Reno crash raises questions about the future of air races (The Christian Science Monitor)

[UPDATE: The number of people killed in the Reno Air Races crash Friday has risen to nine, according to the Reno police. Also, a T-28 aircraft crashed on the runway during a six-aircraft routine Saturday at an airshow in Martinsburg, West Virginia, killing the pilot. There were no other casualties, according to initial reports.]

The crash at the Reno Air Races in Nevada Friday afternoon – the worst accident in the history of the event – raises questions about the future of what’s billed as “the world’s fastest motorsport.”

Have the capabilities of the high-speed aircraft flown at very low level exceeded the abilities of even the best pilots? Should age be a consideration in allowing pilots to compete? Should the race course be moved farther away from the tens of thousands of spectators who gather there each September.

Sometimes likened to the top race cars as “Formula One with wings,” racing aircraft fly at up to 500 miles an hour and less than 100 feet above the ground. The fastest categories fly an 8-mile oval course around pylons.

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Many of the competing aircraft started out as vintage World War II fighters, such as the P-51 Mustang and the F8F Bearcat. But they are highly modified, with larger engines and aerodynamic characteristics that have been altered to increase performance during high-G turns that can stress airframes.

Jimmy Leeward, the pilot in the crash, was flying a P-51 named the "Galloping Ghost."

Mr. Leeward, a real estate developer and owner of the Leeward Air Ranch Racing Team in Ocala, Fla., was a veteran pilot who’d flown 250 types of aircraft. He was a long-time racer who’d flown at Reno since 1975, and he’d flown as a stunt pilot in such films as "Amelia," Cloud Dancer," and "The Tuskegee Airmen."

In an interview with the Ocala Star-Banner last year, Leeward talked about the P-51 – the aircraft flown in combat in World War II by famed pilot Chuck Yeager, who once shot down five enemy aircraft on a single mission.

"They're more fun. More speed, more challenge,” Leeward said of the P-51. “Speed, speed and more speed.”

Initial reports indicated that the pilot had pulled up and called a€?maydaya€

At this writing, three people (including the pilot) have died as a result of the crash and 56 were taken to local hospitals, many of them critically injured.

But given the total destruction of the aircraft, former NTSB investigator Greg Feith told MSNBC, the exact cause of the accident – perhaps a mechanical failure or a medical situation experienced by the pilot – may never be known.

Some have raised questions about Leeward’s age, initially reported as 80 but then corrected to 74. Those who knew him well reject the suggestion that he was too old to participate in such a stressful and potentially dangerous sport requiring physical strength, extraordinary reflexes, and the ability to react instantly to emergency situations including engine failure at low level.

Leeward's aviation medical records were up-to-date, and he was "a very qualified, very experienced pilot," said Reno Air Races President and CEO Mike Houghton.

Some witnesses to the crash suggested that Leeward may have maneuvered his aircraft away from the grandstands where the casualties could have been higher.

Four pilots have been killed in recent years. Over the years, there have been 19 deaths due to crashes and collisions at Reno, but none until this week had involved spectators.

Two pilots died at the event in 1994, and organizers softened two of the curves pilots negotiate after two more pilots crashed into nearby neighborhoods in 1998 and 1999, according to an Associated Press report. In 2007 and 2008, four pilots were killed at the races, prompting local school officials to consider barring student field trips to the event.

Air shows not involving races also have a long record of accidents involving pilots and spectators. There have been eight so far this year, five involving fatalities. The worst was in 2002 when a Ukrainian Air Force fighter crashed during an air show near Lviv, Ukraine, killing 77 people and injuring 543.

National Transportation Safety Board (NTSB) officials have taken over the investigation in Reno. The Federal Aviation Administration (FAA) is involved as well.

The Monitor's weekly news quiz for Sept. 11-16, 2011

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UBS raises rogue equity trade losses to $2.3 billion (Reuters)

ZURICH (Reuters) – Swiss bank UBS increased the amount it said it had lost on rogue equity trades to $2.3 billion on Sunday and Chief Executive Oswald Gruebel said the alleged fraud would have consequences for strategy and possibly also for himself.

"It is obvious that these incidents will have an influence on the strategy of the investment bank," a visibly chastened Gruebel told Swiss television, adding that the firm would present a new strategy for its investment bank soon.

"I will bear all the consequences of the incident. They will be announced as soon as we put them in practice," he said.

UBS stunned markets on Thursday when it announced unauthorised trades had lost it some $2 billion. London trader Kweku Adoboli was charged on Friday with fraud and false accounting dating back to 2008.

UBS said in a statement on Sunday the trader concealed "unauthorised speculative trading in various S&P 500, DAX, and EuroStoxx index futures over the last three months" by creating fictitious hedging positions in internal systems.

"The loss arising from this matter is $2.3 billion. As previously stated, no client positions were affected," it said.

Global stock markets have been extremely volatile in recent months, plunging on concerns over euro zone and U.S. debt crises and then rebounding on hopes for their resolution.

BUCK STOPS WITH GRUEBEL?

The loss is a disaster for the reputation of Switzerland's biggest bank, which had just started to recover after it almost collapsed during the financial crisis and faced a damaging U.S. investigation into aiding wealthy Americans to dodge taxes.

"Loss even more. Reads like they're making excuses," Helvea analyst Peter Thorne said of the UBS statement in an e-mail.

The new scandal has prompted calls for UBS's top managers to step down and for its investment bank to be split into a separate unit from its core wealth management business.

Chris Wheeler, bank analyst at Mediobanca, said there would be pressure on UBS to address the investment bank fast.

"That had been planned anyway for the investor day on November 17 and there may be pressure on them to accelerate that."

Gruebel, who was brought out of retirement in 2009 to turn the bank around, was quoted in a newspaper on Sunday as saying he was not considering quitting over the crisis, but said it was up to the board to decide.

In a memo to staff on Sunday, he said: "Ultimately, the buck stops with me. I and the rest of senior management are responsible for dealing with wrongdoing."

Swiss newspapers quoted unnamed insiders as saying the UBS board and important shareholders such as the Singapore sovereign wealth fund still backed Gruebel, with immediate changes the last thing the bank needs and an obvious successor lacking.

CONFIDENCE, SECURITY, DISCRETION?

The bank, whose three keys logo symbolise "confidence, security, discretion," has for now pulled its "We will not rest" global advertising campaign that was designed by advertising agency Publicis to try to rebuild its image.

Meanwhile, UBS client advisers have been writing to customers to reassure them of the underlying financial strength of the bank despite the trading loss, a spokesman said.

"That we now suffer this setback at this point in our efforts to improve our reputation is very disappointing. This incident also sets us back somewhat in our capital-building efforts," Gruebel said in his memo to staff.

"However, I wish to remind you that our fundamental strengths as a firm remain intact... we remain one of the best-capitalised banks in the industry.

UBS said its board of directors had set up a committee chaired by independent director David Sidwell, former chief financial officer at Morgan Stanley, to conduct an independent investigation into the trades and the bank's control systems.

A source close to the bank said the trades involved positions with a notional value of about $10 billion.

The bank said it had covered the risk resulting from the unauthorised trades, and its equities business was again operating normally within previously defined risk limits.

It said the trader had allegedly concealed the fact his trades violated UBS risk limits by executing fake exchange-traded fund (ETFs) positions.

"Following inquiries directed to him by UBS control functions that were reviewing his positions, the trader revealed his unauthorised activity," the bank said.

ETFs are index funds listed on an exchange and can be traded just like regular stocks. They try to replicate index performances and offer lower costs than actively managed funds, but regulators have warned about risks from some complex ETFs.

The instruments involved in the UBS case are similar to those that Jerome Kerviel, the rogue trader at Societe Generale, traded when he racked up a $6.7 billion loss in unauthorised deals in 2008.

Christoph Blocher, vice-president of the right-wing Swiss People's Party (SVP) -- the country's biggest -- renewed his calls for a splitting off of the investment bank.

"One has to seriously examine a ban on investment banking for commercial banks," he told the SonntagsZeitung newspaper, adding his party might team up with the center-left Social Democrats to push for such a move.

(Reporting by Emma Thomasson and Silke Koltrowitz; Additional reporting by Steve Slater in London; Editing by David Hulmes and Peter Graff)

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Euro zone bond debate raises pressure on Merkel (Reuters)

BERLIN/FRANKFURT (Reuters) – Leading German business groups called on Monday for joint euro zone bond issuance, despite their government's opposition, and the European Central Bank showed its intent to defend Italy and Spain.

The ECB spent a record 22 billion euros ($31 billion) on government debt last week, to try to halt the spread of the euro zone debt crisis.

Spanish and Italian bond yields, which had soared to dangerous levels, fell back as a result of the central bank's support, which marked its first bond purchases for 19 weeks.

The ECB is keen to put the ball back in the court of euro zone governments, but despite some internal opposition stepped into a vacuum until the bloc's rescue fund acquires new powers to intervene in the secondary bond market.

Most experts say the latest measures will only buy some time whereas common bond issuance could solve the currency area's intractable debt crisis by allowing all its members to borrow at affordable rates.

But the idea of so-called "Eurobonds" has been fiercely opposed by Berlin, which is fearful such a step would push up German borrowing costs and reduce incentives for weaker euro zone members like Greece to reform their economies.

A German government spokesman was emphatic -- German Chancellor Angela Merkel and French President Nicolas Sarkozy will not discuss common euro zone issuance at a meeting in Paris on Tuesday because Berlin does not think it is a good idea.

"The German government has said on numerous occasions that it does not believe Eurobonds make sense and that's why they will not play any role at tomorrow's meeting," spokesman Steffen Seibert said.

However, a deepening of the debt crisis over the past weeks, with big member states like Italy, Spain and even France coming under pressure, has convinced some Germans to reconsider, even if top government officials continue to rule it out.

The president of Germany's BGA export association became the first senior industry head to back the idea, telling Reuters all other avenues for fighting the crisis had been exhausted.

"The alternative is the markets attack Italy, then France, we lose our AAA rating and then it's our turn. This is a downward spiral that would lead to a worldwide depression," Anton Boerner said in an interview.

"What have we achieved then?" Boerner said. "We'll end up paying three times over. This way we pay just once."

His view was backed by the head of Germany's trade association for small- and mid-sized companies, Mario Ohoven, who said Eurobonds could be introduced with guarantees to cap German liability. Other German trade groups remain opposed.

The head of the center-left Social Democrats, Sigmar Gabriel, also backed the idea, telling German public television station ARD late on Sunday that euro zone countries should be able to raise 50-60 percent of their funding through such joint issues if they agreed to certain conditions.

"States that use Eurobonds would have to agree to give up a degree of sovereignty over their own budgets," Gabriel said.

After unveiling tougher austerity plans in return for ECB help, Italian Economy Minister Giulio Tremonti said a common euro zone bond would stop markets forcing high-debt economies in the bloc to the brink. "We would not have arrived where we are if we had had the euro bond," he said at the weekend.

GOVERNANCE IN FOCUS

With common debt issuance off the agenda, Merkel and Sarkozy are instead expected to discuss improving economic governance.

Officials have said they could agree to regular meetings of euro zone leaders -- a longstanding French demand -- and enlarge the role of European Council President Herman van Rompuy to make him a spokesman for the euro.

These steps could bring greater policy discipline in the 17-nation bloc, which has regularly sowed confusion in the markets by talking with disparate voices, but are unlikely to assuage concerns about the high debt of certain countries in the bloc.

Both German Finance Minister Wolfgang Schaeuble and Economy Minister Philipp Roesler gave interviews over the weekend in which they spoke out against euro zone bonds.

German media reports have said a working group within Merkel's CDU party has been studying the idea of Eurobonds in greater detail, suggesting some may be open to it. But leading members of the party and other northern European member states, such as the Netherlands and Finland, remain vehemently opposed.

Merkel, whose popularity has sunk to its lowest level in nearly five years according to some recent polls, could face a revolt within her coalition and Germany's broader economic policy establishment if she agreed to joint bond issuance.

Her coalition partners, the Free Democrats (FDP) and the Bavarian Christian Social Union (CSU), are seen as dead-set against the idea.

The leadership of the FDP have set a meeting for Wednesday to discuss their stance on the euro crisis, while the Secretary-General of the CSU, the Bavarian sister party to Merkel's CDU, attacked the opposition SPD for its support of common bonds.

"The SPD must say what type of tax increases it wants to raise to get the umpteen billion euros for Eurobonds to aid Greece and other Dolce-Vita countries," Alexander Dobrindt said

in comments to business daily Financial Times Deutschland.

Boerner of the BGA said, however, that Eurobonds may be the only solution that can prevent the markets from launching new assaults on euro zone members.

"We must show the markets that we are ready to use the appropriate tools, and that means Eurobonds signed off by Germany," said Boerner. "We need Eurobonds with strict conditions attached. We need this and we need it fast."

(Additional reporting by Brian Rohan, writing by Noah Barkin, editing by Mike Peacock)

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Syrian siege of Hama raises humanitarian concerns (AP)

BEIRUT – Gunmen in plainclothes are randomly shooting people in the streets of the besieged Syrian city of Hama and families are burying their loved ones in gardens at home for fear of being killed themselves if they venture out to cemeteries, a resident said Thursday.

Military forces on Sunday launched an offensive against anti-government dissent in Hama and at least 100 people have been killed since, according to human rights groups. Phones, Internet and electricity have been cut or severely hampered for days. The resident told The Associated Press people are being forced to ration food and share bread to get by during the holy month of Ramadan, when many Muslims fast from dawn to dusk then celebrate with large, festive meals after sundown.

"People are being slaughtered like sheep while walking in the street," said the resident, who spoke by phone on condition of anonymity for fear of reprisals. "I saw with my own eyes one young boy on a motorcycle who was carrying vegetables being run over by a tank." He said he left Hama briefly through side roads to smuggle in food supplies.

The resident said around 250 people have been killed since Sunday. Hozan Ibrahim, of the Local Coordination Committees which tracks the crackdown on protesters, said up to 30 people may have been killed in Hama Wednesday only based on reports from fleeing residents. But neither of those numbers could be immediately verified.

Families have resorted to burying their loved ones in home gardens or roadside pits "because we fear that if we go to the cemetery, we will end up buried along with them," the resident said.

He said the army and pro-government gunmen known as "shabiha" have been shooting randomly at people and keeping food supplies from entering the city. He said he knew they are allied with the military because they sometimes walk behind soldiers and talk to them.

Activists have expressed concern about worsening humanitarian conditions in Hama, saying medical supplies and bread were in short supply even before the latest siege. Phones and Internet in Hama have been cut or severely hampered for at least two days. Electricity has been out or sporadic since Sunday.

Rami Abdul-Rahman, who heads the London-based Observatory for Human Rights, said some 1,000 families have fled Hama in the past two days, most of them to the village of Mashtal Hilu west of Hama and al-Salamieh to the east.

The siege of Hama is part of a new government offensive to put down the country's uprising against President Bashar Assad's authoritarian rule. Now in its fifth month, the protests have been gaining momentum in defiance of the military crackdown.

Hama, a city of 800,000 with a history of dissent, had fallen largely out of government control since June as residents turned on the regime and blockaded the streets against encroaching tanks. But Syrian security forces backed by tanks and snipers launched a ferocious military offensive that left corpses in streets Sunday and sent residents fleeing for their lives, according to residents.

In 1982, Assad's father, Hafez Assad, ordered the military to quell a rebellion by Syrian members of the conservative Muslim Brotherhood movement there. Hama was sealed off and bombs dropped from above smashed swaths of the city and killed between 10,000 and 25,000 people, rights groups say.

In other parts of Syria, security forces killed at least seven protesters overnight when they went out to demonstrate after special nighttime prayers for the Muslim holy month of Ramadan, activists said.

Assad has sought to deal with the extraordinary revolt against his family's 40-year-dynasty through deadly force, but has also acknowledged the need for reform.

On Thursday, he issued two legislative decrees that will allow the formation of political parties alongside the Baath Party and enable newly formed parties to run for parliament and local councils. Both draft bills were endorsed by Cabinet last month, and were key demands of the opposition movement. But opposition figures now dismiss the moves as maneuvering tactics and insist they want regime change.

On Wednesday, Syrian tanks stormed Hama under heavy shelling, taking over a main city square. Activists said authorities have effectively imposed a news blackout on the city by cutting cellular and land lines and Internet.

Phone calls by the Associated Press to the city on Thursday were not going through. Abdul-Karim Rihawi, Damascus-based chief of the Syrian Human Rights League, said there was no information coming out from Hama on Thursday.

"A high number of casualties is expected from such a massive military operation," he said.

Rihawi said that elsewhere in Syria, seven people were killed by security forces Wednesday night. Two protesters were shot dead in the Damascus central neighborhood of Midan, three in the southern village of Nawa and one in the ancient city of Palmyra. An 11-year-old boy was also killed when security forces opened fire on a protest in Talbiseh, near Homs, he said.

He said more than 60 Syrian children have died since the start of the protests in March.

The Local Coordination Committees confirmed the deaths.

Since Ramadan started on Monday, Muslims have been thronging mosques for the special nightly prayers after breaking their dawn-to-dusk fast. The gatherings have turned into large anti-government protests that draw fierce military force to try to break them up.

Abdul-Rahman said military operations were also under way in the central city of Homs, where heavy machine guns and automatic gunfire was heard throughout the night in the Bab Sbaa and Qalaa districts. At least 27 people have been arrested in security raids, he said.

Amateur videos posted by activists online showed dozens of people in Damascus' district of Midan clapping their hands and shouting: "We don't love you, Bashar!" and "Bashar, leave!" after emerging from the city's Daqaq Mosque. The footage, which activists said was taken Wednesday night, then shows chaos breaking out as gunfire is heard, and the camera zooms onto vehicles with bullet holes and smashed windows.

Another video also posted overnight showed a large group of people in Hama's Kfarzita district marching and shouting: "The people want to topple the regime."

The military offensive against Hama, 130 miles (210 kilometers) north of the capital Damascus, prompted the U.N. Security Council to act after months of deadlock.

A Council statement late Wednesday condemned Assad's forces for attacking civilians and committing human rights violations. It called on Syrian authorities to immediately end all violence and launch an inclusive political process that will allow the Syrian people to fully exercise "fundamental freedoms ... including that of expression and peaceful assembly."

British Foreign Secretary William Hague said the statement "demonstrates the rising international concern at the unacceptable behavior of the regime and shows that President Assad is increasingly isolated."

French Foreign Minister Alain Juppe called the statement "a turning point in the attitude of the international community" and said Syria must now halt the attacks and implement reforms.

About 1,700 civilians have been killed since the uprising began in mid-March, according to tallies by activists.

Authorities in Syria blame the unrest on a foreign conspiracy and armed extremists seeking to destabilize Syria, as opposed to true reform-seekers.

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Zeina Karam can be reached on http://twitter.com/zkaram

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