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One week and counting. An unprecedented number of states have only days left to pass their fiscal 2010 budgets.

At least 19 states are still hammering out their spending plans as the recession wreaks havoc with their finances and sparks fights between governors and lawmakers. If spending plans aren’t approved, state workers may not receive their paychecks and some government offices may shut down.

“If you buy something — a stock or a bond — in the morning, and you sell in the afternoon, the tax probably ought to be 80 percent,” said Gerstner, also a former chairman of Carlyle Group, the world’s second-largest private equity firm.

“If you hold it for six months, maybe it ought to be 60 percent,” Gerstner told Bloomberg Television.

Selling an investment after five years should carry a zero rate “to try to get the incentives for investment to go back to being a true investor and not a trader,” he said.

Gerstner acknowledged that such a change would be “controversial” yet argued it is necessary to encourage investors to think about the longer term. The top tax rate on gains from investments sold within one year is now 35 percent.

“We do have a greed or an inefficiency that comes out of excessive focus on the short term,” said Gerstner, who bemoaned an investment climate driven by quarterly earnings and a 24-hour news cycle. He was an executive at American Express Co. and RJR Nabisco Inc. before joining IBM.

Gerstner, 67, also criticized compensation practices, saying “there’s been astoundingly unnecessary, excessive executive compensation in certain instances.”

Government Rules

He said the solution isn’t government rules or caps on pay.

“I despair of a government solution,” Gerstner said. “We’ve had governments attempt to control executive compensation for 40 or 50 years.”

Instead, Gerstner called for more disclosure and oversight of boards of directors by shareholders, “because ultimately the boards need to make these decisions.”

“The system can fix itself without rigid rules,” he said.

Gerstner, who approves of generous compensation for executives who add shareholder value, called for an end to golden parachutes for failed managers. “We have to see an elimination of pay for people who get fired and then wind up with these huge payments,” he said.

Gerstner acknowledged that Wall Street executives he knows wouldn’t like his plan for higher taxes on investment gains.

The FBI interrogations of the toppled tyrant – codename “Desert Spider” – were declassified after a Freedom of Information Act request.

The records show Saddam happily boasted of duping the world about stockpiling weapons of mass destruction. And he consistently denied cooperating with Osama Bin Laden’s Al Qaeda.

Of all his enemies, Iraq’s ex-president – who insisted he still held office during captivity – hated Iran most.

Asked how he would have faced “fanatic” Iranian ayatollahs if Iraq had been proven toothless by UN weapons inspectors in 2003, Saddam said he would have cut a deal with Bush.

“Hussein replied Iraq would have been extremely vulnerable to attack from Iran and would have sought a security agreement with the U.S. to protect it from threats in the region,” according to a 2004 FBI report among the declassified files.

Without Bush’s help, “Iraq would have done what was necessary,” he told FBI Agent George Piro in his Baghdad International Airport cell.

That didn’t mean an alliance of evil with Al Qaeda, he insisted months into what he called a “dialogue” with Piro.

The interrogations unfolded in 2004 after his capture the previous December at the same farm where he said he’d hidden after orchestrating a failed 1959 coup plot.

Saddam denied ever laying eyes on the “zealot” Bin Laden, bent on striking the U.S.

He said he “did not have the same belief of vision” as the terror kingpin.

Saddam never sought Al Qaeda assistance because he feared the terror group would turn on him. To protect his country, the more likely ally “would have been North Korea.”

Saddam also said the U.S. “used the 9/11 attack as a justification to attack Iraq” and “lost sight of the cause of 9/11.”

The U.S. “was not Iraq’s enemy,” just its policies, Saddam explained.

Asked about WMDs, Saddam insisted: “We destroyed them. We told you.”

Wherley’s wife, Ann, was also among the nine people killed when a train plowed into the rear of a stopped train during rush hour on June 22, Quintin Peterson, a spokesman for the Metropolitan Police Department, said in a telephone interview. Both were 62 and lived in southeast Washington.

Wherley was commander of the 113th Fighter Wing at Andrews Air Force base in Maryland during the September 2001 terrorist attacks and sent up aircraft with orders to protect the White House and the Capitol, according to the 9/11 Commission report.

“To avoid the inherent deficiencies of using sovereign currencies for reserves, there’s a need to create an international reserve currency that’s delinked from sovereign nations,” the People’s Bank of China said in its 2008 review released today. The IMF should expand the functions of its unit of account, Special Drawing Rights, the report said.

The restatement of Governor Zhou Xiaochuan’s proposal in March added to speculation that China will diversify its currency reserves, the world’s largest at $1.95 trillion at the end of March. Chinese investors, the biggest foreign holders of U.S. Treasuries, reduced holdings in April after Premier Wen Jiabao expressed concern about the value of dollar assets.

“Zhou Xiaochuan sees the current international financial system is flawed, putting too much emphasis on the dollar as a reserve currency,” said Kevin Lai, an economist with Daiwa Institute of Research in Hong Kong. “The dollar should depreciate to address the global imbalance but because it’s a reserve currency it cannot.”

President Barack Obama needs the support of China as the U.S. tries to spend its way out of recession. The Dollar Index that measures the currency’s performance against six trading partners fell as much as 0.7 percent at 12:42 p.m. in London.

Mounting Tension

China, the biggest foreign holder of U.S. government, cut its holdings by $4.4 billion to $763.5 billion in April, the first monthly reduction since February 2008, according to U.S. Treasury Department data. At the end of 2008 the dollar accounted for 64 percent of global central bank reserves, down from 73 percent in 2001, according to the IMF in Washington.

“There may be signs here of tensions mounting between the PBOC’s economic concerns over China’s holdings of dollars and the Chinese government’s diplomatic reasons for doing so,” Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London, wrote in an e-mail.

Search giant Google confirmed to the BBC that when the news first broke it feared it was under attack.

Millions of people who Googled the star’s name were greeted with an error page rather than a list of results.

It warned users “your query looks similar to automated requests from a computer virus or spyware application”.

“It’s true that between approximately 2.40PM Pacific and 3.15PM Pacific, some Google News users experienced difficulty accessing search results for queries related to Michael Jackson and saw the error page,” said Google spokesman Gabriel Stricker.

It was around this time that the singer was officially pronounced dead.

Google’s trends page showed that searches for Michael Jackson had reached such a volume that in its so called “hotness” gauge the topic was rated “volcanic”.

The BBC news website reported that traffic to the site at 0400 BST was 48% higher than average.

Fail

Google was not the only company overwhelmed by the public’s clamour for information.

Jamil Rahman, who is suing the Home office, says he believes MI5 were responsible for his arrest in 2005.

He claims Bangladeshi officers beat him and threatened to rape his wife if he did not confess to being a terrorist.

The BBC cannot verify the claims; the Home Office says it will respond with vigour to any action Mr Rahman brings.

The British government says it does not condone torture or its use abroad.

In his first interview since launching a legal action against the government, Mr Rahman told the BBC that he was arrested in Bangladesh in December 2005 by the DGFI intelligence agency.

The former civil servant from south Wales had emigrated earlier that year to marry.

Mr Rahman said he believed that two MI5 officers directed his arrest and were aware that he was subsequently subjected to physical and mental abuse.

He was initially held for three weeks before being released. His alleged mistreatment continued at sporadic interviews for another two years.

Speaking for the first time about the alleged abuse, Mr Rahman said that Bangladeshi officers assaulted him after he was taken to an interrogation centre.

“They stripped me naked and said that if I didn’t say what they wanted me to say, they would rape me and my wife and burn her and other family members.

“They told me to say I was al-Qaeda and the organiser of the 7/7 [London suicide] bombings.”

The 31-year-old told the BBC that two British men would question him separately. He later concluded they were the same balaclava-wearing men to whom Bangladeshi officers turned to for orders during his arrest.

“The first time [they interviewed me] they tried to be friendly, they came in trying to show they were my friends, calm and relaxed, nothing wrong. I tried to demonstrate my innocence – I thought this is wrong, because they were British I might get some justice.

“But they just said ‘they had not done a good job on you’ we need a ten minute break. The DGFI guys would take me to a room and beat me.”

Surveillance pictures

Mr Rahman says that he was questioned about bomb plots and shown scores of surveillance pictures taken in the UK.

“They were questioning me on the July 7 bombings, showing me pictures of the bombers. I didn’t even know who they were. They showed me hundreds of pictures. Black, white, Chinese, bearded non-bearded, woman, man, young and old. Every time, they came for a new session, same pictures with new ones.

“They showed me maps, terrains of Bangladesh, Pakistan, Afghanistan, UK, they asked me to draw things out and write names next to pictures.

“The main thing they wanted me to be is a witness against another British man in Bangladesh. They pressured me so much to be a witness against this guy in court.

“They threatened my family. [The MI5 officers] they go to me: ‘In the UK, gas leaks happen, if your family house had a gas leak and everyone got burnt, there’s no problems, we can do that easily.

“It was all to do with the British,” he said. “Even the Bengali intelligence officer told me that they didn’t know anything about me, that they were only doing this for the British.”

Mr Rahman admits that he attended meetings in the UK of the radical Islamist group, al-Muhajiroun, but that he rejected their ideology before his emigration for marriage.

In a statement, the Home Office said it would respond vigorously to any action that Mr Rahman brings.

“We firmly reject any suggestion that we torture people or ask others to do so on our behalf. Mr Rahman has made a lot of unsubstantiated allegations. They have not been evidenced in any court of law.”

The Bangladeshi government has not answered BBC requests for a response to Mr Rahman’s allegations.

At least seven former detainees are now alleging British collusion in their mistreatment abroad. Their cases list 19 alleged officers – although it’s not clear whether they are all separate people because of the use of pseudonyms.

BBC home affairs correspondent Daniel Sandford said the allegations went against what security service personnel would be taught.

“Those who are familiar with MI5’s techniques say the whole point about the way MI5 works is they try to build a rapport with people,” he said.

The Financial Services Agency told Citibank Japan Ltd. to halt retail banking sales from July 15 to Aug. 14, except in cases where the company is approached by customers, the regulator said in a statement in Tokyo today. It also ordered the bank to improve governance and control systems.

The regulator found Citigroup had “fundamental problems” with its compliance, including systems to detect and monitor suspicious transactions. The New York-based bank failed to implement an improvement plan it submitted after it was forced to close its private banking business in Japan in 2004 for a similar failure, the watchdog said.

Citibank Japan didn’t update a database used to screen suspicious transactions since 2004, and management officials “lack an understanding of the rules applied in Japan, such as laws and regulations, and an awareness of improvement,” the regulator said in its statement.

Citigroup will comply with the regulator’s order and will submit an improvement plan by July 31, the company said in a statement. The order won’t have any impact on business with institutional clients, the bank said.