Thursday, September 18, 2008

Campbell brwon

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McCain campaign keeps Palin far from prying eyes and reporters' questions

Sponsored ByMcCain campaign keeps Palin under wraps

DAVID ESPO AP Special Correspondent
AP
Asked about her refusal to turn over e-mails to an Alaska investigator, Republican vice presidential candidate Sarah Palin looked up, smiled — and then stepped wordlessly into her waiting car.

Four days after leaving Alaska for her first solo campaign trip, Palin's hallmark is a disciplined adherence to a sparse public schedule. Appearances are few, interviews with the news media fewer still, and unscripted moments nonexistent.

She is frequently feisty in front of an audience, including Monday evening when she drew cheers as she laid into "far-East Coast politicians" who don't understand the need for control of coyotes or other predators. Or when her introduction of husband Todd as "first dude" evoked a few wolf whistles at a fundraiser.

But by the campaign's design, the self-described pitbull with lipstick, a history-making vice presidential candidate who has helped reshape the race for the White House, doesn't freelance.

"The American people are going to get to know Gov. Palin very well by the end of the campaign," says Steve Schmidt, the top strategist for presidential candidate John McCain. He said she has appeared in public nearly every day since her introduction as ticketmate more than two weeks ago, had a lengthy interview with ABC and been "delivering the reform and change message apart from John McCain and with John McCain."

In the coming days, he said, there will be more interviews, and Palin will join McCain for their first town hall-style appearance.

Yet some Republicans concede privately that Palin lacks familiarity with the numerous complex issues that she must deal with as the campaign progresses and question her readiness for high public office.

A gaffe could prove devastating to her and the ticket, they add. At the same time, she also must prepare for a nationally televised debate in October with her Democratic counterpart, Sen. Joe Biden of Delaware.

Several senior campaign officials accompanied Palin to Alaska recently for what amounted to a crash course in running for vice president, and the tutorial continues as she travels around the country.

"The campaign is not being run for the benefit of the press," says Rich Galen, a Republican strategist with extensive political experience. "The campaign is being run for the benefit of the campaign, and when everything is going well, then there is no need to change from what has been working."

Whatever concerns about Palin's readiness, the enthusiasm she has brought to McCain's candidacy is evident.

Polls nationally and in several key states show a swing toward McCain since she was added to the ticket, as conservatives warm to a politician they have long viewed warily. She is also the first woman running mate on a Republican ticket in history, making her a draw for female voters. The organizers of a fundraiser in Ohio where she spoke on Monday said the event raised nearly $1 million.

Yet surprisingly, even some of those who come to hear her speak temper their enthusiasm.

"She might not have the experience but a lot of people don't have experience when they take a job," said Candy Cartaya, a Cuban-American and retired accountant.

Loyal Merrick, a 32-year-old Denverite with his toddler daughter perched on his shoulders, said he has long admired McCain. "I think she's the style to his substance," he says. "She has about as much experience as (Barack) Obama does, so if you want to compare our No. 2 to their No. 1 I'm fine with that."

The governor faces an investigation back home into abuse-of-power allegations in connection with the firing of a state official, and her husband has been subpoenaed to testify in the probe.

Her views on numerous issues remain unknown. Her interview with ABC drew notice when she speculated about a possible war with Russia, and when she seemed to agree with Democratic presidential nominee Obama that U.S. troops should be permitted to cross into Pakistan to track terrorists.

Yet ironically, McCain himself was responsible for one of the ticket's most obvious public stumbles in recent days as he tried to take advantage of Palin's presence on his ticket.

Last week, he erroneously claimed she had never sought federal earmarks as governor, an assertion neither he nor his campaign disavowed. Asked about the issue on Monday, he said Obama had sought more earmarks than Palin. "The important thing is she's vetoed a half a billion dollars in earmark projects — far, far in excess of her predecessor and she's given money back to the taxpayers and she's cut their taxes, so I'm happy with her record," he said.

It's the type of questioning that the campaign has severely limited for Palin.

Since departing Alaska on Saturday for her first solo campaign trip, Palin has spoken before two rallies and appeared at a fundraiser.

After a speech in Carson City, Nev., on Saturday, she flew to Denver and made no public appearances on Sunday. She spoke in Colorado on Monday morning, then held her first solo fundraiser later in the day in Ohio. One scheduled interview was postponed due to storm-related damage. She has refused to answer shouted questions about issues ranging from the economy to the home-state investigation.

Aides keep reporters well away from her when she is campaigning, and also protect her privacy aboard her chartered campaign plane by pulling a curtain across the center aisle to separate the Palins and her top aides from the rest of the passengers.

Even Palin's carefully scripted moments can produce puzzlements.

"Too often, the government gets in the way when innovators take on cancer or Parkinson's or Alzheimer's," she told an audience in Golden, Colo. One aide suggested later that was a reference to federal earmarks that lawmakers sometimes insert into legislation, but the campaign provided no documentation for the claim.

Then, too, Palin seems to relish repeating claims that make selective use of undisputed facts. She told one audience she said "thanks, but no thanks" to the infamous Bridge to Nowhere" that was intended to link a small Alaska village to its airport on a nearby island.

In reality, she welcomed federal funding for the project until it became a national symbol of wasteful spending.

URL: http://www.newsweek.com/id/159198© 2008

Lawmakers Left On the Sidelines As Fed, Treasury Take Swift Action

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By Lori Montgomery
Washington Post Staff Writer
Thursday, September 18, 2008; A01



The frenetic pace of the financial crisis has forced the Treasury Department and Federal Reserve to make rapid-fire decisions in recent days, leaving Capitol Hill lawmakers effectively impotent -- and frustrated.

Lawmakers on both sides of the aisle expressed concern yesterday that they have had no control over when and how federal money has been used to curb the panic on Wall Street. While many have been convinced that the moves so far have been necessary to prevent a wider financial meltdown, they said they felt confined to the sidelines as power to make momentous decisions has been concentrated in very few hands.

House Speaker Nancy Pelosi (D-Calif.) said she has dispatched Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, to determine whether Federal Reserve Chairman Ben S. Bernanke should retain authority to unilaterally bail out failing firms, as he did Tuesday with a loan of $85 billion to insurance giant American International Group.

Congressional leaders learned of the rescue late Tuesday during a hastily called meeting in the Capitol with Bernanke and Treasury Secretary Henry M. Paulson Jr., who explained the deal after it was done.

"My instincts and my gut tell me they made the wrong move. But I don't have all the information they do," said Rep. Paul D. Ryan (R-Wis.), the senior Republican on the House Budget Committee, who yesterday fielded furious calls from constituents. "People are angry because they see this as their tax dollars bailing out Wall Street speculators. And in some cases, it is."

Paulson and Bernanke have taken the lead not only from lawmakers but from President Bush. Bush has left direct management of the crisis to them and other advisers, and has limited his public remarks on the economy. On Tuesday, he canceled plans to brief reporters after meeting with his economic advisers.

Yesterday, asked by reporters why Bush had not addressed the issue of the economy more directly in the midst of a crisis, White House spokeswoman Dana Perino said Bush was wary of holding news conferences in general because he didn't want to distract from the presidential campaign.

"I grant you that it's been a while," she said, "and I understand that people want to hear from the president during this time." Last night, the White House said Bush called off a scheduled trip to Alabama and Florida today to meet with his economic team.

Republicans in the House have scheduled a news conference for today to protest the string of bailouts that began in March with Wall Street investment bank Bear Stearns and extended in recent weeks to mortgage-finance giants Fannie Mae and Freddie Mac, as well as AIG. The latest decision was particularly hard to swallow, some lawmakers said, because it came just one day after Paulson refused to intervene to save Lehman Brothers Holdings and indicated that further rescues were unlikely.

"Just how long can the poor beleaguered taxpayer be expected to bear all the losses and bear all the risk?" said Rep. Jeb Hensarling (R-Tex.), one of the protest's organizers. "Lehman Brothers must have the worst lobbyist in town, since they are the only ones that appear to have lost out on the bailout mania."

Republicans and Democrats alike said the crisis is in part the result of insufficient government regulation on Wall Street. Frank and Rep. Henry A. Waxman (D-Calif.), chairman of the House Committee on Oversight and Government Reform, both plan hearings aimed at exposing regulatory failures and developing a new system for managing the bad assets of financial institutions collapsing under the burden of their investments in a plummeting housing market.

With Congress scheduled to adjourn next week, no one expects quick action, and there's a good reason for that, said Senate Majority Leader Harry M. Reid (D-Nev.).

"No one knows what to do," Reid told reporters. "We are in new territory here. This is a different game." Even Bernanke and Paulson aren't sure how to fix the system, he said, "but they are trying to come up with ideas."

One idea that's rapidly gaining currency is the creation of a new federal entity that would acquire "toxic" mortgage-backed assets from failing firms and hold them until the housing market improves. Economists including former Fed chairman Paul Volcker and former Treasury secretary Lawrence Summers have endorsed the idea. Summers, who served in the Clinton administration, is scheduled to speak to Senate Democrats at a luncheon today.

Setting up such an entity also would give lawmakers a chance to determine the parameters of future bailouts, as opposed to leaving the decision in Bernanke's hands. While most lawmakers said they trust Bernanke's judgment, Frank said he was troubled to learn in the meeting Tuesday that Bernanke has legal authority to use the central bank's reserves, which total $888 billion, to make loans to any entity under any terms he deems economically justified.

"No one in this democracy -- unelected -- should have $800 billion to dispense as he sees fit," Frank said. "It may be that there is so much bad debt out there clogging our system that we may have to have some intervention. But it shouldn't be the unilateral decision of the chairman of the Federal Reserve with the backing of the secretary of the Treasury."

Pressed by lawmakers at the Tuesday meeting to justify the AIG rescue, Bernanke argued that the insurance giant was deserving of government help because of its broad reach into global financial markets. But several lawmakers said it was not clear to them how Bernanke and Paulson were deciding which firms would be allowed to fail and which would be saved.

"They made very clear that they could give us no assurance that there wouldn't be other shoes that would drop," said Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee. "They also did not draw any bright line distinction in how they would handle things going forward."

Conrad said Paulson and Bernanke also could not say what the effect might be on the federal budget, which is already running up near-record deficits. Nor could they say what the ultimate cost to taxpayers might be.

"These massive amounts, it is deeply troubling," said Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate Banking Committee. "You start by taking $29 billion for Bear Stearns, $200 billion with Fannie and Freddie. Not to mention the discount window stuff. It is mounting. And it is deeply troubling."

If Bernanke and Paulson have a coherent strategy, many Republican lawmakers say they do not understand it, either. Rep. Adam H. Putnam (R-Fla.), chairman of the House Republican Conference, yesterday urged the administration to send an "envoy" to Capitol Hill to explain their decisions, as well as "the nature of the events that are unfolding in front of us" at this "historic moment."

"There's a great deal of confidence in Bernanke, but that reservoir is not limitless," Putnam told reporters. "People need to understand what the guiding principles are behind this ad-hoc strategy and how you decide that AIG is worthy of a bailout and that Lehman is not and that Bear Stearns is and Fannie. There has to be some better understanding of that."


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How General Petraeus led Iraq out of its darkest moment

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From The Times
September 18, 2008
But the Washington consensus of cutting troop numbers puts the gains of the surge at risk
Rosemary Righter
When he assumed overall command in Iraq in February 2007, General David Petraeus described the situation as “hard but not hopeless”. It is important to remember that, in that grim time, his assessment ranked as cock-eyed optimism - not least in Washington.

Two battles were raging in Iraq, with both American and Iraqi casualties horrifyingly high and shooting upwards. Lethal attacks by insurgents or al-Qaeda on coalition forces averaged 180 a day, while Iraq's Sunni and Shia communities were simultaneously tearing at each other's guts. In parts though not all of Iraq, death squads roamed at will, kidnapping, torturing and killing in an orgy of sectarian violence that sundered neighbourhoods and had families cowering in terror behind barred doors. On General Petraeus's first day touring Baghdad, 55 corpses lay decomposing in the streets, victims of sectarian killings. The national daily average of civilian deaths had topped 80.

His mission was to implement the new strategy announced by George Bush the previous month: a surge deployment of five extra army brigades and three Marine units, aimed at reducing violence enough to create space for the economy to revive and political reconciliation to begin. That mission, tough enough in itself, was all but friendless back home in Washington.

President Bush had ordered the surge in the teeth of opposition from the Pentagon's top generals and the State Department. In Congress, not only Barack Obama (more troops would worsen the violence) but Republicans such as Senator Chuck Hagel (it would be “the most dangerous foreign policy blunder in this country since Vietnam”) were loudly against, and the bipartisan Iraq Study Group had echoed public opinion in arguing for a strategy of “managed failure” to camouflage a speedy US withdrawal - with Senator Joe Biden further arguing that partition was Iraq's inevitable and even desirable fate. John McCain's backing for the surge looked like sinking his bid for the presidency.

This week General Petraeus handed over command to his stalwart deputy, General Ray Odierno, with thanks to American and the much improved Iraqi forces for turning hard but not hopeless into “hard but hopeful”, and this time was hailed for his modesty. Incontrovertibly, Iraq on his watch has pulled back from the precipice.

Al-Qaeda in Iraq is not finished, as constant suicide bomb attacks attest; but it is no longer an existential menace. Its losses since April are reported on jihadist networks to be double its casualties in the four years from 2003 to 2007 - not least because of the Sunni “Awakening” against the nihilistic brutality of al-Qaeda's methods.

Anbar, the “unwinnable” western province that was the heartland of the bloody Sunni insurgency and also of al-Qaeda in Iraq, is in consequence now so peaceable that on September 1 it became the 11th of Iraq's 18 provinces to be handed from American to Iraqi military control.

In the south, Basra has been reclaimed from Shia militia rule (despite rather than because of Britain's inadequate and in part shameful contribution), as, for now, has the militantly Shia Sadr City area of Baghdad. Countrywide, daily attacks have fallen from around 180 last year to around 25, and there has been a drop of almost 80 per cent in civilian deaths. Street markets, even the odd swimming pool, have reopened. Despite still-dysfunctional electricity and water supplies and inefficient and corrupt public administration, the economy is picking up.

The surge has ended: the additional units are out of Iraq. The gains are holding, with monthly US military fatalities dramatically down, from a peak of 126 as the surge got under way to 18 last month. They are holding because the surge involved much more than extra US troops.

Militarily, it underpinned the switch, masterminded by General Petraeus, to a counter-insurgency strategy that moved forces out of barracks into Iraqi streets with a mission to protect the Iraqi population and earn their trust. Politically, the surge sent the all-important message that the US was not, after all, going to cut its losses and run.

That altered the dynamics in Iraq. Factions that had been jostling for power ahead of America's discomfited departure realised that the US would stay around until it could in some confidence leave Iraq to manage its own destiny. The Sunni switch to alliance with US forces was the most dramatic consequence, a turnaround that General Petraeus shrewdly encouraged and financed. Political conciliation is not yet a fact but at least it is talked about.

General Petraeus, however, no more does modesty than he does cock-eyed optimism. If he says that progress is fragile and still reversible, he must be taken seriously. It would be as big an error to declare the surge a “success”, as Mr Obama has abruptly found it expedient to do, as it was to oppose it in the first place, if doing so is a prelude to cutting American troop strengths in Iraq rapidly and “moving on”. This is perilously close to being the new Washington consensus.

It is not the Iraqi consensus. As Hoshyar Zebari, the Iraqi Foreign Minister, said this week: “What we do next is critical to the viability and endurance of any hard-won gains we have made.” Big tests are imminent.

Nouri al-Maliki's Shia-dominated Government takes over paying the wages of the Sunni “Sons of Iraq” from the US next month. It could make the huge mistake of refusing to incorporate more than a fifth of these fighters into Iraq's security forces: they could return to insurgency. It is still foot-dragging on vital laws on elections and sharing oil revenues throughout Iraq.

Mr Zebari did not say so, but until Iraq's factions get serious about sharing power a relapse into violence is a real risk; and most Iraqis know, even if they resent the American presence, that it is their insurance cover. Politically as well as militarily, the US holds the ring. There is, Mr Zebari insists, no fixed timetable for US troop withdrawal: decisions must be “conditions-led on the ground” to avoid “a vacuum of instability”. Nor must there be. There are no short cuts to stabilising Iraq. And that is not what Americans want to hear.





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Wednesday, September 17, 2008

Oil's Dramatic Price Retreat Ripples Around the World

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By Steven Mufson
Washington Post Staff Writer
Wednesday, September 17, 2008; A01



Just two months ago, spiking petroleum prices were emboldening confrontational oil exporters such as Venezuela, Russia and Iran, fueling inflation anxiety at the Federal Reserve, raising expectations at American biofuel producers, and crimping the budgets of airlines and ordinary households alike.

Suddenly, the oil market's dynamic has changed. Prices have beaten a two-month retreat, confounding forecasts that many experts had just revised upward, fanning tensions within OPEC, dimming the financing prospects for alternative-fuel firms, and erasing tens of billions of dollars of value of energy stocks and oil and gas investments.

Prices remain extremely high by historical standards, and the House of Representatives, sensitive to voters' unhappiness, passed an energy bill that would allow oil drilling in new offshore areas, trim oil company tax breaks, ease the way for oil shale development and help finance alternative energy sources.

But in two months, the world's total energy costs have dropped by more than $4 billion a day. That will hurt government budgets from Tehran to Juneau, but it will ease burdens for countless others. The United States, which spent $51.4 billion on oil imports in July, accounting for most of its trade deficit, is on track to spend much less than that this month, reducing pressure on the dollar, the trade deficit and inflation.

Oil markets, analysts said, have been spun around by lower consumption in a U.S. economy weakened by financial instability and by a change in sentiment among financial players, many of whom are scurrying to stem losses or protect much-needed capital.

"The downward pressure on oil is just extraordinary right now," said Daniel P. Ahn, an energy economist at Lehman Brothers. Just a few weeks ago, Lehman looked bearish when it forecast $94 oil for 2009, he said, "and that is already upon us."

Oil prices fell again yesterday. The cost of the benchmark light sweet crude oil settled at $91.15 a barrel on the New York Mercantile Exchange yesterday, down $4.56, or 4.8 percent. It is at the lowest level since Feb. 7. Prices now stand about 38 percent below their July 11 peak.

"Personally, I expect oil prices will go further down," said Paolo Scaroni, chief executive of ENI, the Italian oil giant. He said that prices could fall as low as what it costs to produce the world's most expensive oil, citing the $65- to $70-a-barrel cost of developing Canadian tar sands. "This seems to me the bottom," he said.

Like rising oil prices, falling prices can scramble everything from foreign policy to the plans of automobile companies.

The Organization of the Petroleum Exporting Countries, which in late 2006 slashed production by 1.5 million barrels a day to prevent prices from falling to $50 a barrel, bickered about prices in Vienna last week. OPEC hardliners advocated a new $100 floor on prices, but Saudi Arabia last week resisted a call to trim its output to comply with official OPEC quotas. Now the market has already broken through the $100 level, and analysts said the Saudis might be reconsidering.

For oil-exporting nations, high prices this year have helped underwrite political agendas. In Venezuela, they have helped President Hugo Chávez pay for nationalizations of banks, the Caracas electric utility, a portion of foreign oil interests, radio stations and the local plant of an international cement firm. Other analysts said high prices may have emboldened Russia, which invaded Georgia, and Iran, which continues to defy international calls to abandon its nuclear program.

"An oil drop of $30 a barrel is significantly more damaging to Iran's economy than U.N. Security Council sanctions," said Karim Sadjadpour, an associate at the Carnegie Endowment for International Peace. "That's a loss of about $75 million per day in oil revenue. A further drop in prices could play a decisive role in the June 2009 presidential elections, for it could deflate [President Mahmoud] Ahmadinejad's populist agenda."

Falling prices could alter corporate agendas, too, though the rise and fall of oil prices have been so sudden that most energy companies, which usually make conservative price forecasts, have said their plans are not changing.

Chevron said it is going ahead with its new oil and gas production projects in Nigeria, Angola, Brazil and the United States. "When we are considering our investments in these projects, we look at both prices and costs over the long term, as the projects we bring on today will continue producing 20 or 30 years from now, or longer," said Kurt Glaubitz, a Chevron spokesman. "While we don't disclose our price forecasts externally, I can say that these projects are economic under a variety of scenarios, including the price ranges we're seeing today."

ENI's Scaroni said that his company assumes that oil prices will be as low as $65 a barrel in 2012 when it calculates whether to go ahead with a costly exploration and production project. ENI assumes that the price will rise about 2 percent a year after that.

For other companies and investors, the swift turnaround in prices has been a reminder of the unpredictability of energy prices.

T. Boone Pickens, the Texas oilman and hedge fund manager, suffered heavy losses over the summer while he was predicting higher oil prices and promoting his own comprehensive U.S. energy plan. Figures compiled by Morningstar show that the energy funds managed by Pickens's firm, BP Capital, fell by a third in July and then nearly 10 percent in August.

"There's a run-up and you profit, and there's a correction the other way and you take a hit," said Daniel Farkas, a hedge fund analyst at Morningstar. Farkas also said that an energy-intensive fund run by Sprott Management slid 10 percent in July and another 10 percent in August.

Major oil companies' shares have tumbled. Exxon Mobil has lost roughly $80 billion of market value this year. The shares of Brazil's Petrobras, whose new offshore fields will be expensive to develop, have plunged 45 percent from their 52-week high. Airline stocks, however, have soared in anticipation of cheaper jet fuel.

Auto companies, most of which are working on hybrids or plug-in vehicles, worry that falling fuel prices could reduce the incentive for consumers to pay extra for fuel-efficient vehicles. (While oil prices are falling, gasoline prices have been temporarily boosted by refinery outages on the hurricane-battered Texas coast.)

"If we stabilize, will people get used to it?" said John German, manager of environmental and energy analysis for American Honda.

"The price of oil will be what it will be," said John B. Howe, a vice president at Verenium, a Massachusetts firm that has built a demonstration plant in Louisiana for making cellulosic ethanol. Verenium sealed a $90 million financing deal with BP over the summer, and it hopes that BP will help finance the construction of commercial plants.

Like many executives with alternative-fuel firms, Howe insists that the freefall in oil prices will end. "It's possible that oil could fall for a short period of time and disrupt investments," he said. But, he added, growing Asian demand will eventually buoy prices. "What the last couple of years have shown is that everything hinges on the price of oil. . . . Do we want our long-term security to be subject to fluctuations of a volatile commodity?"


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Government steps in again, bails out AIG with $85B

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By JEANNINE AVERSA, IEVA M. AUGSTUMS and STEPHEN BERNARD, AP Business Writers
11 minutes ago



The U.S. government stepped in Tuesday to rescue American International Group Inc., one of the world's largest insurers, with an $85 billion injection of taxpayer money. Under the deal, the government will get a 79.9 percent stake in AIG and the right to remove senior management.

AIG's chief executive, Robert Willumstad, is expected to be replaced by Edward Liddy, the former head of insurer Allstate Corp., according to The Wall Street Journal, citing a person it did not name. Willumstad had been at the helm of AIG since June.

A call to AIG to confirm the executive change was not immediately returned.

It was the second time this month the feds put taxpayer money on the hook to rescue a private financial company, saying its failure would further disrupt markets and threaten the already fragile economy.

AIG said it will repay the money in full with proceeds from the sales of some of its assets.

Under the deal, the Federal Reserve will provide a two-year $85 billion emergency loan to AIG, which teetered on the edge of failure because of stresses caused by the collapse of the subprime mortgage market and the credit crunch that ensued. In return, the government will get a 79.9 percent stake in AIG and the right to remove senior management.

The move was similar to government's seizure on Sept. 7 of mortgage giants Fannie Mae and Freddie Mac, where the Treasury Department said it was prepared to put up as much as $100 billion over time in each of the companies if needed to keep them from going broke.

The Fed said it determined that a disorderly failure of AIG could hurt the already delicate financial markets and the economy.

It also could "lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said in a statement.

The decision to help AIG marked a reversal for the government from the weekend, when it refused to use taxpayer money to bail out Lehman Brothers Holdings Inc. Lehman, which filed for bankruptcy protection Monday, collapsed under the weight of mounting losses related to its real estate holdings.

The White House said it backed the Fed's decision Tuesday.

"These steps are taken in the interest of promoting stability in financial markets and limiting damage to the broader economy, " White House spokesman Tony Fratto said.

After meeting with Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke in a late-night briefing on Capitol Hill, Congressional leaders said they understood the need for the bailout.

"The administration is approaching an unprecedented step, but unfortunately we are living in unprecedented times. Hearing of these plans, you have to stop to catch your breath. But upon reflection, the alternatives are much worse," said Sen. Charles Schumer, D-N.Y.

In a statement late Tuesday, AIG's board of directors said the loan will protect all AIG policy holders, address concerns of rating agencies and buy the company time to sell off assets.

"We expect that the proceeds of these sales will be sufficient to repay the loan in full and enable AIG's businesses to continue as substantial participants in their respective markets," the statement said. "In return for providing this essential support, American taxpayers will receive a substantial majority ownership interest in AIG."

New York officials said the deal helps stave off a fiscal crisis for the state. AIG is based in New York.

"Policy holders will be protected, jobs will be saved," New York Gov. David Paterson said Tuesday night.

The Fed's move was part of a concerted push to help calm jittery markets and investors around the world.

On Tuesday, the Fed decided to keep its key interest rate steady at 2 percent, but acknowledged stresses in financial markets have grown and hinted it stood ready to lower rates if needed.

The central bank also pumped $70 billion into the nation's financial system to help ease credit stresses. In emergency sessions over the weekend, the Fed expanded its loan programs to Wall Street firms, part of an ongoing effort to get credit flowing more freely.

The stock market, which Monday posted its largest point loss session since the Sept. 11 attacks, recovered Tuesday after the Fed's decision on interest rates. The Dow Jones industrials rose 141 points after losing 500 points on Monday.

AIG's shares swung violently, though, as rumors of potential deals involving the government or private parties emerged and were dashed. By late Tuesday, its shares had closed down 20 percent — and another 45 percent after hours.

The problems at AIG stemmed from its insurance of mortgage-backed securities and other risky debt against default. If AIG couldn't make good on its promise to pay back soured debt, investors feared the consequences would pose a greater threat to the U.S. financial system than this week's collapse of the investment bank Lehman Brothers.

The worries were heightened Monday after Moody's Investor Service, Standard and Poor's and Fitch Ratings lowered AIG's credit ratings, forcing AIG to seek more money for collateral against its insurance contracts. Without that money, AIG would have defaulted on its obligations and the buyers of its insurance — such as banks and other financial companies — would have found themselves without protection against losses on the debt they hold.



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Monday, September 15, 2008

Lehman may have waited too long to seek help

MSNBC.com



By the time firm showed distress, government was done giving out money
The Associated Press
updated 7:54 p.m. ET, Sun., Sept. 14, 2008
SAN FRANCISCO - If the mortgage meltdown is like a financial hurricane, then think of Lehman Brothers as a casualty that waited too long to cry for help.

By the time that Lehman Brothers Holdings Inc. sent out its distress signal, the U.S. government had become reluctant to lend a helping hand as it did other recent bailouts that could cost taxpayers tens of billions of dollars.

And without some government protection, other banks still trying to cope with their own risky real estate investments weren't inclined to come to Lehman's rescue.

Finally, investors and lenders have become leery of throwing more money into the seemingly bottomless pit of losses piling up as the home values securing mortgages across the United States continue to crumble.

"The first losses in a crisis are usually easier to take," said Daniel Alpert, managing director of Westwood Capital LLC. "It's the last losses that become debilitating because the well starts to run dry. There just isn't a lot of cushion left."

Alpert and other analysts contacted Sunday said it's difficult to determine the enormity of the unrecognized losses still lurking on Lehman's books, but that issue had almost become moot because Wall Street already had written the 158-year-old investment bank's obituary. U.S. Treasury Secretary Henry Paulson hammered the final nail in Lehman's coffin by steadfastly refusing to include any government guarantees in a sale of the bank.

"It became a crisis in confidence," said Steven Goldman, chief market strategist for Weeden & Co.

That lack of faith means Lehman's best customers and employees would probably have abandoned the company, destroying even the best pieces of its franchise, such as its investment banking operations and its Neuberger Berman wealth management unit.

"The fire wall has been breached," said Joseph Battipaglia, market strategist for Stifel, Nicolaus & Co.'s private client group. "Lehman is shrinking before our eyes."

Analysts said Lehman Brothers hard-charging chief executive of the past 15 years, Richard Fuld, should have sold Neuberger Berman and its real estate portfolio earlier this year, when market sentiment wasn't as bad as it is now.

Fuld "overplayed his hand" by demanding too high of a price for those assets, said Bert Ely, a banking consultant

Lehman's apparent demise adds to the alarming fallout from the real estate boom during the first half of this decade and the subsequent bust of the last two years.

Emboldened by the lowest mortgage rates since the 1950s, lenders made millions of home loans to people who either had bad credit ratings or lacked adequate income to qualify for the money under traditional underwriting standards.

The risky loans didn't blow up immediately because the exotic mortgages began with artificially low teaser rates before adjusting upward. Because the easy money encouraged more people to own property, home values soared for several years — a phenomenon that helped borrowers refinance their mortgages when the payments became more expensive.

But things began to unravel in 2006 as more borrowers began to default. Home values then began to crater, making it more difficult to refinance and triggering a wave of foreclosures that have hammered property values even more.

Most of the toxic mortgages were packaged into securities that are now owned by a wide range of investors and large banks, including Lehman. Besides holding mortgage-backed securities, Lehman also got caught up in the real estate mania by financing some developments, such as a country-club community in Bakersfield, Calif. that is now in limbo.

To make matters worse, Lehman also is major owner of commercial real estate, a market that's also deteriorating.


As the mortgage mess widened last year, some major banks began to clean house. Both Merrill Lynch & Co. and Citigroup Inc. dumped their chief executives last year, recognized large losses and raised billions in additional capital to weather the oncoming storm.

Lehman seemed to be far better off than many of its peers for awhile, but that turned out to be a mirage.

After posting a $4.2 billion profit in its fiscal 2007 and opening the first quarter of this year with earnings of $489 million, Lehman has reported nearly $7 billion in losses in just the past six months.


And investors have no clue how much worse things might get, despite Fuld's recent reassurances. The uncertainty devastated Lehman's stock, which had plunged 95 percent from its 52-week high to $3.65 Friday. The free-fall wiped out nearly $35 billion in shareholder wealth in just 10 months.

As part of an overhaul announced last week, Fuld said he had taken steps to winnow Lehman's exposure to the residential real estate market to $13.2 billion and reduce its commercial real estate portfolio to $32.6 billion.

But it's impossible for anyone outside the company to make an educated guess about which loans are solid which are ticking time bombs. By some estimates, Lehman had more than two times its net worth tied up in exotic mortgages and other esoteric securities that are difficult to value.

"It's a little like Hurricane Ike," Battipaglia said. "You know it's going to hit eventually, but you just don't know where and how hard."

Alpert has little doubt there is a lot more pain to come throughout the financial services industry before the mortgage purge is finished. He estimates banks and lenders have recognized about $550 billion of the $1.25 trillion in losses that he expects to be attributed to the mortgage meltdown.

Lehman's fate might have been slightly different had it faced up to its troubles earlier. Rival Bear Stearns wound up getting sold to JP Morgan Chase & Co. in March largely because the U.S. government agreed to provide a $29 billion loan to complete the deal. And earlier this month the government took over mortgage bellwethers Fannie Mae and Freddie Mac.

"In this cycle, timing is everything," said Sung Wong Sohn, an economics professor at Cal State University, Channel Islands.


Paulson insisted the efforts to salvage Lehman didn't merit government aid because the financial markets have been aware of Lehman's problems for a much longer period than the circumstances that led to Bear Stearns' downfall. What's more, investment banks can now obtain emergency loans directly from the Fed, a crutch that wasn't available when Bear Stearns was rescued.

Alpert understands why Lehman didn't attack its problems more forcefully.

"It's human nature not to want to write things down right away, especially if you believe the crisis is temporary," he said. "Fuld probably thought he could keep a steady hand on the tiller and sail though this rough patch without giving up the entire firm. Now even if (Lehman) isn't truly insolvent, the rest of the world thinks it is."


Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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HARD LESSONS IN HURRICANE'S AFTERMATH

By Mark Potter, NBC News Correspondent
MIAMI – With the destructive arrival of Hurricane Ike in the Caribbean and then in Texas, it's clear that many hurricane lessons from previous storms still need to be reviewed and heeded next time.


In Cuba, where Ike made two landfalls, evacuations were carried out effectively and the loss of life was low compared to other countries. But, houses were in such poor shape and so unprotected that hundreds of thousands of homes and apartments were badly damaged or destroyed and could take years to replace. Something as simple as hurricane roofing straps or window shutters might have helped immensely in many cases – if such materials were ever available.


SLIDESHOW: Ike's impact

After covering scores of hurricanes in more than three decades I have come to learn that these storms sometimes have a strange way of fooling the experts, often in the last hours before or after landfall, and that there are no acceptable odds in gambling whether you'll narrowly escape the storm. I also know that hurricanes are always dangerous and should never be underestimated.

How many people in Texas now regret riding out this latest storm and swear they'll never do it again. I wish I had a dollar for every time I've heard that over the years, but take no joy in saying that. The terror and pain in the eyes of storm surge and hurricane eye-wall survivors is hard to forget. I will tell you that I know that fear personally.

In recent years, hurricane evacuation and recovery plans in the United States have gotten so much better, particularly after the Katrina disaster in New Orleans. Florida has been at the forefront of this development and now many other states, along with the federal government, have joined to improve the plan. The coordinated evacuation effort in Louisiana before Hurricane Gustav this year was light years ahead of what happened in 2005.

Texas also mobilized extensively before Ike struck, but those plans are only as good as the people who are willing to follow them. As always, many people this time thought they knew better than the authorities and stayed behind, only to find themselves climbing into a Coast Guard helicopter rescue basket to save their lives.

Emergency managers’ tough job
Emergency management officials have an extremely difficult and often thankless job, because they have to order mass evacuations while the sun is still shining and the winds are still calm. They base those decisions on forecasts from the National Hurricane Center which often change with the unstable atmospheric conditions. It takes time to move hundreds of thousands –sometimes millions – of people, so those evacuation orders have to be issued early.

And when they are proven wrong, because the storm moved away from the evacuation zone, there is then a lot of grumbling and talk of the "cry wolf" syndrome, leading to predictions that next time people won't be so willing to pack up and leave when ordered. For managers trying to save lives, it's the nightmare scenario.


VIDEO: Cuba faces tough recovery from hurricanes


Over the years, many people have asked me what I think about all the hurricanes I have covered and without a second thought I say that it's a complicated relationship. On the one hand, I find them fascinating scientifically and have tried to learn as much as I can about how their tracks and intensities are forecast. I have immense respect for the men and women at the National Hurricane Center and eagerly follow their work.

But, more and more I mostly despise hurricanes for what they do to so many people at once. I often say that if you are not injured, and your loved ones are safe, the worst part of a hurricane is not the storm, itself, but the traumatic years of rebuilding afterward.

When Hurricane Andrew demolished much of South Florida, where I live, I saw so many people struggling to recover – a half million people fighting for contractors and limited building supplies, all at the same time, while living in tiny trailers and spending hours and hours wrestling with their insurance companies. The emotional toll was sky-high, with many reports of domestic violence, depression and other distress.

For the reasons stated above, however, I also believe that covering hurricanes before and after their arrival is very important and serious work. Before landfall, our job is to warn residents in the storm zone of the upcoming dangers. Afterward, our job is to alert everyone else in the country about how badly many of their fellow citizens have been hurt, to report on their needs and to assess the recovery efforts.


Hurricane survival tips
For whomever it might help, I'd like to share a few hurricane survival observations made during so many years in the stormy tropics:

First, please get your house in order. A well-constructed and properly protected home is more likely to survive intact than a flimsy structure with no effort made to seal if from the winds. More than anything, shutters are essential – be they wood, aluminum, accordion-style, roll downs or hurricane-proof glass – for keeping the storm out of your house. Once the winds get inside, they have to get back out, and that is how roofs blow away and walls explode. Also, make sure you have enough water, food, flashlights, batteries, medicines and other supplies to last a week.


Second, there is no such thing as a "minimal" hurricane. I've heard many people say, "It's just a Category 1." Trust me, the eye-wall and surrounding winds of a Category 1 can knock you down, put a limb through your unprotected window, topple a tree onto your roof and snap a live power-line and lay it at your feet.

Just last week, my colleagues from the NBC News Havana office and I were in the town of Los Palacios in western Cuba just as the then-Category 1 Hurricane Ike roared through. We saw roofing materials blowing away, slogged through flooded streets, felt the sharp sting of rain on our faces and kept a wary lookout overheard for swaying telephone poles and wires. On the way into town, we had to stop our cars under a bridge for a while to protect ourselves from the fierce wind and blinding rain. All hurricanes are powerful and dangerous.


VIDEO: In the eye of the storm as Ike slams Cuba


Third, watch out for the water – all of it. The obliterated Mississippi coast during Katrina in 2005 taught us again about the unfathomable power of a hurricane storm surge. You must get far away.

And then there is the water that kills more people than anything else – the inland flooding resulting from torrential rain. Most people who die in hurricanes do so after the storm passes, often trapped in rushing water a long distance from the coast.

Fourth, don't be too sure of where the hurricane is going. As I wrote earlier, they can change direction quickly. Few remember this, but Hurricane Katrina hit South Florida first, before taking its fateful aim at the Gulf Coast.

Right after landfall north of Miami, it took an unexpected southerly turn, catching a lot of people by surprise, including my wife, who found herself unknowingly driving though the calm eye of the storm right into the raging winds of the eye-wall. Moments later, a huge tree fell on her car with her in it. She was badly shaken, but luckily escaped injury. I was even more shaken when I got her cell phone call telling me she was under that tree. I was miles away on the north side of the storm covering it for NBC Nightly News and couldn't get to her. There is no more helpless feeling in the world.

And lastly, a point worth repeating. When emergency managers order an evacuation it really IS time to go, hopefully to a safe place that you've picked in advance.

In Florida, it usually means moving inland only a few miles or more. Elsewhere along the Gulf Coast it's a longer trip to safety, but is still absolutely necessary.

If you need convincing, go to Google, type in the words "Waveland, Mississippi" and then hit "Images." Those scenes of utter devastation are real and occurred just three years ago.

If that doesn't do it, find someone who rode out Katrina there and somehow survived. Listen to his or her harrowing tale to know why they won't make that near-fatal error again. And, please, you shouldn't make that mistake, either.

NBC News Correspondent Mark Potter is based in Miami, Florida. He has covered hurricanes in Florida, the Gulf and Atlantic Coasts and throughout the Caribbean for more than 30 years.

Click here for complete coverage of Hurricane Ike

Rescuers fly to flattened coastal areas

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Houston under weeklong cleanup curfew; death toll at 32 in 8 states
NBC, MSNBC and news services
updated 11:47 a.m. ET, Mon., Sept. 15, 2008
GALVESTON, Texas - More than 48 hours after Hurricane Ike swamped the Gulf Coast, rescuers flew for the first time Monday into areas cut off by the storm and found a scene of devastation, with whole subdivisions obliterated, and began evacuating survivors.

A Texas helicopter task force flew 115 rescuers onto the heavily damaged resort barrier island of Bolivar Peninsula, just east of hard-hit Galveston. Task force leader Chuck Jones said they were the first rescuers to reach the area that is home to about 30,000 people in the peak summer beach season.

"They had a lot of devastation over there," Jones said. "It took a direct hit."

Some subdivisions in the area are completely gone, he said.

Jones did not have information on whether anyone had died on the island, mainly because they still don't know how many stayed through the storm that struck early Saturday.

Of particular concern is a resident who collects exotic animals who is now holed up in a Baptist church with his pet lion. "We're not going in there," Jones said. "We know where he (the lion) is on the food chain."

Relief workers were hoping to make it back from Bolivar to Galveston on Monday night, but they were packing for an overnight stay just in case.

32 deaths in 8 states
Two days after Ike battered Houston and forced thousands into emergency shelters, the death toll rose to 32 in eight states, many of them far to the north of the Gulf Coast as the storm slogged across the nation's midsection, leaving a trail of flooding and destruction.

Houston, littered with glass from skyscrapers, was placed under a weeklong curfew and millions of people in the storm's path remained in the dark.

Rescuers said they had saved nearly 2,000 people from waterlogged streets and splintered houses by Sunday afternoon. Many had ignored evacuation orders and tried to ride out the storm. Now they were boarding buses for indefinite stays at shelters in San Antonio and Austin.

Brian Smith, public information officer from the Urban Search and Rescue Division of the Texas Engineering Extension Service, said Monday that search and rescue missions continued across the affected area, although no air rescues had been needed since Sunday morning.

"Operations are ongoing," Smith said. "They will continue until we've heard from every local incident commander and been assured by them that search and rescue missions are no longer needed."

In hard-hit towns like Orange, Bridge City and Galveston, authorities searched door-to-door into the night, hoping to reach an untold number of people still in their homes, many without power or supplies.

A line of at least 30 cars formed early Monday at a strip mall in Orange, a Texas town on the Louisiana state line east of Beaumont, a day after food and water were distributed there by the National Guard. But the line dispersed after state troopers told the gathering that supplies would be passed out elsewhere.

Wanda Hamor, 49, of Orange, had been fifth in line with her 21-year-old son William. They were trapped in their house by floodwaters until Monday morning before they could venture out.

They had run out of food Sunday night. They left for Gustav and say they couldn't afford to leave for Ike or buy any more than $60 in food.

"He's diabetic and he has to eat four times a day," she said of her son.

'Do not come back to Galveston'
Many of those who did make it to safety boarded buses without knowing where they were going or when they could return to what might remain of their homes.

Shelters across Texas scurried to find enough cots, and some evacuees arrived with little cash and no idea of what the coming days held.

Even for those who still have a home to go to, Ike's 110 mph winds and battering waves left thousands in coastal areas without electricity, gas and basic communications — and officials estimated it may not be restored for a month.

"We want our citizens to stay where they are," said a weary Galveston Mayor Lyda Ann Thomas. "Do not come back to Galveston. You cannot live here at this time."

The downtown area, containing the few buildings that survived a hurricane in 1900 that killed thousands, was under a layer of foul-smelling mud and sewage. Boats, water scooters and even a catamaran were strewn on the streets.

Many residents traveled in cars, trucks or bicycles or pushed supermarket carts to a National Guard distribution point to pick up water, ice and ready-to-eat meals.
“It looks like a war zone. Everything is gone. It’s heartbreaking,” said Susan Rybick, a retiree driving along the seafront with her husband, John.

Michael Geml has braved other storms in his bayfront neighborhood in Galveston, where he's lived for 25 years, though none quite like Ike. The 51-year-old stayed in the third-story Jacuzzi of a neighbor's house, directly on the bay, with family pets as waves crashed across the landscape.

"I'll never stay again," Geml said. "I don't care what the weatherman says — a Category 1, a Category 2. I thought I was going to die."

“I live in an elevated area and I didn’t think it (water) could come through that high,” added Galveston resident Kevin Gonzalez, describing the storm surge that flooded his house early on Saturday. “When I went downstairs, my furniture was floating.”

Kathi and Paul Norton huddled inside their house in Crystal Beach until it collapsed and was swept away. Their flag pole kept the house from collapsing on top of them, buying them a few seconds to escape, holding onto the staircase.

"You never know what a hurricane is like until you ride it on a staircase," said Kathi Norton, 47. As she spoke outside the giant, warehouse-like shelter on a former Air Force base in San Antonio, busloads of new evacuees were arriving, bumper to bumper.

10 oil platforms destroyed
The hurricane also battered the heart of the U.S. oil industry as Ike destroyed at least 10 production platforms, officials said. Details about the size and production capacity of the destroyed platforms were not immediately available, but the damage was to only a fraction of the 3,800 platforms in the Gulf.

It was too soon to know how seriously it would affect oil and gas prices.


President Bush made plans to visit the area on Tuesday.

He said getting power restored is an extremely high priority and urged power companies to "please recruit out-of-state people to come and help you do this."

Ike was downgraded to a tropical depression as it moved north. Roads were closed in Kentucky because of high winds. As far north as Chicago, dozens of people in a suburb had to be evacuated by boat. Three million customers were without power in Texas, Arkansas, Kentucky, Ohio and Louisiana.

The U.S. death toll stood at 32 deaths in eight states as Ike moved from Texas northeastward across the U.S. midsection:

Texas — seven dead, including one person found in a submerged vehicle in Galveston and a 4-year-old Houston boy dead of apparent carbon monoxide poisoning from an emergency generator.
Louisiana — six dead, including a 16-year-old boy trapped in rising water.
Tennessee — two dead, both golfers killed by a falling tree.
Arkansas — one killed by a tree falling on a mobile home.
Ohio — four dead, including one killed by a tree falling on a home.
Indiana — six dead, including a father and son killed helping children escape from a ditch.
Illinois — two dead, including an elderly man found in a flooded backyard.
Missouri — three dead, including a woman struck by a tree limb and an elderly man suspected of drowning in a flooded yard.
Kentucky — one dead, a 10-year-old boy struck by a tree limb while mowing a lawn.
Ike killed more than 80 in the Caribbean before reaching the United States.

Huge medical complex still open
Houston, the nation's fourth-largest city, was reduced to near-paralysis in some places. But power was on in downtown office towers Sunday afternoon, and Texas Medical Center, the world's largest medical complex, was unscathed and remained open. Both places have underground power lines.

Its two airports — including George Bush Intercontinental, one of the busiest in the United States — were set to reopen Monday with limited service. But schools were closed until further notice, and the business district was shuttered.

Five people were arrested at a pawn shop north of Houston and charged with burglary in what Harris County Sheriff's spokesman Capt. John Martin described as looting, but there was no widespread spike in crime.

Authorities said Sunday afternoon that 1,984 people had been rescued, including 394 by air. Besides people literally plucked to safety, that figure includes people met by crews as they waded through floodwaters trying to find dry ground.

Still others chose to remain in their homes along the Texas coast even after the danger of the storm had passed. There was no immediate count Sunday of how many people remained in their homes, or how many were in danger. The Red Cross reported 42,000 people were at state and Red Cross shelters Saturday night.

Louisiana damage
The storm also took a toll in Louisiana, where hundreds of homes were flooded and power outages worsened as the state struggles to recover from Hurricane Gustav, which struck over Labor Day.

In Hackberry, La., about 15 miles from the coast, workers moved a large shrimp boat out of the highway with a bulldozer, but the team had to stop because of strong currents in the floodwaters and difficulty in seeing the roadway.


The Associated Press and Reuters contributed to this report.
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The Big 'What If'

Biola1 wrote:
A professor of law actually wrote this???!??!!???????!!!!!!!! That Obama should win to prove Americans are not racist? What is the point of this article? He won the nomination because of white guilt...and that was acceptable to you??? If he loses, he loses on issues. Period. America has been tolerant of his celebrity status to reward him with a nomination....He is going to win by losing actually because I frankly believe he will have a failed presidency...but that aside, let no man come and cry here to have a black president...I need one who knows what he's doing and none of the options really do it for me...btw, I am black!! and I am voting against Obama...not for the old man...Obama cried racism the whole primary season...it was so sick..so glad he is being paid back in his own coin now....
9/15/2008 10:34:11 AM
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http://www.washingtonpost.com/wp-dyn/content/article/2008/09/12/AR2008091202414_Comments.html

Biola1 wrote:
My question is, how can Washingtonpost print this insult to Black, Asian, White, Brown and every shade in between Americans?
9/15/2008 11:16:44 AM
Recommend (4)

Sunday, September 14, 2008

Nearly 2,000 brought to safety in Texas

Back to Story - Help
By CHRISTOPHER SHERMAN, Associated Press Writer
2 minutes ago



Rescuers searching the waterlogged streets and splintered houses left behind by Hurricane Ike said Sunday they had saved nearly 2,000 people — many of whom then boarded buses to shelters without knowing where they were going or when they could come home.

More than 48 hours after the first direct hurricane hit a major U.S. city since Hurricane Katrina, authorities imposed a weeklong nighttime curfew on Houston, where electricity was scarce and downed trees and shattered glass made roads unsafe.

The storm also battered the heart of the U.S. oil industry: Federal officials said Ike destroyed a number of production platforms, though it was too soon to know how badly.

Ike was downgraded to a tropical depression as it moved into the nation's midsection and left more harm in its wake. Roads were closed in Kentucky because of high winds. As far north as Chicago, dozens of people in a suburb had to be evacuated by boat. Two million people were without power in Texas, Arkansas and Louisiana.

The death toll from the storm rose to 13. Three were in the hard-hit barrier island city of Galveston, Texas, including one body found in a vehicle submerged in floodwater at the airport. Many deaths, however, were outside of Texas as the storm slogged north.

Ike's 110 mph winds and battering waves left Galveston without electricity, gas and basic communications — and officials estimated it may not be restored for a month.

"We want our citizens to stay where they are," a weary Mayor Lyda Ann Thomas said. "Do not come back to Galveston. You cannot live here right now."

Houston, the nation's fourth-largest city, was reduced to near-paralysis in some places — although power had been restored to some of the downtown office towers by Sunday afternoon. Texas Medical Center, the world's largest medical complex, was unscathed and remained open.

Its two airports — including George Bush Intercontinental, one of the busiest in the United States — were set to reopen Monday with limited service, but schools were closed until further notice, and the business district was shuttered.

Five people were arrested at a pawn shop north of Houston and charged with burglary in what Harris County Sheriff's spokesman Capt. John Martin described as looting, but there was no widespread spike in crime.

Authorities told reporters Sunday afternoon that 1,984 people had been rescued, including 394 by air.

The search-and-rescue effort was the largest in Texas history, including more than 50 helicopters, 1,500 volunteers and teams from federal, state and local agencies.

Once evacuees were safe and dry, there was another problem — where they would go. Some buses went to shelters in San Antonio and Austin. Shelters across Texas scurried to find enough cots, and some arrived with little cash and no idea of what the coming days held.

From the city of Orange alone, near the Louisiana line, more than 700 people sought dry ground — "a Herculean effort to organize a reverse evacuation that nobody had ever planned for," Mayor Brown Claybar said.

Hundreds of people wrapped around a high school in Galveston, some with pets, overstuffed duffel bags and medicine as they waited to board a bus to a shelter. Some didn't know where they were going, and even more didn't know when they could return.

"I have nowhere to go," said Ldyyan Jonjocque, 61, waiting for a bus while holding the leashes of her four Australian shepherd dogs. She said she had to leave two dogs behind in her home. She wept as she told of officers rescuing her in a dump truck.

Rescue crews vowed to continue the search until they had knocked on every door, and planned to work through the night for the second day in a row. They were helped by receding floodwaters, but there were constant surprises as people rowed and sloshed through towns.

Two people who took a flat-bottom boat to check on a funeral home in the city of Orange found dozens of caskets had popped above ground in the floodwaters. Only a chain-link fence kept them from drifting into the surrounding neighborhood.

"I haven't seen any bodies, just caskets," said one of the men, Warren Claybar.

The storm also took a toll in Louisiana, where hundreds of homes were flooded and power outages worsened as the state struggles to recover from Hurricane Gustav, which struck over Labor Day.

In Hackberry, La., about 15 miles from the coast, workers moved a large shrimp boat out of the highway with a bulldozer, but the team had to stop because of strong currents in the floodwaters and difficulty in seeing the roadway.

The three deaths reported Sunday in Galveston were among five in Texas attributed to the storm. Two deaths in Louisiana were blamed on the storm, as was one in Arkansas when a tree fell on a mobile home, killing a 29-year-old man. A 4-year-old Houston boy died of carbon monoxide poisoning from the generator his family was using for power. Two people died in Kansas floods, and another two died in Indiana floods.

President Bush made plans to visit the area Tuesday. On his trip to Texas, Bush said he intends to express "the federal government's support — sympathy on the one hand and support on the other — for this recovery effort and rebuilding effort."

The oil industry was trying to find out how severe damage was to at least 10 production platforms destroyed by the storm. Specifics about the size and production capacity of the destroyed platforms were not immediately available, but the damage was to a fraction of the 3,800 platforms in the Gulf. By comparison, Hurricane Katrina destroyed 44 platforms.

As the remnants of the hurricane broke down and streamed northeastward, torrential rain caused flooding and power outages in parts of Kansas, Missouri and Illinois.

More rain fell in Chicago on top of 6.6 inches Saturday, and work crews placed 30,000 sandbags along the Chicago River, which was 2 feet above its normal level Sunday. Forty people in suburban Albany Park had to be evacuated by boat.

SWAT commander Sgt. Rodney Harrison and five other members of the Port Arthur Police Department drove a 2 1/2-ton truck into the waters to search for victims in Sabine Pass near the Louisiana border Sunday morning.

The waters were so intense and the roads so blocked that a gear shift broke off in the driver's hand. After two hours of struggle, the team had little to show for their work other than sopping wet clothes and exhaust-streaked faces. They even dodged an alligator.

"You have people that have families at home who put their lives on the line to come out here and save somebody that made a bad decision," Harrison said. "I don't think that's right. I don't think that's fair to everybody."

___

Associated Press Writers Michael Kunzelman in Orange, Juan A. Lozano and Jon Gambrell in Galveston, Allen G. Breed in Sabine Pass, Doug Simpson in Baton Rouge, La., and Pauline Arrillaga and Chris Duncan in Houston contributed to this report.



Copyright © 2008 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.


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Houston family huddles, rides out Ike like others

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By MONICA RHOR, Associated Press Writer
Sat Sep 13, 11:48 AM ET



Long before her windows started humming and the lanky pine trees began swaying, new mother Claudia Macias had second thoughts about her family's decision to ride out Hurricane Ike in their home on the far east side of Houston.

As the night wore on and television news programs churned out reports of flooding and tornado warnings, Macias again questioned her decision to stay.

The Houston native had been through other hurricanes, but this one was different. This time, Macias was worried about her 3-month-old daughter.

Macias and her husband, Alex Villegas, 39, who evacuated during Hurricane Rita in 2005, were encouraged by the mayor's advice that thousands of families not in evacuation zones should "hunker down."

So, they planned to do just that in their four-bedroom home, along with Macias' parents, Carmen and Pedro Macias, and eight dogs.

But as the wind gathered strength, and worried relatives peppered the family with calls about flooding nearby, Macias began to gnaw at her cuticles and peek anxiously out her windows.

She wondered aloud whether there was still time to leave.

It was not yet 8 p.m. local time, and Hurricane Ike was still about 100 miles from landfall. Macias braced herself for a long night.

"I don't know who's going to sleep here tonight, maybe the baby," said Macias, 34, a teacher and principal who is taking a break from work after giving birth. "I'm not sleeping."

___

At the home on a quiet middle-class street, a pink "It's a girl" banner still hangs over a doorway. Toys, infant bouncers and strollers litter the house. The couple, married nine years, delight in every gurgle, smile and new move from their little girl, Citlahli.

Macias wanted to be prepared for the worst — a last-minute evacuation, lengthy power outages and possible tornadoes. She packed clothes and emergency bags. She loaded nonperishable food into plastic bins and laundry baskets. She bought enough water to line the perimeter of her dining room.

And she cleared out a "shelter of last resort" in her first-floor laundry room and walk-in closet. If the wind began to roar like a freight train, this is where they would retreat.

"We're trying not to be visibly apprehensive," said Villegas. "We need to be confident in body language, and tone. We're trying to be calm, at least visibly."

___

Around 9 p.m., shortly after a local news radio station announced a tornado watch, that calm shuddered, then seemed to regroup.

Macias returned to the comfort of the routine. It was time for Citlahli's nightly bath. Macias tried not to think about the big window on one wall of the bathroom, or the sound of the quickening rain and wind hitting the panes.

Instead, she and her mother, Carmen Macias, 59, gently cooed to the smiling infant.

"I'm trying to ignore everything I'm hearing outside the window by singing and talking to her. It's not just for her sake, but mine too," she said. "I'm trying to keep it as routine for Citlahli so she doesn't pick up on the bad vibes I may be emitting."

Still, she noted earlier, even the baby seemed to know something was different about tonight. Citlahli couldn't even fall asleep for her afternoon nap.

"Her eyes are bigger. She is raising her eyebrows more," Macias said. "I can't believe she's going to go through her first hurricane."

___

As the night wore on, each person in the house found their own way of staying calm.

Villegas sat over his laptop, one eye on the screen, the other on the TV set. Every hour, he stepped out to the garage to check on the dogs.

Claudia Macias hovered over Citlahli, gently rocking the infant to sleep in her arms, then laying her down for the night in the laundry room crib.

Pedro Macias, 62, who is famous in his family for sleeping through Hurricane Alicia in 1983, posted himself in front of the television, occasionally nodding off for a few minutes now and again.

And Carmen Macias, who had taken a "little anxiety pill" before coming to her daughter's house, steadied herself the only way she knew: by going to work in the kitchen. Cooking chicken and rice. Washing dishes. Scouring the sink and the stove.

Still, every thud against a wall, every creak outside the window, every gust rattling the house, seemed to unnerve her.

"What is that? Is that a tornado?" she asked as the air conditioning unit kicked on just after 12:30 a.m.

Her daughter shared those nerves.

"It sounds ugly upstairs," Claudia Macias said, as she walked down the stairs.

"Maybe this is as bad as it's going to get," said her husband.

"No, this is just the beginning," replied Claudia.

___

The worst was yet to come.

Around 2 a.m., the power went out, plunging the house into total darkness.

Alex Villegas and Claudia Macias scrambled to grab flashlights, scanning the rooms for any damage.

Carmen Macias, who had been upstairs, scurried down to check on her daughter and granddaughter, who remained fast asleep. Her grandfather, sleeping soundly on an upstairs couch, also did not stir.

Cell phones chirped, as they had all night long, with friends and relatives anxious to make sure the family was safe.

Outside, the wind gusted and rain drummed against the window like small stones.

The bands of Ike were reaching their house, and Claudia, Alex and Carmen huddled together on an air mattress tossed on the corner of the first floor bedroom floor. Their faces illuminated by flashlights, they talked quietly through the pre-dawn hours.

Carmen Macias recounted stories about family trips to Mexico when she was a young girl, funny tales about getting through Hurricane Carla in 1961 and anything to get their mind off the mounting storm.

___

Around 6 a.m., the house began to stir again.

There had been momentary relief when the eye of the storm passed overhead, quieting the wind and rain to a whisper. Claudia Macias was able to take a brief nap, before jolting awake to the storm powering back to life.

"The nerves come and go. When it stops outside, I think we're OK, the house is still standing, then it picks up again," she said. "It's almost over, and with sunlight, it'll be better. The howling and the wind in the darkness makes it worse."

Citlahli, who had slept undisturbed through the night, called out to her mother, as if sensing the renewed movement around her.

The waning night also brought the first hints of hurricane damaged. Leaks sprouted in the living room ceiling, likely where shingles had been blown off the roof, and water seeped in through the fireplace. In the front yard, a tree had lost a good chunk of its upper limbs and debris could be seen in the street.

And there were still hours to go. The storm, still howling, was predicted to hover overhead until noon.



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Saturday, September 13, 2008

Ike causes 'devastating' floods in southeast Texas


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Sat Sep 13, 12:07 PM ET



Officials in one southeast Texas county say they are trying to rescue families trapped by devastating floods from Hurricane Ike.

Orange County Judge Carl Thibodeaux says rescue teams in dump trucks are plowing through deep water Saturday in a risky effort to help families stranded on roofs and in attics. Thibodeaux says the effort is a gamble but authorities have to do something.

He says the flooding from Ike will be worse than Hurricane Rita, which ravaged the county near the Louisiana border in 2005. Floodwaters are as high as 8 feet in some areas.

Thibodeaux expects it will be weeks before power is restored to parts of the county.




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Ike Ravages Texas Coast With Lower-Than-Expected Storm Surge, Cutting Off Power to Millions

Saturday , September 13, 2008



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GALVESTON, Texas —

Howling ashore with 110 mph winds, Ike ravaged the Texas coast Saturday, flooding thousands of homes and businesses, shattering windows in Houston's skyscrapers and knocking out power to millions of people.

At first light though, it was unclear how many may had perished, and authorities mobilized for a huge search-and-rescue operation to reach the more than 100,000 people who ignored warnings that any attempt to ride the storm out could bring "certain death."

"The unfortunate truth is we're going to have to go in ... and put our people in the tough situation to save people who did not choose wisely. We'll probably do the largest search-and-rescue operation that's ever been conducted in the state of Texas," said Andrew Barlow, spokesman for Gov. Rick Perry.

Click here for photos | Click here for uReport photos | Click to view live Doppler radar of Hurricane Ike

Click for the latest on Ike at MyFOXHurricane.com | The National Hurricane Center

With the winds still blowing and many roads impassable, authorities in some places could not venture outside to get a full look at the damage, but they were encouraged that the storm surge topped out at only 13.5 feet — far lower than the catastrophic 20-to-25-foot wall of water forecasters had feared.

The storm, nearly as big as Texas itself, blasted a 500-mile stretch of coastline in Louisiana and Texas. It breached levees, flooded roads and led more than 1 million people to evacuate and seek shelter inland.

"Every storm's unique, but this one certainly will be remembered for its size," said Benton McGee, supervisory hydrologist at the U.S. Geological Survey's storm surge center in Ruston, La.

Of greatest concern were the more than 100,000 people in coastal counties who ignored mandatory evacuation orders, including thousands of residents of Galveston, the low-lying barrier island where Ike crashed ashore at 3:10 a.m. EDT.

"We don't know what we are going to find," Galveston Mayor Lyda Ann Thomas said. "We hope we will find the people who are left here alive and well."

South of Galveston, Surfside Beach Mayor Larry Davison said about 16 houses were destroyed.

"It's not as bad as I thought it was going to be, but it's pretty bad," Davison said. "It'll take six months to clean it up."

Ray Wilkinson, 67, didn't want to leave Friday until it was too late. When authorities realized he was there, they decided not to endanger their personnel to get him out of town.

When authorities got to him Saturday morning, Wilkinson was drunk.

"He kinda drank his way through the night," Davison said. Wilkinson was waving when officials got to the house.

Farther up the coast, much of Bridge City and downtown Orange were under up to 8 feet of water and rescue teams in dump trucks were plowing through in an effort to reach families trapped on roofs and inside attics.

"We've got to try and do something," said Orange County Judge Carl Thibodeaux.

In Louisiana, Ike's storm surge inundated thousands of homes and businesses. In Plaquemines Parish, near New Orleans, a sheriff's spokesman said levees were overtopped and floodwaters were higher than either hurricane Katrina or Rita.

"The storm surge we're experiencing, on both sides of the Mississippi River, is higher than anything we've seen before," Marie said.

Officials in Houston and along the coast reported receiving thousands of distress calls overnight but they were unable to respond because of the dangerous hurricane conditions. Emergency responders were fanning out Saturday morning from the Reliant Center in Houston to take stock of the damage and rescue any holdouts who needed help

"This is a democracy," said Mark Miner, a spokesman for Perry. "Local officials who can order evacuations put out very strong messages. Gov. Perry put out a very strong warning. But you can't force people to leave their homes. They made a decision to ride out the storm. Our prayers are with them."

The oil and gas industry was closely watching Ike because it was headed straight for the nation's biggest complex of refineries and petrochemical plants. Fears of shortages pushed wholesale gasoline prices to around $4.85 a gallon, up from $3 earlier in the week.

At least eight refineries were shut down ahead of the storm but it was too soon to know how they fared.

Ike passed over Houston before dawn, blowing out windows in the state's tallest building, the 75-story Chase Tower. Behind splintered shards, desks were exposed to the pounding morning rains, metal blinds hung in a twisted heap from some windows, and smoky black glass covered the streets below.

Documents, marked "highly confidential," were strewn across nearly empty streets.

"It sounded like ice or something hitting the window but really it was glass," said Santa Montelongo, 53, who took refuge inside her office at a nearby building. "We could see it fly by. It got really spooky."

Fires burned untended across Galveston and Houston. Brennan's, a landmark downtown Houston restaurant, was destroyed by flames when firefighters were thwarted by high winds. Fire officials said a restaurant worker and his young daughter were taken to a hospital in critical condition with burns over 70 percent of their bodies.

Mindful of the deadly chaos that ensured in 2005 when the nation's fourth-largest city emptied out ahead of Hurricane Rita, Houston officials evacuated only the lowest-lying areas and told some 2 million others to "hunker down" and ride out the storm at home. Ike was the first hurricane since Alicia in 1983 to land a direct hit on Houston.

"From the beginning, we knew this was going to be a big storm, a frightening situation," said County Judge Ed Emmett, who urged residents to stay inside, even if they think the storm has passed. "Those of us who were around 25 years ago when Alicia came through, we know what it's like to listen to those winds and that rain. But from where we now stand, as the storm goes through and clears our area, we are going to see our community at its very best."

As Ike moved north later Saturday morning, the storm dropped to a Category 1 hurricane with winds of around 80 mph. At 11 a.m. EDT, the center was about 20 miles north-northeast of Huntsville, Texas, and moving north at 16 mph. It was expected to turn toward Arkansas later in the day. At 2 p.m. EDT Ike become a tropical storm with winds near 60 mph.

Because Ike was so huge, hurricane winds pounded the coast for hours before landfall and continued through the morning, with the worst winds and rain after the center came ashore, forecasters said.

"For us, it was a 10," Galveston Fire Chief Mike Varela said. Varela said firefighters responded to dozens of rescue calls before suspending operations Friday night, including from people who changed their minds and fled at the last minute.

Six feet of water had collected in the Galveston County Courthouse in the island's downtown, and the University of Texas Medical Branch at Galveston was flooded, according to local storm reports on the National Weather Service's Web site.

"I'm drained. I'm beat up," said Steven Rushing, a commercial fisherman who tried to ride out the storm with his wife and several family members, including his pregnant 17-year-old daughter, in their one-story brick home on Galveston Island. Early Saturday, he loaded his family into a 17-foot ski boat and headed for safety. The boat ran aground and the Rushings sprinted for safety, guided by lights from police responding to a 911 call made from the boat.

"My family is traumatized. I kept them here, promising them everything would be alright, but this is the real deal and I won't stay no more."

More than 3 million customers lost power in southeast Texas, and some 140,000 more in Louisiana. That's in addition to the 60,000 still without power from Labor Day's Hurricane Gustav. Suppliers warned it could be weeks before all service was restored.

But there was good news: A stranded freighter with 22 men aboard made it through the brunt of the storm safely, and a tugboat was on the way to save them. And an evacuee from Calhoun County gave birth to a baby girl in the restroom of a shelter with the aid of an expert in geriatric psychiatry who delivered his first baby in two decades.

The Federal Emergency Management Agency said more than 5.5 million prepackaged meals were being sent to the region, along with more than 230 generators and 5.6 million liters of water. At least 3,500 FEMA officials were stationed in Texas and Louisiana.

Houston Mayor Bill White said the police department, Coast Guard, federal emergency rescue workers and thousands of Centerpoint Energy employees were set to begin recovery efforts as soon as the rain and wind eased enough to allow safe travel on city streets.

Click here for Texas emergency contacts and information.


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Crews fan out in Texas to assess damage

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At least two deaths in the state are being blamed on the storm
The Associated Press
updated 2:49 p.m. ET, Sat., Sept. 13, 2008
HOUSTON - Rescue crews navigated flooded and debris-strewn streets Saturday to search for those who insisted on staying and riding out a fierce Hurricane Ike, which shattered skyscraper windows, cut power to millions and flooded thousands of homes as it sloshed across the Texas coast.

State and local officials began searching for survivors by late morning, just hours after Ike roared ashore at Galveston with 110 mph winds, heavy rains and towering waves. Overnight, dispatchers received thousands of calls from frightened residents who bucked mandatory orders to leave as the storm closed in.

Rescue crews were frustrated, but vowed to get to the more than 140,000 people who stubbornly stayed behind as soon as they could.

"This is a democracy," said Mark Miner, a spokesman for Gov. Rick Perry. "Local officials who can order evacuations put out very strong messages. Gov. Perry put out a very strong warning. But you can't force people to leave their homes. They made a decision to ride out the storm. Our prayers are with them."

Sedonia Owen, 75, and her son, Lindy McKissick, defied evacuation orders in Galveston because they wanted to protect their neighborhood from possible looters. She was watching floodwaters recede from her front porch Saturday morning, armed with a shotgun.

"My neighbors told me, 'You've got my permission. Anybody who goes into my house, you can shoot them,'" said Owen.

Bush declares disaster
President Bush declared a major disaster in his home state of Texas and ordered immediate federal aid. Officials were encouraged that the storm surge topped out at only 13.5 feet — far lower than the catastrophic 20-to-25 foot wall of water forecasters had feared, but major roads were washed out near Galveston, and the damage was still immense.

Residents of Houston emerged to take in the damage, even as glass from the JPMorgan Chase Tower — the state's tallest building at 75 stories — continued to rain on streets below. Trees were uprooted in the streets, road signs mangled by wind.

"I think we're like at ground zero," said Mauricio Diaz, 36, as he walked along Texas Avenue across the street from the Chase building. Metal blinds from the tower dotted the street, along with red seat cushions, pieces of a wood desk and office documents marked "highly confidential."


Houston Police officer Joseph Ledet was out patrolling the streets early Saturday, but stopped and simply stared as he approached Chase Tower. "It looks like a bomb went off over there," he said. "Just destruction."

Shortly before noon, Houston police cars prowled downtown, ordering citizens off the streets over bullhorns: "Please clear the area! Go home!"

The storm, which had killed more than 80 in the Caribbean before making landfall in the United States, claimed at least two lives in Texas, but the toll was likely to rise. A woman died early Saturday when a tree fell on her home near Pinehurst in Montgomery County, crushing her as she slept. A 19-year-old man also slipped off a jetty near Corpus Christi and apparently washed away.

FEMA ready to roll
The Federal Emergency Management Agency said search and rescue teams were at the ready in Houston, poised to go to the aid of those stranded by Hurricane Ike. At a sports arena, tractor-trailers and large sport utility vehicles sat idle as the vast storm churned northward across the state.

The storm, nearly as big as Texas itself, blasted a 500-mile stretch of coastline in Louisiana and Texas. It breached levees, flooded roads and led more than 1 million people to evacuate and seek shelter inland.

South of Galveston, authorities said 67-year-old Ray Wilkinson was the only resident who didn't evacuate from Surfside Beach, population 800. He was drunk and waving when authorities reached him on Saturday morning.

"He kinda drank his way through the night," Mayor Larry Davison said.

Some homes were destroyed, but the storm was not as bad for Surfside Beach as Davison had feared. "But it's pretty bad," he said. "It'll take six months to clean it up."

Farther up the coast, much of Bridge City and downtown Orange were under up to 8 feet of water and rescue teams in dump trucks were plowing through in an effort to reach families trapped on roofs and inside attics.

"Right now we're pretty devastated," Orange County Judge Carl Thibodeaux said. "We're still watching the water steadily rise slowly. Hopefully it's going to crest soon."

Thibodeaux said Ike was not causing as much structural damage as Rita, but that rising water was making the effects more devastating. Thibodeaux and other officials were stuck inside an emergency operation center, where he said the water outside was at least 5 feet and rising.

Storm surge causing problems
In Louisiana, Ike's storm surge inundated thousands of homes and businesses. In Plaquemines Parish, near New Orleans, a sheriff's spokesman said levees were overtopped and floodwaters were higher than either hurricane Katrina or Rita.

"The storm surge we're experiencing, on both sides of the Mississippi River, is higher than anything we've seen before," Marie said.

As Ike moved north later Saturday morning, the storm dropped to a Category 1 hurricane, then a tropical storm. At 2 p.m. EDT, the storm's center was just southeast of Palestine, Texas, and moving toward the north near 16 mph. Winds were still at 60 mph, and tornadoes were possible.

Because Ike was so huge, hurricane winds pounded the coast for hours before landfall and continued through the morning, with the worst winds and rain after the center came ashore, forecasters said.

"For us, it was a 10," Galveston Fire Chief Mike Varela said. Varela said firefighters responded to dozens of rescue calls before suspending operations Friday night, including from people who changed their minds and fled at the last minute.

Ike landed near the nation's biggest complex of refineries and petrochemical plants, and already, prices were reacting. Gas prices nationwide rose nearly 6 cents a gallon to $3.733, according to auto club AAA, the Oil Price Information Service and Wright Express. Some feared worries about a prolonged shutdown in the Gulf of Mexico could send prices surging back toward all-time highs of $4 per gallon, reached over the summer when oil prices neared $150 a barrel.

More than 3 million customers lost power in southeast Texas, and some 140,000 more in Louisiana. That's in addition to the 60,000 still without power from Labor Day's Hurricane Gustav. Suppliers warned it could be weeks before all service was restored.

But there was good news: A stranded freighter with 22 men aboard made it through the brunt of the storm safely, and a tugboat was on the way to save them. And an evacuee from Calhoun County gave birth to a baby girl in the restroom of a shelter with the aid of an expert in geriatric psychiatry who delivered his first baby in two decades.

'I kept them here'
Steven Rushing, a commercial fishmerman, tried to ride out the storm with his wife and several family members, including his pregnant 17-year-old daughter, in their one-story brick home on Galveston Island.

Early Saturday, they watched the water rise and donned life jackets. When the water reached the TV, about 4 feet high, Rushing's plan was to kick out a window so they could tie themselves to a tree and await rescue.

But then he noticed a sudden calm, apparently the hurricane's eye passing over. He loaded his family into a 17-foot ski boat and headed for the San Luis resort, the headquarters for emergency personnel about 20 blocks away. It took 20 minutes to float 16 blocks before the boat ran aground. Then the Rushings sprinted for safety, guided by lights from police responding to a 911 call made from the boat.

"I'm drained. I'm beat up," Rushing said later Saturday morning. "My family is traumatized. I kept them here, promising them everything would be alright, but this is the real deal and I won't stay no more."

One Galveston landmark destroyed by the storm was the 79-year-old Balinese Room
a famous Texas nightclub where Frank Sinata and Bob Hope once performed.

The popular dance and gambling hall was washed away by battering storm surge as Ike roared ashore early Saturday.

Erected on Galveston's sea wall, the building was added to the National Register of Historic Places in 1997.

The Balinese Room survived Hurricane Carla in 1961 and Alicia in 1983. But Ike proved too much for the Texas icon as battering waves ripped the building apart.

Dominque Joha, who managed the Balinese Room for the past year, says she is trying to absorb the blow, adding, "I gave so much of my heart to this building."

Oil and gas industry impact
Much of the region's industrial recovery will depend on how quickly power companies can restore electricity; that, in turn, will depend on how quickly the utilities can get employees back to work.

"I received a call from one of my employees, who was evacuated to San Antonio. He was just informed that his house was totally destroyed," said Bill Reid, the CEO of Ohmstede, which builds and repairs refineries. Reid, who lives in Kemah, Texas, about 35 miles south of Houston, said his town was without power and water, and still had 15 feet of flooding.

The port of Houston, the nation's second-largest, was without power Saturday but expects to reopen Monday morning if the Coast Guard finds no obstacles in the shipping lanes. Some empty cargo containers were blown about, but not too far.

"All the terminals did very well and we had only very minor damage, like fencing being blown down," said port spokeswoman Argentina James.

Refineries as far east as Louisiana were affected by the storm, however. The tourist island town of Galveston was flooded and office buildings in downtown Houston were damaged, but it could have been worse.

"It appears that, at least from our facility and operations standpoint, the impact is a little less than we did anticipate," said Mike Smid, chief executive of trucking company YRC North America, which runs Yellow and Roadway lines. The company evacuated its 900 employees ahead of the storm.

Preliminary estimates put the damage at $8 billion or more, but a precise accounting of the storm's wrath was far from complete.


© 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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