Washed It!

In a sharp setback, the United States and South Korea failed to reach agreement on an elusive free-trade deal but will continue pressing for an accord in the weeks ahead, President Obama said Thursday.

Obama had hoped to announce a deal on the long-stalled pact while in South Korea for meetings of the Group of 20 economic powers, but instead he will return home empty-handed.

“We have asked our teams to work tirelessly in the coming days and weeks to get this completed,” Obama said at a joint news conference with South Korean President Lee Myung-bak.

“We don’t want months to pass before we get this done,” Obama said. “We want this to be done in a matter of weeks.”

Prospects for reaching a deal seemed unlikely before Obama’s meeting and subsequent appearance with his South Korean counterpart.

At issue is a pact to slash tariffs and other barriers to trade, one that was signed in 2007 when previous administrations were in power. It remains unratified by lawmakers in both countries, and trade between the nations has slipped. The U.S. wants the deal to address a trade imbalance and beef access to South Korea’s market before submitting it to Congress.

Earlier in the day in a speech marking America’s Veterans Day, Obama condemned North Korea for continuing on “a path of confrontation and provocation” that he says deepens its isolation from the world and worsens the poverty of its people.

Obama said the reclusive communist nation must show a “seriousness of purpose” before the U.S. will restart six-party talks aimed at curbing the country’s drive to become a nuclear power.

He saluted the bravery of U.S. troops who defended South Korea during its war with North Korea.

Speaking at an Army garrison in a country where the U.S. keeps more than 28,000 troops, Obama said North Korea knows the path to prosperity and suggested its leaders take it.

“Because the Korean War ended where it began geographically, some used the phrase ‘Die for a Tie’ to describe the sacrifice of those who fought here,” Obama said. “But as we look around at this thriving democracy and its grateful, hopeful citizens, one thing is clear: This was no tie. This was victory.

“This was a victory then, and it is a victory today,” he said.

In the Veterans Day address, Obama said that, some 60 years after the war, the Korean peninsula provides the world’s clearest contrast between a society that is open and one that is closed, between a dynamic, growing nation like South Korea and a North Korea “that would rather starve its people than change.”

“It’s a contrast that’s so stark you can see it from space, as the brilliant lights of Seoul give way to utter darkness in the North,” he said, describing the difference as a direct result of the road taken by the reclusive, communist North.

Obama said the U.S. “will never waver” in its commitment to South Korea’s security and that North Korea’s continued pursuit of nuclear weapons will only lead to more isolation and less security. He urged Pyongyang to take another path, a road that he said will offer its people growing opportunity instead of crushing poverty.

The commander in chief spoke inside a packed gymnasium, addressing a uniformed audience of service members from the different branches of the U.S. military. They surrounded him from all sides and many snapped photos as he spoke.

Obama condemned North Korea, saying its circumstances were not “an accident of history” but a direct result of the country choosing “a path of confrontation and provocation.” That path, Obama said, includes its relentless pursuit of nuclear weapons and the deadly sinking earlier this year of a South Korean warship.

“In the wake of this aggression, Pyongyang should not be mistaken: The United States will never waver in our commitment to the security of the Republic of Korea. We will not waver,” he said. “The alliance between our two nations has never been stronger, and along the with the rest of the world, we have made it clear that North Korea’s continued pursuit of nuclear weapons will only lead to more isolation and less security.”

Obama said North Korea has another path available to it.

“If they choose to fulfill their international obligations and commitments to the international community, they will have the chance to offer their people lives of growing opportunity instead of crushing poverty — a future of greater security and greater respect; a future that includes the prosperity and opportunity available to citizens on this end of the Korean peninsula,” he said.

After the speech, Obama laid a wreath at a war memorial.
U.S. fails to reach free-trade deal with South Korea

For former insiders at some of the several hundred banks that collapsed during the financial crisis and in its aftermath, a day of reckoning has arrived.

The Federal Deposit Insurance Corp. has told dozens of former bank officers and directors that it has drawn up lawsuits accusing them of misdeeds such as fraud and breach of fiduciary duty. The federal agency is seeking damages to help offset losses in the nation’s deposit insurance fund.

It’s time, the FDIC warns these officials, to sit down and work out settlements — or head to court to decide the matters there.

The letters being sent by the agency are “very detailed,” said Jeffrey A. Tisdale, a Los Angeles lawyer for former officials of five banks targeted by the agency.

“I mean eight to 10 single-spaced pages of purported misdeeds,” he said.

The showdowns follow FDIC probes that typically take well over a year.

“We’re only doing this after careful investigation. We don’t bring suit every time a bank fails,” said Richard Osterman, the FDIC’s acting general counsel.

The FDIC board has authorized suits seeking to recover more than $2 billion from more than 80 former bank officials, up from about 50 a month ago, Osterman said. The number could multiply as the agency works through its investigative backlog.

The agency could end up suing or settling with former insiders of about one-quarter of the more than 300 banks that have failed since the start of 2008, officials say.

“This is only the first wave,” Tisdale said. “I’ve got my next five-year professional plan laid out pretty well.”

Although the FDIC says it will try to settle the cases, officials expect to file a significant number of suits. Criminal charges could result in a few cases.

“We are investigating [criminal] bank fraud and related cases in many different parts of the country, including in California,” said Fred Gibson, deputy inspector general at the agency.

So far only two civil suits have been filed. The first, filed in July, accuses four executives of Pasadena’s defunct IndyMac Bank of negligence in granting construction and development loans that the suit says were unlikely to be repaid. The defendants are contesting the suit, which seeks $300 million in damages.

Last week, the FDIC sued 11 former insiders at defunct Heritage Community Bank in Glenwood, Ill. Calling the case “regrettable and wrong,” defense lawyers said in a statement that their clients, in failing to foresee the economic meltdown, were no different from Wall Street and the FDIC itself.

Tisdale concurs that the FDIC is going after people for failing to accurately predict the future.

“The economy is the real culprit here,” he said. “There was no way to plan for real estate values dropping 30% to 50% throughout California, Nevada and Arizona.”

But Darren Robbins, a San Diego lawyer who specializes in filing investment fraud suits, says the FDIC has plenty to work with just by looking at what banks said about their assets toward the end of the boom.

“It’s our belief that in places like Illinois, Georgia, California and Arizona there was an inordinate amount of game-playing with financial statements in ‘07 and ‘08,” said Robbins, whose firm has fraud suits pending against several casualties of the bust, including PFF Bancorp, the former parent company of Pomona’s PFF Bank & Trust, which failed in November 2008.

In targeting the former officials, the FDIC typically also has its eyes on insurance companies that would be on the hook for damages stemming from alleged misconduct by the bankers. In many cases, the FDIC formally gave notice of possible litigation months ago, just before the expiration of the relevant insurance policies, to ensure that the coverage would apply.

Some policies covering directors and officers don’t apply to actions by the FDIC. In such cases, the agency is going after bank officials only if they have sufficient assets to justify the expense and risk of litigation, Osterman said.

The FDIC’s litigation strategy borrows from a playbook the agency used after the savings and loan meltdown of about two decades ago. From 1986 through 1996 the FDIC recovered $5.1 billion from former insiders at failed banks and savings and loans, Osterman said. That’s a small fraction of the eventual cost of the S&L crisis.

scott.reckard@latimes.com
FDIC prepares to crack down on officials of failed banks

The first great American autobiographies both appeared in the 19th century, were born of conflict and written by public men — “The Life and Times of Frederick Douglass” and “The Personal Memoirs of Ulysses S. Grant.”

Since then, what we might call the publishing-industrial complex has turned the reminiscences of our public men and women into a never-ending stream. As former President George W. Bush — barely two years out of office — points out in the acknowledgement of his memoir, “Decision Points,” virtually every member of his extended, very political family has published a bestseller, including his parents’ dogs.

Where does Bush’s account of his astonishingly eventful eight years rank in such company? Probably far higher than many of his detractors expected. As Bush writes in “Decision Points,” he enjoys surprising those who underestimate him. As the title suggests, the former chief executive elected to abandon the usual chronological approach to these volumes (except for a brief, obligatory foray into childhood and school years) in favor of his recollection of his presidency’s key choices and the personal decisions that Bush says prepared him to make them.

Foremost among the latter were his conversion to active Christianity, which he attributes to an after-dinner talk that evangelist Billy Graham gave to the extended Bush family at their Maine compound, and to participation in his male friends’ Crawford, Texas Bible study group. According to Bush, he continued to read the Bible every morning of his presidency — like his daily run, a comforting habit. Bush credits his religious awakening, along with a growing sense of obligation to his wife and daughters, with his other foundational personal choice: the decision to quit drinking after a night of boorish overindulgence in celebration of his Laura’s 40th birthday. It’s a change Bush credits with making possible his subsequent public life.

Leaks and an active publicity campaign of television and radio appearances have made many of the substantial points Bush makes rather familiar. Essentially, “Decision Points” confirms many of the better nonfiction accounts of his presidency published while he was in office, particularly Bob Woodward’s four volumes and Robert Draper’s “Dead Certain.” The Bush White House may not have been given to doubts or its chief executive to indecision, but it did have a penchant for ad hoc deliberation, stubborn persistence in the face of failure — as in Iraq up to the surge — excessive personal loyalty and for being “blind-sided” by events beyond the unforeseeable tragedy of 9/11.

Nearly midway through “Decision Points,” Bush writes that, “History can debate the decisions I made, the policies I chose, and the tools I left behind. But there can be no debate about one fact: After the nightmare of September 11, America went seven and a half years without another successful terrorist attack on our soil. If I had to summarize my most meaningful accomplishment as president in one sentence, that would be it.”

For that reason, Bush is singularly unapologetic and clear about the fact that he personally ordered the torture of key Al Qaeda members, who CIA interrogators were convinced held information of other planned terrorist attacks. (Bush also continues to insist that waterboarding is not torture.) When then-CIA Director George Tenet asked whether he had permission to waterboard Khalid Sheikh Mohammed, the 9/11 mastermind, Bush replied, “Damn right.” Bush writes that about 100 “terrorists” were placed in the CIA interrogation program and that about a third “were questioned using enhanced interrogation”; three were waterboarded. All, according to Bush, gave up usable intelligence that thwarted other acts of terrorism. Other reports have contradicted that assertion, but Bush is firm on the point.

Similarly, he writes that his stomach still churns over the fact that he and the rest of the country were misled by faulty intelligence concerning Saddam Hussein’s pursuit of weapons of mass destruction, but that the nation and world still are better off with the Iraqi dictator deposed. His only real regret, in fact, is that he failed to act more rapidly and decisively when Hurricane Katrina devastated New Orleans.

Many readers will be surprised by Bush’s warm account of his cooperative relationship with the late Sen. Edward Kennedy and his disappointment that they were unable to push through comprehensive immigration reform, which both felt was within a vote or two of their grasp. Given the contentious political use Karl Rove and other Bush aides made of abortion, readers also may be interested in the former president’s unfailingly respectful discussion of the abortion-rights advocates with whom he disagrees. (There’s also something amusing about Bush’s account of urging the late Pope John Paul II not to waver in his pro-life convictions.)

Actually, one of the impressions that arises repeatedly in “Decision Points” is how much civility and bi-partisan cooperation matter to Bush. “The death spiral of decency during my time in office, exacerbated by the advent of 24-hour cable news and hyper-partisan political blogs, was deeply disappointing,” he writes.

Looking back on his exit from office, Bush recalls, “I reflected on everything we were facing. Over the past few weeks we had seen the failure of America’s two largest mortgage entities, the bankruptcy of a major investment bank, the sale of another, the nationalization of the world’s largest insurance company, and now the most drastic intervention in the free market since the presidency of Franklin Roosevelt. At the same time, Russia had invaded and occupied Georgia, Hurricane Ike had hit Texas, and America was fighting a two-front war in Iraq and Afghanistan. This was one ugly way to end the presidency.”

There’s a great deal in that statement of what this unexpectedly engrossing memoir suggests is the essential George W. Bush — a disarming candor, for example, combined with almost alarming off-handedness about the implications of what’s being said. The man and the president portrayed in these pages is, at the same time, passive and strong; intelligent but not curious; a public person apparently at his best in private; willing to admit shortcomings, but not particularly self-critical; unfailingly civil himself, but happily surrounded by bare-knuckle partisans. There is a kind of pragmatic courage that makes a leader fearless of contradictions. Bush, for his part, seems oblivious to them.

Immediately after the admission that his presidency was coming to an “ugly” end, Bush adds, “I didn’t feel sorry for myself. Self-pity is a pathetic quality in a leader…. As well, I was comforted by my conviction that the Good Lord wouldn’t give a believer a burden he couldn’t handle.”

One suspects that Bush hopes to have the way in which he bore his unexpected burdens compared to the service of another wartime president, Lincoln. “Decision Points” records that, during his eight years in the Oval Office, Bush read 14 books on the first Republican commander-in-chief.

Somehow, though, it isn’t the Great Emancipator who comes to mind at the end of this memoir, but Shakespeare’s Macbeth:

“To know my deed, ’twere best not know myself.”

timothy.rutten@latimes.com
Book review: ‘Decision Points’ by George W. Bush

They’re called “floating cities,” massive cruise ships that resemble skyscrapers and offer all the amenities of high-end resorts — spas and casinos, Broadway shows and amusement parks, fine dining and luxury shopping.

But the Carnival Splendor also offers a cautionary tale about just how vulnerable these mega-ships can be. Left powerless by an engine fire shortly after embarking on a seven-day cruise to the Mexican Riviera, the Splendor is expected to be towed into port in San Diego late Thursday. If the ship cannot make sufficient speed under tow, it is possible it will be taken to Ensenada, company officials said.

An early morning fire in the generator compartment Monday knocked out several of the ship’s operating systems and left the nearly 4,500 passengers and crew members without air conditioning, hot food and telephone service. Even the flush toilets were down for a while.

With communications largely cut off, it’s unclear what kind of hardship passengers have had to endure. But Carnival Chief Executive Gerry Cahill acknowledged in a statement that passengers were dealing with an “extremely trying situation.”

“Conditions on board the ship are very challenging, and we sincerely apologize for the discomfort and inconvenience our guests are currently enduring,” he said.

The “gourmet delicacies” of the “Manhattan chic” Pinnacle Steakhouse were replaced by 70,000 pounds of bread, canned milk and other emergency supplies, which were flown from the North Island Naval Air Station at Coronado to the U.S. aircraft carrier Ronald Reagan and then helicoptered out to the Splendor, stranded 160 miles southwest of San Diego. The company is paying the military for the food and supplies, officials said.

“There are significant risks as these ships get bigger and bigger,” said Kendall Carver, president of International Cruise Victims. “This one held over 4,000 people. The new ones owned by Royal Caribbean hold over 6,000 passengers and 2,000 crew members, over 8,000 people. A fire on a ship like that would be disastrous.”

The Carnival Splendor experienced its problems relatively close to several major ports, making rescue possible in only a few days.

“If it was hundreds of miles out, and you had a fire that wasn’t suppressed, and you had rough weather, you’d have a complete disaster,” said Jim Walker, a Miami-based attorney who specializes in cruise line litigation.

Although the $40-billion cruise ship industry — and its vessels — has been growing, it has been dogged in the last decade with controversies over passenger health and safety. Carver helped start International Cruise Victims after his daughter, Merrian, disappeared while on an Alaskan cruise in 2004.

The organization has pushed for stiffer laws regulating the cruise ship industry; just four months ago, President Obama signed into law tougher new rules for reporting crimes at sea, improving ship safety and training staff to collect evidence of crimes. The changes will go into effect in 2012.

But the new law makes only passing mention of fire safety issues, even though “the most serious event that can happen on a cruise ship is a main space fire, which is what happened on the Splendor,” said Mark Gaouette, former director of security for Princess Cruises and author of the recently released “Cruising for Trouble.”

On a Navy ship, Gaouette notes, every person has a fire-fighting role, and the crew is trained constantly in how to respond to a fire. On a cruise ship, “two-thirds to three-quarters of the population are passengers. They become problems and liabilities in a major fire. They have to be shepherded to safe areas.”

Statistics are hard to come by for incidents on cruise ships, but Gaouette said the website cruisebruise.com lists eight major fires on cruise ships in the last five years, compared with just three in the previous seven years.

“As cruise ships become larger and their number increases on the high seas,” he said, “the threat of fire and other risks to passengers will increase proportionally.”

On the Splendor at 6:30 a.m. Monday, the 3,299 passengers were evacuated from their cabins and told to go to the ship’s upper deck. They were later allowed to return. By afternoon, the U.S. Coast Guard had dispatched three cutters and an HC-130 Hercules helicopter to the ship’s aid. The Mexican navy sent aircraft and a 140-foot patrol boat.

The Coast Guard has remained in contact with the ship throughout the ordeal, officials said. Whether the ship goes to San Diego or Ensenada, the company has promised to transport passengers back to Long Beach.

Miami-based Carnival Cruise Lines has promised a full refund for passengers and a complimentary future cruise equal to the amount paid for this voyage, which was scheduled to visit Puerto Vallarta, Mazatlan and Cabo San Lucas. The company, which along with its brands has 98 ships worldwide, announced that the Nov. 14 seven-day cruise from Long Beach to the same ports has been canceled.

“The safety of our passengers and crew is our top priority, and we are working to get our guests home as quickly as possible,” said Cahill of Carnival Cruise Lines. Carnival Corp. reported revenues of $13.2 billion in 2009.

A spokeswoman for the Cruise Lines International Assn. did not respond to requests for comment. The organization’s website says the U.S. Coast Guard calls cruising “one of the safest modes of transportation, and the industry is constantly striving to improve its safety procedures. Over the past two decades, an estimated 90 million passengers safely enjoyed a cruise vacation.”

But that is little comfort to Lynnette Hudson, whose father died of smoke inhalation during a fire on the Star Princess, which is operated by Carnival, in 2006. It was his first cruise, she testified to Congress, and he was celebrating his 72nd birthday.

Hudson pushed for the more stringent standards that were signed into law this summer and is still fighting for stiffer laws. “I think if there’s a major fire on a cruise ship, they’re not prepared,” she said in an interview. “They don’t have sufficient training.”

maria.laganga@latimes.com

tony.perry@latimes.com

Times staff writer Richard Marosi contributed to this report.

Stranded cruise ship offers lesson in huge vessels’ vulnerabilities

A dispute among influential Republican lawmakers over a ban on “earmark” spending threatens an area of potential bipartisan agreement between the GOP and White House in the aftermath of last week’s midterm election.

The incoming House Republican majority has proposed extending a moratorium on earmarks, which are funds requested by individual lawmakers for specific projects back home. On Tuesday, conservative Sen. Jim DeMint of South Carolina said that he would press his GOP colleagues in the Senate to adopt a similar moratorium when lawmakers returned to Washington next week.

But several senior Republican lawmakers consider earmarks part of their constitutional obligation to determine how federal money is spent. They disagree with election-year rhetoric that government spending can be reined in with a strict earmark ban. A ban is an idea that “doesn’t save any money,” said Mitch McConnell of Kentucky, the Senate Republican leader.

The disagreement is surfacing at a crucial point. Republicans, fresh from winning control of the House and gaining seats in the Senate, will make their first attempt next week to convert ideas from successful political campaigns into governing policy.

Earmark spending is a favorite campaign symbol of government excess. Examples of pork projects go back years — among the most well-known is the “bridge to nowhere” in Alaska.

Yet attempts to limit lawmakers’ ability to steer funding to their home states regularly runs into dissent. Popular Capitol wisdom holds that one lawmaker’s pork is another’s vital infrastructure project, representing a road or hospital that would not get built without federal government funds.

The House GOP this year imposed a moratorium on earmarks within its own ranks as a way to burnish its conservative credentials heading into campaign season, particularly among “tea party” voters. Earmarks soared to unprecedented levels prior to 2006, the last time the GOP had been in the majority.

Senate Republicans, though, did not agree to such a ban. DeMint proposed a halt on earmarks this spring, but senators voted it down.

Now, in a first test of their newly bolstered numbers in Congress, Republicans in both chambers are returning to the issue. The GOP is intent on showing voters it understood the lesson of the election and the message of tea party conservatives who helped propel the party to power.

President Obama identified the earmark ban as an issue “we can work on together.” Rep. Eric Cantor, the No. 2 Republican in the House, said he would like to take Obama up on the offer.

Yet old spending habits are hard to break among Congress members who see the power of the purse as one of their greatest strengths. Although earmarks make up a tiny fraction of the federal budget, they are an enormous source of power for lawmakers to provide resources to constituents.

The Republican leaders of the main House and Senate spending committees are divided on the question. Rep. Jerry Lewis of Redlands supports an earmark moratorium, while Sen. Thad Cochran of Mississippi does not.

In recent days, Sen. James M. Inhofe (R-Okla.) has appeared on 10 conservative radio talk shows across the country with an appeal about the importance of such spending.

“People now realize you can’t have a ban on earmarks,” Inhofe said.

If Congress chooses not to direct spending, Inhofe argues, the responsibility will fall to the administration, which already exerts influence over its own pet projects in the president’s annual budget. Inhofe said his aim was to reform the earmarking process, not eliminate it.

The conservative Oklahoman, who is perhaps most widely known for calling global warming a hoax, is intent on branding earmark foes as “goguers” — those who demagogue the issue to score political points.

“It’s the most demagogued thing I’ve run into in the years I’ve been in politics,” Inhofe said. “Many of the big-spending Republicans demagogue earmarks so people think they’re conservative.”

Inhofe will argue for new Senate rules to make the earmarking process more transparent, without an outright ban.

But he will face a challenge from fellow conservative DeMint, who will be seeking an unqualified ban next week from his peers.

The South Carolina senator counts support from several newly elected colleagues — including Rand Paul in Kentucky, Marco Rubio in Florida and Pat Toomey in Pennsylvania — and other tea-party-backed candidates he supported in the election.

“Many Republicans are still addicted to earmarks and won’t give them up without a fight,” DeMint wrote in a letter to supporters Tuesday. “I know it’s difficult to quit this habit.”

He should know. DeMint confided to supporters, “I used to request earmarks too.”

lmascaro@tribune.com
‘Earmark’ ban proves an early obstacle to GOP unity

Military and aviation officials say they don’t know who may have launched a mysterious object spotted in the sky late Monday off the Southern California coast, but said that whatever the projectile was, it did not pose a threat to national security.

A KCBS news helicopter spotted what appeared to be a missile traveling through the sky northwest of Catalina Island, about 35 miles west of Los Angeles.

Video posted online by the television station showed a luminous point hurtling through the sky followed by a long contrail.

Officials with the Defense Department, the Navy and the Air Force said did not have any details on the object or its launch site. Pentagon officials said that initial indications were that the military was not involved.

“We are aware of the unexplained contrail reported off the coast of Southern California yesterday evening,” according to a statement from the North American Aerospace Defense Command and the U.S. Northern Command, which operates the U.S. and Canadian missile warning system. “At this time, we are unable to provide specific details but we are working to determine the exact nature of this event.”

“We can confirm that there is no indication of any threat to our nation and we will provide more information as it becomes available,” the statement said.

The Federal Aviation Administration didn’t approve any commercial space launches in the area Monday, said spokesman Ian Gregor.

“We’re looking into this,” he said.

Updated at 9:55 a.m.: Naval Base Ventura County spokeswoman Teri Reid said the contrail seen off the Southern California coast Monday did not originate at Naval Air Station Point Mugu.

“It didn’t happen here,” she said. “There was no firing on the range yesterday.”

Nor was it Vandenberg Air Force Base, whose last launch was putting a satellite into orbit on Friday.
Mystery ‘missile’ launch near L.A. no threat to national security, government officials say

President Obama, challenged by Indian students Sunday to explain why the United States had not labeled Pakistan a terrorist state, defended his administration’s efforts to help the Pakistani government root out extremism and urged Indians to remember their own stake in promoting their longtime rival’s stability.

Obama’s call to India for a gradual rapprochement with Pakistan, made during a sometimes lively town hall-style meeting at St. Xavier’s College in the Indian city of Mumbai, is likely to be repeated at a speech Monday to the Parliament in New Delhi.

Despite the pointed exchange over Pakistan, Obama’s day with students included a session of impromptu dancing by the president and the first lady that offered personal images to balance the generally serious and carefully scripted elements in the Obamas’ first visit to this nation.

A day earlier, Obama met with survivors of the 2008 terrorist attack on Mumbai by Pakistani extremists, but he was careful to avoid mentioning Pakistan.

On the second day of a 10-day Asia trip, Obama was clearly ready for more direct engagement on the matter. “I must admit I was expecting it,” he said, eliciting laughter from the college audience assembled outdoors on a sunny afternoon.

Obama said the U.S. approach toward Pakistan on the issue of terrorism has been “to be honest and forthright … to say we are your friend, this is a problem and we will help you with it, but the problem has to be addressed.”

He said he was “absolutely convinced that the country that has the biggest stake in Pakistan’s success is India.”

“So my hope is, is that over time trust develops between the two countries,” he said, “that dialogue begins — perhaps on less controversial issues, building up to more controversial issues — and that over time there’s a recognition that India and Pakistan can live side by side in peace and that both countries can prosper.”

India was partitioned to create Pakistan at the time of independence from Britain in 1947, and the two neighbors have fought three major wars since.

Although Indian students also grilled him about his views on jihad and Afghanistan policy, as well as his take on the teachings of Mahatma Gandhi, Obama kept at least a part of his message focused on the main aim of his second extended trip to Asia: opening up markets to create job opportunities for Americans.

Over the weekend, he spoke about the “enormous untapped potential” in trade, calling on India to lower barriers in everything from retail imports to telecommunications. On Sunday, he told students that Americans were frustrated with the U.S. economy and how the midterm election results had forced him to make “some midcourse corrections and adjustments.”

“So I want to make sure that we’re here because this will create jobs in the United States and it can create jobs in India,” Obama said. “But that means that we’ve got to negotiate this changing relationship.”

Some listeners were skeptical, aware that Obama and other Democrats often speak disapprovingly of U.S. companies that “ship jobs overseas.” India has long been a favored destination for American outsourcing of data processing, call centers and back office functions.

“It is offensive,” said Lopa Mullick, an owner of an events-management company who attended Obama’s session at St. Xavier’s College. “It hurts us…. You’re not looking at all the opportunities that India has created for the U.S., at the economic benefits both sides get.”

Still, the young entrepreneur said she came to listen to Obama because she believes he can “shift the focus” and that he may actually want to do so.

During an earlier visit with schoolchildren, Michelle Obama broke out into a lengthy dance that dominated TV and inspired local newspaper headlines such as “When Michelle Got Into the Groove.”

The president himself showed off his footwork as schoolchildren enticed him to join the first lady in a traditional Indian dance during a Diwali celebration. It inspired some low-key moves, though mostly unrelated to the elaborate steps everyone else was doing.

cparsons@latimes.com

don.lee@latimes.com

Parsons reported from Mumbai and Lee from Washington.
Obama fields tough questions from Indian students

President Obama visited the site of the 2008 terrorist attacks here Saturday, making it the first stop of his two-week trip to Asia in order to convey a message to plotters of that attack and others.

“In our determination to give our people a future of security and prosperity,” he said, “the United States and India stand united.”

Obama spoke with a group of hotel employees and other survivors gathered in a hotel courtyard shortly after checking into the hotel. He is the first foreign head of state to stay at the Taj Mahal Palace and Tower Hotel since the attacks, an event known in India by the shorthand 26/11.

In a scene some local newscasters compare to President Bush’s bullhorn declaration from the rubble of the World Trade Center, Obama then stood in a hotel plaza overlooking the Arabian Sea to issue his own defiant message.

“By striking the places where our countries and people come together,” he said, “those who perpetrated these horrific attacks hoped to drive us apart . . . (but) today the United States and India are working together more closely than ever to keep our people safe.”

Later the president visited a museum devoted to the life of Indian independence leader Mahatma Gandhi. He also plans to meet with some 200 American business leaders who have traveled to India to join Obama at a business roundtable promoting trade between the two nations.

First and foremost, said Obama’s economic point man, the trip is about improving trade relations and creating new opportunities for American jobs.

Nevertheless, as the first event of his four-day stay in India, Obama chose to highlight the terrorist attacks and what he said was a shared commitment to fighting extremists around the world.

During the attacks two years ago, millions watched horrific and vivid images of smoke pouring from the windows of this hotel, in a coordinated attack by a terrorist organization based in Pakistan. More than 170 people died.

Fully renovated since then, the Taj hotel now stands as a symbol of India’s resilience, administration officials say. Obama wanted to recognize India’s rejection of terrorism, according to close advisers.

One of those who met with Obama today was Karambir Singh Kang, the hotel manager. He lost his wife, Niti, and their two sons in the attacks, but then went on to help save others.

“Mumbai is a symbol of the incredible energy and optimism that defines India in the 21st century,” Obama said. “And ever since those horrific days two years ago, the Taj has been the symbol of the strength and the resilience of the Indian people.”
Obama visits site of Mumbai attacks, praises India’s resilience

Jerry Brown returned to Sacramento on Thursday as California’s next governor, forging relationships and crunching numbers as he anticipates his first budget, which will set the tone for a new administration that he says will be characterized by his trademark frugality.

The former two-term governor has little time. He must present a spending plan within days of taking office in January, when the state will probably be grappling with a new deficit as well as with the new restrictions that voters placed on how revenue can be raised and used. Throughout his campaign, Brown offered few specifics on how he would balance the state’s books, focusing instead on an “exhaustive” collaborative process that he says will include all stakeholders, including labor unions and business.

The spending plan is typically sent to the printer in late December, meaning Brown won’t even be governor by the time his initial draft must be finished. Brown said his transition team is working with the staff at the state Department of Finance.

On Thursday, Brown met with the state budget director, Ana Matosantos. Addressing reporters, Brown described the meeting as “very sobering” and vowed to start working full-time on a budget after he returns from a weeklong vacation.

“I think the problems we face are as bad as anyone could imagine, and it’s going to take a lot of very tough decisions,” Brown said. “It’s very daunting. It’s certainly as bad as it’s ever been, and it’s going to take people in both the Democratic Party and the Republican Party” to produce a viable budget.

He added: “The people of California, they’ll have a chance to see in great depth what it is we’re doing and what kind of money we have to do it and what the gap is. And it’s certainly considerable.”

By next Tuesday, Brown’s transition team will probably be sitting in on a key meeting that takes place at this time every year, when leading state economists come to Sacramento to offer revenue projections. The governor’s office uses those projections to come up with its own forecasting model, on which the proposed budget is based. One of the economists, Stephen Levy, director of the Center for the Continuing Study of the California Economy in Palo Alto, said all the early signs suggest no major improvements.

“The budget will include some very difficult revenue numbers,” he said. “We’ll be back in the soup.”

Legislative leaders have estimated that the state will face a deficit of at least $12 billion.

Brown flew with Gov. Arnold Schwarzenegger to Sacramento on Thursday from San Diego, where the two attended the funeral of a police officer. Later, Brown worked the halls of the Capitol, meeting with Matosantos, Assembly Speaker John P

Qantas grounded all six of its Airbus 380 superjumbos after one of them blew out an engine Thursday, shooting flames and debris and forcing an emergency landing in Singapore with 459 people aboard.

The carrier said the double-decker Airbus A380 landed safely with no injuries.

It was most serious midair incident involving the A380, the world’s largest jetliner, since it debuted in October 2007 with Singapore Airlines flying it to Sydney — the same route that Qantas flight QF34 was flying when it was stricken Thursday.

Qantas said there had been no explosion, but witnesses aboard the plane and on the ground reported hearing blasts.

After the plane touched down in Singapore, the engine closest to the fuselage on the left wing had visible burn marks and was missing a section of plate that would have been painted with the red kangaroo logo of the airline. The upper part of the left wing also appeared to have suffered some damage.

One passenger, Rosemary Hegardy, 60, of Sydney, said she heard two bangs and saw yellow flames from her window.

“There was flames — yellow flames came out, and debris came off. … You could see black things shooting through the smoke, like bits of debris,” she said.

In another seat, Tyler Wooster watched as part of the skin of the wing peeled off, exposing foam and broken wires.

“My whole body just went to jelly and I didn’t know what was going to happen as we were going down, if we were going to be OK,” Wooster told Australia’s Nine Network news.

Hegardy said the pilot informed passengers of the engine trouble and that the plane would have to dump fuel before it could land.

Witnesses on the western Indonesian island of Batam, near Singapore, reported hearing a large blast and seeing debris — including a massive red panel with a white Qantas streak — falling onto houses, an elementary school and a nearby shopping mall. No one was injured.

Indonesian police inspected massive chunks of metal the size of emergency exits while others carted away smaller, black twisted panels for future investigations.

The engine trouble happened 15 minutes after takeoff from Singapore at 9:56 a.m. and before the flight had time to approach Indonesia’s Mt. Merapi, which has erupted frequently over the past 10 days. The plane landed after one hour and 50 minutes.

“The shutdown of the Qantas engine had no connection with Mt. Merapi,” said Bambang Ervan, a spokesman for the Transportation Ministry. “It was too far from the volcano — the sky over Singapore and Sumatra island is free of dust. “

The flight is a regular service that flies between Sydney, Singapore and London. Qantas’ A380s can carry up to 525 people, but flight QF34 was carrying 433 passengers and 26 crew, all of whom were evacuated by a step ladder in an operation that lasted two hours.

Qantas spokeswoman Emma Kearns in Sydney said there were no reports of injuries or an explosion on board. The airline described the problem as an “engine issue” without elaborating.

“We will suspend those A380 services until we are completely confident that Qantas safety requirements have been met,” Qantas CEO Alan Joyce told a news conference in Sydney.

Joyce appeared to blame the engine, made by Rolls-Royce.

“This issue, an engine failure, has been one that we haven’t seen before. So we are obviously taking it very seriously, because it is a significant engine failure,” he said.

Qantas grounds its Airbus 380 superjumbo jets after engine blows out