Sea Dispute Upends Asian Summit A summit of foreign ministers of the Association of Southeast Asian Nations in Phnom Penh, Cambodia, ended Friday amid tense disagreements over how to address territorial claims in the sea, which is claimed by China and in part by the Philippines, Vietnam, Malaysia, Taiwan and Brunei. U.S. Secretary of State Hillary Clinton, who attended the talks, had pressed for discussion of a multinational agreement to ease tensions—a move opposed by China, which prefers to negotiate with each nation separately. But Southeast Asian nations argued over how hard to press the Chinese, with countries such as Cambodia resisting any steps that would embarrass China, and the Philippines—which has competing maritime territorial claims with China—pushing to take a harder line, according to people familiar with the talks. Tempers grew so hot that the 10 Asean member nations weren't able to agree on language for a concluding communiqué, which is typically issued at the end of such summits and used as final records of the events. Such a failure is "unprecedented" in the group's 45-year history, said Asean Secretary-General Surin Pitsuwan, who called it "very disappointing." "We'll need time to recover," he said, adding that "Asean will need to learn how to consolidate and coordinate positions if it wants to take on the global community." Mrs. Clinton late Thursday said the talks demonstrated progress because they showed the nations were willing to discuss the difficult issue. But analysts said the result favors Beijing. "Southeast Asian nations have to come up with a common position," said Dan Blumenthal, director of Asian studies at the American Enterprise Institute, a conservative think tank. "Anytime they don't, it's a victory for China."

Japan braces for more rain after at least 19 die Southwestern Japan was bracing for the effects of more torrential rain on Friday, on top of "unprecedented" downpours that swamped whole neighbourhoods, leaving at least 19 dead and eight missing. Television footage showed torrents of muddy water carrying uprooted trees and other debris after Thursday's violent deluge, while rivers burst their banks and flooded towns and villages in the main southern island of Kyushu. Reports showed residential streets in the city of Kumamoto covered in mud, while battered cars that had been swept away by flood water were left dumped on hillsides in scenes reminiscent of the March 2011 tsunami in the northeast.In the city of Aso, landslides buried 17 households, killing at least 17 people with five more still missing.Public broadcaster NHK showed rescuers continuing their search on Friday morning, using heavy machinery to remove uprooted trees, boulders and debris as rain fell. The weather had eased somewhat by Friday morning, but the Japan Meteorological Agency forecast further downpours in Kyushu later in the day."We expect heavy rain on the same scale we saw yesterday will fall again today. We remain on the highest alert," said a local official in badly-hit Oita prefecture. The city of Hita, Oita prefecture, issued evacuation orders to more than 11,000 people amid increasing fears the Kagetsugawa river, which runs through the city, would burst its banks, local officials said.Nearly 25,000 people in other areas of the prefecture were advised to seek safety, the officials said.In neighbouring Kumamoto prefecture, more than 250 households were told to evacuate, while everyone living in the floodplain of the Shirakawa river in Kumamoto city was advised to evacuate.

New York Fed May Shed Light on Libor Scandal
Just how bad is the Libor scandal? That may partly depend on papers expected to be released by the New York Fed.

Some bankers argue the scandal is overblown because the system for setting the London interbank offered rate was always flawed. Sixteen banks submit estimates of the price at

which they believe they can borrow. Libor is the average, excluding the four highest and four lowest. In the crisis, there were so few transactions that some submissions were

questions of judgment. As a banker quips, it became the London interbank nonoffered rate.

But U.S. and U.K. investigations clearly rejected any idea that this absolved Barclays BARC.LN -1.41%. The U.K. bank was fined $450 million partly because it falsified Libor

submissions even as it complained to regulators that rivals were low-balling theirs. Given some banks were submitting lower rates than Barclays even though they had lost market

access, investigators must decide in those cases where judgment ends and deliberate falsehood begins.

What would take the crisis to another level is if U.K. authorities were aware of this low-balling and failed to act. That is where the Federal Reserve Bank of New York can help.

It says Barclays alerted it to issues with Libor, leading to the New York Fed sharing its concerns with the Bank of England in the spring of 2008.The New York Fed hasn't said

whether this analysis included allegations of misconduct. If it did, it would raise questions as to why U.K. banks continued low-balling Libor for months. The BOE denies knowing

of any allegation of misconduct. Deputy governor Paul Tucker says the BOE believed Libor was "a malfunctioning market, not a dishonest one."