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Let's no kid ourselves about where this is likely headed.
I give this ten to one odds it winds up with a pardon anyways.
This is just a bargaining war to see how much leverage Libby has to demand his pardon and get a greta private sector and possibly government job later. Look at Oliver North for example.
It's also a game to see how much loyalty Miller deserves for continued patronage.
Everybody involved in this wants to keep all the ugly secrets hidden, and the press is complicit to a large extent because one of their own, Judith Miller, is implicated.
The developing outline of the Libby trial is disappearing beneath moment-to-moment minutiae. The trees are hiding the forest. Some running analysis or an occasional recap-summary-overview would be most helpful.
Judith Miller is still resisting revealing her sources within the admin for all the bad WMD intel and also for the Joe Wilson smear campaign, which are certainly the same.
She's still covering her ass because she, understandably, doesn't want her career further ruined for her shoddy journalism.
Libby's attorney's seem to be playing this two ways:
1) the more pressure they put on the admin the more leverage Libby has to get pardoned.
2) by smearing the guilt around in a vague way, it may be enough to get Libby off, but they're obviously not really pressing for indictments of Rove and others. Not a wise strategy for the long term, especially with the changing political climate.
There's a 3rd possibility, the outside option the Bush admin isn't offering a pardon, or can't if they fear impeachment or a political climate in which a pardon would be too detrimental to the Republicans. In that case they may really sacrifice Libby to save Rove, Cheney, etc. all of whom have memos and other evidence they were intimately involved with outing Plame.
Clearly though, the prosecution should go after Libby to get him to offer up incriminating evidence on Rove + Cheney, and not settle for this 'no fault' defense. Same goes for Judith Miller, who has completely voided the privilege of the Fourth Estate.
Allowing Judith miller to claim the confidentially privilege only weakens it for legitimate journalists. The sooner journalists realize that, the better.