The Next Crisis for German Banks — Shipping

FRANKFURT — For all the talk about Germany’s financial exposure to Greece, it turns out that some German banks have a problem of more titanic proportions — their vulnerability to the global shipping trade.

Germany’s 10 largest banks have 98 billion euros, or $128 billion, in outstanding credit or other risks related to the global shipping industry, according to Moody’s Investors Service. That is more than double the value of their holdings of government debt from Greece, Ireland, Italy, Portugal and Spain. And it is more than any other country’s financial exposure to the shipping industry, which is in the fifth year of a recession.

Moreover, German banks bear a generous share of the blame for spawning that recession. By helping to finance and market funds used to build and buy ships, a popular tax shelter, the banks helped create a glut in large container ships that has led to a collapse in cargo hauling prices worldwide.

Germans grumble chronically about having to pay for Greece’s bad debts, and German policy makers style themselves as guardians of fiscal prudence. But the shipping-related crisis, and the threat it poses to the German economy from billions of euros in bad loans and losses at shipping-related companies, is a reminder that German banks and political leaders also have plenty to answer for.

The recession in shipping has been overshadowed by the euro zone debt crisis, but it has many of the same causes. They include complex financial products that turned sour, market-distorting government incentives and a gigantic underestimation of risk.

“The container ship market is completely overbuilt,” said Thomas Mattheis, a partner at TPW Todt, an accounting firm in Hamburg that advises clients in the industry. He attributed the situation to banks that granted easy credit, cargo companies that ordered too many vessels and investors eager for the tax-free profits that were part of the allure, thanks to German law.

“When you look back you can say they all had a share,” Mr. Mattheis said.

HSH Nordbank in Hamburg, the world’s largest provider of maritime finance, is expected to raise its estimate of potential losses from shipping on Wednesday when it reports quarterly earnings. The bank, owned by local governments and savings banks, has already warned that in coming years it will need to avail itself of 1.3 billion euros in guarantees offered by Hamburg and the state of Schleswig-Holstein, putting a further strain on taxpayers.

“I have to admit that grave mistakes were made in the years before 2009,” Constantin von Oesterreich, chief executive of HSH, said in an interview published on Saturday by The Hamburger Abendblatt. In October, Mr. von Oesterreich became the bank’s third chief executive since 2008.

Other German banks that were particularly active in ship finance, including Commerzbank in Frankfurt and NordLB in Hanover, which both rank in the top five globally in that market, have said they have made adequate provisions for losses and will not need any government aid.

Commerzbank, which is partly owned by the German government after a bailout, shut down a unit specializing in ship financing this year and is winding down its holdings. The bank warned in its most recent quarterly report that it would be at least another year before it could sell units that were set up to finance construction of cargo ships with names including Marseille and Palermo. While larger, relatively new cargo ships sell for tens of millions of dollars, older, smaller ships often fetch only a few million — not much more than the value of the scrap metal.

Exposure to shipping is one reason Moody’s affirmed its negative outlook for German banks last month. In a report, the ratings agency warned that the global shipping industry “faces weakened demand amid sluggish global economic growth and evolving structural overcapacity.” It said money that the 10 largest German banks had lent to the shipping industry equaled 60 percent of their capital, the funds held in reserve for potential losses.

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No word from Supreme Court on gay marriage cases

WASHINGTON — The Supreme Court justices are not exactly facing the "fiscal cliff," but they will be under more pressure this week to decide which gay marriage cases they will rule on this term.

They discussed the pending appeals at their private conference on Friday, but announced no decisions. The justices will try again at their weekly conference this Friday, the last such meeting before the long holiday recess.

It is not uncommon for the justices to discuss an appeal for two or more weeks before voting to grant it. The gay marriage question is complicated because there are 10 pending appeals, including a defense of California's Proposition 8, which bans same-sex marriage.

Eight of the appeals ask the court to rule on the constitutionality of the Defense of Marriage Act, which bars federal benefits to legally married gay couples. Judges in New England, New York and California have declared this provision unconstitutional because it denies gays and lesbians equal protection of the laws.

The Supreme Court has a duty to rule when a major federal law has been struck down in one part of the nation. But it is not clear which case the court should decide.

The first ruling on the issue arose when Nancy Gill, a postal worker from Massachusetts, sued because she could not include her female spouse on her healthcare plan. She won, but Justice Elena Kagan may be forced to sit out that case because she worked on it as solicitor general, potentially setting up a 4-4 tie.

In October, Solicitor Gen. Donald Verrilli Jr. advised the court that the New York case of Edith Windsor "now provides the most appropriate vehicle" for deciding the constitutional question. It was filed after Kagan had stepped aside from the Justice Department.

Windsor and her partner, Thea Spyer, lived together for more than 40 years and married in Canada in 2007. When Spyer died in 2009, she left her estate to Windsor, but the Internal Revenue Service assessed Windsor $363,000 in estate taxes, saying she did not qualify as a "surviving spouse."

But because Windsor and Spyer were married in Canada, they may not serve as the proper stand-ins for the other plaintiffs who were legally married in one of the states.

Massachusetts has raised a third complication. State Atty. Gen. Martha Coakley filed a separate appeal and urged the court to decide the issue on states' rights grounds. Since marriage has always been a matter of state law, she argued, the Defense of Marriage Act violates the 10th Amendment, which protects the powers of the states.

If the court sees a problem with the Gill or Windsor cases, it could opt to decide similar cases involving federal benefits brought by same-sex couples from Connecticut, New Hampshire, Vermont and California.

Once the justices decide which of the Defense of Marriage Act cases to hear, they must decide whether to go further and rule on California's Proposition 8 and the potentially broader issue of the right to marry for gay couples. If the court votes to hear the case, the justices will decide by next summer on whether the state's ban on gay marriage violates the Constitution's guarantee of equal protection of the laws.

If the court turns down the appeal, it will clear the way for gay marriages to resume in California, but without setting a national precedent.

In addition, Arizona has asked the court to revive a state measure that denies benefits to the domestic partners of state employees — a case known as Brewer vs. Diaz.

The court's recent practice has been to announce on Friday afternoon which cases have been granted a review, and to announce on Monday the appeals that were turned down.

david.savage@latimes.com

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A Google-a-Day Puzzle for Dec. 4

Our good friends at Google run a daily puzzle challenge and asked us to help get them out to the geeky masses. Each day’s puzzle will task your googling skills a little more, leading you to Google mastery. Each morning at 12:01 a.m. Eastern time you’ll see a new puzzle posted here.

SPOILER WARNING:
We leave the comments on so people can work together to find the answer. As such, if you want to figure it out all by yourself, DON’T READ THE COMMENTS!

Also, with the knowledge that because others may publish their answers before you do, if you want to be able to search for information without accidentally seeing the answer somewhere, you can use the Google-a-Day site’s search tool, which will automatically filter out published answers, to give you a spoiler-free experience.

And now, without further ado, we give you…

TODAY’S PUZZLE:

Note: Ad-blocking software may prevent display of the puzzle widget.

Ken is a husband and father from the San Francisco Bay Area, where he works as a civil engineer. He also wrote the NYT bestselling book "Geek Dad: Awesomely Geeky Projects for Dads and Kids to Share."

Read more by Ken Denmead

Follow @fitzwillie and @wiredgeekdad on Twitter.

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Katt Williams Arrested After Alleged Bar Rampage

LOS ANGELES (TheWrap.com) – Katt Williams didn’t have much to laugh about this weekend after the comedian was arrested in Seattle, following an incident at a bar during which Williams allegedly attacked a woman with a cigarette, according to the Seattle Police Department.

According to police Williams – born Micah Williams – “exchanged words” with other customers at the World Sports Grille in the city’s South Lake Union area Sunday afternoon and “brandished a pool cue” at the bar’s manager.

At one point, police say, Williams – who was in town to perform at the Paramount Theatre – followed a family outside of the bar and flicked a lit cigarette into their car, striking a woman just below the eye. He also threw a rock at the car, according to police.

Police showed up at the establishment just before 2:30 in the afternoon and, after a struggle to get Williams into the patrol car, transported him to the West Precinct. Williams was booked into the King County Jail for investigation of assault, harassment and obstruction, police said.

A representative for Williams has not yet responded to TheWrap’s request for comment.

According to TMZ, he has been released on bail.

The bar incident wasn’t Williams’ only brush with police this weekend. According to the Seattle Police Department, after the 41-year-old comedian’s show Friday night, three fans claimed Williams attacked them when they tried to take a picture with him after the show. Williams’ denied the allegation, saying that the fans had forced their way into his dressing room, and no arrests were made.

Williams told police after the Friday night incident that he planned to cancel Saturday’s show and leave town, but apparently didn’t.

Celebrity News Headlines – Yahoo! News

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National Briefing | New England: New Hampshire: Not Guilty Plea in Hepatitis Case

A traveling hospital technologist accused of stealing drugs and infecting patients with hepatitis C through contaminated syringes pleaded not guilty in federal court on Monday. The technologist, David Kwiatkowski, whom prosecutors described as a “serial infector,” was indicted last week on charges of tampering with a consumer product and illegally obtaining drugs. Until May, Mr. Kwiatkowski worked as a cardiac technologist at Exeter Hospital, where 32 patients were given diagnoses of the same strain of hepatitis C he carries. Before that, he worked in 18 hospitals in seven states, moving from job to job despite having been fired twice over accusations of drug use and theft. In addition to the New Hampshire patients, a handful of patients in Kansas and one in Maryland have been found to carry the strain Mr. Kwiatkowski carries.

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British Business Hesitant to Defend Staying in European Union

LONDON — The chairman of the London Stock Exchange, Chris Gibson-Smith, simply does not have the time to speak. Christopher North, the boss of Amazon in Britain, is too busy as well. And Charles Dunstone, the founder of the mobile phone retailer Carphone Warehouse, also has an exceptionally full agenda.

All three are among a dozen or so top business and financial leaders concerned enough about Britain’s future in the European Union to join the advisory council of a group campaigning to keep the country in the bloc.

But not many of them seem ready to explain why in public.

Bringing access to an economic area of about 500 million people, membership in the European Union is vital to many British businesses. Yet with the public divided over Britain’s ties to the bloc, most business leaders prefer a discreet silence to risking criticism.

Recently the stakes have increased, with Prime Minister David Cameron promising to loosen British ties to the bloc and possibly hold a referendum after negotiating a more arm’s-length relationship. After almost three years of crisis in the euro zone, there is more speculation than ever about a possible British withdrawal.

Britons have never been enthusiastic about the idea of European integration. So pro-Europeans are frustrated by the reluctance of business to stress the commercial benefits, particularly since, in private, company bosses can be outspoken about the risks of withdrawal.

“What they say to me when I meet them is this would be disastrous for British business,” said Glenis Willmott, leader of the British Labour Party’s members of the European Parliament.

Last month, Roger Carr, chairman of the main business lobbying organization, the Confederation of British Industry, appealed to his colleagues to break their silence or risk a possibility that now goes by the shorthand “Brixit”: British exit.

On Europe it was “essential that the voice of British business is loud and clear in extolling the virtues of future engagement,” he said.

A poll of business leaders by Ipsos MORI, commissioned in 2011 by Business for New Europe, a lobbying group campaigning for continued British membership, showed that 33 percent said they strongly agreed that a British exit from the European Union would damage business.

So why the silence when the stakes are so high?

“I ask myself, Why are these people not willing to be more outspoken?” said Phillip Souta, director of Business for New Europe. Its advisory council includes Mr. Gibson-Smith, Mr. North and Mr. Dunstone — all of whom declined to be interviewed.

“But I understand why they are not willing to be more outspoken is because it is so politically divisive,” he added. “Boards are divided on all of these issues. If you don’t have consensus they will agree not to talk.”

Some business leaders who supported earlier pro-European initiatives have been compromised by having advocated British membership in the now struggling euro.

Martin Sorrell, chief executive of the advertising group WPP and one of a handful of business figures happy to go on television to make a pro-European case, says many colleagues find the European Union too politically charged.

“Business leaders don’t want to speak out on these controversial issues,” he said. “They’ve got enough to do trying to run their own businesses and focusing on their own businesses and challenges.”

And even pro-European company bosses tend to have some reservations about the way the European Union is run, including the level of bureaucracy, the “more extreme” pieces of European legislation and the increases demanded by some in the bloc’s budget, he said.

Nevertheless, Mr. Sorrell says he believes that Europe’s internal market is “a major economic opportunity that we would live to regret passing up” and Britain has a better chance of resolving its problems with the union if it argues from within.

With the debate moving so swiftly in a euro-skeptic direction, pro-union campaigners are beginning to organize a counteroffensive.

If there is a referendum on Britain’s relations with the union, Mr. Sorrell says he believes that his business colleagues will stir.

Ms. Willmott thinks there’s no time like the present. “They say this to us privately, why not say it publicly?” she said. “It’s about time we heard these arguments.”

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Coast Guardsman is killed after suspected smugglers ram his boat

A veteran U.S. Coast Guard chief petty officer was killed Sunday after suspected smugglers rammed his vessel near Santa Cruz Island, casting him into the ocean with a fatal head wound.

Chief Petty Officer Terrell Horne III, 34, of Redondo Beach was second in command of the Halibut, an 87-foot patrol cutter based in Marina del Rey. Authorities said they could not recall a Coast Guard chief petty officer being killed in such a manner off the coast of California.

Early Sunday morning, the Halibut was dispatched to investigate a boat operating near Santa Cruz Island, the largest of California's eight Channel Islands. The island is roughly 25 miles southwest of Oxnard.

The boat, first detected by a patrol plane, had fallen under suspicion because it was operating in the middle of the night without lights and was a "panga"-style vessel, an open-hulled boat that has become "the choice of smugglers operating off the coast of California," said Coast Guard spokesman Adam Eggers.

The Coast Guard cutter contains a smaller boat — a rigid-hull inflatable used routinely for search-and-rescue operations and missions that require a nimble approach. When Horne and his team approached in the inflatable, the suspect boat gunned its engine, maneuvered directly toward the Coast Guard inflatable, rammed it and fled.

The impact knocked Horne and another Coast Guardsman into the water. Both were quickly plucked from the sea. Horne had suffered a traumatic head injury. While receiving medical care, he was raced to shore aboard the Halibut. Paramedics met the Halibut at the pier in Port Hueneme and declared Horne dead at 2:21 a.m.

"We are deeply saddened by the loss of our shipmate," said Adm. Robert J. Papp, the Coast Guard commandant. "Our fallen shipmate stood the watch on the front lines protecting our nation, and we are all indebted to him for his service and sacrifice."

The second crew member knocked into the water suffered minor injuries and was treated and released from a hospital later Sunday. He was not identified.

Using a helicopter and a 45-foot boat stationed in Los Angeles, the Coast Guard later found the panga and stopped it.

Two men were detained. The Coast Guard declined to identify them or say whether drugs were found aboard the boat. A second suspicious vessel was believed to have been traveling alongside the panga before the incident.

"We are actively working to ensure that all of the individuals involved in this illegal activity are brought to justice," said Coast Guard Capt. James Jenkins.

The Coast Guard was unable to provide a detailed account of Horne's service.

He had been heralded by the agency on several occasions.

He appears to have arrived in Southern California last summer after serving for two years as an executive petty officer in Emerald Isle, N.C. There, he received a Coast Guard Commendation Medal for his leadership in 63 search-and-rescue cases, in which 38 lives were saved.

According to an account of the medal ceremony, the most notable of those operations involved a boat that capsized in a North Carolina inlet in 2010. The account said he coached his team through "treacherous" sea conditions to rescue five people.

The Coast Guard also noted Horne's involvement in a January operation in which the Halibut found and stopped two boats operating at midnight with

no lights. The boats contained 2,000 pounds of marijuana.

In the last five years, as U.S. authorities have become increasingly successful at blocking traditional land routes, smugglers have taken increasingly to the sea — ferrying both drugs and immigrants. Authorities believe a smuggling vessel is launched toward California every three days; the number of immigrants and smugglers arrested at sea or along the coast more than doubled to 867 in 2010 from the previous year.

Drug runners and human smugglers have run ashore at a dog beach in Del Mar, at Crystal Cove in Orange County and next to the San Onofre nuclear power plant. Border Patrol agents have been diverted from land to sea, and an agency supervisor recently called the ocean "the front line."

The eruption in sea-based smuggling has created the same cat-and-mouse game in the ocean that has long existed along the U.S.-Mexico border. Smuggling boats often travel without lights and at a slow speed to limit their wakes. When U.S. agents began disrupting routes into San Diego beaches, smugglers began conducting counter-surveillance, using radios to direct boat pilots to unguarded beaches.

scott.gold@latimes.com

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Attack of the Mutant Pupfish

West of Pahrump, Nevada, in a corner of the Mojave Desert a couple thousand feet above Death Valley, a warm aquifer provides a home for one of the world’s rarest animals. It’s a tiny silvery-blue fish, smaller than your pinkie toe, and in the past 50 years it has survived real-estate speculators, death threats, congressional battles, and human screwups. The Devils Hole pupfish—Cyprinodon diabolis—is nothing if not tenacious.

But the biggest existential threat to the pupfish comes from its own DNA. Once upon a time, pupfish lived in a sprawling lake. Around 20,000 years ago, water levels dropped, the landscape turned to desert, and the pupfish ended up in disconnected ponds. Today, nine different species are scattered across the Southwest, and half of them are endangered. Devils Hole is the worst case; as of September 2012, there were 75 fish left. Thousands of years of adaptation have left the Devils Hole pupfish able to live only in one very particular environment: It needs 90-degree water, low oxygen, and a shallow submerged ledge on which to spawn. It’s hard enough being endangered; being endangered and picky is a deadly combination.

Endangered, picky, and unlucky? Even worse. Beginning in the 1970s, government scientists built three pools to contain backup populations of Devils Hole pupfish as a final hedge against extinction. At two of these refuges, pumps, valves, and other mechanical bits malfunctioned repeatedly, killing most of the fish. In one case, lightning struck a transformer. But at the third site, called Point of Rocks, something more interesting happened. Somehow a few pupfish of a different species managed to infiltrate the refuge and—to put it politely—their DNA quickly spread through the population. After about half a decade, every fish in the pool was descended from the invaders, who gave their offspring telltale genes and an extra set of fins. Wildlife officials moved all the hybrids to a hatchery, where, unlike captive Devils Hole pupfish, they couldn’t stop making babies. “There were floor-to-ceiling tanks of these hybrid fish,” says Andy Martin, an evolutionary biologist at the University of Colorado at Boulder who led the research into the hybrids’ DNA. “This was a population that had been sputtering away, and now it was going like mad.”

To Martin, the fact that an influx of new genes caused a population explosion suggested what was wrong: “genetic load,” a glut of defective DNA that accumulates in a small population. On the upside, that diagnosis suggests a cure—a way to save the species. Martin has a plan to bring the fish back from the brink. But to the kind of people who have battled extinctions in the past, his solution is heresy.

For half a century, conservationists have seen themselves as preservationists: Protect species X as it exists in place Y at time Z. Of course, nature has no such compunctions. Evolution is change. So the way to save the Devils Hole pupfish, Martin says, is to introduce genes from its cousin, the Ash Meadows Amargosa pupfish—C. nevadensis, the same little Casanova from the refuge—which is native to a spring just a few miles away. Martin wants to take one or two and drop them in with their endangered relatives. That simple act would have profound implications. It would protect the Devils Hole pupfish by rewriting its genome.

Whether or not you care about pupfish, this plan represents a major philosophical change in how we think about our relationship with nature—because it doesn’t end with the pupfish. It ends with us becoming architects, engineers, and contractors for entire ecosystems. The old approach involved fencing off swaths of wilderness and stepping aside. In the new order, we’d be the stewards not just of land or wildlife but of individual chromosomes. So far, in the world of Devils Hole pupfish conservation, Martin has run into a wall of no. But around the world, in other places where other species are in trouble, the answer, increasingly, is yes.

In 1995, Florida wildlife officials flew eight female cougars (Puma concolor stanleyana) from Texas to breed with their hometown Florida panthers (Puma concolor coryi), a local variety on the brink of extinction. The panther project met with passionate resistance, but it worked. Population numbers have tripled since then. (Of course, their habitat is increasingly covered in asphalt, and the cats often meet their end in a splattery heap on the highway. But at least their genes are hardy and their testicles are more likely to fully descend.)

Still, the Florida panther project isn’t exactly like what Martin proposes to do with pupfish. The pumas were two different subspecies. Martin wants to cross two separate species. That’s supposed to be a no-no. In fact, by one definition of what constitutes a species, it shouldn’t even be possible. Scientists have long thought of species as reproductively isolated units. In the days before Darwin, if two animals couldn’t produce fertile offspring, it meant they were different species. Then things got complicated. In the late 1800s, Darwin and naturalist Alfred Russel Wallace, who independently proposed the idea of natural selection, both said the sterile-offspring definition wasn’t enough. Over the next century, evolutionary biologists from Theodosius Dobzhansky to Ernst Mayr ladled on new criteria. Mate choice, physiology, geography, invisible genetic differences—all these might distinguish species.

But it turns out that biology doesn’t even adhere to those categories. For example, the ability to reproduce can evolve far more slowly than other traits. So when one species branches off from another, it may still be able to breed with its relatives up the evolutionary tree. “It raises the question, what really is a species? It’s very hard to clearly articulate,” says M. Sanjayan, lead scientist for the Nature Conservancy. “There are lots of things that can breed together but look morphologically and genetically different.”

That means scientists triaging endangered species might have more options than they thought. Three decades ago, ornithologists made a last-ditch effort to save the dusky seaside sparrow by breeding it with a related bird. (They failed; the last one died at Walt Disney World Resort on June 17, 1987.) Or take rhinos: Sanjayan is part of an initiative to save the northern white rhinoceros—the last eight until recently lived in zoos. The hope is to breed it with the more abundant southern white rhinoceros, which, depending on whom you believe, is either a different species or a different subspecies. It’s anyone’s guess whether the northerners and southerners will choose to mate.

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Obama salutes entertainers taking a Washington bow

WASHINGTON (Reuters) – Music legend Led Zeppelin was recognized on Sunday alongside entertainers from stage and screen for their contributions to the arts and American culture at the Kennedy Center Honors, lifetime achievement awards for performing artists.

The eclectic tribute in Washington, alternated between solemn veneration and lighthearted roasting of honorees Academy Award-winning actor Dustin Hoffman, wisecracking late-night talk show host David Letterman, blues guitar icon Buddy Guy, ballerina Natalia Makarova and Led Zeppelin.

“I worked with the speechwriters – there is no smooth transition from ballet to Led Zeppelin,” President Barack Obama deadpanned while introducing the honorees in a ceremony in the White House East Room.

Friends, contemporaries and a new generation of artists influenced by the honorees took the stage in tribute.

“Dustin Hoffman is a pain the ass,” actor Robert DeNiro said in introducing Hoffman, the infamously perfectionist star of such celebrated films as “The Graduate” and “Tootsie.”

“And he inspired me to be a bit of a pain in the ass too,” DeNiro said with a big smile.

At a weekend dinner for the winners at the State Department, Secretary of State Hillary Clinton noted that the performing arts often requires a touch of diplomacy as she toasted Makarova, a dance icon in the former Soviet Union when she defected in 1970.

Tiler Peck of the New York City Ballet, who performed in “Other Dances,” one of Makarova’s signature roles, said she has studied her idol’s technique for years.

“This is a role she created,” Peck said.

Despite the president’s misgivings about his own speech, the performance at the Kennedy Center navigated the transition from refined ballet to gritty blues music when the spotlight turned to Guy, a sharecropper’s son who made his first instrument with wire scrounged from around his family’s home in rural Louisiana.

“He’s one of the most idiosyncratic and passionate blues greats, and there are not many left of that original generation…,” said Bonnie Raitt, who as an 18-year-old blues songstress was often the warm-up act for Guy.

George “Buddy” Guy, 76, was a pioneer in the Chicago blues style that pushed the sound of electrically amped guitar to the forefront of the music.

“You mastered the soul of gut bucket,” actor Morgan Freeman told the Kennedy Center audience. “You made a bridge from roots to rock ‘n roll.”

In a toast on Saturday night, former President Bill Clinton talked of Guy’s impoverished upbringing and how he improvised a guitar from the strands of a porch screen, paint can and his mother’s hair pins.

“In Buddy’s immortal phrase, the blues is ‘Something you play because you have it. And when you play it, you lose it.’”

It was a version of the blues that drifted over the Atlantic to Britain and came back in the finger-rattling rock sound of Led Zeppelin.

Jimmy Page, 68, was the guitar impresario who anchored the compositions with vocalist Robert Plant, 64, howling and screeching out the soul. Bassist/keyboardist John Paul Jones, 66, rounded out the band with drummer John Bonham, who died in 1980.

The incongruity of the famously hard-partying rock stars sitting in black tie under chandeliers at a White House ceremony was not lost on Obama.

“Of course, these guys also redefined the rock and roll lifestyle,” the president said, to laughter and sheepish looks from the band members.

“So it’s fitting that we’re doing this in a room with windows that are about three inches thick – and Secret Service all around,” Obama said. “So, guys, just settle down.”

The gala will be aired on CBS television on December 26.

(Reporting By Patrick Rucker and Mark Felsenthal)

Music News Headlines – Yahoo! News

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Vietnam Veterans, Claiming PTSD, Sue for Better Discharges

NEW HAVEN — In the summer of 1968, John Shepherd Jr. enlisted in the Army, figuring that the draft would get him anyway. By January 1969, he was in the Mekong Delta, fighting with the Ninth Infantry Division.

Within a month, his patrol was ambushed, and Mr. Shepherd responded by tossing a hand grenade into a bunker that killed several enemy soldiers. The Army awarded him a Bronze Star with a valor device, one of its highest decorations.

Yet the medal did little to assuage Mr. Shepherd’s sense of anxiousness and futility about the war. A few weeks after his act of heroism, he said, his platoon leader was killed by a sniper as he tried to help Mr. Shepherd out of a canal. It was a breaking point: his behavior became erratic, and at some point he simply refused to go on patrol.

“I never felt fear like I felt when he got shot,” Mr. Shepherd said last week.

After a court-martial, the Army discharged Mr. Shepherd under other-than-honorable conditions, then known as an undesirable discharge. At the time, he was happy just to be a civilian again. But he came to rue that discharge, particularly after his claim for veterans benefits was denied because of it.

Today, Mr. Shepherd, 65, is part of a class-action lawsuit against the armed forces arguing that he and other Vietnam veterans had post-traumatic stress disorder when they were issued other-than-honorable discharges. The suit, filed in Federal District Court, demands that their discharges be upgraded.

The suit raises two thorny issues that could affect thousands of Vietnam veterans: Can they be given a diagnosis of PTSD retroactively, to their time in service, though the disorder was not identified until 1980? And if they can, should recently instituted policies intended to protect troops with PTSD be applied retroactively to their cases?

Mr. Shepherd’s legal team, students with the Yale Law School veterans legal clinic, argues yes on both counts. In court papers, they assert that it is reasonable to assume that Mr. Shepherd and other veterans who were later given PTSD diagnoses began exhibiting troublesome symptoms while in service.

Moreover, under rules put in place during the Iraq war, troops who say they have PTSD must be given medical examinations before they are forced out of the military, to ensure that problematic behavior is not linked to the disorder. If they are given a PTSD diagnosis, service members may still receive an honorable discharge.

“Vietnam War-era veterans, in contrast, have been denied this opportunity for appropriate consideration of the PTSD,” the students said in the complaint.

But the Army says no. In a rejection of an earlier request by Mr. Shepherd to upgrade his discharge, the Army tersely rejected evidence that his misconduct 43 years ago was linked to PTSD and raised questions about whether his platoon leader was actually killed.

A spokesman for the Army said the military has a policy of not discussing pending litigation.

The details of Mr. Shepherd’s case aside, the suit could have a wide impact. The Yale team says that its review of records from 2003 to 2012 shows that 154 Vietnam-era veterans petitioned the Army to upgrade discharges because of PTSD, but that only two were successful. Yet the Army Board of Corrections for Military Records granted upgrades nearly half of the time for other cases.

The students estimate that more than a quarter million Vietnam-era veterans were discharged under other-than-honorable conditions, and that thousands of those probably had PTSD. Their suit names as defendants the secretaries for the Army, Air Force and Navy. Vietnam Veterans of America, the veterans service organization, is joining the case as a plaintiff on Monday.

Discharges that are other than honorable can make it harder for veterans to find work and also disqualify them for veterans benefits.

In Mr. Shepherd’s case, a Department of Veterans Affairs doctor in 2004 gave him a diagnosis of service-connected PTSD. As a result, the department will provide health care for his PTSD. But it will not provide him general medical care, unless he is found to have other health problems related to his service.

Veterans disability compensation is also a problem. Mr. Shepherd’s undesirable discharge was actually upgraded to a general discharge in the 1970s under a special Carter administration program. That upgrade should have made it easier for him to apply for disability compensation. But subsequent legislation enacted by Congress said that clemency upgrades like Mr. Shepherd’s did not automatically qualify veterans for benefits. Mr. Shepherd’s compensation claim was ultimately rejected.

Mr. Shepherd, who has been divorced twice and battled through alcoholism and drug abuse, lives in New Haven, getting by on Social Security and a Teamsters pension. (He drove trucks for years.) He could use the extra money from disability compensation, but what matters as much, he says, is removing the stain of his discharge.

“I want that honorable,” he said. “I did do my part, until I really felt it wasn’t worth getting killed for.”

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