

Borderline personality disorder (BPD) is a serious mental illness characterized by pervasive instability in moods, interpersonal relationships, self-image, and behavior. This instability often disrupts family and work life, long-term planning, and the individual's sense of identity. Originally thought to be at the "borderline" of psychosis, people with BPD suffer from emotion regulation. While less well known than schizophrenia or bipolar disorder (manic-depressive illness), BPD is more common, affecting 2 percent of adults, mostly young women. There is a high rate of self-injury without suicide intent, as well as a significant rate of suicide attempts and completed suicide in severe cases. Patients often need extensive mental health services, and account for 20 percent of psychiatric hospitalizations. Yet, with help, many improve over time and are eventually able to lead productive lives.

While a person with depression or bipolar disorder typically endures the same mood for weeks, a person with BPD may experience intense bouts of anger, depression and anxiety that may last only hours, or at most a day. These may be associated with episodes of impulsive aggression, self-injury, and drug or alcohol abuse. Distortions in cognition and sense of self can lead to frequent changes in long-term goals, career plans, jobs, friendships, gender identity, and values. Sometimes people with BPD view themselves as fundamentally bad, or unworthy. They may feel unfairly misunderstood or mistreated, bored, empty, and have little idea who they are. Such symptoms are most acute when people with BPD feel isolated and lacking in social support, and may result in frantic efforts to avoid being alone.

People with BPD often have highly unstable patterns of social relationships. While they can develop intense but stormy attachments, their attitudes toward family, friends, and loved ones may suddenly shift from idealization (great admiration and love) to devaluation (intense anger and dislike). Thus, they may form an immediate attachment and idealize the other person, but when a slight separation or conflict occurs, they switch unexpectedly to the other extreme and angrily accuse the other person of not caring for them at all.

Most people can tolerate ambivalence where they experience two contradictory states at one time. People with BPD, however, shift back and forth to a good or a bad state. If they are in a bad state, for example, they have no awareness of the good state.

Even with family members, individuals with BPD are highly sensitive to rejection, reacting with anger and distress to mild separations. Even a vacation, a business trip, or a sudden change in plans can spur negative thoughts. These fears of abandonment seem to be related to difficulties feeling emotionally connected to important persons when they are physically absent, leaving the individual with BPD feeling lost and perhaps worthless. Suicide threats and attempts may occur along with anger at perceived abandonment and disappointments.

People with BPD exhibit other impulsive behaviors, such as excessive spending, binge eating and risky sex. BPD often occurs with other psychiatric problems, particularly bipolar disorder, depression, anxiety disorders, substance abuse, and other personality disorders.

Although the cause of BPD is unknown, both environmental and genetic factors are thought to play a role in predisposing patients to BPD symptoms and traits. Studies show that many, but not all individuals with BPD report a history of abuse, neglect, or separation as young children. Forty to 71 percent of BPD patients report having been sexually abused, usually by a non-caregiver. Researchers believe that BPD results from a combination of individual vulnerability to environmental stress, neglect or abuse as young children, and a series of events that trigger the onset of the disorder as young adults. Adults with BPD are also considerably more likely to be the victim of violence, including rape and other crimes. This may result from both harmful environments as well as impulsivity and poor judgment in choosing partners and lifestyles.

Neuroscience is revealing brain mechanisms underlying the impulsivity, mood instability, aggression, anger, and negative emotion seen in BPD. Studies suggest that people predisposed to impulsive aggression have impaired regulation of the neural circuits that modulate emotion. The brain's amygdala, a small almond-shaped structure , is an important component of the circuit that regulates negative emotion. In response to signals from other brain centers indicating a perceived threat, it marshals fear and arousal. This might be more pronounced under the influence of drugs like alcohol or stress. Areas in the front of the brain (pre-frontal area) act to dampen the activity of this circuit. Recent brain imaging studies show that individual differences in the ability to activate regions of the prefrontal cerebral cortex thought to be involved in inhibitory activity predict the ability to suppress negative emotion.

Serotonin, norepinephrine and acetylcholine are among the chemical messengers in these circuits that play a role in the regulation of emotions, including sadness, anger, anxiety, and irritability. Drugs that enhance brain serotonin function may improve emotional symptoms in BPD. Likewise, mood-stabilizing drugs that are known to enhance the activity of GABA, the brain's major inhibitory neurotransmitter, may help people who experience BPD-like mood swings. Such brain-based vulnerabilities can be managed with help from behavioral interventions and medications, much like people manage susceptibility to diabetes or high blood pressure.

Treatments for BPD have improved. Group and individual psychotherapy are at least partially effective for many patients. A new psychosocial treatment termed dialectical behavior therapy (DBT) has been developed specifically to treat BPD, and this technique has looked promising in treatment studies. Pharmacological treatments are often prescribed based on specific target symptoms shown by the individual patient. Antidepressant drugs and mood stabilizers may be helpful for depressed and, or, labile mood. Antipsychotic drugs may also be used when there are distortions in thinking.

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