Oil jumps above $104 a barrel on US bailout plan
September 19, 2008 - 4:36pmBy STEVENSON JACOBS
AP Business Writer
NEW YORK (AP) - Oil prices shot up more than $6 a barrel Friday, breaking back into $100 territory as a sweeping government plan to rescue the imperiled U.S. financial system emboldened investors to re-enter the markets.
Light, sweet crude for October delivery rose $6.67 to settle at $104.55 a barrel on the New York Mercantile Exchange, after earlier rising as high as $105.25. It was oil's first close above $100 in a week.
Crude has climbed over $13 in the past three days as the government carries out a historic intervention into the financial system. But analysts say prices could resume their downward trend, noting that demand for energy will likely remain weak as a slumping economy leads Americans to drive less and businesses to scale back operations.
On Friday, Treasury Secretary Henry Paulson said the rescue plan was aimed at removing billions of dollars of troubled assets from the books of banking institutions and restoring calm to panicky financial markets after a week of intense volatility. The Securities and Exchange Commission also temporarily banned short-selling _ or betting that a stock will fall _ of about 800 financial firms, hoping to stem heavy losses in that sector.
The moves soothed skittish traders and sent stocks surging on Wall Street, giving a boost to energy and other commodities. Crude jumped nearly $5 in morning trading, gave back most of the gains later in the day and then climbed again toward the end of regular trading.
"The government rescue plan has reduced the likelihood of a financial meltdown, so the theme of energy demand deterioration is being pushed to the back burner for the time being," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.
But he and other analysts pointed out that oil's fundamentals remain largely bearish.
Crude prices have fallen about $43 since reaching a record $147.27 a barrel on July 11 on concern that slowing economic growth in developed countries will undermine crude demand.
Those fears deepened this week as turmoil in the U.S. financial system led to the bankruptcy of investment bank Lehman Brothers Holding Inc. and an $85 billion government rescue of insurer American International Group Inc.
"People realize we still have a weak economy and $100 oil in these conditions is still very expensive," said Stephen Schork, an analyst and oil trader in Villanova, Pa. "I'm not a believer that the ship has been turned around and that we're going back toward $150 oil."
Meanwhile at the pump, gas prices eased slightly as more Gulf Coast refineries came back on line following the passage of Hurricane Ike last weekend. A gallon of regular fell less than half a penny to a new national average of $3.807, according to auto club AAA, the Oil Price Information Service and Wright Express.
Nigeria's main militant group said Thursday it bombed another oil pipeline, marking a sixth straight day of stepped-up violence in Africa's oil giant.
The Movement for the Emancipation of the Niger Delta said in a statement it used high explosives to destroy the conduit run by a unit of Royal Dutch Shell PLC.
Shell officials could not immediately be reached for comment.
The militants have declared an "oil war" in the Niger Delta, where militants demanding more oil-industry funds from the federal government have increased attacks. About 40 percent of Nigeria's normal daily oil production is now off-line, severely curtailing exports.
Still, oil traders seemed to largely ignore the violence, repeating a trend of recent weeks in which normally bullish news fails to rally the market.
"The focus of the market right now has switched from supply to demand," said Mark Pervan, senior commodity strategist with ANZ Bank in Melbourne. "So these stories will have some impact, but not as much as they had during the last six months when the market was supply-driven."
In other Nymex trading, heating oil futures rose 11.54 cents to settle at $2.8978 a gallon, while gasoline prices gained 11.73 cents to settle at $2.5997 a gallon. Natural gas for October delivery fell 7.8 cents to settle at $7.848 per 1,000 cubic feet.
In London, November Brent crude rose $4.42 to settle at $99.61 a barrel on the ICE Futures exchange.
http://wtop.com/?nid=111&sid=577994By John Fraher and Simon Kennedy
Sept. 18 (Bloomberg) -- The Federal Reserve almost quadrupled the amount of dollars central banks can auction around the world to $247 billion in a coordinated bid to ease the worst crisis facing financial markets since the aftermath of the 1929 Wall Street crash.
The Fed increased the amount of dollars that the European Central Bank, the Bank of Japan and other counterparts can offer from $67 billion ``to address the continued elevated pressures in U.S. dollar short-term funding markets.'' The Bank of England, the Bank of Canada and the Swiss National Bank also participated. Several of them lent funds in their own currencies as well with the Fed adding a record $105 billion in temporary reserves.
Policy makers have struggled to revive confidence in markets this week as investors stockpiled money on concern more financial institutions would fail after the bankruptcy of Lehman Brothers Holdings Inc. and the U.S. government bailout of American International Group Inc. The cost to hedge against losses on U.S. government debt climbed to a record yesterday.
``There's a complete lack of faith in the markets,'' said Jim O'Neill, chief economist at Goldman Sachs Group Inc. in London. ``There's a lot of cash hoarding and people losing trust in banks, so the central banks are acting to relieve that. This might not be the last time they have to act.''
Cheaper Borrowing
Markets welcomed the announcement, which was made in statements from each central bank at 9 a.m. Frankfurt time at the start of European trading. The cost of borrowing dollars overnight slid to 3.84 percent from 5.03 percent yesterday. It was 2.15 percent last week and reached the highest since 2001 on Sept. 15.
The Fed will spray dollars around the world via swap lines with other central banks. They can then auction them in their own markets.
The ECB, Bank of England and SNB allotted a total of $64 billion for one day today. With both the ECB and Bank of England offering $40 billion, U.K. banks bid for just $14 billion, while those in the 15-nation euro area sought almost $102 billion.
``The timing, so early in the trading day, shows both the severity of the strains in the interbank market and as well the authorities' determination to resuscitate orderly functioning of the money markets,'' said Julian Callow, head of European economics at Barclays Capital in London.
$110 Billion for ECB
Under the new arrangements, the ECB doubled the limit of dollars it can get from the Fed to $110 billion and Switzerland's central bank can offer $27 billion, an extra $15 billion. Today marked the first time the two had auctioned dollars overnight since swap lines were opened with the Fed last December.
New swap facilities with the Bank of Japan, the Bank of England and the Bank of Canada amount to $60 billion, $40 billion and $10 billion, respectively. The arrangements are authorized until Jan. 30.
The ECB said it would offer $40 billion ``for as long as needed'' in overnight funds to the region's banks. It will also increase by $5 billion the amount it lends for 28 days and 84 days to $25 billion and $15 billion. The Swiss National Bank will boost its 28-day auctions to $8 billion and the 84-day offering to $9 billion. Both were previously $6 billion.
The Bank of Canada said it has decided not to draw on its $10 billion swap facility at this time. The Bank of Japan, whose policy board held an emergency meeting today, said it will use its $60 billion as required by market conditions.
Adding Euros, Pounds
In auctions of their own currencies, the ECB today lent 25 billion euros in one-day money and the Bank of England 66.2 billion pounds in one-week loans.
The joint action is the latest attempt by central bankers to fight the financial crisis which deepened this week after Lehman and AIG tumbled and Merrill Lynch & Co. was sold. The crisis began over a year ago after the U.S. housing market imploded and has pushed the world economy to the brink of recession.
As markets seized up this week, central bankers pushed more than $200 billion into markets with those in Japan, Hong Kong, South Korea and Australia doing so again today. The U.S. Treasury today announced plans to sell an additional $100 billion in short- term debt to aid the Fed's balance sheet as it extends credit to financial companies.
Wall Street's woes have gone global, forcing the U.K. government to sponsor a rescue of mortgage lender HBOS Plc and Russia to pour money into its banks. Russia's government said today it would invest in the country's stock market when it reopens tomorrow. The official Xinhua News Agency said China will buy equity stakes in state-owned banks to stabilize its market.
Swap Lines
Swap lines were first established in December when officials joined forces to boost dollar liquidity around the world after interest-rate reductions in the U.S., the U.K. and Canada failed to ease concerns about bank lending. The Fed increased its link with the ECB in July.
The announcement today boosted U.S. shares, which have been pummeled this week as contagion spread through financial markets. The Standard & Poor's 500 Index jumped 9.47, or 0.8 percent, to 1,165.86 at 11:05 a.m. in New York, recovering about one-fifth of its loss from yesterday. More than $19 trillion has been wiped off the value of global stock markets since Oct. 31.
Failure to calm markets will see central banks inject even more cash, said Robert Barrie, an economist at Credit Suisse Group in London. Other options central banks could take include accepting greater collateral denominated in foreign currencies, increasing lending to banks abroad and eventually even buying assets directly.
``The lack of dollars has been making the financial crisis worse around the world, which is why we now have this coordinated response,'' Barrie said. The rate of borrowing in dollars for three months rose to the highest since January, indicating bankers are still wary.
Unaddressed Problem
Laurence Mutkin, head of European fixed income strategy at Morgan Stanley, said that while the central banks had prevented money markets from failing, their intervention didn't ``address the key problem'' of banks sitting on cash and refusing to lend.
Since the credit squeeze began in August 2007, central banks have sought to keep apart the need to soothe markets and to combat inflation. They argue that interest rates are a blunt tool for helping markets and that price pressures prevent them from cutting rates.
While the Fed slashed its key lending rate to 2 percent, the central bank has left it there since April. The Bank of Japan kept its key rate at 0.5 percent this week and the European Central Bank increased its benchmark to a seven-year high in July. The Swiss National Bank kept its key rate on hold today.
If the spasms in the markets continue and threaten to derail growth central bankers may shift, although for now they will want to wait, said Kevin Gaynor, head of economics at Royal Bank of Scotland Group Plc in London.
``Partly this is to keep powder dry and partly because cutting interest rates won't make much difference,'' he said.
To contact the reporters on this story: John Fraher in London at jfraher@bloomberg.net; Simon Kennedy in Paris at Skennedy4@bloomberg.net
Treasury pulls out stops to support money markets
By Mark Felsenthal Fri Sep 19, 9:28 AM ET
WASHINGTON (Reuters) - U.S. officials rushed to shore up ailing money markets on Friday after signs that this long-safe corner of financial markets, home to some $3.5 trillion of deposits, was at risk of falling victim to the year-old credit crunch and bring the crisis to Main Street.
The U.S. Treasury Department said it would use $50 billion to back money market mutual funds whose asset values fall below $1 a share. Separately, the U.S. Federal Reserve said it would lend even more money directly to financial institutions so they could purchase certain assets from money market funds.
The latest government efforts come after the credit crisis, which had largely been seen as problem for Wall Street risk takers, threatened to spill over into Main Street after some super-safe money market funds buckled.
"For the next year, the U.S. Treasury will insure the holdings of any publicly offered eligible money market mutual fund -- both retail and institutional -- that pays a fee to participate in the program," the Treasury said in a statement.
President George W. Bush approved use of the Exchange Stabilization Fund to guarantee payments, Treasury said. The fund, which traces its roots to the Gold Reserve Act of 1934, allows the Treasury to conduct various transactions with the Treasury secretary's authorization.
The surprise moves comes as the Treasury and the Federal Reserve consider broad government intervention to prevent the collapse of the financial system, shaken in recent days by a crisis at insurer American International Group that required a $85 billion government rescue and the bankruptcy of investment bank Lehman Brothers Holdings Inc.
The move shows authorities are trying to get out in front of problems before another institution is pushed to the brink of failure, an analyst said.
"It is probably a testament to how bad things really are when you look beneath the hood," said Weston Boone, vice president of listed trade, Stifel Nicolaus Capital Markets, in Baltimore.
"The markets are frozen," he said.
News of the backstop for money market funds had instant impact in stock, bond and currency markets.
U.S. equity index futures, already soaring on optimism for other measures authorities are taking to contain the spiraling credit crisis, shot to session highs, indicating Wall Street will add to gains after its best day in six years on Thursday.
Rates on U.S. Treasury bills shot higher, too. They had fallen to near zero earlier in the week as investors panicked and rushed for the safety of government securities after the oldest U.S. money market fund "broke the buck," or fell below $1 net asset value.
The dollar, meanwhile, rose to a one-week high against the Japanese yen as investors regained an appetite for risk amid all the steps being taken to address the credit crunch.
The Treasury said concerns about the net asset value of money market funds falling below $1 have exacerbated global financial market turmoil and caused severe liquidity strains in world markets.
"Maintaining confidence in the money market fund industry is critical to protecting the integrity and stability of the global financial system," the Treasury Department said in a statement.
The panic in money markets began Tuesday, when the Reserve Primary Fund, a money-market mutual fund whose assets have tumbled 65 percent in recent weeks, fell below $1 a share in net asset value, because of its losses on debt issued by Lehman Brothers Holdings Inc.
In the industry, money money funds whose net assets drop below $1 a share are said to have "broken the buck."
http://news.yahoo.com/s/nm/20080919/bs_nm/financial_treasury_dc
Paulson plan could cost $1 trillion
Congressional leaders said after meeting Thursday evening with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke that as much as $1 trillion could be needed to avoid an imminent meltdown of the U.S. financial system.
Paulson announced plans Friday morning for a "bold approach" that will cost hundreds of billions of dollars. At a news conference at Treasury headquarters, he called for a "temporary asset relief program" to take bad mortgages off the books of the nation's financial institutions. Congressional leaders had left Washington on Friday, but Paulson planned to confer with them over the weekend.
"We're talking hundreds of billions," Paulson told reporters. "This needs to be big enough to make a real difference and get to the heart of the problem."
Stock markets soared around the world in anticipation of the rescue, with British and Chinese indexes recording their biggest gains ever.
Senate Banking Committee Chairman Chris Dodd (D-Conn.) said on ABC’s “Good Morning America” said lawmakers were told last night “that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications, here at home and globally.”“What you heard last evening is one of those rare moments — certainly rare in my experience here — was that Democrats and Republicans decided we needed to work together, quickly,” Dodd said.
The solution being proposed by the Bush administration is the most expensive bailout in the nation’s history, sharply curtailing the ability of the next president to push for tax cuts or new spending.
Congressional leaders tell Politico that to expedite the rescue, Treasury plans to seek additional authority rather than creating a new entity. The plan involves buying up hundreds of billions of dollars in bad mortgages to take them off the books of financial institutions that otherwise might fail.
Sen. Richard Shelby of Alabama, the ranking Republican on the Banking Committee, told “Good Morning America”: “I figure it will be at least half a trillion. But if you look at what the Fed has already done [by rescuing insurance giant AIG], and the extension of power to Treasury to deal with Fannie Mae and Freddie Mac, I believe we're talking about a trillion dollars.”
Some Republicans are expressing concerns about writing essentially a blank check to the Bush administration.
“They're lurching from one crisis to another,” Shelby said. “They don't seem to have a superplan to deal with this. ... We want to see the plan. This is not a done deal yet. But we know there's crisis, there's stress, in the financial markets that we haven't seen in, say, 70 years.”
Some conservatives are balking even more bluntly.
Sen. Jim DeMint (R-S.C.), a member of the Joint Economic Committee, told the Los Angeles Times: “What is missing from it and from the recent string of bailouts is a commitment to return to a free enterprise economy. ... What we need now is not what could be nearly a trillion dollars in new taxpayer bailouts but pro-growth policies that allow our markets to correct and start growing again.”
http://www.politico.com/news/stories/0908/13602.html
Suicide bomb guts Pakistan Marriott hotel; 40 dead
By STEPHEN GRAHAM and NAHAL TOOSI
Associated Press Writers
ISLAMABAD, Pakistan (AP) - A massive suicide truck bomb gutted the heavily guarded Marriott Hotel in Pakistan's capital Saturday, killing at least 40 people and wounding hundreds. Dozens more were feared dead inside the building that was still burning hours after the attack.
The targeting of the American hotel chain appeared to be one of the largest terrorist attacks ever in Pakistan and came at a time of growing anger in Pakistan over a wave of cross-border strikes on militant bases by U.S. forces in Afghanistan.
The bomb left a vast crater some 30 feet deep in front of the main building, where rescuers ferried a stream of bloodied bodies. The fire was still burning six hours after the blast and had devastated most of the five-story hotel, sending up a thick pall of smoke over the area.
"The fire has eaten the entire building," said Mohammed Ali, an emergency service official at the scene. He said that after an initial chaotic search to find survivors, rescue teams had only been able to make two brief forays inside but found no bodies or survivors and had to retreat quickly.
The bombing came just hours after President Asif Ali Zardari made his first address to Parliament, less than a mile away from the hotel, and days ahead of the new leader's meeting with President Bush Tuesday in New York on the sidelines of the U.N. General Assembly.
Rehman Malik, head of Pakistan's Interior Ministry, told the AP authorities had received intelligence that there might be militant activity timed to coincide with Zardari's inaugural address and security had been tightened.
Zardari reappeared after midnight on state television to condemn the "cowardly attack."
He said he understood the victims' pain because he had buried his own wife _ assassinated former Prime Minister Benazir Bhutto _ in December.
"Make this pain your strength," he said. "This is a menace, a cancer in Pakistan which we will eliminate. We will not be scared of these cowards," he said.
Witnesses and officials said the truck exploded about 60 feet away from the hotel at two heavy metal barriers blocking the entrance. It went off at about 8 p.m., when four restaurants inside would have been packed with diners at the hour that Muslims break their daily fast during the holy month of Ramadan.
The Marriott had been a favorite place for foreigners as well as Pakistani politicians and business people to stay and socialize in Islamabad despite repeated militant attacks on the hotel. One American was confirmed among the dead.
Earlier, a U.S. State Department official led three colleagues through the rubble from the charred building, one of them bleeding heavily from a wound on the side of his head.
One of the four, who identified himself only as Tony, said they had been moving toward the rear of a Chinese restaurant inside the hotel after a first, small blast when a second explosion hurled them against the back wall.
"Then we saw a big truck coming to the gates," he said. "After that, it was just smoke and darkness."
Mohammed Asghar, a worker from a nearby office with a makeshift bandage round his head, said there was more than one man in the truck and that they had argued with the hotel guards.
"Then there was a flash of light, the truck caught fire and then exploded with an enormous bang," he said.
Mohammad Sultan, a hotel employee, said he was in the lobby when something exploded. He fell down and everything temporarily went dark.
"I didn't understand what it was, but it was like the world is finished," he said.
Senior police official Asghar Raza Gardaizi said rescuers had counted at least 40 bodies at the scene and that he feared that there "dozens more dead inside."
Associated Press reporters saw at least nine bodies scattered at the scene. Scores of people, including foreigners, were running out _ some of them stained with blood.
Information Minister Sherry Rehman said 250 people were wounded. Two hospitals said 10 foreigners were among those in their treatment, including one each from Germany, Saudi Arabia, Morocco and Afghanistan.
Pakistan faces a raging insurgency by the Taliban in the border areas, where Western governments worry that al-Qaida militants could be plotting more attacks on their cities. Security officials say the two groups work together to carry out attacks in Afghanistan and Pakistan.
Though there was no immediate claim of responsibility for the blast, officials have warned that the U.S. cross-border raids on Pakistani territory could fuel violent extremism.
President Bush said the attack was "a reminder of the ongoing threat faced by Pakistan, the United States, and all those who stand against violent extremism." "We will fully support the democratically elected government of Pakistan and the Pakistani people as they face enormous challenges economically as well as from terrorism," he said.
IntelCenter, a group which monitors al-Qaida communications, said senior al-Qaida leader Mustafa Abu al-Yazid, who claimed the June Danish Embassy bombing in Islamabad, threatened additional attacks against Western interests in Pakistan in a video timed to the recent anniversary of the Sept. 11 attacks.
U.S. Embassy spokesman Lou Fintor said officials were trying to account for embassy staff and any other Americans affected.
Ambulances rushed to the area, picking their way through the charred carcasses of vehicles that had been in the street outside. Windows in buildings hundreds of yards away were shattered. Tropical fish from the tanks inside lay among the torn furnishings in the entrance area.
"We live in a dangerous world and this is a terrible tragedy. We grieve for those people who died, or were injured, and their families," Bill Marriott, chairman and CEO of Marriott International, said in a statement.
The hotel served as the headquarters for the international media during the 2001 war against the Taliban in neighboring Afghanistan. Its 290 rooms and suites and popular health club stood in a plot surrounded by government office buildings less than a mile from the president's office and Parliament. It had been targeted before.
In January 2007, a security guard blocked a suicide bomber who triggered a blast just outside the Marriott, killing the guard and wounding seven other people.
Pakistan has faced a wave of militant violence in recent months following army-led offensives against insurgents in its border regions, including several in the capital.
The country's deadliest suicide bombing was on Oct. 18, 2007 and targeted Bhutto, who survived. It killed some 150 people in Karachi during celebrations welcoming her home from exile. Bhutto was assassinated in a subsequent attack on Dec. 27.
On Aug. 21, 2008, suicide bombers blew themselves up at two gates into mammoth weapons factory in town of Wah, killing at least 67 people and wounding more than 70.
Yemen bomb raises fears of greater threat
The attack outside the perimeter of the compound, which killed 16 people, including six assailants, follows a March mortar attack on the embassy and two attacks against Yemen's presidential compound in late April.
None of those killed or wounded in the latest attack were US diplomats or embassy staff.
US intelligence officer for transnational threats Ted Gistaro said, ''Yemen is rapidly re-emerging as a jihadist battleground and potential base of operations''.
The extent of Yemen's problem with extremists and the shortcomings of its counterterrorism efforts are underscored by the fact Yemenis make up the largest population of detainees at least 108 of 270 held at Guantanamo Bay.
The Bush Administration has sought to return dozens of these prisoners to Yemen but has been unable to gain assurances from the Yemeni Government they would be held or rehabilitated.
Yemen poses a frustrating problem for US counterterrorism efforts.
It considers itself a strong partner with the US in the fight against terrorism, and US officials say Yemeni intelligence services have been helpful since the suicide bombing of the USS Cole in 2000.
But the country has a weak central government and a powerful tribal system. That leaves large, lawless areas open for terrorist training and operations.
A senior US military official said, ''Al-Qaeda senior leaders have called for increased pressure in Yemen, and their northern territory is not under central government control.''
Yemen has a history of being unable to keep imprisoned terrorist suspects.
Seventeen suspects in the 2000 USS Cole bombing that killed 17 American sailors were arrested; 10 of them escaped in 2003. One of the primary suspects in the attack, Jamal al-Badawi, escaped jail in 2004. He was returned to custody last autumn under pressure from the US government. The fallout from that incident reinforced US officials' worries about Yemen's commitment to fighting terrorism and led Secretary of State Condoleezza Rice to cancel a visit to Yemen last year for an international conference.
Dr Rice spoke to Yemen's President earlier this week to express regret at the loss of Yemeni lives in the attack and to reinforce the importance of counterterrorism cooperation.
Al-Qaeda's history is intertwined with Yemen. Osama bin Laden's family came from Yemen and it was home to several al-Qaeda training camps in the late 1990s.
The USS Cole bombing was one of al-Qaeda's most devastating attacks on a US target before the September 11 attacks.
The latest attack has not been attributed to al-Qaeda, however, officials say it follows the terrorist organisation's modus operandi.
The attack involved multiple vehicle-borne devices and armed personnel on foot, seemingly in an attempt to try to breach the embassy's perimeter, enter the compound and inflict further damage and loss of life.
The bombings were carefully orchestrated, with sniper fire and some attackers apparently dressed as soldiers.
As many as five explosions struck the embassy, and Yemeni authorities who first responded were ambushed by snipers.
Yemeni officials said a little-known group called Islamic Jihad, unrelated to the Palestinian group of the same name, claimed responsibility for the attack. AP
http://www.canberratimes.com.au/news/local/news/general/yemen-bomb-raises-fears-of-greater-threat/1276894.aspxArabs denounce cleric's fatwa on 'immoral' TV
September 19, 2008 - 6:36am
RIYADH, Saudi Arabia (AP) - Arabs across the ideological spectrum, from secular-minded liberals to Muslim hard-liners, are denouncing a top Saudi cleric's edict that it was permissible to kill the owners of satellite TV stations that show "immoral" content.
Many expressed worry the recent comments by Sheik Saleh al-Lihedan _ chief of the kingdom's highest tribunal, the Supreme Judiciary Council _ would fuel terrorism, encouraging attacks on station employees and owners.
The edict, or fatwa, has also focused the spotlight on Saudi Arabia's legal system because of al-Lihedan's senior position in the judiciary. The system is run by Islamic cleric-judges, many of them hard-liners, and has increasingly been criticized by some Saudis because of the wide discretion judges have in punishing criminals and the perception that many judges are out of touch with the realities of the world.
Even conservative clerics who agree that Arab satellite networks show too many "indecent" programs said al-Lihedan had gone too far.
"Our religion prevents Muslims from watching films that provide seduction, obscenity and vulgarity," said Sheik Hazim Awad, an Iraqi cleric, who, like al-Lihedan, is Sunni Muslim.
But "the real Muslim can just cancel (subscriptions to) these channels," he said.
Many conservatives frown on the Arab world's numerous satellite networks for airing music videos _ often with scantily clad women singers _ or Western movies and TV shows like "Sex and the City," from which nude scenes are sometimes but not always cut.
Obscenity isn't the only thing that disturbs some. On Tuesday, another Saudi cleric, Sheik Mohammed Munajjid, said the cartoon character Mickey Mouse should be killed. Munajjid said in an interview with a religious Web site that under Islamic law, rats and mice are considered "repulsive" and as "soldiers of Satan."
"For children they've become something great and beloved. Like this Mickey Mouse, who is seen as a great figure, even though under Islamic law, Mickey Mouse should be killed," said Munajjid, who is a well-known cleric but does not hold a government position.
The controversy over al-Lihedan's fatwa began a week ago, when the cleric was answering questions from callers to the daily "Light in the Path" religious program on Saudi state radio. One caller asked about Islam's view of the owners of satellite TV channels that show "bad programs" during the holy month of Ramadan, which began more than two weeks ago.
"I want to advise the owners of these channels, who broadcast calls for such indecency and impudence ... and I warn them of the consequences," al-Lihedan said in the program. "Those calling for corrupt beliefs, certainly it's permissible to kill them."
The remarks were especially surprising because many of the most popular Arab satellite networks are owned by Saudi princes and well-connected Saudi and Gulf businessmen.
On Sunday, reportedly under pressure from senior government figures, al-Lihedan appeared on Saudi state TV to explain his comments, apparently to prevent vigilante killings. He said owners should first be brought to trial and then sentenced to death if other penalties don't deter them.
He said his "advice" was aimed at owners who broadcast witchcraft, indecent programs, shows mocking Islamic scholars or religious police and comedies inappropriate for Ramadan.
The edict chilled managers of satellite networks. Several channels based in Dubai declined comment. One network representative said the staff was taking the fatwa very seriously, but he did not want his name or channel revealed. "Why select yourself as a target by commenting on it?" he said.
Saudi Arabia's judiciary is a bastion of hard-line clerics implementing Islamic law under the strict Wahhabi interpretation. Judges are appointed by the king on the recommendation of the Supreme Judicial Council and have complete discretion to set sentences, except in cases where Islamic law outlines a punishment, such as capital crimes.
King Abdullah has said reforming the legal system is one of his priorities, but so far few changes have been announced _ a sign of wariness in confronting the powerful clerics.
One Saudi cleric challenged al-Lihedan, telling the Saudi Al-Jazirah newspaper that the new edict would "lend support to terrorism."
Militants will "recruit our youths to take lives and blow up stations and the properties of the owners of the stations, all based on (al-Lihedan's) grave response," said Sheik Abdul-Mohsen al-Obaikan, an adviser at the Justice Ministry and a member of the appointed Consultative Council, which acts like a parliament.
In Jordan, hard-line cleric Ibrahim Zeid Kailani said although the networks are spreading "decay" among the youth, it's the responsibility of the government and not individuals to deal with the issue.
"Such edicts, which call for killing people, instigate sedition," said Kailani, who heads the Islamic Action Front's Scholars Committee, a hawkish group. "They could transform the countries into internal battlefields."
Around the Arab world, many said el-Lihedan was out of line.
"He shouldn't give such a judgment because he's not God," said Noora Baker, a 27-year-old folkloric dancer from the Palestinian city of Ramallah. "I am against religion interfering with the matters of society."
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