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The CNN Washington Bureau’s morning speed read of the top stories making news from around the country and the world.

WASHINGTON/POLITICAL

For the latest political news: www.CNNPolitics.com

CNN: Homeland Security chief Napolitano arrives in Afghanistan

Homeland Security Secretary Janet Napolitano arrived in Afghanistan Friday and planned to spend New Year's Eve with U.S. troops in the region. Napolitano is scheduled to meet with senior U.S. and Afghan officials during her weeklong trip that also includes stops in Qatar, Israel and Belgium.

CNNMoney: Former auto czar pays $10 million fine

Quadrangle investment group founding partner and former Obama "auto czar" Steven Rattner agreed Thursday to pay a $10 million fine in a settlement with the New York attorney general's office over a pension fund scheme. Rattner was accused of a "pay-to-play" scheme involving New York's pension fund, in which Rattner's Quadrangle allegedly gave kickbacks to officials if they directed state pension money to the fund.

New York Times: E.P.A. Limit on Gases to Pose Risk to Obama and Congress

With the federal government set to regulate climate-altering gases from factories and power plants for the first time, the Obama administration and the new Congress are headed for a clash that carries substantial risks for both sides. While only the first phase of regulation takes effect on Sunday, the administration is on notice that if it moves too far and too fast in trying to curtail the ubiquitous gases that are heating the planet it risks a Congressional backlash that could set back the effort for years.

Washington Post: Maine seeks exemption from provision of health-care law

Days before a key and controversial provision of the health-care law is set to take effect, Maine is the only state to have asked the Obama administration for an exemption, despite concerns expressed by at least a dozen states.

CNN: Alaska certifies Sen. Murkowski's re-election

Alaska's top two elected officials on Thursday certified Sen. Lisa Murkowski's re-election in November as a write-in candidate, clearing the way for Murkowski to be sworn in on time for the new congressional session that starts next week.

CNN: Well-known governors prepare to leave office

Beginning Saturday and continuing over the next few weeks, some of the nation's most prominent governors will be leaving office as a new crop of state chief executives are sworn in.

CNN Poll: CNN Poll: WikiLeaks has few fans in U.S.

It appears the website WikiLeaks has few fans in the United States. A just-released CNN/Opinion Research Corporation poll finds 77 percent of Americans disapprove of the online organization's release of thousands of confidential U.S. government documents concerning U.S. diplomatic and military policies. Only 20 percent approved of the action.

Washington Post: WikiLeaks cable dump reveals flaws of State Department's information-sharing tool

Millions of people around the world now know that the State Department's secret cables became the property of WikiLeaks. But only recently have investigators understood the critical role played by Net-Centric Diplomacy, a computer initiative that became the conduit for what was perhaps the biggest heist of sensitive U.S. government documents in modern times.

CNN Poll: Opposition to Afghanistan war remains high

More than six in ten Americans oppose the U.S. war in Afghanistan, according to a new national poll. And a CNN/Opinion Research Corporation survey released Thursday also indicates that 56 percent of the public believes that things are going badly for the U.S. in Afghanistan.

Las Vegas Sun: GOP presidential hopefuls paying attention to Nevada

Nevada was a political afterthought for Republicans in the 2008 presidential election. Caucus votes were nonbinding, meaning delegates could change their minds about whom to support, so candidates focused on other more influential states rather than risk wasting time and money in Nevada. But that strategy seems to be changing, with the state GOP deciding to make caucus votes binding. Now that Nevada can boast real political juice, Republicans toying with the idea of presidential bids are scoping out the Silver State.

Chicago Sun-Times: Andy Martin, self-proclaimed 'king of the birthers,' says he'll run for president

Andy Martin, a political gadfly who ran for President Obama's former Senate seat in 2010, announced Wednesday in New Hampshire that he will run for the Republican nomination for president on a "birther" platform.

Politico: GOP pals could be 2012 rivals

Should both Haley Barbour and Mitch Daniels seek the White House in 2012, Americans would glimpse a rare sight in the annals of presidential campaigns: actual friends competing against one another for the nomination. Not "friends" in the political sense, the way fellow senators disingenuously refer to one another during floor debate, but pals who truly like each other, and have a long-standing, personal relationship. It’s a nontransactional friendship that’s uncommon in the rarefied air of national politics.

St. Petersburg Times: Records in GOP fraud case reveal more of Jim Greer's business dealings

Delmar Johnson, former executive director of the Florida Republican Party, was president, secretary and treasurer of Victory Strategies, which prosecutors say was a "shell company" created to skim off GOP contributions. But most of the cash went to former state party Chairman Jim Greer, newly released documents show. …GOP finance committee officials began questioning Greer about the company in December 2009, and he resigned as party chairman in January.

Politico: Morning Joe to run again?

Former Florida Rep. Joe Scarborough says he would consider running for office again but, for the time being, thinks he’s better off right where he is. …But that could change. “An absence of leadership” could draw him back to elective office, he said in an interview with Parade magazine published Thursday. “The same thing that had me run the first time, in 1994, when I felt the country was veering off dangerously in the wrong direction.”

NATIONAL

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Los Angeles Times: Holiday anti-terrorism focus is on 'soft targets'

After arrests in Europe and sting operations in the U.S., intelligence agencies have been on edge this holiday season over concerns that terrorist organizations are setting their sights on easier-to-hit targets such as subways, trains and large public gatherings. Federal and local authorities have responded with demonstrations of force and high-profile arrests to deter would-be plotters.

CNN: NYC mayor to probe claims that workers delayed snow cleanup

Four days after a monster blizzard blanketed much of the northeastern U.S., New York Mayor Michael Bloomberg said he will investigate whether sanitation workers intentionally delayed cleanup efforts over frustrations regarding citywide budget cuts.

Washington Post: As frustration grows, airports consider ditching TSA

Some of the nation's biggest airports are responding to recent public outrage over security screening by weighing whether they should hire private firms such as Covenant to replace the Transportation Security Administration. Sixteen airports, including San Francisco and Kansas City International Airport, have made the switch since 2002. One Orlando airport has approved the change but needs to select a contractor, and several others are seriously considering it.

INTERNATIONAL

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CNN: Ban 'deeply alarmed' over call for violence

U.N. Secretary-General Ban Ki-moon, distressed over a call to attack the hotel where Ivory Coast's president-elect and U.N. security forces are based, said Thursday that the forces are "authorized to use all necessary means to protect its personnel" and any others at the location.

The Guardian: Research links rise in Falluja birth defects and cancers to US assault

A study examining the causes of a dramatic spike in birth defects in the Iraqi city of Falluja has for the first time concluded that genetic damage could have been caused by weaponry used in US assaults that took place six years ago.

The Daily Telegraph: Chinese military aircraft more aggressive since September, Japan claims

Defence officials in Tokyo told the Asahi newspaper that in addition to the harassment of Japanese aircraft, China has stepped up its probing of air defences in the region and the monitoring of military exercises involving units from the United States and Japan. In the last nine months, Japanese fighters have been scrambled to intercept Chinese intruders on 44 occasions, the highest figure in the last five years and more than double the number for the whole of fiscal 2006, the defence ministry officials said.

NPR: Dubai Restaurant Offers A Taste Of North Korea

North Korea's best-known exports tend to be conventional weapons and nuclear technology. But now, curious diners can add to noodles to that list, thanks to a chain of North Korean restaurants in China, Nepal, Thailand and Dubai. Analysts say the restaurants are a prominent source of foreign exchange for Pyongyang, which struggles under economic sanctions for its nuclear program — and for its sometimes belligerent behavior toward South Korea.

CNN: Russia's Mikhail Khodorkovsky faces another 6 years in prison

A judge in Moscow sentenced Mikhail Khodorkovsky, the former head of Russia's Yukos oil company, and his business partner to 14 years in prison on corruption charges Thursday.

Wall Street Journal: Estonia Prepares to Join the Euro Zone

When the tiny Baltic nation of Estonia rings in the new year, it will become the latest addition to the euro zone—and the poorest member of a currency bloc that is struggling to restore financial stability.

Der Spiegel: The Underbelly of Ukrainian Gas Dealings

The agreement in early 2009 which restarted gas deliveries from Russia via Ukraine to Western Europe, was hailed as a success. But since Viktor Yanukovych became Ukrainian president in February, many of those involved in the deal have been arrested. Furthermore, the president's friends have profited handsomely while the state has lost a fortune.

Wall Street Jouranl: IMF Chides Pakistan on Budget Gap

The International Monetary Fund issued a stern warning to Pakistan to take steps to cut its spiraling budget deficit, said a senior Pakistani government official. In an official letter to the government of President Asif Ali Zardari, the IMF warned that the state of the nation's economy is far worse than previously realized and urged immediate fiscal belt-tightening measures, according to the official, who has seen the missive.

CNN: Vatican Bank to reform banking standards

The Vatican Bank will adapt to meet international standards on money-laundering and other illegal activities, Pope Benedict XVI decreed Thursday, after some of the bank's assets were ordered frozen in Italy.

CNN: South Korea works to contain foot-and-mouth, bird flu

South Korea confirmed an outbreak of bird flu Friday as it struggles to contain foot-and-mouth disease, which has rapidly spread across the country. A duck and a chicken have tested positive for the deadly bird flu virus, authorities said. The government has culled 119,000 birds and set up a quarantine zone around the affected farms.

CNN: Residents evacuated in Australia amid lengthy flood forecast

Thirteen townships in Australia's flooded Queensland state were evacuated Thursday as forecasters warned it may be weeks before river levels start to drop. …Over the entire month of December, Queensland has seen 1.3 meters (4.3 feet) of rain - most of which fell during the past four or five days, said Tony Auden, a forecaster with the Bureau of Meteorology.

BUSINESS

For the latest business news: www.CNNMoney.com

CNN: Ford, Chrysler recalling thousands of vehicles

Ford Motor Co. is recalling 19,600 2011 model year trucks and crossover SUVs over concerns that an electrical short could cause a fire, the manufacturer said Thursday. Chrysler Group LLC also is recalling nearly 145,000 trucks and crossover wagons in three separate campaigns for steering, stalling and airbag concerns, according to letters posted this week on the website of the National Highway Traffic Safety Administration.

CNNMoney: Jobless claims drop below 400,000 mark

For the first time in more than two years, the number of Americans filing for their first week of unemployment benefits fell below 400,000 last week - a ray of hope in the one of the longest job droughts in U.S. history. The number of initial claims fell to 388,000 in the week ended Dec. 25, down 34,000 from the week before, the Labor Department said Thursday.

Fortune: Goldman bonus pool looking shallower

The days of the $500,000 average paycheck are long gone, even at Wall Street's most gilded firm. So predicts a report issued Thursday by Credit Suisse analyst Howard Chen. He slashed his fourth-quarter earnings estimate on Goldman Sachs (GS) to $3.70 a share from $5.08, citing its latest soft trading quarter and higher non-compensation expenses.

In Case You Missed It

CNN's Jill Dougherty explores why the public admires Hillary Clinton.

CNN's Jeanne Meserve reports on recent terrorism incidents around the world.

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With Sunday night's announcement that Goldman Sachs had invested $450 million in Facebook, one could almost hear the supple leather stampede of Ferragamo loafers beating down Lloyd Blankfein's door. After all, with Goldman's rare "special purpose vehicle," its private clients would be able to invest $1.5 billion collectively, without the SEC's oversight, in a social network that Goldman conveniently just inferred was worth $50 billion. And all for the rumored low, low cost of a minimum of $2 million and a promise not to sell until 2013. That is, if clients were willing to do it within the week and without the requisite memorandum explaining the risks.

Such is the magic of Goldman, reasons Fortune contributing editor Duff McDonald. In an article about the five reasons McDonald is not buying Facebook stock — including the troubling facts that (1) no one knows the company's actual financials, and (2) people use it to play backward games like Farmville and Cityville — he also cited Goldman's involvement as a reason to be wary. But we prefer to see McDonald's criticism as yet another reason for Goldman to be proud of being so dang vampire squid about the whole thing. Market manipulation is so baller. We're glad it's making a comeback so early in the new year.

Reuters' Felix Salmon has already pointed out that Goldman's motivation in investing in Facebook is partly to lock down the lead slot as a book runner for when the company does go public. Others have remarked that, depending on the fees that come with Facebook going public, Goldman might pay for its investment on that alone. According to Yipit founder Vinicius Vacanti, when you count them up, Goldman's strategic investments in Facebook actually value the social network closer to $36 billion. McDonald pegs it at $39 billion. Although, of course, it's in Goldman's interest to make everyone think Facebook looks like it's worth $50 billion, which might explain the rush job and lack of private placement memo.

By McDonald's hypothetical math, if Facebook offered the public a chance to buy 20 percent of the company in an IPO, that would be worth $10 billion. Goldman would earn a 2 percent underwriting fee as a book runner on that $10 billion, picking up $200 million. McDonald continues:

Goldman would have to share such spoils, so let's call it $100 million into their pocket. Subtracting that underwriting fee [$100 million] from the Goldman investment [$450 million], and you could easily make the case that for a net purchase price of $350 million, Goldman's ante only values Facebook at $39 billion. Hey, that's just off by $11 billion, so don't worry about it. Buy your shares where you can get them. In other words, go open a $10 million minimum private client account at Goldman Sachs. (Who says Goldman didn't learn its lesson about shafting its own customers? This time around, they've managed to get the customers to line up the shaft themselves.)

C'mon, you don't get to be America's great big bubble machine by expending energy trying to shaft clients. You gotta teach them to do it for themselves. Sorta like "give a man a fish," only, you know, with shafting. By Salmon's reasoning, even if Facebook stays private, Goldman could make out with an even handsomer reward with more private placement deals. "Right now, [Goldman's] in the highly enviable position of having the exclusive ability to parcel out Facebook shares to its own clients, and to make money on pretty much every trade in Facebook shares. That, surely, is more valuable than any one-off IPO fee." The greatest trick the devil ever played was convincing the world that Facebook was definitely worth $50 billion in January 2011? Is Lloyd Blankfein Keyser Söze?

Five reasons why I'm not buying Facebook [Fortune]

Goldman’s Investment Actually Values Facebook At Much Less Than $50 Billion [BI]

Why Facebook won’t go public [Reuters]

Related: Goldman Sachs Investment in Facebook Makes That $50 Billion Valuation Look More Legit

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Thursday, 6 January 2011

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