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The idea that Japan would ever dump its $900 billion holdings of U.S. Treasurys, the second largest foreign ownership after China, has long been just that _ an idea never seriously entertained.

The long-standing argument paints a horrific picture of the consequences: The dollar would crash, world markets would be sent into a tailspin and the post-World War II military and political alliance between the U.S. and Japan would be shaken.

But after Washington’s credit rating was downgraded for the first time ever earlier this month _ from AAA to AA+ by Standard & Poor’s _ some daring advocates are voicing that taboo idea: Why not sell Treasurys?

Those playing devil’s advocate aren’t Japan’s mainstream policymakers by any means. But they aren’t totally fringe either.

“The holdings translate to 1 million yen ($13,000) per Japanese taking this risk in shouldering U.S. debt, all without their fully being aware of it,” said Kenji Nakanishi, a lawmaker in a new opposition party that made significant gains in the last election.

Nakanishi told The Associated Press that Japan shouldn’t sell all its holdings at once, but should reduce them by about 10 trillion yen ($130 billion) each year, and earmark some of that money for recovery spending in northeastern Japan, which was devastated by the March 11 earthquake and tsunami.

A simple explanation to Washington that the move won’t change the U.S.-Japan political and defense alliance should be enough, according to Nakanishi. It alarms Nakanishi that the government is trying to raise taxes to fix its deficit and finance the earthquake recovery, a move he fears would further squeeze the Japanese economy.

Views like Nakanishi’s may be winning some acceptance. No one expects them to be acted upon immediately.

The Japanese government and ruling party officials have repeatedly said Japan won’t sell U.S. bonds, and instead will keep buying them.

The common wisdom is that a weak dollar would prove devastating to the Japanese economy by making it more difficult for Toyota Motor Corp., Sony Corp. and other pillars of corporate Japan to sell their goods overseas.

Peter Schiff, chief executive of Euro Pacific Capital, a New York-based investment company, said the current accumulation of debt by the U.S. government is unsustainable.

“The more money the world lends to America today, the more money they’re going to have to lend tomorrow,” he said in a telephone interview. “It’s a giant Ponzi scheme. Nobody is ever going to get their money back.”

Japan would be venturing into untested territory if it decided to reduce Treasury holdings.

In 1997, mere musing by then Prime Minister Ryutaro Hashimoto about selling Treasurys set off a Wall Street plunge until Japanese officials quickly jumped in for damage control and promised Japan had no such plans.

But Naoto Amaki, a writer and former government bureaucrat, thinks the time is ripe to start thinking the unthinkable.

Amaki has long advocated reducing Treasury holdings, but is only recently growing optimistic that others may finally see how his view may be good for Japan.

Japan, with its towering public debt, is in no position to help finance America’s deficit, especially after the March 11 earthquake and tsunami, he said in a recent blog.

“Japan’s finances were already in serious trouble. Now, we are literally being backed into a crisis of no return,” Amaki said.

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Libyan authorities on Saturday accused NATO of killing 15 people in an airstrike that hit a restaurant and bakery in the east, though the alliance said there were no indications that civilians had died.

It was the latest outcry from Libyan leader Moammar Gadhafi’s government blaming NATO for killing civilians amid a four-month uprising that has sparked a civil war. NATO insists it does all it can to avoid such casualties.

Meanwhile, rebel representatives said their fighters were coordinating around the country for the “zero hour” when their forces would reach the capital of Tripoli.

The rebels said they have been working to cut fuel supplies from Tunisian borders in an attempt to paralyze Gadhafi’s forces. Rebels also are making homemade bombs and trying to ferry other weapons to their comrades in Tripoli, a spokesman for an underground guerrilla group there said.

Libya’s state news agency quoted a military official in Gadhafi’s forces as saying that NATO warplanes hit a number of civilian sites Saturday in the oil town of Brega, including a restaurant and a bakery.

The official said 15 civilians were killed and 20 wounded in the strike. The JANA news agency also claimed five civilians were killed Friday in Brega as well.

A NATO official said alliance warplanes had hit several targets in the vicinity of Brega, but dismissed claims that the attacks had resulted in civilian casualties.

“We have no indications of any civilian casualties in connection with these strikes,” said the official, who spoke on condition on anonymity because he was not authorized to speak to the media on the record. “What we know is that the buildings we hit were occupied and used by pro-Gadhafi forces to direct attacks against civilians around Ajdabiya.”

NATO has acknowledged carrying out two raids near the strategic oil town. The alliance said Friday it hit multiple military command sites near Brega, which has been a frequent flashpoint between rebels and Gadhafi’s forces.

The alliance said Friday that government forces had moved into buildings in an abandoned area of Brega and started using them as military compounds to launch strikes on civilians, putting rebel-held cities such as Ajdabiya and Benghazi at risk.

Reports of civilian casualties have provoked intense anger among many Libyans in the west of the country under Gadhafi’s control.

Images of dead civilians, including young children, described by the government as “martyrs” can be seen frequently at pro-government rallies and on state-controlled television.

NATO is investigating whether one of its airstrikes may have slammed into a civilian neighborhood in Tripoli on June 19, killing several civilians.

A day later, alliance warplanes struck a family compound belonging to a close Gadhafi aide, killing what the Libyan government says was 19 people, including at least three children. NATO called the site was a “command and control” center, and said it regrets any civilian deaths that resulted from the strike.

Meanwhile, at least two explosions could be heard in the capital of Tripoli on Saturday, though it was not immediately clear what the NATO airstrikes may have hit.

The Libyan rebels began their uprising in February against Gadhafi, who has been in power since 1969. The conflict has turned into a civil war, and Gadhafi’s forces are accused of orchestrating deadly attacks on civilians.

The rebels have taken over much of the eastern half of Libya. They also control pockets in the west, including the vital port city of Misrata, about 125 miles (200 kilometers) from the capital.

A coalition including France, Britain and the United States began striking Gadhafi’s forces under a United Nations resolution to protect civilians on March 19. NATO assumed control of the air campaign over Libya on March 31 and is joined by a number of Arab allies.

On Saturday, the spokesman of the rebels’ western mountain military council confirmed that rebels are coordinating with individual cells and with an underground rebel guerrilla group known as the Tripoli Council. The main goals are to cut the fuel from Gadhafi forces, Gomaa Ibrahim said.

Meanwhile, a spokesman for the Tripoli Council said that their fighters have been carrying selective attacks on Gadhafi forces in the capital.

The spokesman, who requested anonymity for fear of reprisals, said that the rebels are coordinating for “the zero hour, when rebels from liberated cities enter Tripoli.”

“It will be a tremendous mission. The city is now besieged by 13 different security brigades, well armed and well equipped. Gadhafi has always said that his loyalists will sabotage the city if he falls. So this will be our mission: to mob it and clean it of mercenaries.”

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A near month-long inspection of Greek finances by the European Union, European Central Bank and International Monetary Fund concluded “positively” on Friday, the country’s Finance Ministry said.

The inspection is crucial to whether Greece will receive the next batch of loans from a euro110 billion bailout fund from the EU and IMF agreed last year and could well inform discussions over an extension to the current financial rescue package.

The prevailing view in the markets is that Greece, which is effectively locked out of raising money through the sale of its bonds because of prohibitively high interest rates, will need another bailout.

The negotiations with the debt inspectors, known collectively as the troika, dealt with both the steps Greece has been taking to reform its economy in line with last year’s package of loans, and a program of additional measures for the years 2012-2015.

A privatization program that seeks to raise funds for the cash-strapped country, further measures to be taken this year to meet deficit reduction targets and structural reforms to the Greek economy were all discussed, the ministry said in a statement.

The Greek government is seeking to narrow its deficit to 7.5 percent of gross domestic product by the end of this year, from the 10.5 percent it stood at in 2010. To achieve that, Finance Minister George Papaconstantinou last month announced remedial austerity measures worth about euro6.4 billion for this year.

The texts detailing the measures are to be finalized “in the coming days” and will be submitted to Parliament after being approved by the Cabinet, the ministry said.

The euro pushed up to day highs of $1.4585 after the statement, while anticipating the news, Greece’s borrowing costs eased during the day, with yields on 10-year Greek bonds dropping some 60 basis points to 16.2 percent. Shares on the Athens Stock Market closed up 4.4 percent at 1,333.66.

The troika was expected to issue its own announcement later Friday.

The ministry statement came as Prime Minister George Papandreou held emergency talks in Luxembourg with Jean-Claude Juncker, who heads the group of 17 eurozone finance ministers business card.

The original bailout plan, from which Greece began drawing funds in May last year, envisaged the country being able to tap bond investors in 2012, but with the interest rates on Greek bonds remaining exceptionally high, that appears increasingly unlikely.

Those funding gaps are likely to have to be filled by a second bailout being negotiated by other eurozone countries.

The austerity measures taken so far have led to frequent strikes and demonstrations.

The latest saw about 200 protesters from the communist party-backed PAME union take over the Finance Ministry building at dawn Friday They unfurled a giant banner from the roof calling for a general strike.

Other protests and demonstrations were planned for later Friday evening.

The new cutbacks are expected to be submitted to parliament in coming days, where the governing Socialists have a six-seat majority. But several Socialist backbenchers have voiced strong criticism, and the government this week canceled two planned briefings of its deputies to avoid a showdown.

Sixteen Socialist lawmakers have signed a letter calling for an extensive debate on the proposed new cutbacks before their ratification, with one of the signatories threatening on Friday not to vote for the reforms.

“If the draft legislation is brought to Parliament without prior discussion, I will not vote for it,” Thomas Robopoulos told state NET television.

Greece’s woes have been compounded by repeated downgrades of its credit ratings _ Moody’s warned Wednesday that the country had a 50-50 chance of defaulting on its debts.

On Friday, Moody’s also cut the ratings of eight Greek banks _ National Bank of Greece, Eurobank, Alpha, Piraeus, Agricultural Bank of Greece, Attica, Emporiki and General Bank of Greece.

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Derek Gatopoulos and Nicholas Paphitis in Athens contributed.

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Spanish financial markets slumped Monday after voters angry about austerity measures dealt the governing Socialist party a painful loss in local and regional elections, raising doubts over the country’s ability to enforce debt cuts.

Investors worried that the government of Prime Minister Jose Luis Rodriguez Zapatero had lost support in its drive to heal public finances and faced a period of political uncertainty. Daily protests against both the Socialists and the opposition conservatives, meanwhile, were spreading to cities across the country and expected to last for days.

The Ibex 35 index on the Madrid stock market closed down 1.4 percent and the yield on Spanish 10-year bonds on the secondary market was up to 5.5 percent. That indicates investors are more cautious about the country’s ability to repay its debts.

The spread, or difference in yield between that bond and the equivalent benchmark German one, stood at about 250 basis points in the afternoon, up from 240 on Friday. A basis point is one-one hundredth of a percent.

The governor of the Bank of Spain said the country cannot sustain spreads of more than 200 basis points for a long period because this will raise government borrowing costs and leave less money available for providing financing for companies and getting stagnant credit flowing again.

Miguel Angel Fernandez Ordonez also said in a speech that the government needs to press ahead quickly with labor market reforms to create jobs and reassure investors. He called for more flexibility in how collective bargaining agreements are negotiated. Economists say the current system is too rigid because in a given sector it treats money losing and profitable companies with the same terms when it comes to giving workers raises.

Investor appetite for Spanish bonds will be tested Tuesday with a treasury auction of 3- and 6-month bills.

Alejandro Varela of brokerage Renta 4 in Madrid said that besides debt worries spilling over from other troubled countries such as Greece, investors feared that conservatives taking over town halls and regional governments might discover bigger debt piles than had been previously disclosed.

That’s what happened late last year when the wealthy and powerful Catalonia region held similar elections. The center-right Catalan nationalists took over from a Socialist-led coalition and recently announced the region’s deficit was much bigger than previously known. Catalonia did not vote on Sunday.

In 13 other regions that were up for grabs Sunday, the conservative opposition Popular Party won virtually all of them from the Socialists, causing new debt concerns to sprout, Varela said.

“There had been speculation to this effect for a week and now that melon will be sliced open,” Varela said.

The Popular Party also cleaned up at municipal elections by winning 2 million more votes than the Socialists with a margin of victory of about 10 percentage points. The party said those numbers show Spain is hungry for change.

Varela said he expects Zapatero to call early elections and that it would be good for the country, although the prime minister said Sunday night as he acknowledged defeat by his party that he would not and plans to serve out his term. General elections must be held by next March. Zapatero has said he will not seek a third term.

Varela said, “Spain is in a very weakened situation and this transitory period is particularly dangerous.”

The Popular Party favors early elections but on Monday refrained from calling for them outright.

“Spain can’t wait another year,” said party Secretary General Maria Delores de Cospedal. “No more time should be lost.”

She ruled out, however, trying to push a no-confidence vote through Parliament where the Socialists still have enough allies to reject it.

The elections were local and regional, but many Spaniards said they had the national picture in mind as they voted. The country is saddled with a eurozone-high jobless rate of 21.3 percent and is struggling to recover from nearly two years of recession triggered by the collapse of a real estate bubble and the end of an overzealous period of free-flowing credit.

For the past week, central Madrid’s Puerta del Sol plaza has been home to a makeshift protest camp to mainly young Spaniards angry over their bleak economic prospects _ the youth jobless rate exceeds 40 percent. The protesters dismiss both Socialist and conservative politicians as inept, corrupt and distant from the plight of everyday people and said the elections result made little difference to them.

“It’s not that important because this protest never had an electoral goal,” said Javier Perez, one of the Madrid camp’s spokespersons. “In the end, the results are another example of Spain’s two-party system and how it fails to resolve the anger, the indignation and our problems.”

United behind the slogan “Real Democracy Now”, the Madrid protest has drawn tens of thousands of people of all ages and spread to dozens of other cities. On Monday, the activists debated how to proceed with their campaign after voting Sunday to stay on for at least another week. They discussed gradually dismantling the camps and taking the protests to city neighborhoods to get more people involved.

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Boeing Co. benefited from $5.3 billion in prohibited state and federal government subsidies, a panel of World Trade Organization judges determined in a report issued Thursday.

But the total amount that will need to be remedied by the U.S. in the trade case is about half that: $2.7 billion, since the U.S. government has already stopped providing Chicago-based Boeing billions of dollars in export-related tax breaks judged to be illegal by the WTO, U.S. officials said.

The ruling is the latest volley in a trade war between the United States and European Union that started in 2005, when the U.S. formally accused European governments of illegally subsidizing every commercial jetliner developed by France-based Airbus SAS. The Europeans countered with a 2006 complaint claiming that Boeing enjoyed substantial hidden state and federal support.

Both sides declared victory from the latest WTO report. Airbus praised the panel’s finding that Boeing could not have launched the 787 Dreamliner without prohibited subsidies.

U.S. officials trumpeted the WTO’s earlier finding that four European governments had provided far greater illegal aid to Airbus: $20 billion, $15 billion of which was impermissible because it was lent to the aircraft manufacturer at below-market rates.

The panel found that much of the $19.1 billion in Boeing aid questioned by the European Commission in its 2006 case against the U.S. either didn’t violate international trade law or didn’t cause commercial harm to France-based Airbus

EVERETT, Wash. — The Boeing Co.’s newest and largest passenger plane has completed its first flight, taking off from Everett and landing about 4 ½ hours later in Seattle.

The 747-8 Intercontinental left Paine Field at 9:58 a.m. PDT Sunday, rousing cheers from Boeing workers. The two pilots flew across Washington state and landed around 2:25 p.m. at Boeing Field.

Chief test pilot Capt. Mark Feuerstein says the flight was clean and that the airplane is “ready to go fly right now.”

Boeing’s Elizabeth Lund says the company expects to deliver the jet by the end of the year.

The new plane can carry up to 467 passengers with a range of nearly 7,000 miles.

AP-WF-03-20-11 2241GMT

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Congress will probably approve a measure this week to keep the U.S. government in operation through April 8, Senator Dick Durbin of Illinois, the majority whip, said yesterday.

The legislation, proposed by House Republicans March 11, would reduce discretionary spending by about $6 billion and fund the U.S. government for three weeks, replacing a measure that expires March 18. Democrat Durbin, speaking on CNN’s “State of the Union,” said the Senate would take up the measure once it passes the House, where Republicans have majority control.

Enacting the sixth stopgap spending measure of fiscal 2011 is needed to prevent a government shutdown and will provide lawmakers and President Barack Obama with more time to work out a deal to fund U.S. programs through the fiscal year that ends Sept. 30, Durbin said. Congress needs to advance the measure to facilitate an agreement addressing the nation’s long-term fiscal straits, Durbin said.

“We’re not going to balance America’s budget in the next six months,” Durbin said. Republican lawmakers, led by the House, propose cutting $61 billion in government spending this year, which Durbin rejected as part of this year’s budget. “That goes way too far,” he said. The Democratic-controlled Senate rejected that proposal March 9.

Fiscal Issues

Long-term fiscal issues can’t be resolved in stopgap funding bills, Durbin said. “We’re looking at this in honest and hard terms about how we deal with this deficit, not in a matter of six months but over a period of time so that we responsibly cut spending and don’t do it at the expense of America’s economic growth.”

The three-week measure worked out between the White House and lawmakers from both parties would forestall a shutdown of non-essential government services after March 18.

Senator Mitch McConnell, a Kentucky Republican and the minority leader, said on “Fox News Sunday” yesterday that the short-term bill puts the U.S. on a “slow path” toward the $61 billion target.

While Senate Republicans will support the latest spending bill, they will insist on deeper budget cuts as a condition of funding the government through Sept. 30 and of voting to raise the debt ceiling, McConnell said.

“My prediction is not a single one of the 47 Republicans will vote to raise the debt ceiling unless it includes with it some credible effort to do something about our debt,” McConnell said.

Political Bickering

President Barack Obama on March 11 urged lawmakers to work out a deal that keeps the government running through the end of the fiscal year, saying the public expects them to “stop with the political bickering.”

“We can’t keep on running the government on two-week extensions,” Obama said. “That’s irresponsible.”

Representative Kevin McCarthy, a California Republican who is the majority whip, vowed a government shutdown wouldn’t happen and said Obama and Senate Democrats hold the keys to an agreement on financing government operations through the end of the fiscal year.

“We think that Democrats need to step up and actually produce something,” McCarthy said on “State of the Union.”

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A swollen river submerged bridges and inundated homes and stores Sunday in Australia’s already sodden Queensland state as more heavy rain added to the country’s worst flooding in decades.

Maryborough became the latest of some 40 towns to be partly awash as a river running through it burst its banks and entered parts of the town of 22,000, which has been heavily protected by sandbags and levies. Downstream, residents of Gympie were frantically sandbagging their town in anticipation of flooding there on Monday.

The latest flooding was not as bad as in recent weeks, when entire towns were submerged beneath an inland sea the size of France and Germany combined, but was a sign that the ground has little capacity left to soak up any more moisture, so any new rain is likely to make matters worse, officials said.

Some areas of Queensland have had more than eight inches (200 millimeters) of rain the past 24 hours, the Bureau of Meteorology said late Sunday.

“This year, with all of the catchments primed and the rivers already flooding, that 200 millimeters of rain will mean something very different,” said Warren Bridson, acting chief of the state emergency services. “It could mean the difference between a minor flood and a major flood.”

Ten people have died since late November and about 200,000 have been affected by the floods. Roads and rail lines have been cut, Queensland’s big-exporting coal mine industry has virtually shut down, and cattle ranching and farming across a large part of the state are at a standstill.

Towns in the path of floodwaters have had time to prepare with sandbags and levies, and officials say the rain falling now is not expected to make the crisis significantly worse. A massive relief operation has moved from emergency operations to recovery.

Residents of some of the 40 affected towns have returned home and begun mopping up sludge left behind by the floods, while others _ including in the city of Rockhampton, home to 75,000 people _ are still waiting for floodwaters to recede to start the cleanup.

Officials say it will be another week before the river level drops, and the situation will stay miserable in the meantime for many people, with dirty water sloshing through 400 homes and 150 businesses.

“The issue of the stench, the question of the mosquitoes, sand flies and black flies … will be very uncomfortable to our community,” Rockhampton Mayor Brad Carter said.

Senior officials got a personal dose of the bad weather on Sunday, when a small plane carrying the army officer in charge of the rebuilding effort, the state premier and other officials was hit by lightning. It sent a flash of light through the cabin and left black scorch marks on both wing tips and the tail, the premier’s office said.

In Maryborough, two houses, a mobile home park and about seven businesses near the river were inundated, and two bridges were covered with water as the floods peaked, police Superintendent Stephen Wardrope said.

A Gympie official, Tony Perret, said the floodwaters were headed toward the town, and some properties close to the river were expected to be inundated Monday.

Prime Minister Julia Gillard flew Saturday to several towns that were cut off or partly submerged by floodwaters, and promised residents they would be fully restored. Maj. Gen. Mick Slater, who is in charge of the recovery operation, said it might take years to fix all the damaged roads, rail lines and bridges.

Queensland officials have said the price of rebuilding homes, businesses and infrastructure, coupled with economic losses, could be as high as $5 billion.

Australia’s worst flooding in some 50 years was caused by tropical rains that fell for days, starting just before Christmas. Some 1,200 homes were inundated and almost 11,000 more have water damage. Nearly 4,000 people were evacuated, and many are still staying with friends or in relief shelters.

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National Fuel Gas Distribution Corp. is relocating its customer assistance center in downtown Buffalo.

The last business day at the current location, 455 Main Street, will be Oct. 22. The center will relocate on Oct. 25 to the Brisbane Building, which is at 409 Main Street, directly across from Main Place Mall.

The center is open from 8:15 a.m. to 4:30 p.m. on weekdays.

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