What is subprime crisis? How it caused financial mayhem?

Text: Rediff Business Desk

The current upheaval in the global financial markets has caused more mayhem in a fortnight than the world has seen in its entire economic history.

Although there are many reasons responsible for bringing the world to the doorstep of financial doom, the main cause of this financial disaster is said to be the �sub-prime loan.'

So what is this sub-prime loan? And why has it caused global panic? If it is related to the American housing sector, why should it affect Indian and other markets?

A sub-prime loan

Sub-prime mortgage loans (or housing loans or junk loans) are very risky. But since profits are high where the risk is high, a lot of lenders get into this business to try and make a quick buck.

Sub-prime loans are dicey as they are given to people with unstable incomes or low creditworthiness. These individuals are not financially sound enough to be given a loan when judged under the strict standards that should normally be followed by a bank or lending institution.

However, there's more to it. Let us simplify this issue to understand better how sub-prime loans work and how they brought the world down to its knees


It all begins with an American wanting to live the famed American dream.

So he seeks a housing loan to give shape to his dream home. But there is a slight problem. He doesn't have good credit rating. This means that he is unable to clear all the stringent conditions that a bank imposes on an individual before it sanctions a loan.

Since his credit is not good enough, no bank will give him a home loan as there is a fear that the chances of a default by him are high. Banks don't like customers who default on their payments.

But lo!, before the American dream can fade away, there enters a second American -- usually a robust financial institution -- who has good credit rating and is willing to take on some amount of risk.


Given his good credit rating, the bank is willing to give the second American a loan. The bank gives the loan at a certain rate of interest.

The second American then divides this loan into a lot of small portions and gives them out as home loans to lots of other Americans -- like the first American -- who do not have a great credit rating and to whom the bank would not have given a home loan in the first place.

The second American gives out these loans at a rate of interest that is much higher rate than the rate at which he borrowed money from the bank. This higher rate is referred to as the sub-prime rate and this home loan market is referred to as the sub-prime home loan market.

Also by giving out a home loan to lots of individuals, the second American is trying to hedge his bets. He feels that even if a few of his borrowers default, his overall position would not be affected much, and he will end up making a neat profit.

Now if this home loan market is sub-prime, what is prime? The prime home loan market refers to individuals who have good credit ratings and to whom the banks lend directly.

Now let's get back to the sub-prime market. The institution giving out loans in the sub-prime market does not stop here. It does not wait for the principal and the interest on the sub-prime home loans to be repaid, so that it can repay its loan to the bank (the prime lender), which has given it the loan.

So what does the institution do?

It goes ahead and �securitises' these loans. Securitisation means converting these home loans into financial securities, which promise to pay a certain rate of interest. These financial securities are then sold to big institutional investors.

Many investment banks (or institutions like the �second American' in our story) sold complicated securities that were backed by debt which was very risky.

And how are these investors repaid? The interest and the principal that is repaid by the sub-prime borrowers through equated monthly installments (EMIs) is passed onto these institutional investors.

With US interest rising, the EMIs too increased. Higher EMIs hit the sub-prime borrowers hard. A lot of them in the first place had unstable incomes and poor credit rating.

They, thus, defaulted. Once more and more sub-prime borrowers started defaulting, payments to the institutional investors who had bought the financial securities stopped, leading to huge losses.

The problem primarily began with the United States keeping its interest rates very low for a very long time, thus encouraging Americans to go in for housing loans, or mortgages. Lower interest rates led to buyers wanting to take on bigger loans, and thus bigger and better homes.

But life was fine. With the American economy doing well at that time and housing prices soaring on the back of huge demand for real estate and bigger and better homes, financial institutions saw a mouthwatering opportunity in the mortgage market.

In their zeal to make a quick buck, these institutions relaxed the strict regulatory procedures before extending housing loans to people with unstable jobs and weak credit standing.

Few controls were put in place to handle the situation in case the housing �bubble' burst. And when the US economy began to slow down, the house of cards began to fall.

The crisis began with the bursting of the United States housing bubble.

A slowing US economy, high interest rates, unrealistic real estate prices, high inflation and rising oil tags together led to a fall in stock markets, growth stagnation, job losses, lack of consumer spending, a virtual halt to new jobs, and foreclosures and defaults.

Sub-prime homeowners began to default as they could no longer afford to pay their EMIs. A deluge of such defaults inundated these institutions and banks, wiping out their net worth. Their mortgage-backed securities were almost worthless as real estate prices crashed.

The moment it was found out that these institutions had failed to manage the risk, panic spread. Investors realised that they could hardly put any value on the securities that these institutions were selling. This caused many a Wall Street pillar to crumble.

As defaults kept rising, these institutions could not service their loans that they had taken from banks. So they turned to other financial firms to help them out, but after a while these firms too stopped extending credit realizing that the collateral backing this credit would soon lose value in the falling real estate market.

Now burdened with tons of debt and no money to pay it back, the back of these financial entities broke, leading to the current meltdown.

The problem worsened because institutions giving out sub-prime home loans could easily securitise it. Once an institution securitises a loan, it does not remain on the books of the institution.

Hence that institution does not take the risk of the loan going bad. The risk is passed onto the investors who buy the financial securities issued for securitising the home loan.

Another advantage of securitisation, which has now become a disadvantage, is that money keeps coming in.

Once an institution securitises the first lot of home loans and repays the bank it has borrowed from, it can borrow again to give out loans. The bank having been repaid and made its money does not have any inhibitions in lending out money again.

Given the fact that institutions giving out the loan did not take the risk, their incentive was in just giving out the loan. Whether the individual taking the home loan had the capacity to repay the loan or not, wasn't their problem.

Thus proper due diligence to give out the home loan was not done and loans were extended to individuals who are more likely to default.

Other than this, greater the amount of loan that the institution gave out, greater was the amount it could securitise and, hence, greater the amount of money it could earn.

After borrowers started defaulting, it came to light that institutions giving out loans in the sub-prime market had been inflating the incomes of borrowers, so that they could give out greater amount of home loans.

By giving out greater amounts of home loan, they were able to securitise more, issue more financial securities and earn more money. Quite a vicious cycle, eh?

And so the story continued, till the day borrowers stop repaying. Investors who bought the financial securities could be serviced.

Well, that still does not explain, why stock markets in India, fell? Here's why. . .

Institutional investors who had invested in securitised paper from the sub-prime home loan market in the US, saw their investments turning into losses. Most big investors have a certain fixed proportion of their total investments invested in various parts of the world. So...

Once investments in the US turned bad, more money had to be invested in the US, to maintain that fixed proportion.

In order to invest more money in the US, money had to come in from somewhere. To make up their losses in the sub-prime market in the United States, they went out to sell their investments in emerging markets like India where their investments have been doing well.

So these big institutional investors, to make good of their losses in the sub-prime market, began to sell their investments in India and other markets around the world. Since the amount of selling in the market is much higher than the amount of buying, the Sensex began to tumble.

The flight of capital from the Indian markets also led to a fall in the value of the rupee against the US dollar.

Any other reason, apart from sub-prime crisis?

Of course! Sub-prime crisis alone could not have caused such mayhem, although it is to blame for the beginning of the end.

This crisis is spreading from sub-prime to prime mortgages, home equity loans, to commercial real estate, to unsecured consumer credit (credit cards, student loans, auto loans), to leveraged loans that financed reckless debt-laden leveraged buy outs, to municipal bonds, to industrial and commercial loans, to corporate bonds, to the derivative markets whose risk are indeterminate, etc.

It has been a total systemic failure that has its roots in the US real estate and the sub-prime loan market.

Note: Some analysts say that the worst might not be over. . .

These Wall St bosses took home over $1 bn!

What Would You do after reading this article as published in Rediff.com


Laugh a Loud


October 8, 2008

In the midst of a financial turmoil that has raised questions, among other things, about fat executive pay packets, a media report listed out 12 top Wall Street bankers who collectively took home over $1 billion (yes, $1 billion!) in the past five years.

The total take-home pay of the 12 bankers, current and former chiefs of some of the biggest names in the US financial space, stands at $1.053.15 billion during 2003-07, as per data compiled by The New York Times.


The report listed out Citigroup's India-born chief executive Vikram Pandit, JP Morgan Chase's James L Dimon and Goldman Sachs' Lloyd C Blankfein, among others.

Fuld, who is also the chairman of Lehman Brothers, took home $256.41 million.

'As recently as June 2008, Fuld said he was confident that Lehman was sound even as the bank posted a second-quarter loss of $2.8 billion. But, on September 15, Lehman filed for bankruptcy and began sliding towards an eventual liquidation,' the report said.

According to the report prepared with data provided by executive compensation research firm Equilar, Bank of America chairman and chief executive Kenneth D Lewis took home $133.36 million, while Dimon pocketed $108.72 million.

However, Pandit's salary is calculated only for a month, since he joined the banking behemoth only in December 2007. He received a compensation of $250,000 in that month.

Blankfein, chief executive and chairman at Goldman Sachs, pocketed $102.74 million.

Interestingly, at the investment banking giant, Blankfein replaced Henry Paulson Jr, the current US treasury secretary.

Meanwhile, former chief executive and chairman of Morgan Stanley Philip J Purcell had a take-home pay of $95.18 million. He resigned from the post in June 2005.

Current chairman and chief executive of Morgan Stanley John J Mack had a total compensation of $41.15 million. J P Morgan Chase's former chairman William B Harrison Jr had a compensation of $71.2 million.

According to the New York Times, Merrill Lynch's former chief executive and chairman E Stanley O'Neal pocketed $80.96 million during 2003-07, while the present chief executive and chairman John A Thain pocketed $15.06 million.

Charles O Prince, the former chief executive and chairman of Citigroup, had a compensation of $65.45 million. He became the chief executive in October 2003 and resigned as CEO and chairman in November 2007.

Alan Schwartz, former chief executive and chairman of Bear Stearns, which was taken over by JP Morgan a few months back, received a total compensation of $82.53 million.

Maya's U-turn, returns Rae Bareli land for rail coach factory

Rediff NEWS

October 18, 2008 20:32 IST

Making a U-turn, the Mayawati government in Uttar Pradesh on Saturday decided to return the land in Rae Bareli for construction of a rail coach factory, an issue on which she had a high-pitched spat with Congress President Sonia Gandhi during the week.

"The Cabinet has decided to give 189.25 hectares of land, which was with the state government, to the Centre for the Rail Coach Factory.

"This was done so that they don't blame us later and the dirty political game Congress is playing over this land, gets buried in this land in Rae Bareli," she told a press conference on Saturday.

Last Saturday, the state government had cancelled the allotment of the land for the coach factory for which Gandhi and Railway Minister Lalu Prasad had planned to go to Rae Bareli on Tuesday and lay the foundation stone.

While the function was cancelled, Gandhi went to Lalganj, where the factory is to be located in her parliamentary constituency Rae Bareli, and charged the Mayawati government with putting hurdles in development programmes.

She made the visit defying prohibitory orders and declared she was ready to go to jail for the sake of development.

The next day, Mayawati hit back at Gandhi saying she made a drama of going to jail without any reason and accused the Congress of placing roadblocks in development.

Lok Sabha Elections 2004: Results at a Glance

Lok Sabha Elections 2004: Results at a Glance

http://www.rediff.com/election/ls04detail.htm#oth

How educated our PM's are -A rediff survey

Dr Manmohan Singh, who will be sworn in as prime minister this weekend, is the most highly qualified occupant of the prime minister's office.

How do his predecessors compare with him?

Dr Manmohan Singh



MA, D Phil (Oxford). Educated at the Universities of Panjab, Cambridge and Oxford. Winner of the University Medal for standing first in BA (Hons), Economics, Panjab University, Chandigarh, 1952; the Uttar Chand Kapur Medal, Panjab University, Chandigarh, for standing first in MA (Economics) 1954; Wright's Prize for distinguished performance at St John's College, Cambridge, 1956 and 1957; Adam Smith Prize, University of Cambridge 1956.





Atal Bihari Vajpayee




Educated at Victoria (now Laxmi Bai) College, Gwalior, and DAV College, Kanpur. Vajpayee holds an MA in political science.



Inder Kumar Gujral



MA, BCom.





H D Deve Gowda


Diploma in civil engineering.






P V Narasimha Rao




B Sc, LLB, Sahitya Ratna. Educated at Fergusson College, Pune, and Nagpur University.





Chandra Shekhar




MA in Political Science from Allahabad University.




V P Singh




BA, BSc, LL.B. Educated at Allahabad and Poona University.



Rajiv Gandhi



Went to Trinity College, Cambridge, but soon shifted to the Imperial College in London. He did a course in mechanical engineering. Short stint at the London School of Economics.




Charan Singh




Science graduate, 1923, and post-graduate from Agra University in 1925. Also trained in law.



Morarji Desai



Graduate from Wilson College in the then Bombay province in 1918.





Indira Gandhi



Studied at Ecole Nouvelle, Bex (Switzerland), Ecole Internationale, Geneva, Pupils' Own School, Poona and Bombay, Badminton School, Bristol, Vishwa Bharati, Shantiniketan and Somerville College, Oxford. No documented degree. Honorary doctorates from a host of Indian and foreign universities.


Lal Bahadur Shastri



Gave up studies at 16 to respond to Mahatma Gandhi's call for satyagraha. Bachelor's degree (Shastri) from Kashi Vidyapeeth in Varanasi.




Gulzarilal Nanda



Twice caretaker prime minister (May 27 to June 9, 1964 and January 11 to 24, 1966). Educated at Lahore, Agra and Allahabad. Research scholar on labour problems at the University of Allahabad. Professor of Economics at National College in Bombay province.




Jawaharlal Nehru



Went to Harrow, the famous public school in England. at 15. Then went to Cambridge for his tripos (a degree course at Cambridge is called a tripos after the three-legged stool on which the student traditionally sits to give his oral exam) in natural sciences. Called to the Bar from Inner Temple.

'Once elections are announced everyone will fall in line' - The Rediff Interview/T S Krishnamurthy, former election commissioner

T S Krishnamurthy was Chief Election Commissioner from February 2004 to May 2005, and it was on his watch that the 2004 Lok Sabha elections were held. As the nation debates the desirability of elections in Jammu and Kashmir [Images], Contributing Editor Shobha Warrior spoke to Krishnamurthy, whose book The Miracles of Democracy --India's Amazing Journey has just been published -- about the issue.
Lok Sabha elections are round the corner. Many states, including Jammu and Kashmir, also go to polls at the same time. Separatist activities are on the rise in J&K. Several serial blasts have occurred in the last few weeks in various parts of India. Do you think the situation is right to hold elections in India?

The elections have to be conducted according to the provisions of the Constitution. Every House has a five-year tenure unless it is dissolved earlier. By the time the tenure is over, you have to conduct the elections.

The last Lok Sabha elections took place some time in April 2004. By May 2009, we have to complete the elections as far as the constitutional provision is concerned. But if the government chooses to dissolve the House, the consequence is, there is a time limit between the last sitting of the House and the convening of the new House which cannot be more than six months. So, suppose they dissolve the House some time in November, then by May, they have to conduct the elections. So, the timing of the conduct of the elections is fairly clear.

The EC normally takes into account many things like school holidays as schools are necessary for conducting the elections. Also taken into consideration are the regional festivities. Like, last time, we had the Kumbh Mela, so we had to adjust the dates for Madhya Pradesh [Images] differently.

The EC doesn't like to interfere with the entrance examinations like the IIT-JEE. We also take into account climatic considerations. For example, in Himachal Pradesh [Images] and J&K, there are practical difficulties in winter.

We have had floods in Orissa, Bihar, etc. If such conditions occur when elections take place, will the Election Commission postpone the elections?

No, elections cannot be postponed because there are constitutional provisions. The only way it can be postponed is, you impose President's rule during the period and elections can be conducted when President's rule is in place. So, there is very little choice as far as the timing is concerned except when a House is dissolved prematurely.

Is it that the tenure of this House cannot go beyond May...

Yes. It cannot go beyond May. By and large, this is the principle followed by the Election Commission.

Who has the say in deciding the timing of the elections? Suppose the Election Commission decides on a date and if the government opposes it?

The government has very little role to play as far as timing of the elections is concerned. As I said, within the constitutional provisions, the Election Commission decides the dates. Whether it is going to be a two-phase or a three-phase election, depends on the availability of the paramilitary forces, etc. They may consult the government about the law and order situation, local holidays, etc but the final decision is that of the Election Commission.

You spoke about the law and order situation. If we take the separatist activities in Jammu and Kashmir, for example, and the violence that is going on there, how will the Election Commission go about conducting the elections in such a situation?

We have conducted elections in even the most difficult times when the militancy was very high. It is not that elections cannot be conducted but we have to take reasonable precautions in conducting the elections.

What are the precautions?

Like people should feel free to come and exercise their franchise. If you have a situation where it is impossible for people to come, then the best remedy will be to dissolve the House and impose President's rule. By the time the President's rule is completed, elections are conducted.

How do you look at the present violent situation in Kashmir? Is it conducive to elections?

Some of these happenings are political and election-oriented. Once the election is announced, all these people will fall in line. This may be some kind of tactic to say that elections cannot be conducted. But as far as the Election Commission is concerned, I am sure they will go by the dates as prescribed in the Constitution.

Unless there is a real fear that voters will not be able to come out to vote, the EC goes ahead with the polls. With the help of the paramilitary forces, we have been conducting elections. Even during the 1996 Kashmir elections, the situation was pretty bad; still we conducted the elections. The voting percentage was not very high in some places.

The EC conducts elections in five or six phases depending upon the ground conditions there. But the Commission will not be scared of any such activities.

During your tenure as Chief Election Commissioner, which place did you find the most difficult to conduct elections?

My major election was the Parliament elections in 2004 throughout the country. The other was the Bihar and Haryana assembly elections. We had some difficult times there; fortunately we were able to conduct without any major problems. There were some disturbing trends like the chief minister of Haryana being attacked, etc. In Bihar, we had a lot of problems. In the end, everything went off well.

As the Chief Election Commissioner, did you have to look at different states differently?

We have to. In states like Maharashtra, Rajasthan, Himachal Pradesh, Gujarat or Kerala [Images], we don't see much of violence or managerial problem though they make a lot of noise. But in states like Bihar and UP, we have problems.

So, in Maharashtra, Tamil Nadu, Kerala, etc sometimes we conduct elections in a single day. There has been no re-poll in Maharashtra at all so far. So, some states are more peaceful than the others.

In some states, we had Naxalite activities. So, we had to deploy more paramilitary forces there. Sometimes, in some places in AP, Bihar, Jharkhand, etc, we took the police personnel by helicopter.

Do you generally opt for more than one-phase election when you find the situation is not peaceful?

Generally, yes. We had more than one-phase elections where we anticipated violence or political confrontation. Even geography is one of the reasons for multi-phase elections. When Assam had Bihu festival for a week, we conducted the elections in more than one phase last time.

You mean it doesn't depend on the size of the state at all?

Yes, generally it doesn't depend on the size of the state but UP because of its size and also because of its problems, we had to have more phases.

Is it because you need more paramilitary forces that you spread elections to many phases?

Yes, the main reason is the lack of adequate forces.

When you compare conducting elections in Kashmir and Bihar, which was the toughest?

Difficult to say, actually. Except for the militancy-related violence and separatist groups boycotting the elections, we didn't have major problems in Kashmir. On the other hand, in Bihar, we had a lot of political confrontation between parties. In UP also, we had similar problems.

Is it because of the fear of extremists that people do not come out to vote in large numbers in Kashmir? It had always had very poor voter turnout.

In fact, in the last Parliament and assembly elections, the percentage of voting was very high compared to the earlier elections. We had adopted a number of special steps so that people came out to vote. We had brought Urdu-knowing people from UP to man 50 per cent of the polling stations. For example, if there were four people manning a polling station, two were from outside the state.

We didn't have many problems but we had special managerial problems like transporting Urdu teachers from Lucknow by Air Force planes to Srinagar [Images] and disperse them. We had to also provide protection to these people.

If you were the CEC now, how would you look at the current situation in India?

There are disturbing trends in some states like violence, militancy, terror attacks, natural calamities, etc. But it is not insurmountable. I am sure the EC will be able to manage the situation. Instead of taking one month, they may take two months to conduct the elections. The EC is so well organised now that they can face any situation without any problem.

When you have opinion polls and exit polls, is conducting elections in a prolonged manner good because these polls affect and influence the mindset of the people?

You are right. Ideally an election should be conducted in a day's time or a week's time. Fortunately we still have good officers who can enforce discipline. By and large, you can say the elections are fair and free.

Thanks to Mr T N Seshan, he set up a high tradition.

Till Seshan took over, people of India were not aware of the fact that the CEC had so much power...

You are right. There is a Supreme Court judgment that the Chief Election Commissioner cannot throw his hands up and appeal to God that he is helpless and divine help should come. The Constitution has given him all the powers to conduct free and fair elections. If there is no legal provision supporting him, whatever he says is the law. There are hidden reservoirs of powers where there is a legislative vacuum. Mr Seshan realised the full fact of this judgement and he started exercising it. 1991 was the turning point.

We tried to uphold and sometimes improve upon it and we had been able to enforce the code of conduct with a little more strictness. We received admiration from all over. It is not that we are patting ourselves on the back.

During the period of election, how do the political parties and politicians look at the powerhouse that is the Election Commission?

They know the EC is powerful during that period -- from the announcement of the date of elections till the announcement of the result of the elections. By and large, they behave. They do create problems too sometimes, but then immediately we assert our rights.

Do you consider Indian elections are relatively fairly conducted?

I can say by and large, it is fair and free. At least 80-90 pc we are fair and free. I will put it this way -- among the election commissions existing in many countries, India has one of the very few ones that are very independent.

Which country, according to you, conducts the fairest elections?

Australia [Images] is one of the countries where elections are fairly well conducted. Germany [Images] also. Maybe there are small countries too.

Though we are a subcontinent, the problems we face are continental in size! Considering the size of the population, language, communal and geographical differences and problems faced by the EC, it is probably the best.

Your book The Miracle of Democracy -- India's Amazing Journey has just released. Why did you decide to write a book?

I thought my experiences with regard to civil servants and politicians have a message to convey. I had situations where I had to strongly differ with the ministers. At one stage, I even thought I would put in my papers. I must say the government supported me. The minister went but I didn't go! There are a number of such incidents in my career. I feel there is an obnoxious nexus between civil servants and politicians which I feel we should arrest.

Similarly we have proliferation of political parties based on language, religion and what not. It is high time there are some changes in the election system. Today, whoever gets the maximum number of votes gets elected. Persons with even 10 pc votes can get elected. So, in my book I have suggested this system should change.

In what way should it change?

It could be proportional representation, or it could be what is known as mixed system where 50 pc is voted on this basis and the remaining 50 pc in the list system. It is there in Germany, Palestine etc where a national list is prepared where there will be a list of 40-50 people. You can tick and whoever gets the maximum votes will represent the country and not the constituency.

A change is necessary in India as I feel there is a threat to the unity and integrity of India. Unfortunately, the political parties are not taking the need for electoral reforms seriously.

Who is the real Rahul Mahajan? - Son of Pramod Mahajan a future leader or a demagaouge?

The latest issue of Showtime promises to be an explosive one. For one, it has Shweta, Rahul Mahajan's ex-wife opening up on her divorce, and her ex-husband's relationship with Payal Rohatgi on Bigg Boss 2.
Here is an excerpt from the interview from Showtime magazine:

It's the biggest show of the season and it's making all the waves that one expected. What was not expected was someone like Rahul Mahajan turning out to be the scene-stealer of the show.

Bigg Boss has all the spice; all the drama and it's Rahul who makes everything so interesting with his sometimes endearing and sometimes shocking antics.

The inmates of the house have been trying to get rid of Rahul for a while now but have been unsuccessful so far. Whether it's his political clout that's holding him back or the genuine affection that viewers seem to have developed for him, one doesn't really know. But there's no denying that he is the strongest contender for the winning post.




Of 13 years of courtship and two months of marriage


We don't know if this is the real Rahul Mahajan or if the guy is just fooling all of us with his clever and scheming ways. The only person who probably knows this best is his childhood friend and ex-wife Shweta.
One may recall that after a long courtship, when Rahul and Shweta finally decided to get married, it was a celebration of sorts.

They had known each other for 13 long years; they even learnt flying together in the United States. It seemed like a perfect match but the truth was something else. Just like everyone was surprised with the timing of the marriage (it happened just three months after the untimely death of Rahul's father, Pramod Mahajan), there were murmurs about the chinks in their relationship even before the couple had settled into matrimony.

The reports were further substantiated when just after two months of living together with Rahul, Shweta shifted back to her parents' home.

Shweta Mahajan, now Shweta Singh, is still trying to come to terms with her divorce. She is strong, independent and sensitive; though at times, she seems a bit unreal too. Right now, she has many plans to discuss and is looking forward to a new lease of life but she wants to do it all differently and quietly.

'Rahul is a nice person but a little impulsive by nature'


When talking about the real Rahul; not necessarily the one we see on Bigg Boss, Shweta is candid enough when she says, "Ketaki Dave, while talking to someone on the show, has already mentioned that everyone is acting here. I am quite convinced with her views. Unlike others, I do not want to go in front of the camera and do some kind of acting. I am not interested in doing so. I do not require any kind of medium to highlight myself and talk about my personal life. Besides this, it is painful to scratch a wound repeatedly. It hurts me always," she says.
It's time to get specific with Shweta -- is this the real Rahul Mahajan, we ask her. She gives it a thought and then answers, "Rahul is a nice person but a little impulsive by nature. It is a little surprising to see that he has changed so soon. It may be all because of the cameras around him all the time... Everybody is there with some kind of an image. Everybody is acting and trying to clear up their mess. Therefore, I cannot comment particularly on anyone."

'I have no clue whether he is going to marry Payal or not'


We've seen Rahul and others excitedly cleaning bathrooms, washing utensils and sweeping the floor in the Bigg Boss house. Shweta believes the excitement is only for effect.
"It is good that the participants of the show are given tasks to perform and they are doing them... Most of them are just pretending. They do not do these things at home but they are doing it here just for the show. Everyone here seems to be very good at acting."

Of late, Rahul's intimacy with Payal Rohatgi is beginning to bloom on the show. Shweta prefers to uphold her dignity when she says, "I don't need to say anything on this. The media knows better about all this -- who he's moving around with and so on. There were media reports that he was seen with Payal in Sai Mandir in Mumbai. It is for him to react on this, if he wants to. Payal herself has said that she is in a relationship with him for the last six years, which I am completely unaware of. I have no clue whether he is going to marry Payal or not. That is their decision, which needs to be taken by them. All I can say is that what he is right now is completely different from what he used to be 10 years ago."

'I cannot talk much about my life because there are people who are staring at me all the time'


The sad part is that Shweta is still plagued with the distressing episode of her marriage.
She cannot hide her plight when she says, "I cannot talk much about my life because there are people who are staring at me all the time. I have to be a bit conscious about my words. Here, the condition is such that it's the survival of the fittest. I do not want to break the balance or harmony."



This is upto us now to decide wheather we want such leaders in our parliament or out of that......

How China could wreck the US economy - M R Venkatesh - (RediffNews)

October 06, 2008

The recent bailout package being approved in the US Congress needs to be viewed in the context of the spurt in the accumulation of forex reserves of China by about $500 billion in the last six months to about $2 trillion in aggregate.

This gargantuan build-up of forex reserves by China has strangely received very little attention of economists, policy analysts, currency traders and, of course, geo-strategists around the world.

Why is China engaged in this exercise? What could be its implications on the on going global financial crisis? Could China trip the bailout package announced by the US last week? Crucially what are the implications for the existing global order?

What is intriguing in the Chinese forex reserve build-up is that both trade surplus and foreign direct investment account only for a part of this gargantuan pile. After adjusting for all known sources of reserve accretion, experts conclude that approximately an excess of $200 billion could have flown into China as 'hot money' -- read inexplicable flow of funds -- in this period.

The Economist -- in one of its issue in recent months -- quotes Michael Pettis, an economist working in China, who explains how and why hot money flows into China. According to Pettis, hot money comes into China when companies overstate FDI and over-invoice exports.

But where is such money getting parked in China? The Chinese stock market, like many of its counter parts across the globe, continues to plunge. Hence, it may not be an attractive destination for hot money. Some experts suggest that it could have gone into property while the predominant view is that it could simply be the Chinese banks that offer interest rates in excess of 4 per cent on yuan deposits compared with a lower rate on dollars.

How a 2 per cent interest rate differential results in such cross-border flow of capital requires some explanation. What makes the dollar-yuan exchange rates central to any discussion on global finance is the fact that trade between the United States and China has burgeoned in the past decade or so. But this is not a two-way trade as would be commonly believed. Most of this is unilateral -- i.e. exports from China to the US.

In fact, this is the fundamental reason for the burgeoning current account surplus that in turn translates into China's forex reserves. In the process, over the years, the US has become extremely dependent on China not only for supplying cheap goods but also for the Chinese to fund such imports by parking their forex surplus within the US.

This twin-dependency on the Chinese for goods and money to finance its deficits has always engaged the attention of the US policy framers who till recently were not at all comfortable with this arrangement. And now added to this is the latest aggressive build-up of forex reserves by China surely has the Americans in a bind.

The economics behind Chinese yuan

Economists in the US till recently believed that a weak yuan implicitly subsidises the Chinese exports leading to such huge trade imbalances between the two countries. Consequently, they have been pointing out to the imperative need for a substantial appreciation of the yuan by a minimum of 20-25 per cent vis-a-vis the US dollar to remedy the situation. In the alternative they have suggested a countervailing duty of a similar scale on imports from China.

Further, economists are of the opinion that by constant intervention in the forex market not only does the Chinese Central Bank ensure a weak yuan it also causes competitive devaluation of various currencies in Asia.

The net consequence is a domino effect with the result that the US dollar is artificially valued at higher-level vis-a-vis most Asian currencies. Experts believe that a significant yuan revaluation will ensure a more realistic exchange rate mechanism in Asia as it could force other countries to follow suit.

It is in this connection that C Fred Bergsten of the Peterson Institute, in a testimony before the hearing on the Treasury Department's Report to Congress on International Economic and Exchange Rate Policy in early 2007, states: "By keeping its own currency undervalued, China has also deterred a number of other Asian countries from letting their currencies rise very much against the for fear of losing competitive position against China."

Naturally, in anticipation of a significant revaluation of the yuan, most experts believe given the uncertainty associated with the global financial markets that hot money is flowing to a relatively safe destination. After all, China not only offers higher return but also is virtually insured against any downward movement against the US dollar.

In effect, is this hot money flowing into China in anticipation of this revaluation of the yuan? Or is it a simple case of China maintaining trade competitiveness through a weak yuan? Or is there something more to it than meets the eye? Are the Chinese acquiring the dollars with some sinister motive? In effect, has the Chinese strategy of a weak currency over the years the un-stated policy of dynamiting the American economy?

Mutually Assured Destruction (MAD)

What is worrying the Americans is that China accounts for about one-fourth of the global forex surpluses and are the counterparts of the US current account deficit. Put simply, while China accumulates forex reserves, the US accumulates a corresponding debt. And the Americans are aware that it is the Chinese are the biggest accumulators of the US treasury bonds.

What is indeed intriguing is that a country -- the US -- that prides on being 'independent' of other countries, especially in security affairs, is now caught in a quagmire as it has to be constantly in the good books of the Chinese government if it wants to avoid a sudden shock.

Countries that hold large US dollar denominated forex reserves have a powerful tool in their arsenal -- they could wreck American financial markets at a mere click of a mouse by selling their dollar holdings. Imagine China with a holding nearly $2 trillion worth of treasury bonds seceding to sell the same overnight.

And that could instantaneously dynamite the global financial system as it could suck out liquidity and cause interest rates to shoot through the roof. Remember, the $700 billion package announced last week by the US is precisely aimed at addressing the liquidity crunch within the US.

China, of course, might have no sinister intent, as this would be at a huge cost. But the Chinese know that no country can ever become a global superpower without a cost. As and when the Chinese decide to take a hit on their dollar holdings, global finance could indeed take a roller coaster ride.

Obviously, the Americans' borrowing from China and the Chinese supply of money to the US is indeed an intriguing geo-political game. Surely, this cannot be simple economics by any stretch of imagination.

Given this paradigm, till date experts opine that both are locked in a tight bear hug. According to Lawrence Summers, 'It is a new form of mutually assured destruction that has quietly emerged over the last few years. This implies that China needs the US (for its exports and to park its forex reserves) as much as the US needs China (for imports and borrowings).

So have the Americans played into the hands of Chinese?

Recent events in the US have turned this 'MAD paradigm' upside down. It is in this context that the recent bailout package needs to be viewed, which seeks to increase liquidity over a period of time by the US government taking over sub-prime assets from financial institutions. That, according to the American thinking, is expected to provide liquidity to the US economy.

But it is all these happenings within the US that makes this accumulation of forex reserves by China extremely interesting. It may be noted that the Chinese, unlike the others, have always questioned the global order with the US at the helm of affairs. And the Chinese accumulation of forex reserves is surely a strategy that perhaps has an ominous side to it.

All this is not pure economics as it is made out to be. Rather, it was and remains a well-planned economic, political and military strategy of the Chinese. And in a way it is the mirror image of the Star Wars programme that the then US President Reagan unleashed on the erstwhile USSR in the early eighties that eventually bankrupted the later within a few years as it engaged in competitive arms build-up with the former.

Statecraft is all about engaging other countries at one's own terms, pace, time and cost. This is what the US did to the USSR in the eighties and succeeded in dynamiting that country. And that is what China could do to a vulnerable US in the coming months. Crucially, if it doesn't, from the Chinese perspective it might well rue this moment forever.

The US till date was depending on the Chinese for imports and to finance them as well for such imports. Now they will have to be considerably dependent on the Chinese to protect their currency as well as to ensure liquidity in their money markets. And that completely alters the existing global order.

1 Chinese yuan = Rs 6.9160
1 US dollar = yuan 6.8527

Full Text of the Starr Report

Full Text of the Starr Report

WARNING: The following report contains sexually explicit language.



The following text was delivered by the Office of the Independent Counsel to the U.S. House of Representatives. The conversion to HTML has altered the pagination and format. The original table of contents is not provided.


Table of Contents


Chronology


Table of Names
The Principals
The First Family
Presidential Aides/Advisors/Assistants
Other White House Personnel
Department of Defense Employees
Monica Lewinsky's Friends/Family/Acquaintances
Monica Lewinsky's New York Employment Contacts
Secret Service
Lawyers and Judges
Media
Foreign Dignitaries
Other


Introduction
Factual Background
The Investigation
The Significance of the Evidence of Wrongdoing
The Scope of the Referral

1. Background of the Investigation.
2. Current Status of the Investigation.

The Contents of the Referral


Narrative
I. Nature of President Clinton's Relationship with Monica Lewinsky

A. Introduction
B. Evidence Establishing Nature of Relationship

1. Physical Evidence
2. Ms. Lewinsky's Statements
3. Ms. Lewinsky's Confidants
4. Documents
5. Consistency and Corroboration

C. Sexual Contacts

1. The President's Accounts

a. Jones Testimony
b. Grand Jury Testimony

2. Ms. Lewinsky's Account

D. Emotional Attachment
E. Conversations and Phone Messages
F. Gifts
G. Messages
H. Secrecy

1. Mutual Understanding
2. Cover Stories
3. Steps to Avoid Being Seen or Heard
4. Ms. Lewinsky's Notes and Letters
5. Ms. Lewinsky's Evaluation of Their Secrecy Efforts


II. 1995: Initial Sexual Encounters

A. Overview of Monica Lewinsky's White House Employment
B. First Meetings with the President
C. November 15 Sexual Encounter
D. November 17 Sexual Encounter
E. December 31 Sexual Encounter
F. President's Account of 1995 Relationship


III. January-March 1996: Continued Sexual Encounters

A. January 7 Sexual Encounter
B. January 21 Sexual Encounter
C. February 4 Sexual Encounter and Subsequent Phone Calls
D. President's Day (February 19) Break-up
E. Continuing Contacts
F. March 31 Sexual Encounter


IV. April 1996: Ms. Lewinsky's Transfer to the Pentagon

A. Earlier Observations of Ms. Lewinsky in the West Wing
B. Decision to Transfer Ms. Lewinsky
C. Ms. Lewinsky's Notification of Her Transfer
D. Conversations with the President about Her Transfer

1. Easter Telephone Conversations and Sexual Encounter
2. April 12-13: Telephone Conversations


V. April-December 1996: No Private Meetings

A. Pentagon Job
B. No Physical Contact
C. Telephone Conversations
D. Public Encounters
E. Ms. Lewinsky's Frustrations


VI. Early 1997: Resumption of Sexual Encounters

A. Resumption of Meetings with the President

1. Role of Betty Currie

a. Arranging Meetings
b. Intermediary for Gifts
c. Secrecy

2. Observations by Secret Service Officers

B. Valentine's Day Advertisement
C. February 24 Message
D. February 28 Sexual Encounter
E. March 29 Sexual Encounter
F. Continuing Job Efforts


VII. May 1997: Termination of Sexual Relationship

A. Questions about Ms. Lewinsky's Discretion
B. May 24: Break-up


VIII. June-October 1997: Continuing Meetings and Calls

A. Continuing Job Efforts
B. July 3 Letter
C. July 4 Meeting
D. July 14-15 Discussions of Linda Tripp
E. July 16 Meeting with Marsha Scott
F. July 24 Meeting
G. Newsweek Article and Its Aftermath
H. August 16 Meeting
I. Continuing Job Efforts
J. Black Dog Gifts
K. Lucy Mercer Letter and Involvement of Chief of Staff
L. News of Job Search Failure


IX. October-November 1997: United Nations' Job Offer

A. October 10: Telephone Conversation
B. October 11 Meeting
C. October 16-17: The "Wish List
D. The President Creates Options
E. The U.N. Interview and Job Offer
F. The U.N. Job Offer Declined


X. November 1997: Growing Frustration

A. Interrogatories Answered
B. First Vernon Jordan Meeting
C. November 13: The Zedillo Visit
D. November 14-December 4: Inability to See the President


XI. December 5-18, 1997: The Witness List and Job Search

A. December 5: The Witness List
B. December 5: Christmas Party at the White House
C. December 6: The Northwest Gate Incident

1. Initial Visit and Rejection
2. Ms. Lewinsky Returns to the White House
3. "Whatever Just Happened Didn't Happen"

D. The President Confers with His Lawyers
E. Second Jordan Meeting
F. Early Morning Phone Call
G. Job Interviews


XII. December 19, 1997 - January 4, 1998: The Subpoena

A. December 19: Ms. Lewinsky Is Subpoenaed
B. December 22: Meeting with Vernon Jordan
C. December 22: First Meeting with Francis Carter
D. December 23: Clinton Denials to Paula Jones
E. December 28: Final Meeting with the President
E. December 28: Concealment of Gifts
D. December 31: Breakfast with Vernon Jordan
E. January 4: The Final Gift


XIII. January 5-January 16, 1998: The Affidavit

A. January 5: Francis Carter Meeting
B. January 5: Call from the President
C. January 6: The Draft Affidavit
D. January 7: Ms. Lewinsky Signs Affidavit
E. January 8: The Perelman Call
F. January 9: "Mission Accomplished"
G. January 12: Pre-Trial Hearing in Jones Case
H. January 13: References from the White House
I. January 13: Final Jordan Meeting
J. January 13-14: Lewinsky-Tripp Conversation and Talking Points
K. January 15: The Isikoff Call
L. January 15-16: Developments in the Jones Law Suit


XIV. January 17, 1998-Present: The Deposition and Afterward

A. January 17: The Deposition
B. The President Meets with Ms. Currie
C. January 18-19: Attempts to Reach Ms. Lewinsky
D. January 20-22: Lewinsky Story Breaks

1. "Clinton Accused"
2. Denials to Aides
3. Initial Denials to the American Public
4. "We Just Have To Win"



Grounds
There is Substantial and Credible Information that President Clinton Committed Acts that May Constitute Grounds for an Impeachment

Introduction

I. There is substantial and credible information that President Clinton lied under oath as a defendant in Jones v. Clinton regarding his sexual relationship with Monica Lewinsky.

(1) He denied that he had a "sexual relationship" with
(2) He denied that he had a "sexual affair" with Monica
(3) He denied that he had "sexual relations" with Monica
(4) He denied that he engaged in or caused contact with the
(5) He denied that he made contact with Monica Lewinsky's

A. Evidence that President Clinton Lied Under Oath During the Civil Case

1. President Clinton's Statements Under Oath About Monica Lewinsky
2. Monica Lewinsky's Testimony

(i) Wednesday, November 15, 1995
(ii) Friday, November 17, 1995
(iii) Sunday, December 31, 1995
(iv) Sunday, January 7, 1996
(v) Sunday, January 21, 1996
(vi) Sunday, February 4, 1996
(vii) Sunday, March 31, 1996
(viii) Sunday, April 7, 1996
(ix) Friday, February 28, 1997
(x) Saturday, March 29, 1997
(xi) Two Subsequent Meetings

3. Phone Sex
4. Physical Evidence
5. Testimony of Ms. Lewinsky's Friends, Family Members, and Counselors

(i) Catherine Allday Davis
(ii) Neysa Erbland
(iii) Natalie Rose Ungvari
(iv) Ashley Raines
(v) Andrew Bleiler
(vi) Dr. Irene Kassorla
(vii) Linda Tripp
(viii) Debra Finerman
(ix) Dale Young
(x) Kathleen Estep

6. Summary


II. There is substantial and credible information that President Clinton lied under oath to the grand jury about his sexual relationship with Monica Lewinsky.

A. Background
B. The President's Grand Jury Testimony
C. Summary


III. There is substantial and credible information that President Clinton lied under oath during his civil deposition when he stated that he could not recall being alone with Monica Lewinsky and when he minimized the number of gifts they had exchanged.

A. There is substantial and credible information that President Clinton lied under oath when he testified that he could not specifically recall instances in which he was alone with Monica Lewinsky.

1. The President's Civil Deposition Testimony
2. Evidence That Contradicts the President's Testimony
3. The President's Grand Jury Testimony
4. Summary

B. There is substantial and credible information that the President lied under oath in his civil deposition about gifts he exchanged with Monica Lewinsky.

1. The President's Civil Deposition Testimony About His Gifts to Monica Lewinsky
2. Evidence that Contradicts the President's Civil Deposition Testimony
3. President's Civil Deposition Testimony About Gifts from Monica Lewinsky to the President
4. Evidence that Contradicts the President's Testimony

(i) Monica Lewinsky's Testimony

5. Grand Jury Testimony of the President and Ms. Currie
6. Summary


IV. There is substantial and credible information that the President lied under oath during his civil deposition concerning conversations he had with Monica Lewinsky about her involvement in the Jones case.

A. Conversations with Ms. Lewinsky Regarding the Possibility of Her Testifying in the Jones Case

1. President Clinton's Testimony in His Deposition
2. Evidence that Contradicts the President's Civil Deposition Testimony

(i) Ms. Lewinsky's Testimony
(ii) The President's Grand Jury Testimony

3. Summary

B. There is substantial and credible information that President Clinton lied under oath in his civil deposition when he denied knowing that Ms. Lewinsky had received her subpoena at the time he had last talked to her.

1. Evidence
2. Summary


V. There is substantial and credible information that President Clinton endeavored to obstruct justice by engaging in a pattern of activity to conceal evidence regarding his relationship with Monica Lewinsky from the judicial process in the Jones case. The pattern included:

(i) concealment of gifts that the President had given Ms. Lewinsky and that were subpoenaed from Ms. Lewinsky in the Jones case; and
ii) concealment of a note sent by Ms. Lewinsky to the President on January 5, 1998.

A. Concealment of Gifts

1. Evidence Regarding Gifts
2. The President's Grand Jury Testimony
3. Summary of Gifts

B. January 5, 1998, Note to the President

1. Evidence Regarding the January 5, 1998 Note
2. President Clinton's Testimony
3. Summary on January 5, 1998, Note


VI. There is substantial and credible information that

(i) President Clinton and Ms. Lewinsky had an understanding that they would lie under oath in the Jones case about their relationship; and
(ii) President Clinton endeavored to obstruct justice by suggesting that Ms. Lewinsky file an affidavit so that she would not be deposed, she would not contradict his testimony, and he could attempt to avoid questions about Ms. Lewinsky at his deposition.

A. Evidence Regarding Affidavit and Use of Affidavit
B. Summary of President's Grand Jury Testimony
C. Evidence Regarding Cover Stories
D. The President's Grand Jury Testimony on Cover Stories
E. Summary


VII. There is substantial and credible information that President Clinton endeavored to obstruct justice by helping Ms. Lewinsky obtain a job in New York at a time when she would have been a witness against him were she to tell the truth during the Jones case.

A. Evidence
B. Summary


VIII. There is substantial and credible information that the President lied under oath in describing his conversations with Vernon Jordan about Ms. Lewinsky.

A. President's Testimony in the Jones Case
B. Evidence That Contradicts the President's Civil Deposition
C. Summary


IX. There is substantial and credible information that President Clinton endeavored to obstruct justice by attempting to influence the testimony of Betty Currie.

A. Evidence

1. Saturday, January 17, 1998, Deposition
2. Sunday, January 18, 1998, Meeting with Ms. Currie
3. Conversation Between the President and Ms. Currie on Tuesday, January 20, 1998, or Wednesday, January 21, 1998.

B. The President's Grand Jury Testimony
C. Summary


X. There is substantial and credible information that President Clinton endeavored to obstruct justice during the federal grand jury investigation. While refusing to testify for seven months, he simultaneously lied to potential grand jury witnesses knowing that they would relay the falsehoods to the grand jury.

A. The Testimony of Current and Former Aides

1. John Podesta
2. Erskine Bowles
3. Sidney Blumenthal
4. Harold Ickes

B. The President's Grand Jury Testimony
C. Summary


XI. There is substantial and credible information that President Clinton's actions since January 17, 1998, regarding his relationship with Monica Lewinsky have been inconsistent with the President's constitutional duty to faithfully execute the laws.

A. Beginning on January 21, 1998, the President misled the American people and Congress regarding the truth of his relationship with Ms. Lewinsky.
B. The First Lady, the Cabinet, the President's staff, and the President's associates relied on and publicly emphasized the President's denial.
C. The President repeatedly and unlawfully invoked the Executive Privilege to conceal evidence of his personal misconduct from the grand jury.
D. The President refused six invitations to testify to the grand jury, thereby delaying expeditious resolution of this matter, and then refused to answer relevant questions before the grand jury when he testified in August 1998.
E. The President misled the American people and the Congress in his public statement on August 17, 1998, when he stated that his answers at his civil deposition in January had been "legally accurate."
F. Summary

A Chronology: Key Moments In The Clinton-Lewinsky Saga

A Chronology: Key Moments In The Clinton-Lewinsky Saga



A Chronology: Key Moments In The Clinton-Lewinsky Saga

1995
June 1995: Monica Lewinsky, 21, comes to the White House as an unpaid intern in the office of Chief of Staff Leon Panetta.

November 1995: Lewinsky and President Bill Clinton begin a sexual relationship, according to audiotapes secretly recorded later by Linda Tripp.

December 1995: Lewinsky moves into a paid position in the Office of Legislative Affairs, handling letters from members of Congress. She frequently ferries mail to the Oval Office.

1996
April 1996: Then-Deputy White House Chief of Staff Evelyn Lieberman transfers Lewinsky to a job as an assistant to Pentagon spokesman Ken Bacon. Lieberman told The New York Times the move was due to "inappropriate and immature behavior" and inattention to work. At the Pentagon, Lewinsky meets Tripp, a career government worker.

Summer 1996: Lewinsky begins to tell fellow Pentagon employee Linda Tripp of her alleged relationship with Clinton.

1997
August 1997: Tripp encountered Kathleen Willey coming out of Oval Office "disheveled. Her face red and her lipstick was off." Willey later alleged that Clinton groped her. Clinton's lawyer, Bill Bennett said in the article that Linda Tripp is not to be believed.

Fall 1997: Tripp to begin taping conversations in which Lewinsky details her alleged affair with the president.

October 1997: Tripp meets with Newsweek's Michael Isikoff, Lucianne & Jonah Goldberg at Jonah's apartment in Washington, according to a Newsweek report. The Goldberg's listen to a tape of Tripp/Lewinsky conversations.

October 1997: Lewinsky interviews with U.S. Ambassador to the U.N. Bill Richardson for a low level public affairs position.

December 1997: Lewinsky leaves the Pentagon.

Dec. 8: Betty Currie, Clinton's personal secretary, asks presidential pal Vernon Jordan to help Lewinsky find a job in New York.

Dec. 11: Lewinsky meets with Jordan and he refers her to several job leads.

Dec. 17: Lewinsky is subpoenaed by lawyers for Paula Jones, who is suing the president on sexual harassment charges.

Dec. 28: Lewinsky makes her final visit to the White House, according to White House logs, and was signed in by Currie. Lewinsky reportedly met privately with Clinton and he allegedly encouraged her to be "evasive" in her answers in the Jones' lawsuit.

January 1998
Jan. 7, 1998: Lewinsky files an affidavit in the Jones case in which she denies ever having a sexual relationship with President Clinton.

Jan. 9: Tripp delivers the tapes to her lawyer, Jim Moody.

Jan. 12: Linda Tripp contacts the office of Whitewater Independent Counsel Ken Starr to talk about Lewinsky and the tapes she made of their conversations. The tapes allegedly have Lewinsky detailing an affair with Clinton and indicate that Clinton and Clinton friend Vernon Jordan told Lewinsky to lie about the alleged affair under oath.

Jan. 13, 1998: Tripp, wired by FBI agents working with Starr, meets with Lewinsky at the Ritz-Carlton Hotel bar in Pentagon City, Va., and records their conversation.

Jan. 14, 1998: Lewinsky gives Tripp a document headed "Points to make in an affidavit," coaching Tripp on what to tell Jones' lawyers about Kathleen Willey, another former White House staffer. Willey recently had testified about alleged unsolicited sexual advances made by the president in 1993.

Jan. 16, 1998: Starr contacts Attorney General Janet Reno to get permission to expand his probe. Reno agrees and submits the request to a panel of three federal judges. The judges agree to allow Starr to formally investigate the possibility of subornation of perjury and obstruction of justice in the Jones case. Tripp and Lewinsky meet again at the Ritz-Carlton. FBI agents and U.S. attorneys intercede and take Lewinsky to a hotel room, where they question her and offer her immunity. Lewinsky contacts her mother, Marcia Lewis, who travels down from New York City by train. Lewis contacts her ex-husband, who calls attorney William Ginsburg, a family friend. Ginsburg advises her not to accept the immunity deal until he learns more.

Jan. 17, 1998: Ginsburg flies to Washington to represent Lewinsky. Clinton gives his deposition in the Jones lawsuit, in which he denies having a sexual relationship with Lewinsky. Newsweek magazine decides not to run a story by investigative reporter Michael Isikoff on the Lewinsky tapes and the alleged affair.

Jan. 18: Clinton meets with Currie, compares his memory with hers on Lewinsky.

Jan. 19, 1998: Lewinsky's name surfaces in an Internet gossip column, the Drudge Report, which mentions rumors that Newsweek had decided to delay publishing a piece on Lewinsky and the alleged affair.

Jan. 21, 1998: Several news organizations report the alleged sexual relationship between Lewinsky and Clinton. Clinton denies the allegations as the scandal erupts.


Jan. 22, 1998: Clinton reiterates his denial of the relationship and says he never urged Lewinsky to lie. Starr issues subpoenas for a number of people, as well as for White House records. Starr also defends the expansion of his initial Whitewater investigation. Jordan holds a press conference to flatly deny he told Lewinsky to lie. Jordan also says that Lewinsky told him that she did not have a sexual relationship with the president.

Jan. 23, 1998: Clinton assures his Cabinet of his innocence. Judge Susan Webber Wright puts off "indefinitely" a deposition Lewinsky was scheduled to give in the Jones lawsuit. Clinton's personal secretary, Betty Currie, and other aides are subpoenaed to appear before a federal grand jury. Ginsburg says Lewinsky is being "squeezed" by Starr and is now a target of the Whitewater investigation.

Jan. 24, 1998: Clinton asks former Deputy White House Chief of Staff Harold Ickes and former Commerce Secretary Mickey Kantor to return to the White House to help deal with the controversy. Talks continue between Starr and attorneys for Lewinsky over a possible immunity agreement.

Jan. 25, 1998: Ginsburg says Lewinsky will "tell all" in exchange for immunity. Clinton political adviser James Carville says "a war" will be waged between Clinton supporters and Kenneth Starr over Starr's investigation tactics.

Jan. 26, 1998: Clinton forcefully repeats his denial, saying, "I did not have sexual relations with that woman, Miss Lewinsky." Ginsburg offers Starr a summary of what Lewinsky is prepared to say to the grand jury in exchange for a grant of immunity from the prosecution.

Jan. 27, 1998: Jones' attorney, John Whitehead, answers Starr's subpoena with several documents, possibly including Clinton's deposition in the Jones suit. Currie testifies before the grand jury. First lady Hillary Rodham Clinton says in a broadcast interview that a "vast right-wing conspiracy" is behind the charges against her husband. A Portland, Ore., man, Andy Bleiler, alleges he had a five-year affair with Lewinsky, and his lawyer promises to turn over documents and items to Starr's investigators. Clinton delivers his State of the Union address, making no mention of the scandal.

Jan. 29, 1998: The judge in the Paula Jones lawsuit rules that Monica Lewinsky is "not essential to the core issues" of the Jones case, and has ordered that all evidence related to Lewinsky be excluded from the Jones proceedings.

Jan. 31, 1998: Immunity discussions between Monica Lewinsky's attorney, William Ginsburg, and Ken Starr's office appear stalled. Ginsburg says Lewinsky plans to go to California in the coming week to visit her father.

February 1998
Feb. 4, 1998: Word comes that Independent Counsel Ken Starr has rejected the latest written statement by Monica Lewinsky's lawyers seeking immunity from prosecution for her. Their on-again, off-again immunity discussions are off.

Feb. 5, 1998: Ken Starr says his inquiry is "moving very quickly and we've made very significant progress."

Feb. 6, 1998: At a news conference, President Bill Clinton says he would never consider resigning because of the accusations against him. "I would never walk away from the people of this country and the trust they've placed in me," he says.

Feb. 10, 1998: Monica Lewinsky's mother, Marcia Lewis, appears before the grand jury. Ken Starr and his investigators suspect Lewis was aware of her daughter's alleged affair with President Bill Clinton.

Feb. 11, 1998: First lady Hillary Rodham Clinton predicts the allegations against her husband "will slowly dissipate over time under the weight of its own insubstantiality." A retired Secret Service uniformed guard, Lewis C. Fox, claims in an interview he saw Monica Lewinsky come to the West Wing on weekends with documents she said were for the president.

Feb. 12, 1998: Monica Lewinsky returns to Washington from California. Her mother fails to appear for a third day of grand jury testimony; her lawyer says she is emotionally drained and unable to proceed.

Feb. 18, 1998: One of President Bill Clinton's closest advisers, Bruce Lindsey, spends the day before the Whitewater grand jury. The hearing is stopped briefly when questions of executive privilege are raised.

Feb. 19, 1998: Ken Starr's chronology shows presidential friend Vernon Jordan began seeking a private-sector job for Monica Lewinsky within 72 hours of her being listed as a potential witness in the Paula Jones civil rights lawsuit against President Bill Clinton.

Feb. 20, 1998: Lewinsky attorney Bill Ginsburg says the former intern met with Vernon Jordan much earlier than was being reported.

Feb. 23, 1998: There is more legal wrangling over when Marcia Lewis, Lewinsky's mother, will resume her grand jury testimony. Her lawyer, Billy Martin, says she is "going through hell."

Feb. 25, 1998: White House lawyers are preparing legal briefs to defend the administration's position that executive privilege should shield several of President Bill Clinton's top aides from certain questions in the Lewinsky investigation.

Feb. 26, 1998: White House senior communications aide Sidney Blumenthal testifies before the grand jury, answering questions about any role he may have played in spreading negative information about investigators in Independent Counsel Ken Starr's office. Fourteen Democrats in the House write Attorney General Janet Reno complaining about subpoenas issued by Starr. A non-profit group that studies women in the workplace says it will contribute $10,000 as seed money for a legal defense fund for Lewinsky.

Feb. 27, 1998: White House communications aide Sidney Blumenthal refused to answer some of the questions posed before the grand jury, citing the controversy over whether the independent counsel can force aides to testify about conversations they had with the president.

March 1998
March 3, 1998: Vernon Jordan Jr. testifies before the grand jury.

March 5, 1998: Lawyers for Monica Lewinsky battle with Ken Starr over whether Lewinsky has a binding immunity agreement.

March 9, 1998: U.S. District Judge Susan Webber Wright rejects a request by Ms. Jones' attorneys to include evidence of a Monica Lewinsky affair during a Jones trial.

March 10, 1998: Kathleen Willey, a former White House volunteer who accused the president of fondling her, testifies before the grand jury for four hours.

March 11, 1998: The grand jury spends the day listening to audio recordings, which sources say are tapes made by Linda Tripp of her conversations with Monica Lewinsky.

March 16, 1998: Clinton says "nothing improper" happened when he was alone with Kathleen Willey, responding to her accusations aired in an interview on "60 Minutes" the previous night. The White House releases letters Willey sent to the president, signed "Fondly, Kathleen" in an effort to cast doubt on her story.

March 17, 1998: The White House charges that Kathleen Willey tried to sell her story to a book publisher for $300,000. Willey's attorney denies the charges. A friend of Lewinsky and the presidential diarist give grand jury testimony.

March 18, 1998: Julie Steele's affidavit is released. In it she says she lied when she claimed Kathleen Willey had come to her house the night of the encounter and told her about it.

March 20, 1998: President Clinton decides to formally invoke executive privilege.

March 25, 1998: Marcia Lewis, Monica Lewinsky's mother, fails to persuade a federal judge to excuse her from a third day of testimony. Starr subpoenas records from Kramerbooks & Afterwords on Monica Lewinsky's purchases at the store. One of her purchases was reportedly Nicholson Baker's "Vox," a novel about phone sex. Jodie Torkelson testifies.

March 26, 1998: White House operatives Marsha Scott and Nancy Hernreich testify again before the grand jury.

April 1998
April 1, 1998: Judge Susan Webber Wright dismisses the Paula Jones case.

April 7, 1998: Presidential diarist Janis Kearney testifies before the grand jury. Harolyn Cardozo, daughter of multimillionaire fund-raiser and Clinton pal Nate Landow and a former White House intern, testifies before the grand jury. She is questioned on Kathleen Willey's accusations of unwanted sexual advances made by the president.

April 9, 1998: A second White House steward is called to testify before the grand jury in a supposed effort to learn of meetings between the president and Monica Lewinsky.

April 14, 1998: Kenneth Starr files a sealed motion in U.S. District Court to compel testimony of uniformed Secret Service agents, according to the Wall Street Journal.

April 16, 1998: Ken Starr withdraws from consideration for the deanship at Pepperdine University Law School. Starr said an end to the Whitewater investigation "was not yet in sight." Bernard Lewinsky lashes out at Kenneth Starr, calling the treatment of his daughter "unconscionable." He also asks for help in paying the former intern's legal bills.

April 18, 1998: U.S. News & World Report says retired Secret Service office Louis Fox testified before the grand jury that during a visit by Lewinsky to the White House in the fall of 1995, Clinton told him, "Close the door. She'll be in here for a while."

April 21, 1998: Former President George Bush weighs in, challenging Ken Starr's attempt to get Secret Service officers to testify before the grand jury.

April 28, 1998: Nancy Hernreich, director of Oval Office operations, testifies for the sixth time in the Lewinsky investigation.

April 29, 1998: A federal judge rules that Monica Lewinsky does not have an immunity agreement with Ken Starr.

April 30, 1998: In his first news conference since the Lewinsky scandal broke, the president lashes out at Independent Counsel Ken Starr charging that he heads a "hard, well-financed, vigorous effort" to undercut the president. Clinton repeatedly declines to elaborate on his relationship with Lewinsky.

May 1998
May 5, 1998: Federal Judge Norma Holloway Johnson rules against President Clinton's claim of executive privilege. Clinton confidant Vernon Jordan testifies for a third time before the grand jury.

May 6, 1998: Clinton's personal attorney, David Kendall, accuses Starr's office of "flagrant leaks," citing a Fox News report that claimed information on Clinton's executive-privilege decision came from the independent counsel's office.

May 8, 1998: Ken Starr and David Kendall quarrel over leaks of grand jury information. Betty Currie testifies before the grand jury for the third time.

May 13, 1998: Ken Starr seeks contempt charges against David Kendall, the president's personal attorney. Starr accuses Kendall of leaking grand jury testimony.

May 14, 1998: Starr argues in federal court that there are no legal grounds for Secret Service agents who guard the president to refuse to testify before the grand jury. Betty Currie, the president's personal secretary, returns for her fourth appearance before the grand jury testimony.

May 21, 1998: Walter Kaye, a retired insurance executive and prominent Democratic contributor, testifies before the grand jury.

May 22, 1998: Federal Judge Norma Holloway Johnson ruled that the Secret Service must testify before the grand jury in the Monica Lewinsky controversy.

May 27, 1998: Monica Lewinsky's lawyer, Bill Ginsburg writes an angry "open letter" to Ken Starr which was published in "California Lawyer." "Congratulations, Mr. Starr! As a result of your callous disregard for cherished constitutional rights, you may have succeeded in unmasking a sexual relationship between two consenting adults." It is reported that death threats were made against Linda Tripp when the Lewinsky scandal first broke in January and she was moved to a safe house.

May 28, 1998: Ken Starr asks the Supreme Court to expedite their ruling on executive privilege. Monica Lewinsky gives handwriting and fingerprints samples to the FBI at Ken Starr's request.

June 1998
June 1, 1998: Clinton's defense team decides to drop the appeal on the executive privilege ruling. But his lawyers will continue to argue for attorney-client privilege to prevent close friend and aide Bruce Lindsey from answering all of Ken Starr's questions.

June 2, 1998: The outspoken Bill Ginsburg is replaced as Monica Lewinsky's lawyer with a team of experienced Washington litigators, Jacob Stein and Plato Cacheris. The split was said to be by "mutual agreement."

June 4, 1998: The Supreme Court denies Ken Starr's request to expedite a ruling on attorney-client privilege and the Secret Service's "protective function privilege." With claims of executive privilege dropped, White House aide Sidney Blumenthal testifies before the grand jury.

June 5, 1998: Appeals court fast tracks attorney-client privilege dispute. Federal Judge Norma Holloway Johnson rules that while Monica Lewinsky's book purchases did have a bearing on her case, only Kramer Books -- and not Barnes & Noble -- would be required to hand over records of her purchases.

June 8, 1998: The Supreme Court hears oral arguments in Ken Starr's attempts to access notes take by the lawyer of late White House deputy counsel Vince Foster nine days after the meeting in question. Foster's lawyer, James Hamilton argued the notes are covered by attorney-client privilege, but Starr's office said the privilege doesn't always extends past death.

June 9, 1998: Presidential friend Vernon Jordan testifies before Ken Starr's grand jury for the fifth time. Lewinsky's new lawyers say they are upset by her photo layout in Vanity Fair magazine.

June 10, 1998: Former White House Deputy Chief of Staff Harold Ickes appears before the grand jury to testify about his involvement, if any, in the release of information from Linda Tripp's personnel records.

June 15, 1998: Deputy White House Counsel Bruce Lindsey files an appeal of federal Judge Norma Holloway Johnson's decision to deny him attorney-client privilege in the Lewinsky case.

June 15, 1998: The publication of an article in the new magazine of media criticism, Brill's Content, alleging that Ken Starr leaked information to the media leads Judge Holloway to hold a private meeting with lawyers for both sides of the case to investigate the charges. The magazine's editor and creator, Steven Brill, said Starr admitted to the leaks in a 90-minute interview.

June 16, 1998: Ken Starr releases a 19-page attack on Brill's article, calling the editor "reckless" and "irresponsible" for printing what he called a misinterpretation of their interview.

June 18, 1998: Sources tell CNN that three FBI agents have testified in secret affidavits that a plan to wire Monica Lewinsky and monitor her conversations did exist. The secret testimony refutes Ken Starr's published denial of the plan, but does not specify that the conversations Starr's prosecution wished to tape were with the president or Vernon Jordan.

June 22, 1998: CNN learns that Ken Starr may be willing to make an immunity deal without requiring that Monica Lewinsky plead guilty to some charge against her if they decide that she is cooperating fully with the prosecution.

June 22, 1998: Kramer Books and lawyers for Monica Lewinsky strike a deal in which records of Lewinsky's purchases are submitted to Ken Starr's office by her lawyers and not the book store, thereby allowing the book store to maintain it stood up for the First Amendment.

June 25, 1998: White House communications aide Sidney Blumenthal testifies before Ken Starr's grand jury for the third time. Blumenthal complains that Starr's inquiry focused on what the White House was saying about his prosecution rather than Blumenthal's conversations with the president.

June 25, 1998: The Supreme Court rules 6-3 that attorney-client privilege extends beyond the grave, exempting Vince Foster's conversations with his lawyers from being called as evidence in Ken Starr's presidential investigations.

June 26, 1998: Ken Starr presents arguments to a federal appeals court requesting that Secret Service personnel be required to testify in the Lewinsky case. Linda Tripp is called to appear before the grand jury on Tuesday, June 30.

June 29, 1998: Attorneys for Dale Young confirm that the Lewinsky family friend testified before the grand jury that Monica Lewinsky spoke to her of an intimate relationship between herself and President Clinton. According to Young's testimony, Lewinsky confided in her in 1996, detailing the limitations and rules Clinton had placed upon their relationship.

June 30, 1998: Linda Tripp appears before the grand jury for her first day of testimony, accompanied by her children. She says that she did not trick Monica Lewinsky when she taped conversations with her former friend.

July 1998
July 1, 1998: Linda Tripp makes her second appearance before the grand jury, during which the Lewinsky tapes may have been played.

July 5, 1998: Starr announces that he will not release an interim report on his investigation to the House of Representatives.

July 7, 1998: The U.S. Court of Appeals rules that Secret Service agents must testify before the grand jury, upholding Judge Norma Holloway Johnson's earlier decision.

July 7, 1998: Linda Tripp returns for her third day of testimony before the grand jury, as the Maryland state's attorney opens investigations into Tripp's taping of her conversations with Monica Lewinsky. The investigation is aimed at deciding whether Tripp had broken Maryland state laws that require both parties in a conversation to consent to be taped.

July 9, 1998: Monica Lewinsky announces she is prepared to cooperate in the Maryland investigation into the legality of Linda Tripp's tapes of phone conversations as Tripp appears before the grand jury for the fourth time.

July 14, 1998: Ken Starr subpoenas Larry Cockell, head of the president's security detail. The Justice Department, backed by the Secret Service, requests a full panel appeal of the Secret Service testimony decision from the U.S. Court of Appeals.

July 16, 1998: The U.S. Court of Appeals refuses a full panel review of the Secret Service decision, sending the appeal to the Supreme Court. Earlier in the day, the court issued a temporary stay on the Secret Service testimony.

July 17, 1998: Supreme Court Chief Justice William Rehnquist denies an extension of the temporary stay on Secret Service testimony. The subpoenaed Secret Service agents appeared before the grand jury, although only three of them testify. Larry Cockell, who is not one of the agents to testify, spends the afternoon waiting.

July 21, 1998: The U.S. Court of Appeals holds a hearing on alleged leaks of grand jury information to the media by Ken Starr's office. The hearings center on Judge Norma Holloway Johnson's secret sanctions against Starr and his subsequent appeal. The sanctions would require Starr to turn over documents and other evidence related to the alleged leaks.

July 22, 1998: Clinton's personal secretary, Betty Currie, testifies before the grand jury, in what is most likely her final appearance.

July 23, 1998: Larry Cockell, President Clinton's lead Secret Service agenet, testifies.

July 25, 1998: Word emerges that Independent Counsel Ken Starr has served President Clinton with a subpoena that calls for his testimony before the Lewinsky grand jury next week. Negotiations are underway on the scope, timing and format of Clinton's testimony.

July 27, 1998: Monica Lewinsky meets with Starr's prosecutors in New York, in a sign an immunity agreement could be near. She tells them she had a sexual relationship with President Clinton, but refuses to say that Clinton told her to lie about it, according to sources close to the investigation.

July 27, 1998: The U.S. Court of Appeals rules that attorney-client privilege does not protect presidential confidant Bruce Lindsey from answering all questions put to him before the Lewinsky grand jury.

July 28, 1998: In a dramatic breakthrough, lawyers for Lewinsky and Starr work out a full immunity agreement covering both Lewinsky and her parents, Marcia Lewis and Dr. Bernard Lewinsky.

July 29, 1998: President Bill Clinton agrees to testify voluntarily and Starr's office withdraws the subpoena. Clinton's testimony is set for Aug. 17 at the White House.

July 30, 1998: Sources say that as part of her immunity agreement, Lewinsky has handed over to prosecutors a dark blue dress that she alleges may contain physical evidence of a sexual relationship with President Bill Clinton. The dress is turned over to the FBI lab for testing.

August, 1998
Aug. 6, 1998: Monica Lewinsky appears before the grand jury to begin her testimony.

Aug. 7, 1998: A federal appeals court lets an investigation of alleged news leaks from Ken Starr's office continue.

Aug. 11, 1998: Hollywood producer and Clinton friend Harry Thomason testifies before the grand jury.

Aug. 17, 1998: President Bill Clinton becomes the first sitting president to testify before a grand jury investigating his conduct. After the questioning at the White House is finished, Clinton goes on national TV to admit he had an inappropriate relationship with Monica Lewinsky.

Aug. 18, 1998: Former Clinton political advisor Dick Morris testifies before the grand jury.

Aug. 19, 1998: Word that Starr has requested and received a sample of Clinton's DNA becomes public.

Aug. 20, 1998: Monica Lewinsky testifies before the grand jury for a second time.

September 9, 1998: Independent Counsel Ken Starr submits his report and 18 boxes of supporting documents to the House of Representatives.

September 11, 1998: The House of Representative votes to receive the Starr report. The House Judiciary Committee takes possession of the 18 boxes of materials and promptly releases the first 445 pages to the public.

September 18, 1998: Over Democrats' objections, the House Judiciary Committee agrees to release President Clinton's videotaped grand jury testimony and more than 3,000 pages of supporting material from the Starr report, including sexually explicit testimony from Monica Lewinsky.

September 21, 1998: The Judiciary Committee releases and many television networks immediately broadcast more than four hours of President Clinton's videotaped grand jury testimony. Along with the videotape, the Judiciary Committee also releases the appendix to the Starr's report which includes 3,183 pages of testimony and other evidence, including a photograph of Lewinsky's semen-stained dress.

September 24, 1998: The House Judiciary Committee announces the committee will consider a resolution to begin an impeachment inquiry against President Clinton in an open session on October 5 or October 6.