New home sales fall to slowest pace since 1991

WASHINGTON – Sales of new homes fell in October to the lowest point in nearly 18 years while the median price of a new home dropped to the lowest level since 2004.

A realty sign stands outside new home for sale in southeast Denver on Thursday, Nov. 20, 2008. The Commerce Department on Wednesday, Nov. 26 reported that new home sales decreased 5.3 percent last month to a seasonally adjusted annual sales pace of 433,000 homes, the lowest level since January 1991, another period when the country was undergoing a steep housing downturn.

The Commerce Department reported Wednesday that new home sales decreased 5.3 percent last month to a seasonally adjusted annual sales pace of 433,000 homes, the lowest level since January 1991, another period when the country was undergoing a steep housing downturn.

The median price of a new home sold in October fell to $218,000, down 7 percent from a year ago. It was the lowest median sales price since September 2004.

The drop in new home sales was bigger than analysts had expected and left sales 40.1 percent below where they were a year ago.

The bad news on new home sales follows other reports this week that paint a bleak picture of the housing industry.

On Tuesday, a report on home prices and downbeat earnings results from homebuilder D.R. Horton showed further deterioration in the housing market. The Standard & Poor's/Case-Shiller U.S. National Home Price Index said home prices tumbled a record 16.6 percent during the third quarter from the same period a year ago. Prices are at levels not seen since the first quarter of 2004.

Fort Worth, Tex.-based D.R. Horton Inc. reported a nearly $800 million loss in its fiscal fourth quarter on slower home sales and more than $1 billion in charges.

A report Monday showed sales of existing homes fell a bigger-than-expected 3.1 percent in October to an annual rate of 4.98 million units. The median or midpoint price for existing homes plunged to $183,000, down 11.3 percent from a year ago.

The disappointing performance for both new and existing homes showed that the country is still in the grips of a severe housing downturn.

The problems in housing have sent shockwaves through the entire economy as mounting mortgage foreclosures have cost banks billions of dollars in loan losses, creating the worst financial crisis to hit the country in seven decades.

President-elect Barack Obama has said Congress should begin working on a sizable stimulus program even before he is sworn in on Jan. 20, with the goal of creating 2.5 million jobs over the next two years to keep the economy from falling into a prolonged recession. The housing industry also is appealing for help from the new administration.

The report on new home sales showed sales were down 18 percent in the West and 6 percent in the South.

Sales posted a 22.6 percent increase in the Northeast and were up 6 percent in the Midwest.

The drop in sales pushed the inventory of unsold homes up to 11.1 months, meaning it would take that long to exhaust the stock of unsold homes at the October sales pace.

Builders, who have been slashing production in an effort to get control of inventories, are being faced with soaring mortgage defaults which are dumping more unsold homes on an already glutted market.

The National Association of Home Builders reported last week that its survey of builder confidence fell to an all-time low of 9 in November, down from 14 last month. Index readings higher than 50 indicate positive sentiment about the market. But the trade group's index has drifted below 50 since May 2006 and below 20 since April.

The housing slump already has cost the country 3 million jobs in construction and related industries, and the home builders are urging Congress to help with increased support for the industry.

Tighter lending standards, rising defaults and fear about the housing market's future have sidelined buyers, an absence felt acutely by homebuilders such as Pulte Homes Inc. and Centex Corp.

Obama says he'll have economic plan on his 1st day

CHICAGO – President-elect Barack Obama pledged on Wednesday to have an economic plan ready for action on the nation's financial crisis on his first day in office. "Help is on the way," he declared.

He also said his Cabinet would "combine experience with fresh thinking" and pushed back against criticism that he was recycling former Clinton administration officials as he builds his new economic team.

In his third news conference on the economy in as many days, Obama announced he had chosen former Federal Reserve Chairman Paul Volcker to head a new White House panel to help create jobs and bring stability to the ailing financial system.

Volcker, 81, will head the President's Economic Recovery Advisory Board. The board's top staff official will be Austan Goolsbee, a University of Chicago economist.

Volcker is a legendary central banker who raised interest rates and restricted the money supply to tame raging inflation in the 1980s. It was a painful prescription that helped send the economy into one of the nation's worst recessions.

"He pulls no punches," Obama said of Volcker. "He seems to be fairly opinionated."

Fifty-five days before his inauguration, Obama defended his selection of former Clinton officials to help run his administration.

"The American people would be troubled if I selected a treasury secretary or a chairman of the National Economic Council at one of the most critical economic times in our history who had no experience in government whatsoever," Obama said.

"What we are going to do is combine experience with fresh thinking," he said. "But understand where the vision for change comes from. First and foremost, it comes from me. That's my job, is to provide a vision in terms of where we are going and to make sure then that my team is implementing."

As he spoke, there was unrelenting bad news on the economy's current state.

The government reported that jobless claims remained at recessionary levels, consumers had cut back on their spending by the largest amount since the 2001 terrorist attacks, orders to U.S. factories had plunged anew and home sales had fallen to the lowest level in nearly 18 years.

Obama said he will announce the remaining members of his new economic panel in the coming weeks. He already has named Congressional Budget Office Director Peter Orszag as his candidate to run the White House Office of Management and Budget and New York Federal Reserve President Tim Geithner as his treasury secretary.

Geithner was a Treasury Department official during the Clinton administration, and Lawrence Summers, who will head Obama's National Economic Council, was Clinton's treasury secretary. Other Clinton administration names include Eric Holder, who will be Obama's attorney general, and Rahm Emanuel, the president-elect's chief of staff.

Obama said he wants the new economic panel to provide outside voices for his administration.

"The walls of the echo chamber can sometimes keep out fresh voices and new ways of thinking," Obama said. "You start engaging in group-think."

His economic team largely complete, Obama is expected to introduce national security officials next week, including Hillary Rodham Clinton as his secretary of state. He is expected to announce he has asked Defense Secretary Robert Gates to remain at the Pentagon for a year. James Jones, a former Marine Corps commandant and NATO commander, is Obama's pick to be national security adviser.

Obama said his new economic panel will include people from business, labor and academia, "who will bring to bear their wisdom and expertise on the formulation, implementation and evaluation of my administration's economic recovery plan."

"I hope that everybody understands that we are going to be able to get through these difficult times, but we're just going to have to make some good choices," Obama said. "I was elected with the charge of getting this economy back in shape but also making sure that it's working on behalf of middle-class families."

Burke crowned 'Dancing with the Stars' queen

Brooke Burke waltzed away with the mirror ball trophy on the "Dancing with the Stars" finale.

The 37-year-old TV personality and mother of four dominated the seventh season of the popular ABC dancing competition and bested former NFL player Warren Sapp and former 'NSync member Lance Bass during the Tuesday night finale, in which she reprised an emotional Viennese waltz routine that earned her a perfect score from the show's panel of judges.

"Unbelievable," was all Burke could muster after winning amid a flurry a confetti.

From the outset, the slinky former host of E!'s "Wild On" and CBS' "Rock Star" commanded the ballroom this season, coming in first place eight out of 10 times and receiving a 10 -- the judges' top score -- 16 times. Burke was crowned the latest "Dancing with the Stars" champion after the judges' scores -- 88 out of 90 -- were combined with viewers' votes.

"I actually can't believe it," said Derek Hough, Burke's professional partner, who's never won the competition. "I really can't. I honestly can't. The journey's been so long. It's been tough. It's been wonderful. It's been everything I could ever hope for. Wow. I can't believe we actually did it, girl."

Burke maintained an eight point lead over Sapp, the charismatic 35-year-old fan favorite whose technique was consistently criticized by the judges. Sapp still managed to hustle his way into second place with professional partner Kym Johnson, despite receiving one point less from the judges than the third place finisher, 29-year-old singer Bass.

"From the moment you start, you make me smile," head judge Len Goodman told Sapp.

Bass and his professional partner, Lacey Schwimmer, were upbeat about their loss. The pair danced away after their dismissal. And he's not hanging up his dancing shoes just yet. The former boybander will join professional dancers and other former contestants for the 38-city "Dancing with the Stars" tour, which is set to kick off Dec. 17 in San Diego.

"You never took the safe road once," judge Carrie Ann Inaba told Bass during the finale.

Previously dismissed celebrities -- actor Cody Linley; sprinter Maurice Greene; actresses Susan Lucci and Cloris Leachman; chef Rocco DiSpirito; reality TV star Kim Kardashian; actor Ted McGinley; and comedian Jeffrey Ross -- also returned for a last dance. Injured volleyball player Misty May-Treanor and singer Toni Braxton remained off their feet.

Protesters shut Thailand's international airport

BANGKOK, Thailand – Thousands of protesters occupied Thailand's main international airport Wednesday, halting all flights in a blow to the country's already-fragile tourism industry as they pressed their demand for the government's resignation.

Anti-government protester sleep at Suvarnabhumi airport, Bangkok in the early hours of Wednesday Nov. 26, 2008 as they continue to besiege parts of Bangkok's main international airport demanding the resignation of Thailand's Prime Minister, Somchai Wongsawat.

The airport takeover was one of the boldest gambles yet by the People's Alliance for Democracy in its four-month campaign to topple Prime Minister Somchai Wongsawat, whom it accuses of being the puppet of a disgraced fugitive predecessor, billionaire Thaksin Shinawatra.

The alliance vowed to bring its campaign to a final showdown this week, and violence has spiked, including streets clashes between supporters and opponents of the government Tuesday that included the first open use of firearms by the anti-government protesters. Police said 11 government supporters were injured, some with gunshot wounds.

Early Wednesday, assailants threw an explosive at anti-government protesters camped out at a separate domestic airport in Bangkok, injuring at least three people, police said.

Demonstrators — some masked and armed with metal rods — had swarmed the international Suvarnabhumi Airport overnight, breaking through police lines and spilled into the passenger terminal.

The airport was fully shut down early Wednesday, with incoming flights being diverted to other points in Thailand including Chiang Mai and Phuket, and as many as 500 passengers remained stranded, airport director Serirat Prasutanont said.

"We have to close the airport because of (alliance) protesters blocked the entire airport," Serirat said.

"However, we are trying to negotiate them to allow outgoing passengers stranded by the protest to fly," he said. "The incident has damaged Thailand's reputation and its economy beyond repair."

The alliance said the airport would be shut down until Somchai quits. The prime minister was scheduled to return late Wednesday from an Asia-Pacific summit in Peru and would land at a military airport, officials said.

The protesters appeared intent on forcing the military to intervene and bring down the elected regime. Army commander Gen. Anupong Paochinda has repeatedly ruled out a coup, though he has also said the army "will keep peace and order to protect the public and uphold important institutions like the monarchy."

The alliance has staged a number of dramatic actions in recent months. It took over the prime minister's office in late August and twice blockaded Parliament — one time setting off street battles with police that ended with two people dead and hundreds injured.

Support for the alliance has been waning in recent weeks, and the group appeared to be edging toward bigger confrontations — involving fewer though more aggressive followers — in hopes of creating chaos.

"They had been losing steam and have so far failed to achieve their goal. Now, they are openly creating instability and provoking a military coup," said Thitinan Pongsidhirak, a political scientist at Bangkok's Chulalongkorn University.

Their brazen tactics could backfire if a majority of Thais begin seeing the disruptive tactics as a threat to the country's economy which depends heavily on foreign tourists.

The airport blockade is a fresh blow to Thailand's $16 billion a year tourism industry, already suffering from months of political unrest and the global financial crisis. Suvarnabhumi is the world's 18th largest airport in passenger traffic, handling over 40 million passengers in 2007.

The anti-government protesters are mostly better educated, more affluent, urban Thais demanding that the country move away from a Western-style electoral system, which they say Thaksin exploited to buy votes. They instead favor a system in which some representatives are chosen by certain professions and social groups.

They are vastly outnumbered by Thaksin's supporters in the rural majority, who delivered his party two resounding election victories. Their loyalty was sealed by generous social and economic welfare programs for previously neglected provincial areas.

The anti-government forces are well organized, and have the behind-the-scenes support of elements of the military and parties close the royal palace, the country's most influential institution.

Officials: Obama to ask Gates to stay at Pentagon

CHICAGO – Seeking experience in wartime, President-elect Barack Obama intends to re-enlist Defense Secretary Robert Gates as head of the Pentagon — if only temporarily — and has chosen a retired Marine general to be White House national security adviser, officials said Tuesday.

Defense Secretary Robert Gates speaks at the Pentagon, Friday, Nov. 14, 2008, during a promotion ceremony to four-star General for Gen. Ann E. Dunwoody

Gates and retired Gen. James Jones would bring decades of experience to the administration of a 47-year-old commander in chief who campaigned on a pledge to redeploy combat troops in Iraq within 16 months while simultaneously ramping up the U.S. military presence in Afghanistan.

While Gates has accepted Obama's appointment, it was not clear that Jones had done the same.

Obama also has also offered the post of secretary of state to Sen. Hillary Rodham Clinton of New York, his rival in the campaign for the White House. Officials have not yet disclosed whether she has decided to give up her seat in Congress to join the Cabinet.

Whatever Clinton's decision, aides to the president-elect say he intends to announce members of his national security team next week, after disclosing his top economic advisers in recent days.

Gates, who has served as President George W. Bush's defense secretary for two years, will remain in the Cabinet for some time, probably a year, according to an official familiar with discussions between him and the president-elect. His appointment would fulfill an Obama pledge to include a Republican in his Cabinet.

A Democratic official said Jones was Obama's pick to head the National Security Council, the part of the White House structure that deals with foreign policy.

The officials spoke on condition of anonymity because Obama has not authorized anybody to discuss the developments.

Obama's search for intelligence officials was less clear. John Brennan, who had been considered a top pick for CIA director, withdrew his name from consideration. He cited a groundswell of criticism about his association with the Bush administration's sanctioning of harsh interrogations of terror suspects.

Former Adm. Dennis Blair has emerged as a likely candidate for director of national intelligence, which oversees CIA and other intelligence agencies.

Retaining Gates provides stability for a stretched military fighting two wars during the changeover in administrations. Gates once said it was inconceivable that he would stay on past the close of Bush's term on Jan. 20.

But the 65-year-old former spymaster had recently turned mum in public on the circumstances under which he would stay, even briefly, in an Obama administration.

Keeping Gates might afford Obama a sort of extended transition, in which critical military issues are left in trusted hands while Obama focuses most intensely on the financial crisis.

This is the first wartime presidential transition since 1968, when the Vietnam War was under way, and there is extra concern about security vulnerabilities during this handover.

Gates has run the department since December 2006, reluctantly giving up his post as president of Texas A&M University to replace Donald H. Rumsfeld when the Iraq war seemed to be failing.

He has gained a reputation as a steady pragmatist, but Gates' resume as a government policymaker is not untarnished.

During his 1991 confirmation hearings to be CIA director, Gates was criticized for missing clues about the impending fall of the Soviet Union and for politicizing Cold War intelligence. Those two complaints — misreading intelligence and using it selectively — have also dogged the Bush administration in its Iraq policy.

But supporters see Gates as a seasoned policymaker who climbed the CIA bureaucracy from an entry-level position to become director under President George H.W. Bush. He also served on his National Security Council, as he had for Presidents Carter and Reagan.

Bush noted that Gates helped lead U.S. efforts to drive the Soviets out of Afghanistan in the 1980s while at the CIA and was deputy national security adviser during Operation Desert Storm, the first U.S.-led invasion of Iraq.

He was part of the 2006 Iraq Study Group, a bipartisan panel led by former Secretary of State James Baker III and former Rep. Lee Hamilton that was asked to help chart a new course in the flagging war.

A native of Kansas, Gates joined the CIA in 1966. By 1987, he became acting CIA director when William Casey was terminally ill with cancer.

Questions were raised about Gates' knowledge of the Iran-Contra arms and money affair, and he withdrew from consideration to take over the CIA permanently. Yet he stayed on as deputy director.

Then-national security adviser Brent Scowcroft, who has been a critic of the younger Bush's policies, asked Gates to be his deputy in 1989 during the administration of Bush's father. The elder President Bush asked Gates to run the CIA two years later.

Gates won confirmation, but only after hearings in which he was accused by CIA officials of manipulating intelligence as a senior analyst in the 1980s.

Melvin Goodman, a former CIA division chief for Soviet affairs, testified that Gates politicized the intelligence on Iran, Nicaragua, Afghanistan and the Soviet Union.

Gates took a much lower profile when he left the CIA and the government in 1993. He joined corporate boards and wrote a memoir, "From the Shadows: The Ultimate Insider's Story of Five Presidents and How They Won the Cold War."

Gates is a close friend of the Bush family. He was interim dean of the George Bush School of Government and Public Service at Texas A&M and became the university's president in 2002. The school is home to the elder Bush's presidential library.

As Obama's choice for national security adviser, Jones has impeccable military credentials, an ambassador's polish and an imposing physical presence at 6 foot 4 inches. He's highly regarded by Republicans and Democrats on Capitol Hill, and as the NATO alliance's top commander — his last assignment before retiring from the military in early 2007 — he's a respected figure in capitals across Europe.

Jones was born in Kansas City, Mo., and grew up in France where his father — also a Marine — worked for International Harvester, the farm equipment company. Jones returned to the United States for his senior year of high school and later graduated from Georgetown University.

In 1967 he was sent to Vietnam and saw combat action as a platoon and a company commander.

Asian stock markets rise after Wall Street rally

TOKYO – Asian markets rose robustly Tuesday as investors regained some confidence on Wall Street's second straight day of day of strong gains, spurred by a U.S. government bailout of banking giant Citigroup.

Initial reaction in the region to the Citigroup news — which broke midday Monday in Asia — was tepid, and most benchmarks had ended the day lower. But after seeing markets in Europe and the U.S. surge overnight, Asian investors joined in the rally.

"The rescue of Citigroup does help ease concerns," said Singapore-based investment analyst Nicole Sze of Bank Julius Baer & Co., which manages about $300 billion in assets. "Citigroup is such a crucial financial institution in the global market. The U.S. action does fuel a return of confidence."

In Japan, which had been on holiday Monday, the Nikkei 225 stock average soared 413.14 points, or 5.2 percent, to 8,323.93.

Australia's benchmark S&P/ASX200 index leaped 5.8 percent to close at 3,623.4, led by materials, energy, banks and consumer discretionary stocks.

Hong Kong's Hang Seng index rose nearly 4 percent to 12,940.42, and the Philippines' main index jumped more than 6 percent. Among major indices, only mainland China and Singapore were in the red.

Wall Street and European markets surged Monday on news that the U.S. government will take a $20 billion stake in Citigroup and guarantee hundreds of billions of dollars in risky assets. The Dow Jones industrials soared 396.97 points, or 4.93 percent, to 8,443.39 Monday — the first two-day advance since Oct. 31.

U.S. stock index futures were mixed. Dow futures were up 4 points, or 0.1 percent, to 8,389, while Nasdaq futures were down 5.25 points, or 0.5 percent, to 1,141.75.

Japanese officials in Tokyo hailed Washington's move.

Economy Minister Kaoru Yosano called the plan a "courageous decision" to save the massive global banking group, noting that the world's economy could be affected by Citigroup's fate, according to Kyodo news agency.

All three of Japan's megabanks climbed. Sumitomo Mitsui Financial Group Inc. soared 11.48 percent, Mizuho Financial Group Inc. added 9.17 percent, and Mitsubishi UFJ Financial Group Inc. closed up 2.85 percent.

Wall Street's gains also drove commodity markets higher as oil prices jumped 9 percent Monday, though they slipped back bit in Asian trading Tuesday. Commodity shares in Australia gained, with BHP Billiton, the world's biggest miner, surging 12.2 percent, and rival Rio Tinto advancing 6.9 percent.

After jumping $4.57 overnight, light, sweet crude for January delivery was down $1.00 to $53.50 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore.

In currencies, the dollar fell to 96.34 yen from 96.88 yen late Monday. The euro also slid to $1.2830 from $1.2925.

In Europe Monday, Britain's FTSE 100 index jumped 9.8 percent to 4,152.96, Germany's DAX soared 10.3 percent to 4,554.33 and France's CAC-40 gained 10.1 percent at 3,172.11.

Obama urges Congress to pass costly stimulus bill

CHICAGO – Citing an "economic crisis of historic proportions," President-elect Barack Obama urged Congress to pass a costly, job-creating stimulus bill as quickly as possible, a rare pre-inaugural call to action delivered as the outgoing Bush administration approved fresh billions to bail out one of the nation's largest banks.

Stock prices surged — the biggest two-day percentage gain for the Dow Jones industrials in 21 years — as investors took heart Monday from the actions and words of the incoming and departing chief executives.

"If we do not act swiftly and boldly, most experts now believe that we could lose millions of jobs next year," said Obama, 57 days shy of taking office in the shadow of the worst economic crisis since the Great Depression.

He blended criticism of Detroit's beleaguered Big Three automakers — General Motors Corp., Ford Motor Co. and Chrysler LLC — with a pledge of support for government aid to help them survive. "We can't allow the auto industry to ... vanish," he said, although he added that a blank check for an industry resistant to change was not the solution to its long-term decline.

At a news conference in which he introduced New York Federal Reserve President Timothy Geithner as his treasury secretary and named other top economic officials, Obama said restoring the economy to health took priority over deficit concerns. Still, he said he would be looking for "meaningful cuts and sacrifices" to restrain federal spending.

The president-elect was expected to stress that pledge at a second news conference on Tuesday. Democratic officials said he intended to name Peter Orszag, currently the head of the Congressional Budget Office, to be his budget director.

Obama and President George W. Bush spoke by telephone during the day, their first disclosed conversation since a visit at the White House more than a week ago, and each man appeared eager to show a transition proceeding smoothly.

At the same time, the juxtaposition of the outgoing and incoming chief executives grappling — publicly and simultaneously — with the economy underscored the severity of a crisis that has sent joblessness rising, caused a large spike in mortgage foreclosures and crippled the credit markets.

Bush said his administration's dramatic overnight rescue of Citigroup Inc. was necessary to safeguard the nation's financial system and help the economy recover. He said more such moves might follow if other institutions need help. Officials said the government might invest $20 billion in the firm, and guarantee $306 billion in risky assets.

Encouraged by the action, investors sent the Dow Jones industrials up 397 points. Coupled with Friday's gain, that mean an 891 point increase over two trading days, the biggest percentage rise since October 1987.

Obama made a point of saying his administration "will honor the public commitments made by the current administration to address this crisis," words of reassurance to the financial markets.

Remarkably for a president-elect, he said he wanted Congress to act "right away" on a stimulus measure that would blend spending and tax cuts. Asked for details, he said without elaboration that he wanted a measure "of a size and scope that is necessary to get this economy back on track."

Democratic officials in Congress said the stimulus plan could include aid to cash-strapped states to provide health care to the poor, along with road and bridge funding. More money for food stamps is also likely, they said.

Obama renewed his campaign-long call for middle class tax cuts but said he would let his advisers make a recommendation on whether to roll back Bush-era tax cuts for the wealthy.

He offered few details about the economic stimulus measure he wants from the new Congress, saying he would ask his new team of advisers to consult with lawmakers.

As a candidate, he supported a $175 billion measure, but the economy has worsened since then, and many lawmakers and economists argue for a more robust jolt. Obama said his goal is to create 2.5 million jobs by "rebuilding our infrastructure, our roads, our bridges, modernizing our schools and creating the clean energy infrastructure of the 21st century."

His forecast was sober. He said there are neither shortcuts nor quick fixes.

"The economy is likely to get worse before it gets better. Full recovery will not happen immediately," he said. At the same time, he coupled those sentiments with optimism. "I know we can work our way out of this crisis because we have done it before."

The new Congress comes into session on Jan. 6, two weeks before Obama takes the oath of office as the nation's 44th president.

Democratic leaders have said they are eager to spend the time before then working on the legislation he wants, and Obama had scarcely made his remarks when political jockeying broke out over the details.

Senate Majority Leader Harry Reid, D-Nev., issued a challenge to Republicans to join Democrats in sending legislation to the White House as soon as possible.

House Republican Leader John Boehner of Ohio said he hoped the new administration would listen to those "who do not believe increasing government spending is the best way to put our economy back on track."

Nominally, Obama called the news conference to introduce the top members of the economic circle of advisers who will join his administration.

As treasury secretary he turned to Geithner as well as Former Treasury Secretary Lawrence Summers to head his National Economic Council.

In recent months, the 47-year-old Geithner has worked closely with the Bush administration on the bailout of the financial industry, and earlier in his career was involved in responding to international financial crises overseas.

Obama named Christina Romer, an economics professor, as chair of his Council of Economic Advisers. Melody Barnes, a former aide to Sen. Edward M. Kennedy, was named director of the White House Domestic Policy Council.

The appointment of Geithner was the first Cabinet selection Obama has announced, a distinction meant to underscore the economy's importance as he prepares to take office.

Democratic officials have said previously the president-elect is on track to name former rival Hillary Rodham Clinton, the New York senator, as secretary of state, and former Clinton administration Justice Department official Eric Holder as attorney general.

Robert Gates, defense secretary during Bush's last two years in office, is a possible holdover, at least for several months, aides to Obama have said.

Bush pardons 14 and commutes 2 prison sentences

WASHINGTON – President George W. Bush has granted pardons to 14 individuals and commuted the prison sentences of two others convicted of misdeeds ranging from drug offenses to tax evasion, from wildlife violations to bank embezzlement, The Associated Press learned Monday.

The new round of White House pardons are Bush's first since March and come less than two months before he will end his presidency. The crimes committed by those on the list also include offenses involving hazardous waste, food stamps, and the theft of government property.

Bush has been stingy during his time in office about handing out such reprieves.

Including these actions, he has granted a total of 171 and eight commutations. That's less than half as many as Presidents Clinton or Reagan issued during their time in office. Both were two-term presidents.

On the latest pardon list were:

_Leslie Owen Collier of Charleston, Mo. She was convicted for unauthorized use of a pesticide and violating the Bald and Golden Eagle Protection Act.

_Milton Kirk Cordes of Rapid City, S.D. Cordes was convicted of conspiracy to violate the Lacey Act, which prohibits importation into the country of wildlife taken in violation of conservation laws.

_Richard Micheal Culpepper of Mahomet, Ill., who was convicted of making false statements to the federal government.

_Brenda Jean Dolenz-Helmer of Fort Worth, Texas, for reporting or helping cover up a crime.

_Andrew Foster Harley of Falls Church, Va. Harley was convicted of wrongful use and distribution of marijuana and cocaine.

_Obie Gene Helton of Rossville, Ga., whose offense was unauthorized acquisition of food stamps.

_Carey C. Hice Sr. of Travelers Rest, S.C., who was convicted of income tax evasion.

_Geneva Yvonne Hogg of Jacksonville, Fla., convicted of bank embezzlement.

_William Hoyle McCright Jr. of Midland, Texas, who was sentenced for making false entries, books, reports or statements to a bank.

_Paul Julian McCurdy of Sulphur, Okla., who was sentenced for misapplication of bank funds.

_Robert Earl Mohon Jr. of Grant, Ala., who was convicted of conspiracy to distribute marijuana.

_Ronald Alan Mohrhoff of Los Angeles, who was convicted for unlawful use of a telephone in a narcotics felony.

_Daniel Figh Pue III of Conroe, Texas, convicted of illegal treatment, storage and disposal of a hazardous waste without a permit.

_Orion Lynn Vick of White Hall, Ark., who was convicted of aiding and abetting the theft of government property.

Bush also commuted the prison sentences of John Edward Forte of North Brunswick, N.J., and James Russell Harris of Detroit, Mich. Both were convicted of cocaine offenses.

Under the Constitution, the president's power to issue pardons is absolute and cannot be overruled.

Some high-profile individuals, such as Michael Milken, are seeking a pardon on securities fraud charges. Two politicians convicted of public corruption — former Rep. Randy "Duke" Cunningham, R-Calif., and four-term Democratic Louisiana Gov. Edwin W. Edwards — are asking Bush to shorten their prison terms.

One hot topic of discussion related to pardons is whether Bush might decide to issue pre-emptive pardons before he leaves office to government employees who authorized or engaged in harsh interrogations of suspected terrorists in the wake of the Sept. 11, 2001, attacks. Some constitutional scholars and human rights groups want the incoming administration of President-elect Barack Obama to investigate possible war crimes.

If Bush were to pardon anyone involved, it would provide protection against criminal charges, particularly for people who were following orders or trying to protect the nation with their actions. But it would also be highly controversial.

At the same time, Obama advisers say there is little — if any — chance that his administration would bring criminal charges.

Government unveils bold plan to rescue Citigroup

WASHINGTON – The government unveiled a bold plan Sunday to rescue Citigroup, injecting a fresh $20 billion into the troubled firm as well as guaranteeing hundreds of billions of dollars in risky assets.

The action, announced jointly by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp., is aimed at shoring up a huge financial institution whose collapse would wreak havoc on the already crippled financial system and the U.S. economy.

The sweeping plan is geared to stemming a crisis of confidence in the company, whose stock has been hammered in the past week on worries about its financial health.

"With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy," the three agencies said in a statement issued late Sunday night. "We will continue to use all of our resources to preserve the strength of our banking institutions, and promote the process of repair and recovery and to manage risks."

The move is the latest in a string of high-profile government bailout efforts. The Fed in March provided financial backing to JPMorgan Chase's buyout of ailing Bear Stearns. Six months later, the government was forced to take over mortgage giants Fannie Mae and Freddie Mac and throw a financial lifeline — which was recently rejiggered — to insurer American International Group.

Critics worry the actions could put billions of taxpayers' dollars in jeopardy and encourage financial companies to take excessive risk on the belief that the government will bail them out of their messes.

The Citigroup rescue came after a weekend of marathon discussions led by Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke. Timothy Geithner, president of the Federal Reserve Bank of New York, who is being tapped by President-elect Barack Obama as his Treasury chief also participated.

Investors reacted cautiously to the plan. Most Asian stock markets retreated when they opened Monday, weighed down by worries about Citigroup. However, losses were pared after the government announcement.

Vikram S. Pandit, Citi's chief executive officer, welcomed the action. "We appreciate the tremendous effort by the government to assure market stability," he said in a statement.

The $20 billion cash injection by the Treasury Department will come from the $700 billion financial bailout package. The capital infusion follows an earlier one — of $25 billion — in Citigroup in which the government also received an ownership stake.

As part of the plan, Treasury and the FDIC will guarantee against the "possibility of unusually large losses" on up to $306 billion of risky loans and securities backed by commercial and residential mortgages.

Under the loss-sharing arrangement, Citigroup Inc. will assume the first $29 billion in losses on the risky pool of assets. Beyond that amount, the government would absorb 90 percent of the remaining losses, and Citigroup 10 percent. Money from the $700 billion bailout and funds from the FDIC would cover the government's portion of potential losses. The Federal Reserve would finance the remaining assets with a loan to Citigroup.

In exchange for the guarantees, the government will get $7 billion in preferred shares of Citigroup.

As a condition of the rescue, Citigroup is barred from paying quarterly dividends to shareholders of more than 1 cent a share for three years unless the company obtains consent from the three federal agencies. The bank is currently paying a dividend of 16 cents, halved from a 32-cent payout in the previous quarter. The agreement also places restrictions on executive compensation, including bonuses.

Importantly, the agreement calls on Citigroup to take steps to help distressed homeowners.

Specifically, Citigroup will modify mortgages to help people avoid foreclosure along the lines of an FDIC plan that was put into effect at IndyMac Bank, a major failed savings and loan based in Pasadena, Calif.

Under the IndyMac plan, struggling home borrowers pay interest rates of about three percent for five years. Rates are reduced so that borrowers aren't paying more than 38 percent of their pretax income on housing.

The IndyMac plan also was used as a model for a new program by mortgage finance companies Fannie Mae and Freddie Mac and for two other failed thrifts taken over by the government on Friday. FDIC Chairman Sheila Bair has been pressing Treasury to use $24 billion from the $700 billion bailout program to put the mortgage modification program on national footing, but Paulson is opposed to that idea.

The once mighty Citigroup, which had at one time been the largest U.S. bank by assets, has seen its shares lose 60 percent of their value in the past week, reflecting a crisis of confidence among skittish investors. They are worried all the risky debt on Citigroup's balance sheet will turn into losses as the economy worsens and the markets stay turbulent — losses that could be nearly impossible to reverse.

Citigroup is such a large, interconnected player in the financial system that it is seen by Washington policymakers as too big to fail. The company has operations stretching around the globe in more than 100 countries.

Analysts consider Citigroup the most vulnerable among the major U.S. banks — especially after it failed to nab Wachovia Corp., which was bought instead by Wells Fargo & Co. That was a missed opportunity for Citi to gets its hands on much-needed U.S. deposits that would bolster its cash position.

Citigroup was especially hard hit by the meltdown in risky, subprime mortgages made to people with tarnished credit or low incomes. Foreclosures on those mortgages spiked, leaving Citi and other financial companies wracking up huge losses on the soured investments. The company has failed to turn a profit during the past four quarters and has announced plans to slash thousands of jobs.

Sources: Government working on Citigroup rescue

WASHINGTON – The government was weighing a plan on Sunday to rescue Citigroup Inc., whose stock has been hammered on worries about its financial health.

The Treasury Department and the Federal Reserve have been in discussions over the weekend to devise a strategy to stabilize the company, according to people familiar with the talks. They spoke on condition of anonymity because the discussions were ongoing.

One option being considered is taking some of the risky assets held by Citigroup off its balance sheet, a move that would give the company more breathing room and put it in a better position to raise capital. It was unclear, however, exactly how that option might be structured, the people said.

A spokesman for New York-based Citigroup declined comment.

The company has seen its shares lose 60 percent of their value in the past week, reflecting a crisis of confidence among skittish investors. They are worried all the risky debt on Citigroup's balance sheet will turn into losses as the economy worsens and the markets stay turbulent — losses that could be nearly impossible to reverse.

Citigroup is such a large, interconnected player in the financial system that if it were to collapse it would wreak havoc on already fragile financial and economic conditions. The company has operations stretching around the globe in more than 100 countries.

Analysts consider Citigroup the most vulnerable among the major U.S. banks — especially after it failed to nab Wachovia Corp., which was bought instead by Wells Fargo & Co. That was a missed opportunity for Citi to gets its hands on much-needed U.S. deposits that would bolster its cash position.

Citigroup was especially hard hit by the meltdown in risky, subprime mortgages made to people with tarnished credit or low incomes. Foreclosures on those mortgages spiked, leaving Citi and other financial companies wracking up huge losses on the soured investments. The company has failed to turn a profit during the past four quarters.

The company has already received a $25 billion from the Treasury Department's $700 billion financial bailout program. In return for the cash infusion, the government gets a partial ownership stake.

Obama aide promotes job plan, warns automakers

WASHINGTON – President-elect Barack Obama signaled Sunday he will move urgently and aggressively to rescue the plunging economy, demanding swift passage by Congress of a massive two-year spending and tax-cutting recovery program. "We're out with the dithering, we're in with a bang," a top Obama aide said.

US President-elect Barack Obama makes a surprise lunch time visit at Manny's Coffee Shop and Deli in Chicago on November 21, 2008. Obama was set to unveil his economic team amid the global financial crisis, his transition office said Sunday as a top advisor confirmed Timothy Geithner had been tapped for Treasury.

Obama's plans, outlined by his transition team on television talk shows, could put aside his campaign pledge to repeal a Bush tax cut for the wealthy. With the downturn in the economy, those tax cuts may remain in place until they are scheduled to die in 2011, said William M. Daley, an economic adviser. "That looks more likely than not," he said.

Obama aides called on lawmakers to pass, by the Jan. 20 inauguration, legislation that meets Obama's two-year goal of saving or creating 2.5 million jobs. Democratic congressional leaders said they would get to work when Congress convenes Jan. 6.

Though Obama aides declined to discuss a total cost, it probably would far exceed the $175 billion he proposed during the campaign. Some economists and lawmakers have argued for a two-year plan as large as $700 billion, equal to the Wall Street bailout Congress approved last month.

"I don't know what the exact number is, but it's going to be a big number. It has to be," said Obama economic adviser Austan Goolsbee.

With the wounded economy worsening, the Obama team's new assertiveness was a recognition he needed to soothe financial markets with signs of leadership. It also foreshadowed a more hands-on role by Obama to influence congressional action during the final weeks of the transition.

Obama will introduce his economic team on Monday, including Timothy Geithner as treasury secretary and Lawrence Summers as head of the National Economic Council. Obama also has settled on New Mexico Gov. Bill Richardson as his commerce secretary.

"We don't have time to waste here," Obama senior adviser David Axelrod said. "We want to hit the ground running on January 20th." Echoing that, the second-ranking House Democrat, Rep. Steny Hoyer of Maryland, said, "We expect to have during the first couple of weeks of January a package for the president's consideration when he takes office."

Added Goolsbee: "We're out with the dithering. We're in with a bang."

Obama's team didn't limit itself to the long-term economic recovery.

Axelrod warned automakers, seeking billions in government help to stave off collapse, to devise a plan to retool and restructure by next month. Otherwise, he said, "there is very little taxpayers can do to help them."

Axelrod couldn't resist taking a jab at the Big Three executives, who left Congress empty-handed last week after flying into Washington in corporate jets and pleading for money. "I hope that they will come back to Washington in early December — on commercial flights — with a plan," he said.

The emphasis on the economy began Saturday when Obama outlined the framework of a plan to save or create 2.5 million jobs by the end of 2010. The scope of the recovery package is far more ambitious than what Obama had spelled out during his presidential campaign, when he proposed $175 billion of spending and tax-cutting stimulus. The new one will be significantly larger and would incorporate his campaign ideas for new jobs in environmentally friendly technologies — the "green economy." It also would include his proposals for tax relief for middle- and lower-income workers.

But there were no plans to balance the tax cuts with an immediate tax increase on the wealthy. During the campaign, Obama said he would pay for increased tax relief by raising taxes on people making more than $250,000.

"There won't be any tax increases in the January package," said one Obama aide, who spoke on condition of anonymity because the details of the Obama package have not been fleshed out.

Obama could delay any tax increase to 2011, when current Bush administration tax cuts expire.

House Republican leader John Boehner of Ohio urged Obama to make that explicit. "Why wouldn't we have the president-elect say, `I am not going to raise taxes on any American in my first two years in office?'"

In a sign of where the congressional debate might lead, Boehner called for lowering capital gains and corporate income taxes.

Some economists have endorsed spending up to $600 billion to revive the economy. Sen. Charles Schumer, D-N.Y., and former labor Secretary Robert Reich, a member of Obama's economic advisory board, both suggested $500 billion to $700 billion.

"I don't know what the number is going to be, but it's going to be a big number," Goolsbee said. "It has to be. The point is to, kind of, get people back on track and startle the thing into submission."

While Obama in the weekend Democratic radio address said his plan "will mean 2.5 million more jobs by January of 2011," aides said the figure was a net sum of jobs created and jobs saved that would otherwise disappear without government help.

The adviser who spoke on condition of anonymity said the plan would likely slow down job losses in 2009, but that new jobs probably would not be evident until 2010.

Obama's plan is both an economic and a political blueprint. By not including tax increases, he silences one potential Republican objection to his plan. If successful, the scope of his plan would set the stage for his other legislative goals, including expanded health care, permanent changes in tax rates and a comprehensive overhaul of energy policy.

"This package is designed to be a down payment to get his entire agenda started," the aide said.

Axelrod appeared on "Fox News Sunday" and ABC's "This Week." Schumer was on ABC, Hoyer and Boehner on Fox and Goolsbee was interviewed on "Face the Nation" on CBS. Reich appeared on "Late Edition" on CNN.

e=mc2: 103 years later, Einstein's proven right

PARIS (AFP) – It's taken more than a century, but Einstein's celebrated formula e=mc2 has finally been corroborated, thanks to a heroic computational effort by French, German and Hungarian physicists.

A brainpower consortium led by Laurent Lellouch of France's Centre for Theoretical Physics, using some of the world's mightiest supercomputers, have set down the calculations for estimating the mass of protons and neutrons, the particles at the nucleus of atoms.

According to the conventional model of particle physics, protons and neutrons comprise smaller particles known as quarks, which in turn are bound by gluons.

The odd thing is this: the mass of gluons is zero and the mass of quarks is only five percent. Where, therefore, is the missing 95 percent?

The answer, according to the study published in the US journal Science on Thursday, comes from the energy from the movements and interactions of quarks and gluons.

In other words, energy and mass are equivalent, as Einstein proposed in his Special Theory of Relativity in 1905.

The e=mc2 formula shows that mass can be converted into energy, and energy can be converted into mass.

By showing how much energy would be released if a certain amount of mass were to be converted into energy, the equation has been used many times, most famously as the inspirational basis for building atomic weapons.

But resolving e=mc2 at the scale of sub-atomic particles -- in equations called quantum chromodynamics -- has been fiendishly difficult.

"Until now, this has been a hypothesis," France's National Centre for Scientific Research (CNRS) said proudly in a press release.

"It has now been corroborated for the first time."

For those keen to know more: the computations involve "envisioning space and time as part of a four-dimensional crystal lattice, with discrete points spaced along columns and rows."

Obama on track to nominate Clinton

WASHINGTON – President-elect Barack Obama is on track to nominate Hillary Rodham Clinton as secretary of state after Thanksgiving, an aide to his transition said Thursday.

One week after the former primary rivals met secretly to discuss the idea of Clinton becoming the nation's top diplomat, the two sides were moving quickly toward making it a reality, barring any unforeseen problems.

The transition aide told The Associated Press that the two camps have worked out financial disclosure issues involving Clinton's husband, former President Bill Clinton, and the complicated international funding of his foundation that operates in 27 countries. The aide said Obama and Hillary Clinton have had substantive conversations about the secretary of state job.

Clinton has been mulling the post for several days, but the transition aide's comments suggested that Obama's team does not feel she is inclined to turn it down.

Some Democrats and government insiders have questioned whether Clinton is too independent and politically ambitious to be an effective secretary of state. But Obama is said to admire her talents and experience, as do many other Democrats.

A senior adviser to Obama said the president-elect believes Clinton would bring instant stature and credibility to U.S. diplomatic relations and that the advantages to her serving far outweighed potential downsides.

Clinton would have to surrender her New York Senate seat, which she has held for eight years, to take the job.

Clinton spokesman Philippe Reines would not comment Thursday night, except to say that anything about Cabinet appointments is for Obama's transition team to address.

The president-elect also is likely to choose Arizona Gov. Janet Napolitano to be secretary of homeland security, top Obama advisers and several Democrats said Thursday as the shape of Obama's Cabinet begins to emerge.

The Obama advisers cautioned that no final decision has been made on putting Napolitano in charge of the Homeland Security Department, the massive agency created by Congress after the Sept. 11, 2001, terrorist attacks. But the advisers said she was easily the top contender.

Thus far, Obama has informally selected Washington lawyer Eric Holder as attorney general and former Senate Majority Leader Tom Daschle as health secretary. The plans could be sidetracked by unexpected glitches in the final vetting process, officials note.

Among other Cabinet posts: Senior Democrats say there is a strong possibility that Defense Secretary Robert Gates would stay temporarily and later give way to former Navy Secretary Richard Danzig. Even so, Republican Sen. Chuck Hagel of Nebraska and Democratic Sen. Jack Reed of Rhode Island also are said to be under consideration.

Democrats also say that several people remain in the running for treasury secretary, including Timothy Geithner, president of Federal Reserve Bank of New York; Lawrence Summers, former treasury secretary and one-time Harvard University president; and former Federal Reserve Chairman Paul Volcker.

Several news organizations reported Thursday that Chicago businesswoman Penny Pritzker, who was Obama's national campaign finance chairman, was his leading choice to become commerce secretary. However, Pritzker issued a statement Thursday saying she is not a contender for the post.

Officials say Laura D'Andrea Tyson, the former chair of White House Council of Economic Advisers in the Clinton administration, is in the running for the Commerce job.

The Obama advisers and Democrats discussed the Cabinet positions only on grounds of anonymity because of the private nature of the screening process.

Obama appears to be assembling a team that includes a mix of longtime aides, Washington insiders and a sprinkling of Democratic governors. Besides Napolitano, strong contenders for Cabinet posts include New Mexico Gov. Bill Richardson and Kansas Gov. Kathleen Sebelius.

Sebelius and Napolitano, who once was Arizona's attorney general, were among the first governors to commit to Obama's candidacy. Richardson endorsed Obama after ending his own presidential bid, angering the Clintons.

As governor, Napolitano has fought to curb illegal immigration, but she has been skeptical that building a fence along the border will solve the problem. She once said, "You build a 50-foot wall, somebody will find a 51-foot ladder."

Last year, her state passed a law that requires all Arizona businesses to use the federal online database, E-Verify, to confirm that new hires have valid Social Security numbers and are eligible for employment. This has been a cornerstone of the Bush administration's immigration policy.

As governor, she has overseen wildfires and severe flooding and worked with the Federal Emergency Management Agency, now part of the Homeland Security Department.

Indian navy sinks suspected pirate "mother" ship

NEW DELHI – An Indian naval vessel sank a suspected pirate "mother ship" in the Gulf of Aden and chased two attack boats into the night, officials said Wednesday, yet more violence in the lawless seas where brigands are becoming bolder and more violent.

Separate bands of pirates also seized a Thai ship with 16 crew members and an Iranian cargo vessel with a crew of 25 in the Gulf of Aden, where Somalia-based pirates appear to be attacking ships at will, said Noel Choong of the International Maritime Bureau's piracy reporting center in Malaysia.

"It's getting out of control," Choong said.

A multicoalition naval force has increased patrols in the region, and scored a rare success Tuesday when the Indian warship, operating off the coast of Oman, stopped a ship similar to a pirate vessel mentioned in numerous piracy bulletins. The Indian navy said the pirates fired on the INS Tabar after the officers asked it to stop to be searched.

"Pirates were seen roaming on the upper deck of this vessel with guns and rocket propelled grenade launchers," said a statement from the Indian navy. Indian forces fired back, sparking fires and a series of onboard blasts — possibly due to exploding ammunition — and destroying the ship.

They chased one of two speedboats that had been shadowing the larger ship, and which fled when it sank. One was later found abandoned. The other escaped, according to the statement.

Larger "mother ships" are often used to take gangs of pirates and smaller attack boats into deep water, and can be used as mobile bases to attack merchant vessels.

Last week, Indian navy commandos operating from a warship foiled a pirate attempt to hijack a ship in the Gulf of Aden. The navy said an armed helicopter with marine commandos prevented the pirates from boarding and hijacking the Indian merchant vessel.

Tuesday incidents raised to eight the number of ships hijacked this week alone, he said. Since the beginning of the year, 39 ships have been hijacked in the Gulf of Aden, out of 95 attacked.

"There is no firm deterrent, that's why the pirate attacks are continuing," Choong said. "The criminal activities are flourishing because the risks are low and the rewards are extremely high."

The pirates used to mainly roam the waters off the Somali coast, but now they have spread in every direction and are targeting ships farther at sea, according to Choong.

He said 17 vessels remain in the hands of pirates along with more than 300 crew members, including a Ukrainian ship loaded with weapons and a Saudi Arabian supertanker carrying $100 million in crude.

The supertanker, the MV Sirius Star, was anchored Tuesday close to Harardhere, the main pirates' den on the Somali coast, with a full load of 2 million barrels of oil and 25 crew members.

Asked about reports that a ransom had been demanded, Saudi Foreign Minister Prince Saud al-Faisal said Wednesday that the owners of the tanker "are negotiating on the issue." He did not elaborate.

He said, "We do not like to negotiate with pirates, terrorists or hijackers." But he said the owners of the tanker are "the final arbiter" on the issue.

Saudi Arabia, the world's leading oil producer, has condemned the hijacking and said it will join the international fight against piracy.

Despite the stepped-up patrols, the attacks have continued unabated off Somalia, which is caught up in an Islamic insurgency and has had no functioning government since 1991. Pirates have generally released ships they have seized after ransoms are paid.

NATO has three warships in the Gulf of Aden and the U.S. Navy's Bahrain-based 5th Fleet also has ships in the region.

But U.S. Navy Commander Jane Campbell of the 5th Fleet said naval patrols simply cannot prevent attacks given the vastness of the sea and the 21,000 vessels passing through the Gulf of Aden every year.

"Given the size of the area and given the fact that we do not have naval assets — either ships or airplanes — to be everywhere with every single ship" it would be virtually impossible to prevent every attack, she said.

The Gulf of Aden connects to the Red Sea, which in turn is linked to the Mediterranean by the Suez Canal. The route is thousands of miles (kilometers) and many days shorter than going around the Cape of Good Hope off the southern tip of Africa.

The Thai boat, which was flying a flag from the tiny Pacific nation of Kiribati but operated out of Thailand, made a distress call as it was being chased by pirates in two speedboats but the phone connection was cut off midway.

Wicharn Sirichaiekawat, manager of Sirichai Fisheries Co., Ltd. told The Associated Press that the ship, the "Ekawat Nava 5," was headed from Oman to Yemen to deliver fishing equipment.

"We have not heard from them since so we don't know what the demands are," Wicharn said. "We have informed the families of the crew but right now, we don't have much more information to give them either."

Later in the day, Thai Foreign Ministry deputy spokesman Voradet Veeravekin told The Associated Press that Thai officials in Kenya were trying to make contact with the vessel.

"Based on previous cases, we believe they were held for ransom. We are optimistic that we will be able to negotiate for their release once we can contact the ship," he said.

Of the 16 crew members, Wicharn said 15 are Thai and one is Cambodian.

The Iranian carrier was flying a Hong Kong flag but operated by the Islamic Republic of Iran Shipping Lines.

On Tuesday, a major Norwegian shipping group, Odfjell SE, ordered its more than 90 tankers to sail around Africa rather than use the Suez Canal after the seizure of the Saudi tanker Saturday.

"We will no longer expose our crew to the risk of being hijacked and held for ransom by pirates in the Gulf of Aden," said Terje Storeng, Odfjell's president and chief executive.