Sunday, October 10, 2004

Erase Debt Now. (Lose Your House Later.)

October 10, 2004



MICHAEL A. KNOX thought he had run out of ways to pay off his credit card bills when he got the salesman's call two years ago. To wipe out his nearly $20,000 debt, he was told, all he had to do was take out a new, bigger mortgage on his house.

Mr. Knox, then 60 and on disability, signed up. The mortgage broker sent him eight checks already made out to his creditors, and Mr. Knox dashed to the post office the day they arrived to mail them.

But the bigger house payment devoured 75 percent of his income. He quickly fell behind. And the full meaning of what he had done suddenly became clear.

By using his mortgage to pay off his credit card debt, Mr. Knox had avoided the humiliation of filing for bankruptcy. But he had put at risk something much more important to him than his pride. In late January, with Mr. Knox in arrears, the Wall Street firm that had bought his mortgage informed him that it was taking away his home.

"They're going to have to carry me out of here," he told a lawyer in early March. Days later, Mr. Knox, who had suffered for years from depression, was found dead of carbon monoxide poisoning in his sealed-up car.

Encouraged by low interest rates and rising home values, millions of Americans have been using their homes to pay off credit card bills. One-fourth of homeowners who refinanced their mortgages took out larger loans on their homes in order to pay off credit cards and other debts, according to a recent study by the Federal Reserve.

The maneuver is known as debt consolidation, and mortgage lenders are using national campaigns - from prime-time advertising to e-mail spam - to pitch it as a sound way to ease the sting of credit card debt, which averages $13,000 for people who don't pay off their balance each month, according to For many, probably a vast majority, it has been a boon. Experts say the device is a factor in a recent leveling off of credit card debt and a drop this year in personal bankruptcies.

But each year, tens of thousands of people - not just the poor - lose their homes after trying to cope with their debts this way, industry figures show, and their heart-rending tales are raising alarm among consumer advocates, federal regulators and some mortgage lending officials.

In Bluefield, W. Va., a retired coal miner, William Anderson, 80, and his wife, Kathleen, 79, owned their home of 45 years free and clear, but lost it in March after falling behind on a new $48,000 mortgage that they were persuaded to get in order to pay off their automobile loans.

Robert and Shirley McCall of Paris, Ill., were trying to pay off $7,720 in medical bills when they took out a new $22,000 mortgage on their house, but in failing to keep up with the larger mortgage payments, they were warned by their lender in August that they were nearing foreclosure.

In Macon, Ga., Melissa and Shawn Lynch are trying to salvage their home. In order to pay off credit card debts, they took out a second mortgage on the three-bedroom home they bought in 2001 for $71,000, but then were hit with medical bills on top of the new, larger mortgage payments. Three weeks ago, they sought help from a debt counselor and discovered that their house was at great risk. "We were young," said Ms. Lynch, 28, and the lender "smelled blood, really."

While not everyone affected is a poor credit risk, much of the booming business of debt consolidation focuses on such borrowers - what is known as the subprime market.

The industry, which has an estimated four million outstanding loans, has enabled many people with modest incomes to own their homes. But last year, more than 16 percent of subprime mortgages were delinquent or in foreclosure. More than 76,000 families with subprime mortgages tumbled into foreclosure in the first quarter of 2004, and an additional 47,000 in the second quarter.

While statistical evidence is piecemeal, the rush to pay off credit cards and other consumer debt by taking out bigger mortgages appears to be playing a growing role in this trouble.

Many people who refinance mortgages, of course, do so simply to lower their house payments. But the people who refinance for extra cash are as much as twice as likely to lose their homes through foreclosure than those who refinance for other reasons, according to statistics from the PMI Group, a major mortgage insurer. And most subprime loans being made today - estimates run as high as 70 or 80 percent - are debt consolidation loans like Mr. Knox's.

"Financing credit card debt on your mortgage, in general, is a bad idea," Edward M. Gramlich, a Federal Reserve governor, said in an interview last week. "With the credit card debt you can go into bankruptcy, but if you put it on your mortgage you could lose your house, and that happens a lot."

Policy makers see the very existence of these debt-consolidation loans as the next issue in their battle with the subprime lending industry, which until now has been criticized largely about its high costs, prompting new state and federal laws.

Some industry officials say lenders have pushed too hard in selling dangerous loans to vulnerable homeowners who may not fully appreciate the risks. Larry Litton Jr., the chief operating officer of Litton Loan Servicing, based in Houston, which collects mortgage payments on behalf of lenders, said that most of the delinquent subprime loans he was handling involved debt consolidation and borrowers who did not realize that they would go back to running up more credit card debt unless they found some way to balance their income and expenses.

"Even though, conceptually, debt consolidation is used to retire debt, it often leads to increased debt burden," he said. "People make decisions sometimes that aren't real rational whenever it comes to incurring debt. I sure hate for people to draw conclusions that these people are irresponsible as a drug addict, but they are similar in the sense that debt can be very addicting."

William C. Apgar, an assistant housing secretary in the Clinton administration, said that homeownership "can't be used as an everlasting reserve fund for folks who have more expenses than income on a perpetual basis."

But as the case of Michael Knox shows, many homeowners do use mortgage refinancing that way and some lenders have sold the maneuver aggressively to people hooked on the promise of easy credit.

Mr. Knox's story, pieced together from financial documents and from the increasingly despairing letters he wrote to company officials, regulators and others, is a particularly sad look at this dark side of the mortgage refinancing boom.

Mr. Knox may have seemed like someone you would not want to lend money to. But by the logic of the subprime market, he looked like a desirable customer.

Subprime lenders charge higher-than-usual interest rates and can protect themselves by selling the loans to Wall Street, which in turn consolidates large numbers of loans into investment pools and markets them to investors worldwide in the form of asset-backed bonds.

But experts say that the market is susceptible to overzealous salesmanship and, sometimes, fraud.

Mr. Knox had already refinanced twice in six months when he got the call from an Aames Financial broker. In qualifying Mr. Knox for a $90,000 mortgage at 9.23 percent that he ultimately could not afford, company records show, Aames waived its own rules for verifying income and employment. The mortgage was also based on an assessment of his house that was considerably higher than an official county estimate.

Aames, a medium-size lender based in Los Angeles, said it had done nothing wrong in lending money to Mr. Knox, particularly because he had almost always paid his bills on time. As Aames pointed out to an arbitrator who ruled in its favor after Mr. Knox filed a complaint, "No one was pointing a gun to his head to do it." More broadly, the company said it had stringent measures to avoid problem lending, including a system adopted last year to determine whether borrowers would truly benefit from its loans.

In April, the company disclosed that it was cooperating with a Federal Trade Commission inquiry into subprime lending practices nationwide. And in Iowa, the state justice department is investigating Mr. Knox's case, saying that it may show that the lending industry is undermining homeownership by pushing too hard for growth.

"In addition to being appalled by what happened to Michael Knox, we are very concerned about appraisals that are inflated and we are very concerned about incomes that are inflated or completely made up," said Tom Miller, Iowa's attorney general.

Serial Refinancings

Mr. Knox became a homeowner in 1988, using a traditional bank mortgage to buy a wood-frame house built in 1946 just north of downtown Des Moines. He paid $29,000 for 984 square feet; ownership was a huge achievement for him. "He loved that house," said his daughter, Marlene Knox.

Divorced and living alone after raising four children, Mr. Knox was anxious about money, people who knew him say. He had held various jobs, from welding grain elevators to working as a security guard at parking garages. But he increasingly suffered from depression, compounded by circulation problems, and his disability check of $1,068 a month left him perennially short of funds.

A neighbor, Janet L. Bequeaith, recalled that he would often buy cream cheese on sale as a substitute for higher-priced protein. He also made his own furniture, dabbled in unlikely inventions and taxied people to the doctor for a few extra dollars. A financial high point came in 1998, when he won $15,000 in a game show sponsored by the Iowa state lottery.

But then he found a surer way to instant cash. Or rather, it found him. Credit card companies sent Mr. Knox blank checks, out of the blue, that he had only to fill out to get thousands of dollars. "I tried to tell him that's not the way to operate," said Dennis M. Wilhelm, a neighbor. "But he couldn't resist."

Mr. Knox opened charge accounts at Wal-Mart, Target and Sears. To pay utility bills and other expenses, he used credit cards from Providian, Wells Fargo and three other banks. His luxury was a desktop computer with an e-mail account, neighbors say.

But eventually Mr. Knox was borrowing cash from one card to pay off another, and when he ran short he would grab a two-week loan from a storefront lender who charged interest at the annual rate of 520 percent.

That was when he started refinancing his home - first for $49,400 in September 2001, then for $67,000 in March 2002. Yet it was never enough.

Aames's brokers hunt for customers by using lists of people who recently refinanced their mortgages. In telephoning these prospects, brokers said they asked about credit card debt, both as an incentive to refinance again and to increase their own commission with a larger loan.

"It's a dog-eat-dog world out there, and you do what you have to, to get loans," said Stephen Black, a former Aames loan officer in Tysons Corner, Va. "You don't lie to your client, but you make them feel like you're their best friend and can be trusted."

Still, Mr. Knox posed something of a challenge. The real estate agent who sold him the house said its value had risen to perhaps $65,000, which the county confirmed in a recent assessment. That was not nearly enough to get Mr. Knox, who was already spending 55 percent of his income on his mortgage, the new loan he needed to pay off his bills.

Six months later, in September 2002, Ames said it would lend him $90,900 based on a $101,000 valuation by an independent appraiser. Startled, Mr. Knox said he worried that his taxes would soar. But he later wrote to the arbitrator that Aames had assured him the appraisal would not be disclosed to the county. "The appraisal was a complete sham," Mr. Knox wrote to the arbitrator.

In an interview, the appraiser, Mark S. Wallace, said all appraisals were matters of opinion, and that he frequently resisted entreaties by lenders who wanted inflated valuations. He has surrendered his license to settle an unrelated case brought by regulators, state records show.

Aames said it had the appraisal checked for accuracy through a consulting appraisal firm.

Who Wrote the Letter?

For Mr. Knox, the new appraisal left a major problem. The bigger mortgage would raise his monthly payment to nearly $800, with taxes and insurance, from $643. But he got only $1,068 in disability from Social Security, and Aames required that his income be at least twice his debt.

Mr. Knox's broker, Matthew Wright, who was then with Aames, first suggested inflating his income by creating a phantom renter, according to Mr. Knox's written account. When he balked, Mr. Knox wrote, Mr. Wright said he could claim income from his attempts to sell a mimeographed book on magic that he had put together.

Mr. Knox wrote that "I never made a dime trying to sell my books," but his loan papers - which Mr. Knox later said he did not notice - reported $820.42 in monthly income from book sales, putting his debt-to-income quotient at 49.9 percent, slipping just under the company's 50 percent cap.

Still, Aames required additional proof of self-employment, and a reference letter appeared in his file from a local banker. The letter was a fabrication, The New York Times learned by calling the bank, which said the name of the banker on the letter was fictitious; no such person worked for the bank.

Mr. Knox's family and friends say it is inconceivable that he concocted the letter. In an interview, Mr. Wright disputed each point in Mr. Knox's account of the loan and denied any involvement in the letter. "I've never, ever committed fraud and never will," said Mr. Wright, who said he left Aames for a better opportunity shortly after Mr. Knox got his loan. "If a customer tells me this stuff you have to believe it."

Experts estimate that fraud is at play in at least 20 percent of all loans that end up in foreclosure; inflated valuations are rampant, experts say, and appraisal trade groups say the system needs to be overhauled. Connie Wilson of AppIntell, a firm in Weldon Spring, Mo., that helps lenders avoid problem loans, said employees of the lender and others who profit from the loans are almost always involved in loans that later end up in foreclosure.

Last month, the Federal Bureau of Investigation warned of a looming "epidemic" in mortgage fraud involving loan brokers, appraisers and lending officers. Its caseload of open fraud inquiries surged to 533 investigations in June from 102 in 2001.

Aames credits a hot line it set up in 2001 with exposing employees who improperly qualified borrowers. In other cases it was the borrower who discovered irregularities. A disabled elderly woman in Seattle who settled a case against Aames last year found fabricated letters and invoices in her file verifying income she did not have.

Whatever the precise origin of Mr. Knox's fake letter, Aames's rules require harder proof of self-employment, like a business license or advertising receipts. Aames said the underwriter who checked the loan had waived this requirement at his discretion.

A New Cycle of Debt

Mr. Knox had expected the new mortgage to leave him free and clear. But borrowing $90,900 cost him $7,259 in fees and other expenses. After repaying his existing $67,000 mortgage and mailing $15,574 to his creditors, he still owed $3,800 in credit card bills.

He did what most borrowers do in this situation, debt counselors say: he ran up more credit card debt. Even filing for bankruptcy on this new debt, which he did six months later, could not save his home. The mortgage alone was simply too big.

"My health has been ruined, my medical bills have gone up because of the stress this loan has caused me," he wrote to Aames.

To consumer advocates, stories like Mr. Knox's show the need, at a minimum, for some government intervention to warn borrowers of the risk in this debt maneuver. With rising interest rates, some say the pressure on homeowners will only increase.

"Credit is not just a benefit; it is also a dangerous instrument," said Margot Saunders, a managing attorney at the National Consumer Law Center in Washington. "Everything from cars to toasters that have some danger are regulated, but loans which can cause such devastation when provided in the wrong situation are not regulated."

Aames says it would object to any measures that unfairly restricted access to credit. "It would be a great disservice to deny millions of prime and subprime borrowers the opportunity to tap into the equity in their homes to pay for important purchases and consolidate debt when the vast majority of these customers repay their loans," Ian Campbell, a spokesman for Aames, said.

In a recent speech on subprime lending, Mr. Gramlich of the Federal Reserve warned that steps being taken to curb lending excesses would apply only to banks and other companies that are closely scrutinized by banking regulators, and not to independent mortgage companies.

"We as an industry do a lot of great things in providing liquidity," said Mr. Litton, the mortgage servicer. "But the problem is, we often lose sight of common-sense things. Is it good business practice in principle to do three cash-outs in one year?"

Mr. Knox pursued arbitration because his loan contract barred him from suing Aames. In November 2003, the arbitrator rejected his case without explanation. Aames, which said it received very few complaints about its loans, said it stopped requiring arbitration because of controversy over the practice.

In Mr. Knox's case, the loan was sold to Bear Stearns, which says it offered to extend his payments to avoid foreclosure. Consumer advocates say such offers generally involve too little money to help people like Mr. Knox.

Instead, he bought more lottery tickets. He visited the local casino. And when the foreclosure notice arrived, he phoned his brother, Christopher, in Arizona to say goodbye.

"I told him to come out with me," Christopher Knox recalled. "And he said, 'I'm too old to start over again.' "

A few weeks later, in early March, he made a last call for help. He phoned a lawyer, and the lawyer contacted former colleagues at the state justice department and told them that Mr. Knox had a strong case. When an investigator there could not reach Mr. Knox, she phoned the police. They found his body in the car.

Last Thursday, the sheriff's office held an auction to sell Mr. Knox's home, which had an opening price of $64,200. Nobody bid on it. Bear Stearns will have to dispose of the property by itself.

Copyright 2004 The New York Times Company

Why Did James Baker Turn Bush Into Nixon?

October 10, 2004

WE'VE never seen anything like this, even the old Kennedy-Nixon classic great debate," said a breathless Chris Matthews on the "Today" show as he touted a poll showing that John Kerry had won presidential debate No. 1 by as much as a 4-to-1 margin. But actually we have seen something like this - and at that first Kennedy-Nixon debate. The polls may have gyrated more violently this time around, but the scenario is identical: a campaign's seemingly mundane decision about television theatrics has potentially changed the dynamic of a presidential election.

Only Election Day will reveal if Sept. 30, 2004, set off a political chain reaction to match that of Sept. 26, 1960; then as now the candidates soon settled down into a post-debate statistical dead heat in the horse race (Kennedy 49, Nixon 46, according to Gallup). But at the very least the first Bush-Kerry debate marked the moment that the savvy Bush-Cheney machine lost its once-invincible grip on the all-important TV game and, just like Nixon before it, did so because of its own blunders, not any sorcery by the opposing J. F. K.

As Mr. Matthews recounts the historical antecedent in his 1996 book, "Kennedy and Nixon," the debate director, Don Hewitt, offered the haggard Nixon makeup to help bridge the video gap with his tan and fit opponent, the junior Democratic senator from Massachusetts. Not only did Nixon decline but this decision was seconded by his campaign media adviser, Ted Rogers. The world remembers the rest. The only cosmetic aid that Nixon used - an over-the-counter product called Lazy Shave to mask his stubble - melted in sweat, casting an incumbent vice president in a lesser light than his lesser known challenger.

In the 2004 replay the Ted Rogers of the story is, of all people, James A. Baker III, the Bush family consigliere who so cannily gamed the 2000 count in Florida, outsmarting the Gore forces at every turn. This may be the year he lost his fast ball, unless you take the Freudian view that he has an unconscious wish to prevent 43 from bettering the re-election record of his original patron, 41. Either way, the thoroughness with which Mr. Baker's offstage maneuvers set his guy up for disaster on Sept. 30 may tell us more about the state of play in the campaign than the much-dissected style and substance of the debaters' onstage performance.

It was Mr. Baker's job to negotiate the 32-page debate agreement with Vernon Jordan, representing the Kerry camp, and by all accounts, the Bush campaign got almost everything it wanted. Yet as we now know, every Bush stipulation backfired, from the identically sized podiums that made the 5-foot-11 president look as if he needed a booster stool, to the flashing "Time's up!" lights that emphasized Mr. Kerry's uncharacteristic brevity and Mr. Bush's need to run out the clock by repeating stock phrases ad infinitum and ad absurdum.

The most revealing Baker error, though, was to insist that the first debate be about the president's purported strong suit, foreign affairs, instead of domestic policy. Did no one anticipate the likelihood that Iraq might once again explode that day, as it has on so many recent others? Insurgent attacks have gone from a daily average of 6 in May 2003 to as high as 87 in August. And so, as Adam Nagourney of The Times reported, "In the hours leading up to the debate, television images of aides to Mr. Bush and Mr. Kerry were mixed with images of corpses and bloody children from Baghdad," on a day when some 35 Iraqi children were slaughtered by car bombs. With this montage grinding away in the media mix, Mr. Kerry probably could have gotten away with even more inconsistent positions about the war than he did that night.

Mr. Baker isn't responsible for the other split-screen visuals that undid Mr. Bush on Sept. 30: the reaction shots during the debate itself. They were forbidden by the 32-page agreement. But earlier that week, the networks, including Fox News, publicly announced they would violate that rule. The Bush campaign has since said that the president knew this was coming, but if so, that makes his lack of self-discipline seem all the more self-destructive, or perhaps out of touch. He couldn't have provided a better out-take promo for the DVD release of "Fahrenheit 9/11" had Michael Moore been directing it himself.

Mr. Bush could recoup by Nov. 2 for all manner of reasons, including his showing in the subsequent debates, both yet to come as I write. John F. Kerry is no John F. Kennedy. But the liberal blog Daily Kos had the big picture right: on Sept. 30, "months of meticulous image manipulation" by the Bush-Cheney forces went "down the toilet in 90 minutes."

That's a shocking development because until recently, that manipulation had been meticulous and then some. The administration has been brilliant at concocting camera-ready video narratives that flatter if not outright fictionalize its actions: "Saving Jessica Lynch," "Shock and Awe," the toppling of the Saddam Hussein statue (a sparsely populated, unspontaneous event, when seen in the documentary "Control Room"), "Mission Accomplished." Mr. Bush has been posed by his imagineers to appear to be the fifth head on Mount Rushmore; he has kept the coffins of the American war dead off-screen; he has been seen in shirtsleeves at faux-folksy Town Hall meetings that, until his second debate with Mr. Kerry, were so firmly policed in content and attendees that they would make a Skull and Bones soiree look like a paragon of democracy in action. Time reported last spring that even the Department of Homeland Security was told to take a break from its appointed tasks to round up one terrorism-fighting photo op a month for the president.

To enforce the triumphalist narrative of these cinematic efforts, the Bush team had to cut out any skeptical press, or, as Mr. Bush once put it, "go over the heads of the filter and speak directly to the people" (as long as they're pre-selected). This didn't just mean avoiding press conferences and blackballing reporters from campaign planes. It also required an active program to demonize "the elite media" while feeding Fox News and its talk-radio and on-line amen chorus at every opportunity. "I end up spending a lot of time watching Fox News, because they're more accurate in my experience" is how Dick Cheney put it earlier this year. Thus the first Bush-Kerry debate was preceded by a three-installment interview with the president by Fox's Bill O'Reilly, whose idea of hard-hitting journalism is encapsulated in his boast that his was "the only national TV news program" to shield its viewers from pictures of Abu Ghraib. The highlight of his pre-debate Bush marathon was his expression of admiration for the president's guts in taking questions not submitted to him in advance. This is a "free press" in the same spirit as that championed by such Bush pals as Silvio Berlusconi, Crown Prince Abdullah, Pervez Musharraf, Ayad Allawi and, of course, dear old "Vladimir."

But those who live by Fox News can die by Fox News. If you limit your diet to Fox and its talk-radio and blogging satellites, you may think that the only pressing non-Laci Peterson, non-Kobe, non-hurricane stories are "Rathergate" and the antics of the Swift Boat Veterans for Truth. Your diet of bad news from Iraq is restricted, and Abu Ghraib becomes an over-the-top frat hazing. You are certain that John Kerry can't score in the debates because everyone knows he's an overtanned, overmanicured metrosexual. You reside in such an isolated echo chamber that you aren't aware that even the third-rated network news broadcast, that anchored by the boogeyman Dan Rather, draws 50 percent more viewers on a bad night than "The O'Reilly Factor" does on a great one (the Bush interview).

Eventually you become a prisoner of your own fiction and lose touch with reality. You start making the mistakes Mr. Baker made - and more. The whole Bush-Cheney operation is less sure-footed about media manipulation than it once was. You could see this the week before the debate, when the president rolled out Mr. Allawi for a series of staged Washington appearances that were even less effective than his predecessor Ahmad Chalabi's State of the Union photo op with Laura Bush. No one at the White House seemed to realize that if you want to keep a puppet from being ridiculed as a puppet you don't put him on camera to deliver sound bites (some 16, by the calculation of Dana Milbank of The Washington Post) that are paraphrases of the president's much replayed golden oldies. The whole long charade played out like a lost reel of "Duck Soup."

The Bush-Cheney campaign can console itself with the hope that the embarrassing first debate images will be superseded by debates No. 2 and No. 3. (Nixon aced the third of his four matchups with Kennedy.) But it can't suppress the pictures from an ongoing war that only Mr. Bush, Mr. Cheney and Mr. Allawi believe is getting better by the day. It was back in March that the discrepancy between the White House's narrative and the reality on the ground was first captured in dramatic split screen: as Dick Cheney delivered a speech at the Reagan presidential library bashing Mr. Kerry and boasting of our progress in Iraq, his sour certitude was paired with an especially lethal car bombing in central Baghdad. These days the bombings are more frequent and often more lethal, and such tragic juxtapositions are the rule rather than the exception.

If anything, the first Bush-Kerry confrontation has given split-screen television a new vogue. Having defied the efforts of both campaigns to squelch its use on Sept. 30, emboldened TV news organizations can run with it at will. So we saw on the Sunday after that debate, when Condoleezza Rice appeared on ABC's "This Week."

There she was quizzed about the report in that morning's Times saying that in 2002 she had hyped aluminum tubes as evidence of Saddam's nuclear threat a year after her staff was told that government experts had serious doubts. Ms. Rice kept trying to talk over the soft-voiced George Stephanopoulos's questions, but he zapped her with a picture: a September 2002 CNN interview in which she had not, shall we say, told the whole truth and nothing but. As the old video played, ABC used a split screen so we could watch Ms. Rice, "This Is Your Life" style, as she watched the replay of her incriminating appearance of two years earlier. Maybe, like Mr. Bush at the first debate, she knew her reaction was being caught on camera. But even if she did, the unchecked rage in her face, like that of her boss three days earlier, revealed that her image and her story, like the war itself, had spun completely out of her control.

Copyright 2004 The New York Times Company | Home

The High Cost of Israel's Gaza Mission: Innocent Victims

October 10, 2004


JABALIYA REFUGEE CAMP, Gaza Strip, Oct. 9 - With helicopters circling overhead and tanks parked on the fringes of the largest Palestinian refugee camp, Israeli forces are trying to pick off masked militants who are shooting at the soldiers and launching rockets into Israel.

The mission is difficult. The militants are elusive, darting through the camp's narrow alleys, and civilians are everywhere, with children filling the streets. The result is that many of the casualties are innocents.

In 11 days of fighting in the northern Gaza Strip, Israeli forces have killed at least 90 Palestinians, including about 55 militants and 35 civilians, according to Palestinian hospital officials.

The dead include 18 Palestinians who were 16 or younger, according to a count by The Associated Press. In addition, most of the wounded, numbering at least 300, have been noncombatants, hospital officials say.

The Israeli offensive in northern Gaza has claimed more Palestinian lives than any operation since the military swept through Palestinian cities in the West Bank in the spring of 2002 in response to a wave of suicide bombings. Over all, several hundred Palestinians were killed.

In the West Bank, Israeli troops went door-to-door in Palestinian cities, and the military also suffered substantial casualties. Now, in Gaza, the Israelis are sticking to the relative safety of their tanks and armored vehicles, and just two soldiers have been killed. But this also means the troops tend to be firing powerful weapons into congested areas from a distance.

In many instances, Israel has singled out militants among large groups of civilians. In an airstrike Tuesday evening, the Israelis fired on a busy street in downtown Gaza City. One missile missed, but the second destroyed the intended target, a white sedan, killing a leading figure in the Islamic Jihad faction, Bashir al-Dabash, and a bodyguard. Three passers-by were lightly wounded.

Several hours later, at about 1 a.m. Wednesday, an Israeli tank came under fire in the nearby town of Beit Lahiya. Israeli forces responded by shelling a house that they believed was the source of the attack, according to the military.

However, Palestinian ambulance drivers and survivors said three houses were hit by three separate shells. In one, a father and son were killed. In another, a teenage boy was killed in his bed. And in the Filfil family home, a five-story building, a shell crashed through a top-floor window and slammed into the living room where the parents and nine children had gathered in an effort to stay safe.

"We were awake from fear, and I was making tea for the family," said Sumaya Filfil, 36, the mother of the children, who range from 7 months to 13 years old. "Suddenly we heard an explosion and were thrown to the floor."

The entire family was sprayed with shrapnel, and they are now recovering in three separate hospitals. Mrs. Filfil and several of her children share a single room. All have faces reddened from cuts.

Prime Minister Ariel Sharon says he is determined to withdraw Israeli soldiers and settlers from Gaza next year. But he also says he will not allow Palestinians to fire rockets at Israeli communities without a response.

Still, Israel was wary of waging a large-scale campaign in northern Gaza out of concern that its troops would get bogged down in urban fighting. The military has acknowledged Palestinian civilian casualties, and it says they are unintentional.

Zalman Shoval, an adviser to Mr. Sharon, said: "Israel carefully weighs the dangers to civilians. But we feel the terrorists were using civilian areas as their shields. Remember, they are deliberately targeting our civilians. Their rockets forced us into this."

Palestinians have fired about 450 rockets in the past three years, most launched from northern Gaza and directed at the Israeli town of Sederot. Four Israelis have been killed, including two children, ages 2 and 4, who were struck on Sept. 29.

Despite the large Israeli military presence, estimated at 200 armored vehicles, the vast majority of Palestinian families have defiantly remained in their homes, even those on the front lines, like the Filfils.

The Filfil family is prosperous and can afford to move from the Beit Lahiya area until the danger passes. Gaza City is just a few miles away and has been largely unaffected.

"Why should I run? This is our house," Mrs. Filfil said.

And when the family members recover, where will they go if Israeli tanks are still parked outside?

"I would go straight home, and take my kids," she said.

Palestinians cite several reasons for staying in the face of such danger. Many have large families and are extremely poor, saying they have no money to move out and no place to go. Others want to express solidarity with the Palestinian militants.

Older Palestinians recall the 1948-9 war at Israel's independence, when hundreds of thousands of Palestinians lost their homes, and say they fear the same thing could happen again.

"The catastrophe of 1948 will not be repeated," said Dr. Mahmoud al-Asali, head of Kamal Adwan Hospital, which has treated most of the casualties. "We say, 'We will die here, but we will not leave here.' "

On Saturday, Israeli forces shot dead five Palestinian militants in northern Gaza, the military said. Also, a helicopter missile strike killed two armed Palestinians in the southern town of Khan Yunis, the military said. Palestinians said the two were policemen.

While Israeli armored vehicles are parked along the eastern and southern edges of the Jabaliya camp, a warren of cinderblock buildings housing more than 100,000 Palestinians, life inside the camp goes on.

Pedestrians clog the streets, making it difficult to maneuver a car. Policemen casually watch over some corners, and men sit on the front steps of shops, sipping tea.

The deceptive normality is frequently interrupted by Israeli drones, buzzing overhead like lawnmowers in the sky, though they are difficult to spot even on a cloudless day.

In such a congested place, children play in the streets, and teenagers gravitate toward the tanks to throw stones or Molotov cocktails.

On Thursday, Sliman Abu Ful, and one of his relatives, Raed Abu Zeid, both 15, were killed by a helicopter missile as they approached to within a couple hundred yards of Israeli tanks, witnesses said.

Family members said the youths were using an empty plastic tube to simulate the firing of a rocket. The Israeli military said the helicopter fired after two Palestinians were seen trying to launch a rocket.

Mrs. Ful said she and her elderly husband tried to keep their son away from the Israeli tanks, to no avail.

"I told him to stay at home or go to school," she said as she wept. "But every day the Israelis were there, he would go. He always told me, 'Forgive me, but I want to be a martyr.' "

As Sliman's body was carried from his house into the street, another noisy funeral procession was in progress just a block away, this one for a teenager who died of wounds suffered last week.

"We won't bow to the Israelis or Americans," said a Palestinian man over a loudspeaker. Then he continued, "Raise your hand if you want to be a martyr." Dozens of young hands shot up in unison.

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Nuclear Fiction

October 10, 2004
Nuclear Fiction


When W. debated Al Gore, it was the Insufficient versus the Insufferable.

When W. debated John Kerry, it was the Obfuscating versus the Oscillating.

We face a choice now between a president who rolled us on Iraq and a senator who got rolled by the president on Iraq.

George Bush is not giving an inch on Iraq. He's toughing out the cascade of confirmation and criticism from his own people about the hyperpower hyperbole that led to an unnecessary war and an unruly occupation. His advisers say it's better for the president to appear out of touch than apologetic. He'd rather seem delusional than deluded.

He can't admit what the Duelfer report says, that Saddam was no threat to the U.S. or any other country. The mushroom cloud was a Fig Newton of Dick Cheney's feverish imagination. That would mean W. didn't fix his father's screw-up, but he screwed up his father's fix. A big Oedipal oops.

After Bush 41's Persian Gulf war, Saddam devolved into the Norma Desmond of vicious dictators, shrinking but pretending to still be big, writing romance novels, trying to order liposuction machines, teeth-whitening material and hair transplant equipment, soaking up American culture like his favorite song, Frank Sinatra's "Strangers in the Night,'' and his favorite book, Ernest Hemingway's "The Old Man and the Sea."

The president may not have gotten his money's worth with the report of Charles Duelfer, the chief U.S. weapons inspector. After all, in a vain retroactive attempt to justify his hokum about W.M.D., he had 1,200 people working for 15 months - stretching our scarce supply of Arab linguists - to produce 918 pages at a cost of about a billion dollars just to find out that Saddam would have liked to have had weapons if he could have, but he couldn't, so he didn't.

But at least for his billion, the president got some earnest Introduction to American Literature analysis of the Iraqi dictator and his taste for some Western culture, noting that Saddam felt a kinship with Hemingway's protagonist Santiago, the poor Cuban fisherman (even though the rich Saddam liked to grenade-fish - toss a grenade in the water and then send in scuba divers to fetch the dead fish).

"Saddam's affinity for Hemingway's story is understandable, given the former president's background, rise to power, conception of himself and Hemingway's use of a rustic setting similar to Tikrit to express timeless themes," the report stated. "In Hemingway's story, Santiago hooks a great marlin, which drags his boat out to sea. When the marlin finally dies, Santiago fights a losing battle to defend his prize from sharks, which reduce the great fish, by the time he returns to his village, to a skeleton. The story sheds light on Saddam's view of the world and his place in it. ... to Saddam even a hollow victory was by his reckoning a real one."

Even though his own report stated that U.N. sanctions had worked to defang Saddam, Mr. Bush decided to stand firm on nonsense, insisting in the debate Friday night that "sanctions were not working. The United Nations was not effective at removing Saddam Hussein."

When a questioner named Linda asked the president to give three bum decisions he had made in office, Mr. Bush took a pass. Lincoln could admit mistakes. J.F.K. could admit mistakes. But W. thinks admitting mistakes is for powder puffs. Of his decision to invade Iraq, he said: "Sometimes in this world you make unpopular decisions because you think they're right." Or you stick to them even after you know they're wrong.

The president's living in a dream world. He kept insisting that 75 percent of Al Qaeda has been "brought to justice," even though such a statistic is misleading, since counterterrorism experts say that the invasion of Iraq was a recruiting boon for Osama and that Al Qaeda has metastasized and spawned other terrorist groups.

Mr. Bush tried to pretend the devastating Duelfer report backed him up, noting after the report came out that Saddam "retained the knowledge, the materials, the means and the intent to produce weapons of mass destruction and could have passed this knowledge to our terrorist enemies."

W. should have followed his father's policy on hypotheticals. As Poppy Bush would say, when someone asked him to be speculative: "If a frog had wings, it wouldn't bump its tail on the ground."

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