MAJOR PAPERS:

• According to people familiar with the matter, the Wall Street Journal reported that Federal Hole Loan Mortgage Corporation (NYSE: FRE) --Freddie Mac -- is considering raising capital by selling up to $10B in new shares to investors. The sources believe this effort may have the potential to avoid a full-blown government rescue.
• The Wall Street Journal also reported that, amid U.S. investigations into allegations it helped American clients evade taxes, UBS AG (NYSE: UBS) said some Swiss-based private bankers will stop offering American clients Swiss bank accounts and other services.
• Starbucks Corporation (NASDAQ: SBUX) will close store in 44 states plus the District of Columbia, including 88 closures in California, 59 in Florida and 57 in Texas, the Wall Street Journal reported.

WEB SITES:

• After Cleveland Cliffs Inc (NYSE: CLF) bought Alpha Natural Resources Inc (NYSE: ANR), there may be many more acquisitions in the coal industry, Bloomberg said.
• Reuters noted that, according to a person with knowledge of the plans, Yahoo! Inc (NASDAQ: YHOO) could renew talks over News Corporation's (NYSE: NWS) Web properties if Microsoft Corporation (NASDAQ: MSFT) gets in the way of discussions with Time Warner Inc's (NYSE: TWX) AOL. Yahoo! is in contact with News Corp. about the assets, but the search engine's talks with Time Warner about AOL are more advanced, the source added.
  

MAJOR PAPERS:

• The Wall Street Journal reported that it is the Bush Administration versus Democrats versus Republicans to decide the strategy to stabilize Federal National Mortgage Association (NYSE: FNM) -- Fannie Mae -- and Federal Home Loan Mortgage Corporation (NYSE: FRE) -- Freddie Mac. The Administration's plan would let the Treasury Department advance a credit line and the opportunity for the government to buy equity in either firm. A package is expected to pass but not before the political and economic ramifications are battled out. Democrats and Treasury want it to be a part of a housing rescue plan; Republications oppose it.
• The Clinton Foundation, headed by former President Clinton, believes it has a pricing agreement in place that it expects will make malaria drugs affordable and available to millions of poor people worldwide, the Wall Street Journal reported.
• The Financial Times reported that UBS AG (NYSE: UBS) and Liechtenstein's LGT Group will today be accused by U.S. Congressional investigators of using the "cloak of bank secrecy laws" to help American clients evade billions of dollars in taxes.

OTHER PAPERS:

• Globes reported that Teva Pharmaceutical Industries Limited (NASDAQ: TEVA) is talks to acquire Barr Pharmaceuticals Inc (NYSE: BRL). The price tag is said to be between $7B and $7.5B.

The Washington Times reports that Phil Gramm, UBS AG (NYSE: UBS) vice chairman and senior economic advisor to John McCain (R.-AZ), thinks we're a nation of whiners. Gramm's UBS is a leader on three important fronts in the effort to destroy the U.S. economy: the $1.3 trillion subprime mortgage catastrophe, the $330 billion Auction Rate Securities (ARS) freeze, and a tax evasion scheme of unknown magnitude.

The Washington Times quotes Gramm as saying: "We have sort of become a nation of whiners. You just hear this constant whining." UBS probably pays Gramm well for his services so I can see where he's coming from. He is making money and he's the only one who matters. But if you think he is helping McCain, think about these things:

Wesley Snipes, the unlikely face of the tax denial movement, has been acquitted of the most serious charges in his tax evasion case. He was found guilty of three of six lesser charges and could face up to three years in prison. He will also have to pay as much as $17 million in back taxes, interest, and penalties.

A jury found him not guilty on two felony charges of fraud and conspiracy, and other charges related to failing to file and pay taxes from 2002 to 2004. However, he was found guilty of failing to file returns or pay taxes from 1999 through 2001.

However his co-defendants, tax advisers, were convicted of the more serious charges, a sign that "I was just listening to my advisers" defense can work.

According to the New York Times, "Instead of prosecuting all offenders, the Justice Department brings cases against well-known individuals, hoping that widespread news coverage will encourage compliance, a policy known as general deterrence. The Snipes prosecution, like the three earlier cases that resulted in full acquittals, appears to have backfired."

The failure to convict Snipes on the most serious charges will probably embolden tax deniers. The feds had been looking to make a strong statement about the importance of paying taxes and appear to have failed miserably.

Cisco Systems (NASDAQ: CSCO) is suffering a public relations black eye this week, as police in Brazil have arrested three senior Cisco executives (among a group of 40 people), including one former president of the Brazilian subsidiary of Cisco in allegations of tax fraud and other charges involving non-payment of required Brazilian duties.

Brazilian authorities concluded a two-year investigation that involved 650 officials from the police, tax authorities and public prosecutors. Now, that's what I call a sting. Ninety-three search warrants turned up loads of documents and other evidence that will be scrutinized for five days while those arrested are incarcerated. The warrants were served in São Paulo, Rio de Janeiro and Bahia and included the homes of the executives and the offices of the Cisco subsidiary in Brazil (Cisco do Brasil).

Although Brazil only accounts for about 1% of Cisco's overall business, the country is considered prime territory for the internet infrastructure manufacturer, along with Russia, India and China. The charges stem around what authorities are calling a "complex network of companies" that were used to import hardware into the company using fraudulent valuations. Hence, the tax and duty fraud allegations. Is this the work of Cisco itself or a bandit group of rogue executives? So far, no word on that. But, with five years of imports and about $500 million at stake here, this case is only just beginning. Well, to the public, anyway.

A New Hampshire couple have taken refuge in their home as an income tax 'protest.' After reading Zac Bissonnette's take, I just couldn't leave this story alone. Here's my response:

Dear Mr. and Mrs. Anarchy,

Pardon me for interrupting your solitude but it appears to me that you may have made a grave error. I'm expecting that you'll be able to read this unless your Internet connection has been severed from the federally protected communication streams. At this time I must ask you if you have ever read the American Constitution. Unless I'm mistaken, Congress empowered the government to collect income tax quite some time ago.

I'm hoping that you have surrendered your vehicles by now. Being that you have no use for federally subsidized roads, I suspect that you plan to walk for the rest of your lives. Please be sure that you take your gas masks along on your walks because the EPA has indicated that it is no longer willing to assure that you have clean air to breathe. When you get home from walking you may wish to consider twice if you'll have a drink of water due to the fact that you have implied that safe water standards no longer apply to you. The government of the United States shall honor your desire to be unprotected in the matters of breathing and hydration.

In advance of your starvation, I'd like to thank you for surrendering all the food you have, with the exception of those things which are not USDA inspected. I apologize that you have little left to eat but the USDA has indicated that it is no longer interested in protecting your digestion. Additionally, every inspector of every product at every port, air terminal and border crossing has made it clear that they will no longer work for you. It is a shame that you shall soon be naked, diseased and starved to death but all federal services rendered in your name have been suspended as you requested.

Please inform us as soon as possible where it is that you shall be moving to. We, as a nation have no desire to force you to remain within our borders. It is possible that some territory remains near the Arctic Circle where you may reside untaxed for the remainder of your lives. We suggest that you go there as soon as possible. Please do be careful as you walk naked, hungry and without personal security. We would hate for some nasty international criminal to make prey of you. Rest assured that there is a large pool of payroll tax paying individuals who will be more than happy to cast lots for your home. Now, please make a hasty exit you deadbeats. We honestly don't want to keep you here.

Best Regards,

Gary E. Sattler