Today's Papers

Europe Changes Tune on Guantanamo Detainees

The Washington Postleads with word that at least half a dozen European countries are currently discussing whether they should accept detainees from Guantanamo who cannot be returned to their home countries due to fears that they would be tortured. These discussions mark quite a change in attitude for European governments that had previously rejected several requests from the Bush administration to accept the detainees. The Los Angeles Timesleads with word that President-elect Barack Obama’s team is receiving lots of new information about Afghanistan from Pentagon and national-security officials as part of an effort to get the new administration to act quickly once it gets into office.

The New York Timesleads with, and the Wall Street Journaland LAT front, news that Toyota will post its first operating loss in seven decades, illustrating how the slump in auto sales is being felt around the world and is hitting even the strongest companies. This downturn comes after years of steady growth and will lead auto companies to cut vehicle production next year. USA Todayleads with new Census Bureau estimates that illustrate how the recession and housing crisis are changing the nation’s migration patterns. The Sun Belt boom is now a thing of the past. For the first time since the early 1970s, more people left Florida than moved in during the 12 months ending in July. Under the new estimates, eight states would lose a seat in the House of Representatives. The WSJ leads its world-wide newsbox with news that a federal jury convicted five men of plotting to kill soldiers at the Fort Dix military base in New Jersey. The five men could face life in prison for a plot that prosecutors described as serious and imminent.

Germany and Portugal are the only two countries that have publicly admitted they’re considering whether to resettle Guantanamo detainees in their countries.  But several others are also discussing the issue as a way to not only help President-elect Barack Obama fulfill his pledge to close Guantanamo but also to gain favor with the new administration. Obama’s team has refused to discuss the issue, but experts say there’s no way to close Guantanamo without European assistance. And while many of the countries balked at such requests in the past, Obama’s election seems to have changed their attitude. Before they agree to anything, European officials say they would want Obama to commit to transfer at least a small number of detainees to the United States. Officials will also request a clear commitment to close the Guanatanamo detention facility as well as a general agreement on legal principles to fight terrorism and how suspects should be treated.

Many think a change of strategy is needed in Afghanistan, and military leaders say Obama will have a limited amount of time in which he’ll be able to implement dramatic measures. “Right now there is a sense you need to apply a tourniquet of some kind,” a senior Defense official tells the LAT. Although everyone is advocating for more troops, Pentagon officials emphasize that they don’t think the answer is that simple and some worry that sending too many troops could prove to be counterproductive. Many military officials also say that a surge in troops needs to be combined with other measures, including more training for local militias as well as a stepped-up effort to strengthen local governments. In addition, many are pushing for better cooperation with the State Department because it’s impossible to separate the war in Afghanistan from Pakistan.

Although the recent debate in Washington kept attention focused on Detroit’s Big Three, Toyota’s announcement made it clear that the whole industry is suffering. Europe and Japan have experienced a huge slump in the sale of new vehicles, a trend that has even extended to emerging markets that were supposed to be the industry’s saviors. “It is just a matter of time before all major automakers are losing money,” one analyst tells the NYT. To deal with the downturn, auto companies aren’t just cutting production but also canceling new factories.

In related news, Japan said exports plunged 27 percent in November, a new record, mainly due to a decrease in shipments of cars and car parts. The WP off-leads a look at how countries across Asia are reporting similar declines in exports that “have exceeded even the grimmest forecasts.” Thailand’s exports fell 19 percent last month, and Taiwan’s fell 23 percent. “Everyone is tanking together,” a trade policy professor said. “The bottom line is that many of these countries that relied on export-led growth will have to rely on domestic demand to get out of this thing.”

The NYT fronts a look at how Hillary Clinton is already working to create a stronger State Department that will have a greater role in dealing with the global economic crisis. Clinton plans to reinstitute the practice of sending high-profile special envoys to key parts of the world, which was common in her husband’s administration. In order to implement a wider portfolio, Clinton will be seeking a bigger slice of the federal budget and is recruiting Jacob Lew, the budget director under President Clinton who has strong ties to Congress, as a key part of that effort. Although expanding the State Department’s duties could cause conflicts inside Obama’s Cabinet, it looks like the Defense secretary and the incoming national security adviser are both supporting Clinton’s push for more resources.

The WP and LAT front, and everyone covers, the Treasury Department’s inspector general announcing that a senior bank regulator allowed IndyMac Bank to alter its records and backdate a capital infusion it received from its parent company to help make it seem as though the California company was in better financial health than was actually the case. Two months later, the bank failed. As a result of the findings, Darrel Dochow was removed from his position as Western regional director of the Office of Thrift Supervision. The finding is another example of the cozy relationship between regulators and industry, and the inspector general emphasized that the same thing had happened with other banks, although no details were provided. Interestingly enough, Dochow also played a role in the savings-and-loan crisis. He was demoted after investigators found he ignored warnings and failed to properly regulate Charles Keating’s Lincoln Saving & Loan Association, which collapsed in 1989 and was, at the time, the biggest bank failure in history.

The WSJ takes a front-page look at “synthetic collateralized debt obligations” that have so far been lurking in the background but could cost investors around the world billions of dollars. Synthetic CDOs essentially insure trillions of dollars, mostly in U.S. corporate debt. Investors have already lost plenty on derivatives tied to subprime mortgages, but many more put money into synthetic CDOs, which were seen as a safe investment since it seemed unlikely there would be a massive wave of corporate defaults. Now that the scenario has become a reality, “synthetic-CDO deals are poised to trigger a massive transfer of wealth” from investors to hedge funds and big investment banks. Synthetic CDO investors “are popping up in unexpected places,” including an Austrlian town, a group of hundreds of individuals in Singapore, and five school districts in Wisconsin, to name a few. Some now say many of the local governments and nonprofits that invested in synthetic CDOs didn’t understand the risks and had no business buying into the derivatives to begin with.

Studios are starting to acknowledge that torture as a central plot for horror movies is growing tired. In an attempt to freshen up the genre, one studio is planning to release a horror movie in 3-D next month. If it’s a success, it could very well mark the beginning of a new era for horror movies. The idea isn’t exactly new as horror movies were one of the first to jump on the 3-D craze in the 1950s. But now, largely thanks to advances in digital technology, studios are willing to give 3-D movies another shot as some think it could motivate young moviegoers to actually go to the theaters. “If there was ever a moment when horror needed to be reinvented, this is it,” a film expert tells the paper.

The WP’s Richard Cohen writes that he can understand Obama’s desire to reach out to constituencies that have rejected him in the past. But many continue to be upset by the selection of Rick Warren to give the inaugural invocation partly because of the apparent “categorization of a civil rights issue—the rights of gays to be treated equally—as some sort of cranky cultural difference.” It would be easy to say that Obama “has a preacher problem,” first with the Rev. Jeremiah Wright and now Warren. But the problem is really “Obama’s inability or unwillingness to be a moral leader,” writes Cohen. “Sooner or later, he just might have to stand for something.”