Monday, November 10, 2008

The Targeting Of Private Retirement Accounts

The Targeting Of Private Retirement Accounts

By: Jim Sinclair

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The following article is a Carolina Journal exclusive:

Dems Target Private Retirement Accounts
Democratic leaders in the U.S. House discuss confiscating 401(k)s, IRAs
By Karen McMahan
November 04, 2008

RALEIGH - Democrats in the U.S. House have been conducting hearings on proposals to confiscate workers’ personal retirement accounts - including 401(k)s and IRAs - and convert them to accounts managed by the Social Security Administration.

Triggered by the financial crisis the past two months, the hearings reportedly were meant to stem losses incurred by many workers and retirees whose 401(k) and IRA balances have been shrinking rapidly.

More…

Let me first say this is improbable. However:

  1. This would be Draconian.
  2. What idiot feels that the Social Security Administration has any capacity to manage enormous investment funds other than through buying Treasury instruments?
  3. This can only be an idea of how to refinance the pillaged social security funds.
  4. This would not be any different than Chavez’s recent moves.
  5. This would place the US alongside all Banana Republics.
  6. This is not gold.
  7. This is a liberal professor speaking to the left.
  8. This is the most disturbing event to be suggested.
  9. This is not good for the dollar.
  10. This is good for gold.

Now having said that, let’s address your major concerns based on today’s calls and faxes.

  1. This is the most disturbing item I have experienced since OTC derivative dealings began in a serious way in 1991.
  2. Discussions of the confiscation of citizen’s assets at this level, no matter how it is presented, has the potential for catastrophic consequences.
  3. If Citizens can have their asset confiscated who in the world would consider the dollar, US Treasuries, or US depositories safe from confiscation without representation?
  4. With the TIC reports already threatening the dollar, consider the flight of petro funds from the US.
  5. Financially the back door was closed by the Patriot Act. On January 1st, 2009 expatriates will have practically all their assets taxed away. That is law and that is fact. The front door is closed because a nation of immigrants refuses to allow legal immigration. The country is locked down.
  6. Never say never regarding confiscation of any asset if in the unlikely case the article above is true.
  7. My solution is public.
  8. Your solution is to do what I have done, not necessarily in the same way.
  9. Incorporate in another country, operate in a third country, trade on multiple national exchanges. It is a form of Harry’s formula of having your money in one country, your citizenship in another country and your body in a third country. For me this is true corporately.
  10. You do not need to do exactly what I have. If you look carefully there are other vehicles which you might already be in that contain the same characteristics.
  11. Take physical delivery of your shares.
  12. Do nothing illegal.
  13. Do not deal with anyone that offers a service that is in the light of day illegal. If you do, they will own you.
  14. If you select to expatriate your gold do it legally.
  15. Gold ETFs will be treated exactly like gold.
  16. Coin dealers will try to talk you into collector gold coins, declaring them free of confiscation risk. They may be but you are entering into an art, not gold market. You will be expertly screwed price wise.

In conclusion, I strongly doubt retirement accounts will be confiscated this early in a new Administration. The USA is still a nation of NASCAR fans in the main. The public would simply go wild.

You cannot try anything illegal as no transfer of funds goes unnoticed today.

The front door is closed and the back door is closed for US citizens on 01/01/09. US citizens simply have to deal with it. I believe I have already.

Take delivery of your shares in the form of paper certificates. As a second option become a direct registration book entry at the respective company’s transfer agent. Do it tomorrow because you already know that soon many gold and silver public companies will become fully computerized and cease the issue of paper certificates while dissuading direct registration if they even allow it.

Every exit is shutting down. “This is it and it is now” takes on a new dimension.

Even though I doubt that such Draconian means will be introduced, I believe in being prepared with all your funds that are now outside of retirement accounts.

We can no longer say never on the possibility of gold confiscation talk at the same level. I still doubt both will ever happen, but be prepared.

Do not act emotionally and pay confiscation tax levels. Cool down and think about things. Nothing so draconian will happen so early in a new Administration - believe me. What was reported is a liberal professor speaking to the left.

Circuit City files for bankruptcy protection

Circuit City files for bankruptcy protection

Circuit City seeks bankruptcy protection amid pressure from vendors ahead of the holidays

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Facing pressure from vendors and consumers who aren't spending, Circuit City Stores Inc. filed for bankruptcy protection Monday as it heads into the busy holiday season with hopes that the move will help it survive.

Under Chapter 11 protection, the nation's second-biggest electronics retailer can keep operating while it develops a reorganization plan. Its Canadian operations also filed for similar protection.

The company also said it cut 700 more jobs at its Richmond, Va., headquarters, after announcing a week ago that it would close 20 percent of its stores and lay off thousands of workers.

In court documents, Chief Financial Officer Bruce H. Besanko cited three factors: erosion of vendor confidence, decreased liquidity and the global economic crisis.

"Without immediate relief, the company is concerned that it will not receive goods for Black Friday and the upcoming holiday season, which could cause irreparable harm to the company and its stakeholders," Besanko said in the filing.

Its shares fell 14 cents, or about 56 percent, to 11 cents on Monday before being halted.

Circuit City, which has had only one profitable quarter in the past year, has faced significant declines in traffic and heightened competition from rival Best Buy Co. and others. The company laid off about 3,400 retail employees last year and replaced them with lower-paid workers, a move analysts said could backfire, hurting morale and driving away customers.

While the retail industry overall is facing what's expected to be the weakest holiday season in decades, Circuit City's struggles have intensified as nervous consumers spend less and credit has become tighter.

At a hearing in Richmond, U.S. Bankruptcy Judge Kevin Huennekens granted Circuit City interim approval to secure $1.1 billion in debtor-in-possession loans while it is in bankruptcy protection. Those funds, needed to stock merchandise and pay employees, replace a $1.3 billion asset-backed loan the company had been using.

Circuit City also was granted interim approval to abandon 150 leases at locations where it no longer operates stores, which it said costs $40 million annually.

The company, which said it had $3.4 billion in assets and $2.32 billion in liabilities as of Aug. 31, is hoping to exit court protection by early summer 2009, putting it in a position to find a buyer for the chain or operate as a standalone business.

Final approval of the motions will be addressed at a Dec. 5 hearing.

Analysts said much depends on Circuit City's relationship with its vendors and how it handles its real estate issues.

Circuit City is a well-known brand and could re-emerge from bankruptcy, Stifel Nicolaus & Co. analyst David Schick said in a note to investors. "We believe the marketplace has a slot for a higher-end chain with a commissioned sales force," he said.

But Stephen Lubben, a professor at Seton Hall Law School, said Circuit City's survival depends on whether its creditors work with the company "or whether they think they're a lost cause and cut them off permanently."

JPMorgan analyst Christopher Horvers agreed, saying it boiled down to merchandise. "If they can get inventory into the stores, I can think they'll remain competitive."

The company's biggest creditors are its vendors: Hewlett-Packard has a $118.8 million claim followed by Samsung ($115.9 million), Sony ($60 million), Zenith ($41.2 million) and Toshiba ($17.9 million). Smaller creditors include GPS navigation system maker Garmin, Nikon, Lenovo, Eastman Kodak and Mitsubishi.

Deutsche Bank analyst Mike Baker told investors that consumers learning about Circuit City's bankruptcy may go elsewhere because of a lack of confidence in the company.

At a Circuit City Warehouse Store already slated for closure in Milwaukee, Courtney Bergeron, 29, said he heard the news about the company and figured he should see if there were any deals for flat-screen TVs.

Although he saw some discounts -- about 15 percent off televisions at least 32 inches wide -- Bergeron figured he should wait.

"On Black Friday, they're probably going to be lower than this," he said.

Bergeron and his friend, Bertha Harris, also 29, said they hadn't shopped much at Circuit City over the years. He said Circuit City's selection was limited, so he ended up buying more electronics from Best Buy and discounter Wal-Mart Stores Inc.

Harris said she was always dissatisfied with service at Circuit City. When she asked questions the workers couldn't answer them on their own, she said.

"They knew as much as I knew about things," she said, adding it wasn't much.

Circuit City announced a week ago it planned to close 155 of its more than 700 U.S. stores by Dec. 31. It is laying off about 17 percent of its domestic work force, which could affect up to 7,300 people.

Horvers said the reorganization could help Circuit City get out of leases for certain bad store locations -- something Schick said had been one of the company's main issues.

Circuit City "had many problems in the end -- but all began, in our view, with holding on to 1980s real estate too long," he wrote.

AP Business Writer Vinnee Tong reported from New York. AP Business Writer Emily Fredrix contributed to this report from Milwaukee.

DHL to cut 9,500 jobs

DHL to cut 9,500 jobs

Baltimore Business Journal

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DHL said Monday it will cut 9,500 U.S. jobs and, starting early next year, will focus its U.S. Express business entirely on the company's international offerings.

About 115 of those cuts will come from the company's corporate headquarters in Florida, spokesman Jonathan Baker sad.

As part of the cuts – announced Monday by parent company Deutsche Post World Net at a press conference in Bonn, Germany – DHL U.S. Express said it will close its U.S. ground hubs, and cut the number of stations to 103 from 412.

"This is the right move for our U.S. Express operations given the current economic climate and for the long run," said John Mullen, global CEO of DHL Express. "Focusing our U.S. Express efforts on what we do better than anyone else – international shipping – serves the best interests of our customers, employees and shareholders around the world."

The company said it will keep 3,000 to 4,000 U.S. Express employees, who will focus on international express customers starting January 30.

The cuts are designed to help DHL's U.S. Express business reduce its operating costs from $5.4 billion to less than $1 billion, a decrease of more than 80 percent. It was not clear what the impact of these moves would be on the company's Baltimore-area operations. DHL opened a new $1.6 million facility at Baltimore/Washington International Thurgood Marshall Airport in Aug. 2007.

In May, DHL announced plans to use UPS instead of Astar and ABX Air, which currently handles most of DHL's freight at a central hub in Wilmington, Ohio. DHL owns a 49 percent stake in Astar. The rest is privately held.

Baker said those talks are ongoing and are expected to be finalized by the end of the year.

Fed Defies Transparency Aim in Refusal to Disclose

Fed Defies Transparency Aim in Refusal to Disclose

By Mark Pittman, Bob Ivry and Alison Fitzgerald

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The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn't require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.

''The collateral is not being adequately disclosed, and that's a big problem,'' said Dan Fuss, vice chairman of Boston- based Loomis Sayles & Co., where he co-manages $17 billion in bonds. ''In a liquid market, this wouldn't matter, but we're not. The market is very nervous and very thin.''

Bloomberg News has requested details of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure.

The Fed made the loans under terms of 11 programs, eight of them created in the past 15 months, in the midst of the biggest financial crisis since the Great Depression.

''It's your money; it's not the Fed's money,'' said billionaire Ted Forstmann, senior partner of Forstmann Little & Co. in New York. ''Of course there should be transparency.''

Treasury, Fed, Obama

Federal Reserve spokeswoman Michelle Smith declined to comment on the loans or the Bloomberg lawsuit. Treasury spokeswoman Michele Davis didn't respond to a phone call and an e-mail seeking comment.

President-elect Barack Obama's economic adviser, Jason Furman, also didn't respond to an e-mail and a phone call seeking comment from Obama. In a Sept. 22 campaign speech, Obama promised to ''make our government open and transparent so that anyone can ensure that our business is the people's business.''

The Fed's lending is significant because the central bank has stepped into a rescue role that was also the purpose of the $700 billion Troubled Asset Relief Program, or TARP, bailout plan -- without safeguards put into the TARP legislation by Congress.

Total Fed lending topped $2 trillion for the first time last week and has risen by 140 percent, or $1.172 trillion, in the seven weeks since Fed governors relaxed the collateral standards on Sept. 14. The difference includes a $788 billion increase in loans to banks through the Fed and $474 billion in other lending, mostly through the central bank's purchase of Fannie Mae and Freddie Mac bonds.

Sept. 14 Decision

Before Sept. 14, the Fed accepted mostly top-rated government and asset-backed securities as collateral. After that date, the central bank widened standards to accept other kinds of securities, some with lower ratings. The Fed collects interest on all its loans.

The plan to purchase distressed securities through TARP called for buying at the ''lowest price that the secretary (of the Treasury) determines to be consistent with the purposes of this Act,'' according to the Emergency Economic Stabilization Act of 2008, the law that covers TARP.

The legislation didn't require any specific method for the purchases beyond saying mechanisms such as auctions or reverse auctions should be used ''when appropriate.'' In a reverse auction, bidders offer to sell securities at successively lower prices, helping to ensure that the Fed would pay less. The measure also included a five-member oversight board that includes Paulson and Bernanke.

At a Sept. 23 Senate Banking Committee hearing in Washington, Paulson called for transparency in the purchase of distressed assets under the TARP program.

'We Need Transparency'

''We need oversight,'' Paulson told lawmakers. ''We need protection. We need transparency. I want it. We all want it.''

At a joint House-Senate hearing the next day, Bernanke also stressed the importance of openness in the program. ''Transparency is a big issue,'' he said.

The Fed lent cash and government bonds to banks, which gave the Fed collateral in the form of equities and debt, including subprime and structured securities such as collateralized debt obligations, according to the Fed Web site. The borrowers have included the now-bankrupt Lehman Brothers Holdings Inc., Citigroup Inc. and JPMorgan Chase & Co.

Banks oppose any release of information because it might signal weakness and spur short-selling or a run by depositors, said Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, a Washington trade group.

Frank Backs Fed

''You have to balance the need for transparency with protecting the public interest,'' Talbott said. ''Taxpayers have a right to know where their tax dollars are going, but one piece of information standing alone could undermine public confidence in the system.''

The nation's biggest banks, Citigroup, Bank of America Corp., JPMorgan Chase, Wells Fargo & Co., Goldman Sachs Group Inc. and Morgan Stanley, declined to comment on whether they have borrowed money from the Fed. They received $120 billion in capital from the TARP, which was signed into law Oct. 3.

In an interview Nov. 6, House Financial Services Committee Chairman Barney Frank said the Fed's disclosure is sufficient and that the risk the central bank is taking on is appropriate in the current economic climate. Frank said he has discussed the program with Timothy F. Geithner, president and chief executive officer of the Federal Reserve Bank of New York and a possible candidate to succeed Paulson as Treasury secretary.

''I talk to Geithner and he was pretty sure that they're OK,'' said Frank, a Massachusetts Democrat. ''If the risk is that the Fed takes a little bit of a haircut, well that's regrettable.'' Such losses would be acceptable, he said, if the program helps revive the economy.

'Unclog the Market'

Frank said the Fed shouldn't reveal the assets it holds or how it values them because of ''delicacy with respect to pricing.'' He said such disclosure would ''give people clues to what your pricing is and what they might be able to sell us and what your estimates are.'' He wouldn't say why he thought that information would be problematic.

Revealing how the Fed values collateral could help thaw frozen credit markets, said Ron D'Vari, chief executive officer of NewOak Capital LLC in New York and the former head of structured finance at BlackRock Inc.

''I'd love to hear the methodology, how the Fed priced the assets,'' D'Vari said. ''That would unclog the market very quickly.''

TARP's $700 billion so far is being used to buy preferred shares in banks to shore up their capital. The program was originally intended to hold banks' troubled assets while markets were frozen.

AIG Lending

The Bloomberg lawsuit argues that the collateral lists ''are central to understanding and assessing the government's response to the most cataclysmic financial crisis in America since the Great Depression.''

The Fed has lent at least $81 billion to American International Group Inc., the world's largest insurer, so that it can pay obligations to banks. AIG today said it received an expanded government rescue package valued at more than $150 billion.

The central bank is also responsible for losses on a $26.8 billion portfolio guaranteed after Bear Stearns Cos. was bought by JPMorgan.

''As a taxpayer, it is absolutely important that we know how they're lending money and who they're lending it to,'' said Lucy Dalglish, executive director of the Arlington, Virginia- based Reporters Committee for Freedom of the Press.

Ratings Cuts

Ultimately, the Fed will have to remove some securities held as collateral from some programs because the central bank's rules call for instruments rated below investment grade to be taken back by the borrower and marked down in value. Losses on those assets could then be written off, partly through the capital recently injected into those banks by the Treasury.

Moody's Investors Service alone has cut its ratings on 926 mortgage-backed securities worth $42 billion to junk from investment grade since Sept. 14, making them ineligible for collateral on some Fed loans.

The Fed's collateral ''absolutely should be made public,'' said Mark Cuban, an activist investor, the owner of the Dallas Mavericks professional basketball team and the creator of the Web site BailoutSleuth.com, which focuses on the secrecy shrouding the Fed's moves.

The Bloomberg lawsuit is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan).

Bush Secretly Gave Banks $140 Billion Tax Windfall

A Quiet Windfall For U.S. Banks

With Attention on Bailout Debate, Treasury Made Change to Tax Policy

By Amit R. Paley

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The financial world was fixated on Capitol Hill as Congress battled over the Bush administration's request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.

But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.

The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill. When they found out, some legislators were furious. Some congressional staff members have privately concluded that the notice was illegal. But they have worried that saying so publicly could unravel several recent bank mergers made possible by the change and send the economy into an even deeper tailspin.

"Did the Treasury Department have the authority to do this? I think almost every tax expert would agree that the answer is no," said George K. Yin, the former chief of staff of the Joint Committee on Taxation, the nonpartisan congressional authority on taxes. "They basically repealed a 22-year-old law that Congress passed as a backdoor way of providing aid to banks."

The story of the obscure provision underscores what critics in Congress, academia and the legal profession warn are the dangers of the broad authority being exercised by Treasury Secretary Henry M. Paulson Jr. in addressing the financial crisis. Lawmakers are now looking at whether the new notice was introduced to benefit specific banks, as well as whether it inappropriately accelerated bank takeovers.

The change to Section 382 of the tax code -- a provision that limited a kind of tax shelter arising in corporate mergers -- came after a two-decade effort by conservative economists and Republican administration officials to eliminate or overhaul the law, which is so little-known that even influential tax experts sometimes draw a blank at its mention. Until the financial meltdown, its opponents thought it would be nearly impossible to revamp the section because this would look like a corporate giveaway, according to lobbyists.

Andrew C. DeSouza, a Treasury spokesman, said the administration had the legal authority to issue the notice as part of its power to interpret the tax code and provide legal guidance to companies. He described the Sept. 30 notice, which allows some banks to keep more money by lowering their taxes, as a way to help financial institutions during a time of economic crisis. "This is part of our overall effort to provide relief," he said.

The Treasury itself did not estimate how much the tax change would cost, DeSouza said.

A Tax Law 'Shock'

The guidance issued from the IRS caught even some of the closest followers of tax law off guard because it seemed to come out of the blue when Treasury's work seemed focused almost exclusively on the bailout.

"It was a shock to most of the tax law community. It was one of those things where it pops up on your screen and your jaw drops," said Candace A. Ridgway, a partner at Jones Day, a law firm that represents banks that could benefit from the notice. "I've been in tax law for 20 years, and I've never seen anything like this."

More than a dozen tax lawyers interviewed for this story -- including several representing banks that stand to reap billions from the change -- said the Treasury had no authority to issue the notice.

Several other tax lawyers, all of whom represent banks, said the change was legal. Like DeSouza, they said the legal authority came from Section 382 itself, which says the secretary can write regulations to "carry out the purposes of this section."

Section 382 of the tax code was created by Congress in 1986 to end what it considered an abuse of the tax system: companies sheltering their profits from taxation by acquiring shell companies whose only real value was the losses on their books. The firms would then use the acquired company's losses to offset their gains and avoid paying taxes.

Lawmakers decried the tax shelters as a scam and created a formula to strictly limit the use of those purchased losses for tax purposes.

But from the beginning, some conservative economists and Republican administration officials criticized the new law as unwieldy and unnecessary meddling by the government in the business world.

"This has never been a good economic policy," said Kenneth W. Gideon, an assistant Treasury secretary for tax policy under President George H.W. Bush and now a partner at Skadden, Arps, Slate, Meagher & Flom, a law firm that represents banks.

The opposition to Section 382 is part of a broader ideological battle over how the tax code deals with a company's losses. Some conservative economists argue that not only should a firm be able to use losses to offset gains, but that in a year when a company only loses money, it should be entitled to a cash refund from the government.

During the current Bush administration, senior officials considered ways to implement some version of the policy. A Treasury paper in December 2007 -- issued under the names of Eric Solomon, the top tax policy official in the department, and his deputy, Robert Carroll -- criticized limits on the use of losses and suggested that they be relaxed. A logical extension of that argument would be an overhaul of 382, according to Carroll, who left his position as deputy assistant secretary in the Treasury's office of tax policy earlier this year.

Yet lobbyists trying to modify the obscure section found that they could get no traction in Congress or with the Treasury.

"It's really been the third rail of tax policy to touch 382," said Kevin A. Hassett, director of economic policy studies at the American Enterprise Institute.

'The Wells Fargo Ruling'

As turmoil swept financial markets, banking officials stepped up their efforts to change the law.

Senior executives from the banking industry told top Treasury officials at the beginning of the year that Section 382 was bad for businesses because it was preventing mergers, according to Scott E. Talbott, senior vice president for the Financial Services Roundtable, which lobbies for some of the country's largest financial institutions. He declined to identify the executives and said the discussions were not a concerted lobbying effort. Lobbyists for the biotechnology industry also raised concerns about the provision at an April meeting with Solomon, the assistant secretary for tax policy, according to talking points prepared for the session.

DeSouza, the Treasury spokesman, said department officials in August began internal discussions about the tax change. "We received absolutely no requests from any bank or financial institution to do this," he said.

Although the department's action was prompted by spreading troubles in the financial markets, Carroll said, it was consistent with what the Treasury had deemed in the December report to be good tax policy.

The notice was released on a momentous day in the banking industry. It not only came 24 hours after the House of Representatives initially defeated the bailout bill, but also one day after Wachovia agreed to be acquired by Citigroup in a government-brokered deal.

The Treasury notice suddenly made it much more attractive to acquire distressed banks, and Wells Fargo, which had been an earlier suitor for Wachovia, made a new and ultimately successful play to take it over.

The Jones Day law firm said the tax change, which some analysts soon dubbed "the Wells Fargo Ruling," could be worth about $25 billion for Wells Fargo. Wells Fargo declined to comment for this article.

The tax world, meanwhile, was rushing to figure out the full impact of the notice and who was responsible for the change.

Jones Day released a widely circulated commentary that concluded that the change could cost taxpayers about $140 billion. Robert L. Willens, a prominent corporate tax expert in New York City, said the price is more likely to be $105 billion to $110 billion.

Over the next month, two more bank mergers took place with the benefit of the new tax guidance. PNC, which took over National City, saved about $5.1 billion from the modification, about the total amount that it spent to acquire the bank, Willens said. Banco Santander, which took over Sovereign Bancorp, netted an extra $2 billion because of the change, he said. A spokesman for PNC said Willens's estimate was too high but declined to provide an alternate one; Santander declined to comment.

Attorneys representing banks celebrated the notice. The week after it was issued, former Treasury officials now in private practice met with Solomon, the department's top tax policy official. They asked him to relax the limitations on banks even further, so that foreign banks could benefit from the tax break, too.

Congress Looks for Answers

No one in the Treasury informed the tax-writing committees of Congress about this move, which could reduce revenue by tens of billions of dollars. Legislators learned about the notice only days later.

DeSouza, the Treasury spokesman, said Congress is not normally consulted about administrative guidance.

Sen. Charles E. Grassley (R-Iowa), ranking member on the Finance Committee, was particularly outraged and had his staff push for an explanation from the Bush administration, according to congressional aides.

In an off-the-record conference call on Oct. 7, nearly a dozen Capitol Hill staffers demanded answers from Solomon for about an hour. Several of the participants left the call even more convinced that the administration had overstepped its authority, according to people familiar with the conversation.

But lawmakers worried about discussing their concerns publicly. The staff of Sen. Max Baucus (D-Mont.), chairman of the Finance Committee, had asked that the entire conference call be kept secret, according to a person with knowledge of the call.

"We're all nervous about saying that this was illegal because of our fears about the marketplace," said one congressional aide, who like others spoke on condition of anonymity because of the sensitivity of the matter. "To the extent we want to try to publicly stop this, we're going to be gumming up some important deals."

Grassley and Sen. Charles E. Schumer (D-N.Y.) have publicly expressed concerns about the notice but have so far avoided saying that it is illegal. "Congress wants to help," Grassley said. "We also have a responsibility to make sure power isn't abused and that the sensibilities of Main Street aren't left in the dust as Treasury works to inject remedies into the financial system."

Carol Guthrie, spokeswoman for the Democrats on the Finance Committee, said it is in frequent contact with the Treasury about the financial rescue efforts, including how it exercises authority over tax policy.

Lawmakers are considering legislation to undo the change. According to tax attorneys, no one would have legal standing to file a lawsuit challenging the Treasury notice, so only Congress or Treasury could reverse it. Such action could undo the notice going forward or make it clear that it was never legal, a move that experts say would be unlikely.

But several aides said they were still torn between their belief that the change is illegal and fear of further destabilizing the economy.

"None of us wants to be blamed for ruining these mergers and creating a new Great Depression," one said.

Some legal experts said these under-the-radar objections mirror the objections to the congressional resolution authorizing the war in Iraq.

"It's just like after September 11. Back then no one wanted to be seen as not patriotic, and now no one wants to be seen as not doing all they can to save the financial system," said Lee A. Sheppard, a tax attorney who is a contributing editor at the trade publication Tax Analysts. "We're left now with congressional Democrats that have spines like overcooked spaghetti. So who is going to stop the Treasury secretary from doing whatever he wants?"

Secret Order Allows US Raids Many Countries

Secret Order Lets U.S. Raid Al Qaeda

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The United States military since 2004 has used broad, secret authority to carry out nearly a dozen previously undisclosed attacks against Al Qaeda and other militants in Syria, Pakistan and elsewhere, according to senior American officials.

These military raids, typically carried out by Special Operations forces, were authorized by a classified order that Defense Secretary Donald H. Rumsfeld signed in the spring of 2004 with the approval of President Bush, the officials said. The secret order gave the military new authority to attack the Qaeda terrorist network anywhere in the world, and a more sweeping mandate to conduct operations in countries not at war with the United States.

In 2006, for example, a Navy Seal team raided a suspected militants’ compound in the Bajaur region of Pakistan, according to a former top official of the Central Intelligence Agency. Officials watched the entire mission — captured by the video camera of a remotely piloted Predator aircraft — in real time in the C.I.A.’s Counterterrorist Center at the agency’s headquarters in Virginia 7,000 miles away.

Some of the military missions have been conducted in close coordination with the C.I.A., according to senior American officials, who said that in others, like the Special Operations raid in Syria on Oct. 26 of this year, the military commandos acted in support of C.I.A.-directed operations.

But as many as a dozen additional operations have been canceled in the past four years, often to the dismay of military commanders, senior military officials said. They said senior administration officials had decided in these cases that the missions were too risky, were too diplomatically explosive or relied on insufficient evidence.

More than a half-dozen officials, including current and former military and intelligence officials as well as senior Bush administration policy makers, described details of the 2004 military order on the condition of anonymity because of its politically delicate nature. Spokesmen for the White House, the Defense Department and the military declined to comment.

Apart from the 2006 raid into Pakistan, the American officials refused to describe in detail what they said had been nearly a dozen previously undisclosed attacks, except to say they had been carried out in Syria, Pakistan and other countries. They made clear that there had been no raids into Iran using that authority, but they suggested that American forces had carried out reconnaissance missions in Iran using other classified directives.

According to a senior administration official, the new authority was spelled out in a classified document called “Al Qaeda Network Exord,” or execute order, that streamlined the approval process for the military to act outside officially declared war zones. Where in the past the Pentagon needed to get approval for missions on a case-by-case basis, which could take days when there were only hours to act, the new order specified a way for Pentagon planners to get the green light for a mission far more quickly, the official said.

It also allowed senior officials to think through how the United States would respond if a mission went badly. “If that helicopter goes down in Syria en route to a target,” a former senior military official said, “the American response would not have to be worked out on the fly.”

The 2004 order was a step in the evolution of how the American government sought to kill or capture Qaeda terrorists around the world. It was issued after the Bush administration had already granted America’s intelligence agencies sweeping power to secretly detain and interrogate terrorism suspects in overseas prisons and to conduct warrantless eavesdropping on telephone and electronic communications.

Shortly after the Sept. 11 attacks, Mr. Bush issued a classified order authorizing the C.I.A. to kill or capture Qaeda militants around the globe. By 2003, American intelligence agencies and the military had developed a much deeper understanding of Al Qaeda’s extensive global network, and Mr. Rumsfeld pressed hard to unleash the military’s vast firepower against militants outside the combat zones of Iraq and Afghanistan.

The 2004 order identifies 15 to 20 countries, including Syria, Pakistan, Yemen, Saudi Arabia and several other Persian Gulf states, where Qaeda militants were believed to be operating or to have sought sanctuary, a senior administration official said.

Even with the order, each specific mission requires high-level government approval. Targets in Somalia, for instance, need at least the approval of the defense secretary, the administration official said, while targets in a handful of countries, including Pakistan and Syria, require presidential approval.

The Pentagon has exercised its authority frequently, dispatching commandos to countries including Pakistan and Somalia. Details of a few of these strikes have previously been reported.

For example, shortly after Ethiopian troops crossed into Somalia in late 2006 to dislodge an Islamist regime in Mogadishu, the Pentagon’s Joint Special Operations Command quietly sent operatives and AC-130 gunships to an airstrip near the Ethiopian town of Dire Dawa. From there, members of a classified unit called Task Force 88 crossed repeatedly into Somalia to hunt senior members of a Qaeda cell believed to be responsible for the 1998 American Embassy bombings in Kenya and Tanzania.

At the time, American officials said Special Operations troops were operating under a classified directive authorizing the military to kill or capture Qaeda operatives if failure to act quickly would mean the United States had lost a “fleeting opportunity” to neutralize the enemy.

Occasionally, the officials said, Special Operations troops would land in Somalia to assess the strikes’ results. On Jan. 7, 2007, an AC-130 struck an isolated fishing village near the Kenyan border, and within hours, American commandos and Ethiopian troops were examining the rubble to determine whether any Qaeda operatives had been killed.

But even with the new authority, proposed Pentagon missions were sometimes scrubbed because of bad intelligence or bureaucratic entanglements, senior administration officials said.

The details of one of those aborted operations, in early 2005, were reported by The New York Times last June. In that case, an operation to send a team of the Navy Seals and the Army Rangers into Pakistan to capture Ayman al-Zawahri, Osama bin Laden’s top deputy, was aborted at the last minute.

Mr. Zawahri was believed by intelligence officials to be attending a meeting in Bajaur, in Pakistan’s tribal areas, and the Pentagon’s Joint Special Operations Command hastily put together a plan to capture him. There were strong disagreements inside the Pentagon and the C.I.A. about the quality of the intelligence, however, and some in the military expressed concern that the mission was unnecessarily risky.

Porter J. Goss, the C.I.A. director at the time, urged the military to carry out the mission, and some in the C.I.A. even wanted to execute it without informing Ryan C. Crocker, then the American ambassador to Pakistan. Mr. Rumsfeld ultimately refused to authorize the mission.

Former military and intelligence officials said that Lt. Gen. Stanley A. McChrystal, who recently completed his tour as head of the Joint Special Operations Command, had pressed for years to win approval for commando missions into Pakistan. But the missions were frequently rejected because officials in Washington determined that the risks to American troops and the alliance with Pakistan were too great.

Capt. John Kirby, a spokesman for General McChrystal, who is now director of the military’s Joint Staff, declined to comment.

The recent raid into Syria was not the first time that Special Operations forces had operated in that country, according to a senior military official and an outside adviser to the Pentagon.

Since the Iraq war began, the official and the outside adviser said, Special Operations forces have several times made cross-border raids aimed at militants and infrastructure aiding the flow of foreign fighters into Iraq.

The raid in late October, however, was much more noticeable than the previous raids, military officials said, which helps explain why it drew a sharp protest from the Syrian government.

Negotiations to hammer out the 2004 order took place over nearly a year and involved wrangling between the Pentagon and the C.I.A. and the State Department about the military’s proper role around the world, several administration officials said.

American officials said there had been debate over whether to include Iran in the 2004 order, but ultimately Iran was set aside, possibly to be dealt with under a separate authorization.

Senior officials of the State Department and the C.I.A. voiced fears that military commandos would encroach on their turf, conducting operations that historically the C.I.A. had carried out, and running missions without an ambassador’s knowledge or approval.

Mr. Rumsfeld had pushed in the years after the Sept. 11 attacks to expand the mission of Special Operations troops to include intelligence gathering and counterterrorism operations in countries where American commandos had not operated before.

Bush administration officials have shown a determination to operate under an expansive definition of self-defense that provides a legal rationale for strikes on militant targets in sovereign nations without those countries’ consent.

Several officials said the negotiations over the 2004 order resulted in closer coordination among the Pentagon, the State Department and the C.I.A., and set a very high standard for the quality of intelligence necessary to gain approval for an attack.

The 2004 order also provided a foundation for the orders that Mr. Bush approved in July allowing the military to conduct raids into the Pakistani tribal areas, including the Sept. 3 operation by Special Operations forces that killed about 20 militants, American officials said.

Administration officials said that Mr. Bush’s approval had paved the way for Defense Secretary Robert M. Gates to sign an order — separate from the 2004 order — that specifically directed the military to plan a series of operations, in cooperation with the C.I.A., on the Qaeda network and other militant groups linked to it in Pakistan.

Unlike the 2004 order, in which Special Operations commanders nominated targets for approval by senior government officials, the order in July was more of a top-down approach, directing the military to work with the C.I.A. to find targets in the tribal areas, administration officials said. They said each target still needed to be approved by the group of Mr. Bush’s top national security and foreign policy advisers, called the Principals Committee.

Military command casts broad net with homeland security operations

Military command casts broad net with homeland security operations

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A recent article by The Colorado Independent reported that the U.S. Northern Command, a military entity created in 2002 for homeland defense missions and based in Colorado Springs, plans to activate and train an estimated 4,700 service members for specialized domestic operations inside the United States.

But figuring out what the military will be doing with those troops is very difficult to determine considering that the command has already conducted a diverse array of operations since its creation, including anti-drug efforts at the Mexican border, natural disaster responses and assisting the federal Secret Service with political convention security.

What's next for the Northern Command? So far the federal government is keeping details relating to the planned troop activation vague, but claims the service members will only be used for humanitarian purposes.

"I hope there are increasingly small numbers of people who don't know what the Northern Command does," Air Force Gen. Gene Renuart, commander of U.S. Northern Command, said at the annual National Homeland Defense and Security Symposium held in Colorado Springs a few weeks ago.

Renuart noted that he was glad to think of the Northern Command as an affective and quiet operation working in the background and keeping the country safe.

Civil liberties advocates, on the other hand, are quick to raise questions about what role the domestic troops will have in interfering with state law enforcement operations:

"One of our founding touchstones of democracy is that the military is not to be used against the American people. Over a hundred years ago that sentiment was put into law in the Posse Comitatus Act, which prohibited the military from being involved in law enforcement functions," [Mike German, national security counsel for the American Civil Liberties Union's legislative office in Washington., D.C ] said. "Our hope is to find as much information as we can to challenge whether this is appropriate or not and to create some public awareness about what's going on"

Here are a few examples of what the Northern Command does and how it works:

-Is integrated with 45 other federal agencies at its headquarters at Peterson Air Force Base

- Tracks down "intelligence information that might identify networks of terrorists" according to Gen. Renuart

-Assists law enforcement with anti-narcotics operations in at the Mexican border

-Was directed by the Joint Chiefs of Staff to provide support and materials to the US Secret Service planning efforts during the Democratic National Convention in Denver in August.

-Shared national security intelligence with 55 government agencies at the Multi-Agency Communication Center (MACC) that was set up during the Democratic National Convention, according to Timothy Koerner, an assistant director with the Secret Service who testified at a congressional Homeland Security hearing in 2007.

-Shared logistical intelligence and maps with the Colorado National Guard during the twin blizzards of 2006

-Assisted in evacuating people and conducted search and rescue efforts during hurricanes Gustav and Ike

-Participated in a field exercise this May in Washington simulating a chemical terrorist attack.

-Will be conducting an exercise this month simulating a massive earthquake disaster in southern California.

Conned Again

Conned Again

By Paul Craig Roberts

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If the change President-elect Obama has promised includes a halt to America’s wars of aggression and an end to the rip-off of taxpayers by powerful financial interests, what explains Obama’s choice of foreign and economic policy advisors? Indeed, Obama’s selection of Rahm Israel Emanuel as White House chief of staff is a signal that change ended with Obama’s election. The only thing different about the new administration will be the faces.

Rahm Israel Emanuel is a supporter of Bush’s invasion of Iraq. Emanuel rose to prominence in the Democratic Party as a result of his fundraising connections to AIPAC. A strong supporter of the American Israeli Public Affairs Committee, he comes from a terrorist family. His father was a member of Irgun, a Jewish terrorist organization that used violence to drive the British and Palestinians out of Palestine in order to create the Jewish state. During the 1991 Gulf War, Rahm Israel Emanuel volunteered to serve in the Israel Defense Forces. He was a member of the Freddie Mac board of directors and received $231,655 in directors fees in 2001. According to Wikipedia, “during the time Emanuel spent on the board, Freddie Mac was plagued with scandals involving campaign contributions and accounting irregularities.”

In “Hail to the Chief of Staff,” Alexander Cockburn describes Emanuel as “a super-Likudnik hawk,” who as chairman of the Democratic Congressional Campaign Committee in 2006 “made great efforts to knock out antiwar Democratic candidates.”

My despondent friends in the Israeli peace movement ask, “What is this man doing in Obama’s administration?”

Obama’s election was necessary as the only means Americans had to hold the Republicans accountable for their crimes against the Constitution and human rights, for their violations of US and international laws, for their lies and deceptions, and for their financial chicanery. As an editorial in Pravda put it, “Only Satan would have been worse than the Bush regime. Therefore it could be argued that the new administration in the USA could never be worse than the one which divorced the hearts and minds of Americans from their brothers in the international community, which appalled the rest of the world with shock and awe tactics that included concentration camps, torture, mass murder and utter disrespect for international law.”

But Obama’s advisers are drawn from the same gang of Washington thugs and Wall Street banksters as Bush’s. Richard Holbrooke, son of Russian and German Jews, was an assistant secretary of state and ambassador in the Clinton administration. He implemented the policy to enlarge NATO and to place the military alliance on Russia’s border in contravention of Reagan’s promise to Gorbachev. Holbrooke is also associated with the Clinton administration’s illegal bombing of Serbia, a war crime that killed civilians and Chinese diplomats. If not a neocon himself, Holbrooke is closely allied with them.

According to Wikipedia, Madeline Albright was born Marie Jana Korbelova in Prague to Jewish parents who had converted to Catholicism in order to escape persecution. She is the Clinton era secretary of state who told Leslie Stahl (60 Minutes) that the US policy of Iraq sanctions, which resulted in the deaths of hundreds of thousands of Iraqi children, had goals important enough to justify the children’s deaths. Albright’s infamous words: “we think the price is worth it.” Wikipedia reports that this immoralist served on the board of directors of the New York Stock Exchange at the time of Dick Grasso’s $187.5 million compensation scandal.

Dennis Ross has long associations with the Israeli-Palestinian “peace negotiations.” A member of his Clinton era team, Aaron David Miller, wrote that during 1999-2000 the US negotiating team led by Ross acted as Israel’s lawyer: “we had to run everything by Israel first.” This “stripped our policy of the independence and flexibility required for serious peacemaking. If we couldn't put proposals on the table without checking with the Israelis first, and refused to push back when they said no, how effective could our mediation be?” According to Wikipedia, Ross is “chairman of a new Jerusalem-based think tank, the Jewish People Policy Planning Institute, funded and founded by the Jewish Agency.”

Clearly, this is not a group of advisors that is going to halt America’s wars against Israel’s enemies or force the Israeli government to accept the necessary conditions for a real peace in the Middle East.

Ralph Nader predicted as much. In his “Open Letter to Barack Obama (November 3, 2008), Nader pointed out to Obama that his “transformation from an articulate defender of Palestinian rights . . . to a dittoman for the hard-line AIPAC lobby” puts Obama at odds with “a majority of Jewish-Americans” and “64% of Israelis.” Nader quotes the Israeli writer and peace advocate Uri Avnery’s description of Obama’s appearance before AIPAC as an appearance that “broke all records for obsequiousness and fawning.” Nader damns Obama for his “utter lack of political courage [for] surrendering to demands of the hard-liners to prohibit former president Jimmy Carter from speaking at the Democratic National Convention.” Carter, who achieved the only meaningful peace agreement between Israel and the Arabs, has been demonized by the powerful AIPAC lobby for criticizing Israel’s policy of apartheid toward the Palestinians whose territory Israel forcibly occupies.

Obama’s economic team is just as bad. Its star is Robert Rubin, the bankster who was secretary of the treasury in the Clinton administration. Rubin has responsibility for the repeal of the Glass-Steagall Act and, thereby, responsibility for the current financial crisis. In his letter to Obama, Nader points out that Obama received unprecedented campaign contributions from corporate and Wall Street interests. “Never before has a Democratic nominee for President achieved this supremacy over his Republican counterpart.”

Obama’s victory speech was magnificent. The TV cameras scanning faces in the audience showed the hope and belief that propelled Obama into the presidency. But Obama cannot bring change to Washington. There is no one in the Washington crowd that he can appoint who is capable of bringing change. If Obama were to reach outside the usual crowd, anyone suspected of being a bringer of change could not get confirmed by the Senate. Powerful interest groups--AIPAC, the military-security complex, Wall Street--use their political influence to block unacceptable appointments.

As Alexander Cockburn put it in his column, “Obama, the first-rate Republican,” “never has the dead hand of the past had a ‘reform’ candidate so firmly by the windpipe.” Obama confirmed Cockburn’s verdict in his first press conference as president-elect. Disregarding the unanimous US National Intelligence Estimate, which concluded that Iran stopped working on nuclear weapons five years ago, and ignoring the continued certification by the International Atomic Energy Agency that none of the nuclear material for Iran’s civilian nuclear reactor has been diverted to weapons use, Obama sallied forth with the Israel Lobby’s propaganda and accused Iran of “development of a nuclear weapon” and vowing “to prevent that from happening.” http://news.antiwar.com/2008/11/07/obama-hits-out-at-iran-closemouthed-on-tactics/

The change that is coming to America has nothing to do with Obama. Change is coming from the financial crisis brought on by Wall Street greed and irresponsibility, from the eroding role of the US dollar as reserve currency, from countless mortgage foreclosures, from the offshoring of millions of America’s best jobs, from a deepening recession, from pillars of American manufacturing--Ford and GM--begging the government for taxpayers’ money to stay alive, and from budget and trade deficits that are too large to be closed by normal means.

Traditionally, the government relies on monetary and fiscal policy to lift the economy out of recession. But easy money is not working. Interest rates are already low and monetary growth is already high, yet unemployment is rising. The budget deficit is already huge--a world record--and the red ink is not stimulating the economy. Can even lower interest rates and even higher budget deficits help an economy that has moved offshore, leaving behind jobless consumers overburdened with debt?

How much more can the government borrow? America’s foreign creditors are asking this question. An official organ of the Chinese ruling party recently called for Asian and European countries to “banish the US dollar from their direct trade relations, relying only on their own currencies.”

“Why,” asks another Chinese publication, “should China help the US to issue debt without end in the belief that the national credit of the US can expand without limit?”

The world has tired of American hegemony and had its fill of American arrogance. America’s reputation is in tatters: the financial debacle, endless red ink, Abu Ghraib, Gitmo, rendition, torture, illegal wars based on lies and deception, disrespect for the sovereignty of other countries, war crimes, disregard for international law and the Geneva Conventions, the assault on habeas corpus and the separation of powers, a domestic police state, constant interference in the internal affairs of other countries, boundless hypocrisy.

The change that is coming is the end of American empire. The hegemon has run out of money and influence. Obama as “America’s First Black President” will lift hopes and, thus, allow the act to be carried on a little longer. But the New American Century is already over.

Tough Times Strain Colleges Rich and Poor

Tough Times Strain Colleges Rich and Poor

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Arizona State University, anticipating at least $25 million in budget cuts this fiscal year — on top of the $30 million already cut — is ending its contracts with as many as 200 adjunct instructors.

Boston University, Cornell and Brown have announced selective hiring freezes.

And Tufts University, which for the last two years has, proudly, been one of the few colleges in the nation that could afford to be need-blind — that is, to admit the best-qualified applicants and meet their full financial need — may not be able to maintain that generosity for next year’s incoming class. This fall, Tufts suspended new capital projects and budgeted more for financial aid. But with the market downturn, and the likelihood that more applicants will need bigger aid packages, need-blind admissions may go by the wayside.

“The target of being need-blind is our highest priority,” said Lawrence S. Bacow, president of Tufts. “But with what’s happening in the larger economy, we expect that the incoming class is going to be needier. That’s the real uncertainty.”

Tough economic times have come to public and private universities alike, and rich or poor, they are figuring out how to respond. Many are announcing hiring freezes, postponing construction projects or putting off planned capital campaigns.

With endowment values and charitable gifts likely to decline, the process of setting next year’s tuition low enough to keep students coming, but high enough to support operations, is trickier than ever.

Dozens of college presidents, especially at wealthy institutions, have sent letters and e-mail to students and their families describing their financial situation and belt-tightening plans.

At Williams College, for example, President Morton Owen Schapiro wrote that with last year’s negative return on the endowment and the worsening situation since June, some renovation and facilities spending would be reduced and nonessential openings left unfilled.

Many students, increasingly conscious of costs, are flocking to their state universities; at Binghamton University, part of the New York State university system, applications were up 50 percent this fall. But with this year’s state budget problems, tuition increases at public universities may be especially steep. Some public universities have already announced midyear tuition increases.

With endowment values shrinking, variable-rate debt costs rising and states cutting their financing, colleges face challenges on multiple fronts, said Molly Corbett Broad, president of the American Council on Education.

“There’s no evidence of a complete meltdown,” Ms. Broad said, “but the problems are serious enough that higher education is going to need help from the government.”

And as in other sectors, she said, some financially shaky institutions will most likely be seeking mergers.

Nationwide, retrenchment announcements are coming fast and furious, as state after state reduces education financing.

The University of Florida, which eliminated 430 faculty and staff positions this year, was told recently to cut next year’s budget by 10 percent, probably requiring more layoffs. Financing for the University of Massachusetts system was cut $24.6 million for the current fiscal year.

On Thursday, Gov. Arnold Schwarzenegger of California proposed a midyear budget cut of $65.5 million for the University of California system — on top of the $48 million reduction already in the budget.

“Budget cuts mean that campuses won’t be able to fill faculty vacancies, that the student-faculty ratio rises, that students have lecturers instead of tenured professors,” said Mark G. Yudof, president of the California system. “Higher education is very labor intensive. We may be getting to the point where there will have to be some basic change in the model.”

Private colleges, too, are tightening their belts — turning down thermostats, scrapping plans for new gardens or quads, reducing faculty raises.

But many are also increasing their pool of financial aid.

Vassar College will give out $1 million more in financial aid this year than originally budgeted, even though the endowment, which provides a third of its operating budget, dropped to $765 million at the end of September, down $80 million from late June. President Catharine Bond Hill of Vassar said the college would reduce its operating costs, but remain need-blind.

Many institutions with small endowments, however, will probably become more need-sensitive than usual this year, quietly offering places to fewer students who need large aid packages.

At Dickinson College in Pennsylvania, Robert J. Massa, the vice president for enrollment and student life, said that about 200 applicants last year might have been accepted if they had not needed so much financial help, but that that number might rise to 250 this year.

Dickinson’s endowment was $280 million in mid-October, Mr. Massa said, down from $350 million in June. And while more than three quarters of the college’s operating budget comes from student fees, some endowment revenue will have to be replaced.

“Here’s the rub,” Mr. Massa said. “I really don’t think that colleges can afford to increase their tuition price at higher than inflation this year. I don’t think the public will stand for it. What we’ve done in higher education is let our dreams and aspirations dictate our cost structure.”

Most colleges will have a better sense next month of how many students are struggling, when second-semester tuition bills come due.

Paola Aguilar, a sophomore at Shenandoah University in Winchester, Va., is worrying about whether she can afford to return next year.

“My mom became a Realtor last year to try to earn more money, but that didn’t help,” Ms. Aguilar said. “I’ve talked to the people here, and they’ve helped me out a little more for next semester, but as of right now, if I don’t get more help, I’ll have to leave next year and go somewhere cheaper, near home.”

Tracy Fitzsimmons, Shenandoah’s president, said she began hearing about students’ financial anxieties in mid-September.

“They’d tell me they were thinking they might have to move off campus next semester and stay three to a bedroom, or give up the meal plan and just eat one meal a day,” Ms. Fitzsimmons said.

Shenandoah has started an emergency grant fund for students, increased its loan program and prepared to stretch out spring tuition payments for hard-pressed families.

Economic uncertainty touches every facet of higher education.

“We are planning to begin a capital campaign of $150-185 million,” said Karen R. Lawrence, president of Sarah Lawrence College. “We will still do that. We’re not compromising our ambitions, but the timing will be a little bit deferred.”

At the wealthiest institutions, endowment revenue usually covers about a third of operating costs, and most colleges and universities spend a percentage of their endowment, based on its average value over the previous three years, helping to smooth out economic ups and downs.

In recent years, with tuition rising faster than inflation, college affordability has become a significant issue. And with the sharp growth of endowments in recent years — Harvard’s hit $36.9 billion this summer — some politicians, notably Senator Charles E. Grassley, Republican of Iowa, have pushed for a requirement that colleges spend 5 percent of their endowments. Many of the wealthiest institutions responded by expanding financial aid last year, with dozens of them replacing loans with grants.

This fall, more universities are taking steps to increase affordability. Benedictine University, a Roman Catholic institution in Illinois, is freezing tuition; Vanderbilt University will replace loans with grants; Boston University has expanded scholarships for students who graduated from Boston public schools; and the University of Toledo announced free tuition for needy, high-performing graduates of Ohio’s six largest public school systems.

Presidents of many expensive private colleges are wondering how much more tuition pressure families can bear.

“I wouldn’t deny that a tuition freeze has occurred to me, but we can’t afford heroic gestures,” said Sandy Ungar, president of Goucher College in Baltimore.

Given the current climate, some say, colleges need to re-examine all of their economic assumptions.

“Several years ago, we started thinking about sustainability in environmental terms,” said Dick Celeste, the president of Colorado College. “Now we need to be thinking about sustainability in economic terms.”