Leon Panetta warns against more cuts in Pentagon budget

WASHINGTON — Defense Secretary Leon E. Panetta effectively told Congress on Thursday to raise taxes and cut Social Security and Medicare before taking another swipe at the Pentagon budget beyond defense cuts already called for in the debt-ceiling deal.

In his first Pentagon news conference, Mr. Panetta, a former budget director in the Clinton White House, lent his voice to the Obama administration’s strategy of putting pressure on Congress to consider raising revenues when a special committee meets this fall to recommend $1.5 trillion in additional deficit-reduction measures. Mr. Obama signed a debt-ceiling deal on Tuesday calling for an initial $1 trillion in cuts.

Mr. Panetta’s argument was that defense had given up enough — about $350 billion of that $1 trillion over 10 years — and that further cuts would have dire consequences. He then segued into a brief discourse on “discretionary” federal spending, like defense, and “mandatory” federal spending, like Social Security and other entitlements.

“Let me for a moment put a budget hat on,” said Mr. Panetta, who is a month into his job as defense secretary. “You cannot deal with the size deficits that this country is confronting by simply cutting the discretionary side of the budget. That represents less than a third of the overall federal budget.

“You’ve got to, as the president’s made clear, if you’re going to look at those size deficits, you’ve got to look at the mandatory side of the budget, which is two-thirds of the federal budget. And you also have to look at revenues as part of that answer.”

Mr. Panetta made his comments on the second straight day of a Pentagon pushback to hundreds of billions of dollars of budget cuts potentially coming its way, the first time since the attacks of Sept. 11, 2001, that it has faced shrinking spending.

Both Mr. Panetta and Adm. Mike Mullen, the chairman of the Joints Chiefs of Staff, who joined Mr. Panetta at the news conference, used words like “disastrous” and “unacceptable” to describe across-the-board cuts that would automatically kick in if the new committee failed to agree on reductions this fall.

Mr. Panetta also took the position that the committee should make no further defense cuts, either. The White House, however, has not ruled out further defense reductions. The committee, to be composed of six Democrats and six Republicans, would also be unlikely to take them off the table.

Defense spending represents about half of the federal government’s discretionary spending, and the military’s budget has increased by more than 70 percent since 2001. Although the conflicts in Iraq and Afghanistan have cost the Pentagon upward of $1 trillion, nearly half of the growth in defense spending in the past decade has been unrelated to the wars.

Panetta said the $600 billion in cuts “would do real damage to our security, our troops and their families, and our military’s ability to protect the nation. It is an outcome that would be completely unacceptable to me as secretary of defense, to the president and, I believe, to our nation’s leaders.”

Earlier this week, a senior defense official said thousands of Defense Department civilians would lose their jobs if larger cuts were triggered by a failure of the bipartisan panel to reach an agreement.

Mullen, who just returned from a trip to Iraq and Afghanistan, said the partisan fight over debt reduction had fueled worries among the troops that they might not be paid on time.

“Our men and women down range have enough to worry about just getting their job done,” Mullen said. “They shouldn’t also be concerned about whether or not they will be paid to do that job or whether or not their families will continue to get the support they need during long absences. We can do better than that, as a military and as a nation.”

Pentagon officials have tried to sound optimistic about the chances of a congressional panel reaching a deal that would spare the Pentagon additional pain. That hasn’t stopped them, however, from citing the dangers should the committee of Democrats and Republicans fail.

Asked whether, given the sharpness of his warning, Panetta thought he would be able to serve as defense secretary if the additional cuts were made, he chuckled.

5 officers convicted in shootings after Katrina

EW ORLEANS  — Five current or former police officers were convicted Friday of federal civil rights charges related to deadly shootings on a New Orleans bridge after Hurricane Katrina:
SGT. Kenneth Bowen
Bowen, 37, was in the passenger seat of a rental truck that police drove to the Danziger Bridge in response to an officer's distress call. Former officer Michael Hunter, who was driving the truck, testified he saw Bowen lean over a concrete barrier on the east side of the bridge and randomly spray gunfire at wounded, unarmed people. Bowen was convicted in the fatal shooting of 17-year-old James Brissette, and of stomping on a dying, mentally disabled man, 40-year-old Ronald Madison, on the west side of the bridge. He's been on leave without pay due to incarceration.
SGT. Robert Gisevius
Gisevius, 39, was one of several officers in the rear of the rental truck when it arrived at the bridge. He allegedly fired an assault rifle on the east side of the bridge, where five people were shot, one fatally. But the weapon wasn't turned over to investigators. Jurors convicted him in the fatal shooting of Brissette — jurors didn't have to decide whether Brissette was murdered because they didn't hold any of the defendants individually responsible for causing his death. Gisevius also was convicted of taking part in a cover-up. In 2009, the FBI secretly taped a conversation in which Gisevius shared his suspicion that someone was leaking information to federal investigators. He's been on leave without pay due to incarceration.
OFFICER Anthony Villavaso
Villavaso, 34, also arrived at the bridge in the rear of the rental truck. A firearms expert who testified for the government said he matched nine ammunition casings found at the bridge to an assault rifle used by Villavaso. Jurors convicted him in Brissette's shooting and the cover-up. During a conversation recorded by the FBI, Villavaso repeatedly insisted he saw a civilian with a gun on the bridge. He's been on leave without pay due to incarceration.
EX-OFFICER ROBERT FAULCON
Faulcon, 47, was convicted in Brissette's shooting and found guilty of fatally shooting Madison on the west side of the bridge. But the jury decided Madison's killing didn't amount to murder. Faulcon, the only defendant to testify during the trial, said he was "paralyzed with fear" when he shot Madison. He didn't dispute that he shot an unarmed man in the back with a shotgun, but he said he believed Madison posed a threat as Faulcon chased him and his brother, Lance Madison, down the bridge. Faulcon left the police force shortly after the hurricane and took a job as a truck driver.
RETIRED SGT. Arthur Kaufman
Kaufman, 55, who was assigned to investigate the shootings, was convicted of participating in a cover-up to make the shootings appear justified. Prosecutors said he fabricated witnesses, falsified reports and planted a gun. Kaufman's attorney tried to shift blame to former Lt. Michael Lohman, who was the ranking officer on the bridge, and Sgt. Gerard Dugue, who also investigated the shootings. Lohman pleaded guilty to participating in a cover-up. Dugue is scheduled to be tried separately later this year. Kaufman, who was not charged with participating in any of the shootings, retired from the police force earlier this year.


Prosecutors alleged that the fifth suspect, Sgt. Arthur Kaufman, a homicide investigator, joined the other four in covering up the incident, inventing witnesses, holding a meeting with the suspects to help them get their stories straight, and saying that a gun from his house was evidence found at the scene.


The four officers who were on the bridge were convicted of civil rights violations and charges related to the cover-up. They face potential multiple life terms.


The jury was asked to determine whether the killings amounted to "murder," which, while not a formal charge, would have resulted in potentially tougher sentences under federal statutes. But jurors declined to do so.

Afghan helicopter crash kills 31 US troops

KABUL, Afghanistan— Thirty-one American troops and seven Afghans died in the overnight downing of a U.S. helicopter, President Hamid Karzai's office said Saturday. The Taliban claimed to have shot down the craft.


The deaths represent the largest loss of military lives in a single incident in the course of the nearly 10-year-old war, and are a blow to Western efforts as the United States and its allies begin drawing down forces in Afghanistan in hopes of ending their combat role in the next three years.


NATO's International Security Assistance Force, or ISAF, confirmed in a terse statement that a helicopter crash had occurred and acknowledged insurgent activity in the area at the time. A Western military official, speaking on condition of anonymity, said the twin-rotor Chinook helicopter had apparently been brought down by a rocket-propelled grenade.


Karzai's statement identified the slain Americans as special operations forces. Sensitive to operational secrecy, special forces commanders as a rule are slower than other branches to publicly acknowledge combat casualties, which would account for the military's near-silence on the incident more than 12 hours after it occurred.


The helicopter went down after midnight in the Sayedabad district of Wardak province, west of the capital, Kabul, according to Shahidullah Shahid, a spokesman for the provincial governor. He and other provincial officials said the crash followed a firefight that had left eight insurgents dead.


The NATO force said recovery efforts were under way, and Afghan officials said the crash site had been cordoned off. The statement from Karzai's office reporting the U.S. and Afghan casualties offered condolences to President Obama and the families of the Afghans who died.


Downings of Western helicopters by hostile fire have been relatively rare in the Afghan conflict. Far more military choppers are lost to mechanical problems or bad weather.


The Taliban claimed its fighters had ambushed Western troops after being tipped off to an imminent night raid in the district. The crash site is located in Wardak's Tangi valley, where the insurgents are known to be active.


The Taliban have claimed responsibility, saying their fighters downed the helicopter in a battle with Nato troops, according to the office of Afghan President Hamid Karzai. The Islamist group also said eight of its fighters had been killed in the fighting.


The incident is believed to be the biggest single loss of life for US forces in Afghanistan since they began operations in 2001.


Nawaz Haqyar, police chief of Maidan Wardak province, said the helicopter had come down in the province, which is west of the country's capital Kabul.


Karzai said in a statement that he has sent his condolences to US President Barack Obama.

US credit rating downgrade prompts warning from China

Allies and critics of President Obama are already pointing fingers over the credit rating downgrade by Standard & Poors.

House Speaker John Boehner, R-Ohio, who clashed with Obama repeatedly during the recent debt ceiling dispute, attributed the downgrade to government spending.

"Unfortunately," Boehner added, "decades of reckless spending cannot be reversed immediately, especially when the Democrats who run Washington remain unwilling to make the tough choices required to put America on solid ground."

Senate Majority Leader Harry Reid, D-Nevada, echoed Obama's call for a "balanced" debt reduction plan, including more tax revenues from wealthy Americans -- a step blocked by Republicans during the recent debate over raising the $14.3 trillion debt ceiling.

"The action by S&P reaffirms the need for a balanced approach to deficit reduction that combines spending cuts with revenue-raising measures like closing taxpayer-funded giveaways to billionaires, oil companies and corporate jet owners," Reid said.

The downgrade of the credit rating -- from AAA to AA-plus -- now puts a premium on the special congressional committee assigned to find $1.5 trillion more in debt reduction over the next decade.

Republican presidential candidates are also weighing in on the downgrade -- pointing the finger straight at Obama.

"America's creditworthiness just became the latest casualty in President Obama's failed record of leadership on the economy," said former Massachusetts Gov. Mitt Romney. "Standard & Poor's rating downgrade is a deeply troubling indicator of our country's decline under President Obama."

Rep. Michele Bachmann, R-Minn., -- who opposed the debt ceiling deal -- called on Obama to fire Treasury Secretary Timothy Geithner, and "submit a plan with a list of cuts to balance the budget this year, turn our economy around and put Americans back to work.

After the European markets closed, Wall Street – which had suffered a 512-point fall on Thursday in one of its worse performances since 2008 – was encouraged by remarks from the Spanish government that the prime minister, José Luis Rodríguez Zapatero, agreed with the French president Nicolas Sarkozy's desire for greater co-ordination.

Even so, the Dow Jones Industrial Average, on a day of wild fluctuations, ended just 60 points higher. Tensions were also eased after Italy's prime minster, Silvio Berlusconi, promised to accelerate austerity measures by a year, and summoned a meeting of G7 finance ministers as soon as possible.

His comments followed rumours that the European Central Bank could reverse its hardline stance and begin buying Spanish and Italian government bonds in return for quicker reforms.

Dealers have been frustrated by the lack of urgency shown by the ECB in supporting Italy and Spain. During Thursday's market mayhem, they had bought only bonds issued by Ireland and Portugal.

Amid fears of an escalation in the crisis, Mervyn King, the governor of the Bank of England, held a conference call with David Cameron and the chancellor, George Osborne – both on holiday – to discuss the impact of the financial crash on Britain's banks and the struggling UK economy. The Bank is likely to cut its growth forecast for the UK when it publishes its latest quarterly inflation report on Wednesday.

"They discussed the financial situation and the chancellor asked the governor for his judgment," a Treasury source said. "They agreed to monitor the situation."

The source said the chancellor was keeping up the pressure on eurozone leaders to carry through the terms of the second bailout of Greece, which was intended to calm the markets when announced on 21 July but has failed to do so, with concerns widening to Italy and Spain. "What we are communicating to our European counterparts is you must deliver on what you have promised," a Treasury source said.

The US jobless rate went down from 9.2% to 9.1%. Analysts said the increase in non-farm payrolls was bigger than the 85,000 jump expected by Wall Street, but the figures were not good enough to make traders feel less gloomy about the possibility of a global double-dip recession.

Glenn Uniacke, senior dealer at Moneycorp, said there was relief at the US jobs figures. "With employment growth in the world's top consumer market an indicator of the future strength of the global economy, today's non-farm payroll figures gave the markets a modest upside surprise and President Obama some short-term reprieve following the blood-letting of the past week," he said.

"However, the data won't stop the rot and is not sufficient to change the bearish outlook from traders, with a sustained figure of 200,000-plus needed for any major positive impact on the unemployment rate. The markets were seen swinging wildly straight after the data, unsure how to interpret the ray of light in an otherwise gloomy week."

The British economist Baroness Vadera, a former Labour minister and G20 adviser who played a role in devising a rescue package for the international banking system at the time of the 2008 crash, said the current crisis could be even worse.

She told BBC Newsnight: "It feels as scary, but it is different. The reason it is potentially worse is that governments stepped in all over the world and saved the banking system in order to save their economies, but now who is going to step in to save governments?

"When we went into that crisis, interest rates were quite high, so we did have monetary policy to use as a tool and now we are at the outer limits of that. Lastly, we are currently facing quite a lot of inflationary pressures, particularly coming from commodities and emerging markets, so our room for manoeuvre is a lot more limited.

EU Struggles to Tame Crisis as Spain

FRANKFURT—The European Central Bank is now open to purchasing government bonds of Italy and Spain, though has made no firm commitment to do so, according to people familiar with the matter.

Buying bonds of the two countries, which together issue roughly €600 billion ($857 billion) of government bonds a year, would be a major step for the central bank. Until this week, the ECB had bought less than €80 billion of Greek, Portuguese and Irish government bonds.

ECB watchers had assumed the there wasn't appetite for such a drastic escalation. The bank's decision on Thursday to restart, after a four-month gap, purchases of Irish and Portuguese bonds was opposed by at least three members of the 23-strong ECB board, including by the head of the powerful German Bundesbank.

Many analysts said those purchases needed to be broadened to Spain and Italy in order to keep the debt crisis that began almost two years ago in Greece from threatening those countries. Friday's signal came as a relief to investors concerned that central bankers might sit idly by while Europe's debt crisis engulfed the euro zone's third- and fourth-largest economies.

The bank, which has generally preferred to see national governments get their own finances in order, urged Italy and Spain to accelerate the pace of fiscal austerity and economic reform, according to people familiar with the matter, though reforms won't necessarily bring bond purchases. Italy on Friday announced new steps to speed up fiscal consolidation.

The ECB "is ready to make major efforts to help the situation, but countries have to do what is necessary first, otherwise it's just like pouring water into a bucket with a hole in it," Belgium's central bank governor Luc Coene told a Belgian radio station early in the day.

ECB President Jean-Claude Trichet on Thursday suggested he was waiting for Italy to make the first move, saying it was "urgent" for European countries to front-load economic reforms, "and for Italy of course."

Any enthusiasm from Mr. Trichet's announcement on Thursday that the central bank was back in the market buying bonds was quickly damped by reports from bond traders that the ECB was only buying Irish and Portuguese debt.

German Chancellor Angela Merkel and French President Nicolas Sarkozy plan to speak by phone later today, their offices said. The European Commission called for an expansion of the European Financial Stability Facility, the 440 billion-euro ($623 billion) rescue fund, earning a rebuke from Germany.

“It’s important to constantly review if there is a need to further reinforce the EFSF in terms of its size,” European Union Economic and Monetary Commissioner Olli Rehn said in a Bloomberg Television interview in Brussels. German Economy Minister Philipp Roesler rejected taking more measures.

Europe’s government leaders were back in the spotlight after a divided ECB restarted its bond-purchase program yesterday following a four-month hiatus. The central bank refused to extend the purchases to Italy and Spain, the two countries at the center of the current turmoil.

“Would the ECB please get serious?” Holger Schmieding, chief economist at Joh. Berenberg Gossler & Co. in London, said in an e-mailed note. Limiting the bond-buying to Ireland and Portugal brings to mind “a fire brigade that responds to a major emergency but then drives to the wrong place and refuses to turn around and douse the real fire.

Spanish and Italian bonds rallied on speculation that policy makers may take more action to arrest the crisis. Ten- year yields dropped 22 basis points to 6.06 percent in Spain and 4 basis points to 6.16 percent in Italy.

The euro was up 0.8 percent at $1.4207 at 4:15 p.m. in Brussels.

Over the opposition of the German central bank, the ECB bought bonds of Ireland and Portugal yesterday, two countries drawing on official aid. It did so again today, according to two people with knowledge of the transactions. The ECB stopped short of buying Italian bonds, and ECB President Jean-Claude Trichet said Italy has to show it is “ahead of the curve” in taming its debt.

A clash over the size of the bailout fund flared between European officials and Germany, the biggest underwriter of aid packages to Greece, Ireland and Portugal.

A call by Jose Barroso, commission president, for a review of “all elements” including the fund’s size was rejected today by Germany’s Roesler.

Atletico Madrid faces Guimaraes in Europa

LONDON: Atletico Madrid, the 2010 Europa League winners, will face Vitoria Guimaraes in a play-off to advance to the group stage this season.

Last season’s runner-up Braga play Switzerland’s Young Boys, and the 2006 and ‘07 winners Sevilla are away in the first-leg against Hannover.

Schalke, Champions League semifinalists last season, were drawn away to HJK Helsinki.

Tottenham travel first to Scotland’s Hearts and AS Roma host Slovan Bratislava.

Big-spending Paris Saint-Germain are away to Olympiakos Volos, although UEFA could disqualify the Greek club that is involved in a match-fixing investigation.

Elsewhere, 2010 Europa League finalists Fulham were handed a tricky-looking draw against Ukrainian club Dnipro Dnipropetrovsk, who are coached by former Sevilla, Spurs and Real Madrid boss Juande Ramos.

Birmingham City will meet Nacional of Portugal, while Stoke City meet Swiss club FC Thun.

Scottish champions Rangers, who were eliminated from the Champions League third qualifying round by Malmo, will meet another Champions League dropout in Maribor of Slovenia.

Last season's runner-up Braga plays Switzerland's Young Boys, and the 2006 and '07 winner Sevilla is away in the first leg against Hannover.

Schalke, a Champions League semifinalist last season, was drawn away to HJK Helsinki.

Tottenham travels first to Scotland's Hearts and AS Roma hosts Slovan Bratislava.

Big-spending Paris Saint-Germain is away to Olympiakos Volos, although UEFA could disqualify the Greek club that is involved in a match-fixing investigation.

First-leg matches are played Aug. 18 and return games on Aug. 25.

The 48-team group stage is drawn Aug. 26 in Monaco.

Madrid denies suspension of bond auction

MADRID — Spain was forced to pay sharply higher interest rates in a pair of bond auctions, reflecting raised investor fears over the country’s ability to handle its debts and avoid a bailout.

The Spanish Treasury says it sold €2.2 billion ($3.2 billion) in three-year notes carrying interest rates of 4.81 percent, and €1.1 billion of three-and-a-half year notes with a rate of 4.98 percent.

t the last comparable bond auction on July 7, three-year bonds had an interest rate of 4.3 percent.

Demand for Thursday’s sale was more than twice supply.

Spanish 10-year yields have jumped about 70 basis points to a high of 6.46 per cent since a euro region leaders’ summit on July 21st failed to convince investors the spread of the debt crisis can be halted by a so-called selective default for Greece.

Spanish 10-year bonds yielded 6.07 per cent after the auction as the spread, or difference, between Spanish and German bonds of that tenor narrowed to 362.6 basis points. However, yields rose again in the afternoon, rising to 6.284 per cent at the close, with the spread rising to 399 basis points.

Demand for the three-year bonds yesterday was 2.14 times the amount sold, compared with 2.29 times in July.

The sale will likely be Spain’s only bond auction this month.

“The Spanish treasury has decided to follow the precedent of the previous two years and not summon a long-term auction on August,” it said in a statement.

Elena Salgado, Spanish finance minister, on Wednesday night insisted that the auction would go ahead in spite of nervousness in the bond markets, in order to show that Spain was capable of raising the money it needed to repay maturing debt and finance its budget deficit. Spain had never cancelled an auction even in turbulent times, she said.

Speaking after an emergency meeting with prime minister José Luis Rodríguez Zapatero to discuss the crisis and jump in debt yields, she acknowledged the volatility was worrying but attributed turmoil this month to thin volume because of the holiday season.

“I don’t think this is a response to the market turbulence, I think this is a summer thing. During the crisis it has been usual for a number of countries to cancel their auctions. But considering the crisis, it’s possible to interpret anything however you like,” interest rate strategist at RBS Harvinder Sian said.

Spain still needs to sell about €38 billion in debt by the end of the year and has completed 60 per cent of its 2011 financing, less than the euro-area average of 67 per cent, according to a report by UniCredit.

Spain Has Lot to Do on Budget

Spain and Italy are especially vulnerable to attacks from market speculators and should accelerate reforms of their economies as much as possible, Gonzalez-Paramo said in an interview with Spain's Cadena Ser radio.

There is no time for holidays. It's extremely urgent to act decisively and to show an inflexible compromise with the need to reform economies to make them grow," the ECB board member said.

Gonzalez-Paramo's words echoed those of European leaders in separate declarations Friday evenings after a round of telephone calls between euro-zone heads of state. 

Spain has practically completed the reform of its banking system but still needs to make progress on budgetary reforms, where elements of vulnerability remain, the ECB board member said.

"We have been told that on August 19 we will hear more of the measures which will assure that Spain will meet its budgetary targets," said Paramo, referring to Spain's commitment to reduce its budget deficit.

Spain still has a lot to do on the budget front,” said Gonzalez-Paramo in an interview with Spanish radio Cadena Ser broadcast yesterday. “Urgent measures also need to be taken to reform the labor market.”

With stock markets sinking for an eighth day, European leaders were hunting for solutions to shield Italy and Spain from market turbulence. The ECB resumed its bond-buying program, without extending the purchases to those two countries.

Umberto Bossi, leader of Italy’s co-ruling Northern League party, said the ECB will start buying Italian bonds on Aug. 8, as part of an exchange for the new economic measures unveiled by Italy’s government yesterday, Ansa newswire reported.

Meanwhile, Spanish Prime Minister Jose Luis Rodriguez Zapatero resumed his vacation in the southern part of the country, his office said in a text message yesterday evening.

Less than a day after first heading out on vacation, Zapatero returned to his office on Aug. 3 to remain in close contact with European leaders as the country’s borrowing costs approached the 7 percent mark that heralded bailouts of Greece, Portugal and Ireland.

Also yesterday, Zapatero spoke to French President Nicolas Sarkozy and agreed to implement accords adopted at the European Union July 21 summit as soon as possible, according to a statement posted on the Spanish government website.

Zapatero spoke by telephone with Italian Prime Minister Silvio Berlusconi and both agreed that the strong fluctuations of recent days in sovereign debt markets make little sense.

“Markets want to see promises kept,” said Gonzalez-Paramo, referring to the July 21 European Union summit which empowered the rescue fund to buy bonds in the secondary market, offer precautionary credit lines and lend to recapitalize banks. Paramo said there are tensions in the market because the European rescue fund can only act in theory until the changes are implemented by European governments.

European finance ministers are likely to meet in early September to speed up the implementation process of the July 21 accords, Spanish Finance Minister Elena Salgado said yesterday to Spanish radio station RNE.

Spanish bonds rallied on speculation that policy makers may take more action to arrest the crisis. The yield on Spain’s 10- year bonds tumbled 25 basis points to 6.04 percent at 4:18 p.m. in London yesterday.

Travel to Spain for World Youth Day

As final preparations are made for World Youth Day 2011 in Madrid, Spain, 21 pilgrims from the Diocese of Sioux City are making final plans of their own.

Andrea Jenson, assistant diocesan director of youth and young adult ministry, will accompany, Father Brent Lingle and eight seminarians along with high school and college students and four chaperones on a pilgrimage from Aug. 11-25.

“Any time that we can get away from home and experience our faith is an opportunity for growth,” said Jenson. “World Youth Day in particular is known for miraculous things happening as well as deep conversions taking place, strengthening of faith, finding of someone’s vocation and an opportunity to see how universal the Catholic Church is.”

This will be a repeat trip to World Youth Day (WYD) for 25 percent of the group, she noted.

“Whether they went when it was in Denver, Canada or Australia, they are going for a second time,” said Jenson. “I think that speaks volumes to what a wonderful experience it is, if they are willing to spend the money to go on the pilgrimage again.”

FALL RIVER — Over 60 persons including teens, young adults and adults from the Fall River Diocese will be traveling to Spain this month to participate in the international celebration of World Youth Day in Madrid from Aug. 16-21.

Held usually every three years in different countries, World Youth Day is an opportunity for youth and young adults from around the globe to unite to celebrate and share their faith through a common experience of pilgrimage, prayer and worship. The weeklong schedule of activities includes catechetical sessions, liturgies, concerts, cultural events, sight-seeing and a prayer vigil and closing Mass with Pope Benedict XVI.

"It's the best experience of the universal Catholic Church that young adults can possibly have," said diocesan Youth and Young Adult Ministry Assistant Director Crystal-Lynn Medeiros who attended World Youth Day 2008 in Sydney, Australia. "There are no words to describe it; you just have to experience it."

She is heading to this year's World Youth Day as part of one local group that includes diocesan Faith Formation Director Claire McManus, two college-age parishioners and the faith formation director from Sacred Heart Parish in Fall River and two parishioners from St. Mary Parish in Mansfield. They will be joining a larger delegation from the Boston Archdiocese.

Other Fall River diocesan World Youth Day pilgrims will be traveling in two different groups.

Twenty-six young people, ages 14-24, from the St. Anthony Parish, New Bedford, Youth Group will be going accompanied by seven adult chaperones including their pastor, Father Roger J. Landry. Members of the youth group have been raising money since 2008 to cover the expense of the trip through bake and candy sales, pilgrimage walk-a-thons, parish breakfasts and other means.

There is also a contingent of 21 heading to Madrid from St. Patrick Parish in Wareham, including some members of that parish's youth group, the director of religious education, and parish parochial vicar Father Ron P. Floyd along with a few young persons from other parishes and three seminarians of the diocese.

First as a seminarian and then as their parish priest, Father Floyd has been working with the St. Patrick's Youth group for several years to plan and fund-raise for participation in World Youth Day 2011.

He described the majority of his group going to Madrid as preparing to enter college in September and believes that age to be right for the World Youth Day experience.

"World Youth Day is an intense time to think about what God is calling you to do, and college age is a great time to focus on that," he said.

At the conclusion of World Youth Day the group will travel to Fatima for a spiritual retreat and then to Lisbon.

Father Landry explained that both young and adult travelers from St. Anthony's have been preparing for their pilgrimage by studying the sites they'll see, the saints whose tombs they'll visit, and previous papal World Youth Day messages. Their expanded itinerary will begin in Lisbon and Fatima and continue on to several Christian shrines in other regions of Spain before their arrival in Madrid. Throughout their journey, youth group members will share their experiences and photos via their online blog at www.saintanthonyyouthgroup.blogspot.com.

"All of us are getting very excited and counting down the days," said Landry. "We've worked hard for three years. Now all the fundraising is over, and we've turned our focus not only to packing but to preparing ourselves spiritually for the graces God in his goodness has been planning from all eternity to give us during this pilgrimage. The theme of the World Youth Day is 'Planted and Built Up in Jesus Christ, Firm in the Faith,' and we're going conscious of the fact that Jesus wants to build us all up in faith, hope and love so that we can return better equipped to help him build up our parish and the Church."

As of mid-July almost a half million young persons were registered to attend World Youth Day with over 29,000 coming from the U.S.

Pope Benedict, who convened the gathering, will pray with and speak to youth at an evening vigil on Saturday, Aug. 20 and then preside over the closing "Mass of Sending" the next morning. These events will take place at the Cuatro Vientos, an air base large enough to accommodate the 1.2 million expected at the closing Mass. Most World Youth Day pilgrims will walk the approximate 5-mile distance to the air base on Saturday morning and remain there overnight for the Sunday Mass.

Euro dream threatens to become nightmare‎

Europe has dramatically scaled up its efforts to stanch its sovereign-debt crisis since the start of last year, but to no apparent avail as the turmoil threatened this week to overwhelm Spain and Italy.

Yet, governments still have some unused weapons in their armory—though the political cost of firing them will be high.

As the common currency of 17 nation states, the euro isn't like national currencies. Governments borrowing in their own currencies don't usually need bailouts, because, as a last resort, national central banks stand behind their banks and their governments.

The euro zone is different. The European Central Bank is prevented by treaty restrictions from lending to governments and has been a reluctant buyer of government bonds in the secondary market. Willem Buiter, chief economist at Citigroup, argues that this creates a "black hole" at the center of the euro zone that constitutes "a fundamental design flaw" of the currency union.

Euro-zone governments have tried to patch over this flaw by setting up bailout funds. Over the past 18 months, they have rescued Greece, Ireland and Portugal after they were shut out of financial markets.

But these steps haven't been enough to stop the much bigger economies of Spain and Italy from drifting into the debt vortex. One reason for this, according to analysts, is that the bailout funds haven't been big enough or flexible enough to handle large liquidity crises.

Euro-zone leaders made big strides boosting the tools available to the main rescue vehicle, known as the European Financial Stability Facility, at a summit July 21, which also set new aid for Greece.

The Italian state marked the 150th anniversary of its creation earlier this year. Its people did so with little celebration. Apart from Italy’s post-second World War decades of successful modernisation, most of this history has been one of underachievement and worse.

The Italian state’s first 50 years were marked by instability and weakness before two decades of fascist night descended over the country. Invasion, defeat and civil war in the 1940s left deep scars.

Now, the economy has been stagnating for almost two decades, with living standards barely rising and its once-vaunted industries – from textiles to autos – shrinking in the face of low-wage competition.

Italian entrepreneurialism and design flair succeeded in medium-tech industries when foreign competition was less intense, but success in high-tech sectors operating in a globalised context has been much harder to achieve.

One reason is schooling. Italy’s education system is ever more inadequate in preparing its young for the modern world of work and many of those who manage to do well are stymied in one of Europe’s least meritocratic societies.

Government influence on economies is often overstated, but it is important. Bad government in particular can have big negative effects on growth. The evidence that mismanaged public finances stifle growth is strong. And in this area Italy has long been a European leader – it is the only country to have a national debt bigger than its GDP uninterruptedly since the 1980s.

In the early 1990s the sweeping away of the cold war political parties and the jailing of many of the most corrupt politicians brought hope of better and cleaner government. Those hopes have long since been dashed.

The country’s long-time prime minister, Silvio Berlusconi, has dominated for most of that period. Even by the low standards of Italian politics, he has plumbed new depths. But however bad his actions, his inactions have been even more damaging.

Many of the reforms that could help spur the economy have gone unimplemented, despite his promises to shake the country up. Nor has he made much of a dent in Italy’s public debt mountain. His main appeal – that he could bring to the business of government the same get-things-done approach that made him one of Europe’s richest men – has proved baseless.

But Berlusconi will not lead Italy forever, and the country’s political class has shown that it can push through painful reform. Perhaps ironically, its biggest achievement in recent times was ensuring that Italy squeezed into the euro as a founding member. There is no such prize for taking radical action now. Instead, incentive comes from the need to avoid disaster. Italy’s politicians might yet rise to the challenge.

If Italy faces huge challenges, Spain’s are no less daunting.

Unlike the plodding Italian economy, Spain enjoyed a decade-long boom from the late 1990s. But the Iberian tiger, like its Celtic cousin, became engorged on credit. Property prices soared, construction boomed and competitiveness evaporated.

When the bubble burst the public finances went into a tailspin, the banks teetered and unemployment soared. It has suffered a much bigger shock than Italy and its economy is still on the floor, with consumers and households pinned down by huge mortgage debts.

Spain’s economy faces bigger challenges than Italy, with the exception of its government’s indebtedness.

With debts of 60 per cent of GDP in 2010, Spain has some breathing space (in Italy the figure was 120 per cent and in Ireland almost 100 per cent).

With such a manageable debt burden Spain does not look close to being insolvent, as the bond market has been moving towards concluding in recent weeks. So why the panic?

One reason for the recent loss of confidence in the country has been because fears are rife that its banks are not coming clean on their property losses. So far, those admitted to have been a tiny fraction of Irish banks’ losses, despite a property collapse there that is much more than a fraction the size of ours. Another suspicion is that the country’s 17 big-spending regional governments are keeping liabilities hidden.

If either or both of these suspicions have some basis in truth, Spain’s true debt levels are higher than officially stated.

But one reason to be optimistic about Spain relative to Italy over the long term is its more effective political system. This has been in evidence since the crisis erupted, with the government earning praise for undertaking some bold reforms and for reining in its budget deficit.

Although the Spanish are sometimes called the Germans of the south, the more likely explanation for their better governance is not cultural but institutional. Whereas in Italy the executive is weak and unstable – famously, the government has changed on average once a year since the second World War – in Spain, since the return to democracy in the late 1970s, governments have been stable and more effective.

This did not happen by accident but by design, and was informed by the lessons the two countries learned from their respective decades of dictatorship. While Italy’s 1948 constitution deliberately created a weak centre to avoid a repetition of the abuses in Mussolini’s time when power was highly centralised, Spain’s 1978 constitution created a strong and stable executive because weak government was seen to be a big factor in Franco’s seizing power in the 1930s.

Spain’s better political system gives reason to believe that it can manage its public debt problems, but no government can magic away a huge private debt burden or restore at a stroke chronic economy-wide uncompetitiveness. Even with lots of luck Spain faces a long and painful struggle.

Europe is in a bad place now. It looks increasingly likely that the euro zone countries will have to throw their fiscal lot in together in order to avoid cataclysm in the short term. But this brings its own risks.

Northerners will not like it. If they feel they will permanently foot the bill for southern profligacy they may rise up against it. That could get very ugly. The longer Italy and Spain remain in a slump, the greater the chances of that happening.

Southerners may not take their medicine lying down either. If their economies don’t return to growth, their peoples may reach breaking point. If they come to believe that an uncaring and alien force is imposing its will on them resentments could boil over.

Protesters Return to Madrid Square

MADRID — Thousands of Spain's "indignant" protesters reoccupied Madrid's main square a day after riot police swooped down on demonstrators who rallied at the interior ministry to protest its closure.

Police stood by late Friday as the demonstrators entered the Puerta del Sol square, the symbol of their movement against the government's handling of Spain's economic crisis.

"This square belongs to the people. We have much to celebrate today. We won this battle," a spokesman for the movement said through a megaphone to applause and cheers.

The protesters set up a huge banner at the entrance to the square that read "Welcome Dignity" and sat on the ground to hold a "popular assembly" to discuss future protest action.

At least 20 people were injured when riot police late Thursday charged demonstrators who had gathered outside the ministry after trying unsuccessfully to gain access to Puerta del Sol square for the third straight day.

Seven of the injured were policemen. It was the most serious incident since the "indignant" movement began in mid-May in the square against Spain's economic crisis, soaring unemployment and political corruption.

Television images showed several protesters with blood on their faces being surrounded by police or being loaded into ambulances.

The protesters, many wearing orange stickers that read "Very Fragile", chanted "Shame! Shame! Shame!" as they passed the interior ministry, protected by more than 50 riot police who stood side by side outside the entrance.

Oriol, a 33-year-old whose arm was broken during the police charge on Thursday, tried to give a white carnation to the head of the riot police.

The policeman refused to accept the flower but shook hands with the protester after a brief chat.

"I asked them to be more respectful of the protesters. My goal was to show that it does not matter if they hit us, we are not afraid. I think this movement deserves the people's support," he told AFP, refusing to provide his last name.

"I had my back to the police and they struck me three times, once in my arm. The riot police hit everyone, women, old people.

The central plaza has become a symbolic site for “Los Indignados,” a movement that has been protesting Spain's high unemployment and the government's handling of the nation's economic crisis.

The rally took place one day after riot police clashed with protesters who had massed outside the interior ministry after trying unsuccessfully to gain access to the square for several days. At least 20 people were injured during Thursday's confrontation.

Spaniards angered about the economic situation have been staging regular protests in Madrid since May 15. The movement later spread to other parts of the country.

Spain's unemployment rate of about 21 percent is the highest in the 17-nation euro zone. The country also has one of Europe's highest public debts. Prime Minister Jose Luis Zapatero has tried to reduce the debt by cutting government spending, raising the retirement age and making it easier for companies to fire employees.

Many citizens blame inept politicians for the country's economic crisis.

laza de Colón Madrid

Plaza de Colón Columbus Square, in English is located in the Alonso Martínez district of Madrid, Spain. This plaza and its fountain commemorate the explorer Christopher Columbus, whose name in Spanish was Cristóbal Colón.

Monuments

The plaza, originally called "Plaza de Santiago" (St. James Square), was renamed "Plaza de Colón" in 1893 to honour Christopher Columbus. The square contains two monuments.

On the Paseo de la Castellana (Promenade of the Castilian) side there is a monument to Columbus built in 1885. This is a statue of Columbus standing at the pinnacle of a tall column. He appears to be pointing west, indicating the route he would take towards the islands of the Caribbean.

The second monument on the Serrano Street. side consists of concrete macro-sculptures by Joaquín Vaquero Turcios. The concrete blocks are decorated with inscriptions by philosophers and indigenous leaders.

Other features

The gardens in the plaza are known as the "Jardines del Descubrimiento" (Gardens of Discovery), where the Royal Mint was located until 1970.

At the base of the Columbus monument is a large fountain with a broad cascade of water. There are steps leading under the cascade and beneath the plaza, where the roar of the fountain is amplified. Under the plaza along with the Centro Cultural de la Villa de Madrid (Madrid City Cultural Centre) lies a stop for a special shuttle that takes passengers to Barajas Airport.

At the other side of the Plaza are the twin Torres de Colón.