Twitter and Nielsen pair up to publish new "social TV" ratings

- Nielsen Holdings NV, the television viewership measurement company, said on Monday it will partner with Twitter to publish a new set of ratings that measure chatter on Twitter about TV programming.
The new measurement, dubbed the "Nielsen Twitter TV Rating," seeks to tap into the stream of viewer commentary and armchair musings generated on "second screens" - the smartphones and tablets perched on Twitter users' laps while they watch, say, Monday Night Football or the latest episode of "Homeland" on their TVs.
The new ratings, to be launched next fall, arrive at a moment when media and advertising industry executives say they are observing a shift in TV viewing habits that include the rise of "second screen" use.
But significant questions remain for advertisers over how best to interpret the data and whether a Twitter ratings system is meaningful at all.
In September, Nielsen ratings showed that TV viewership for Viacom Inc's MTV Video Music Awards, which coincided with the Democratic National Convention, plummeted by more than 50 percent from a year ago. Yet social media chatter tripled, according to the research firm Trendrr.
Brad Adgate, an analyst at Horizon Media, said advertisers will view the Twitter ratings as a useful layer of information about a show's popularity, but it is "not going to be close to the currency" of existing ratings metrics.
"It lets producers and creative directors know if the storyline is working, like a huge focus group," Adgate said. "But I don't think you can translate comments to ratings for a show. Right now I think the bark right now is bigger than its bite."
The new ratings will measure the number of people discussing a show on Twitter, as well as those who are exposed to the chatter, to provide the "precise size of the audience and effect of social TV to TV programming," Nielsen said.
"As the experience of TV viewing continues to evolve, our TV partners have consistently asked for one common benchmark from which to measure the engagement of their programming," Chloe Sladden, Twitter's vice president of media, said in a post on the company blog on Monday. "This new metric is intended to answer that request, and to act as a complement and companion to the Nielsen TV rating."
Mark Burnett, executive producer of NBC's hit "The Voice," argued that advertisers should value programs that can attract a high level of social media engagement from viewers. Deeply embedded social media elements, such as live Twitter polls, were critical in driving "The Voice" to the top of the Tuesday night ratings among viewers between 18 to 49, Burnett said.
"If you're an advertiser, wouldn't you want to know whether people are watching this show passively or if they're actively engaged in the viewing experience?" Burnett said. "Five years from now this will make traditional television ratings seem archaic."
For Twitter, the partnership with a recognized measurement company like Nielsen emphatically punctuates a year-long effort by its media division to bring second-screen usage into the mainstream.
Twitter's convergence with television has been on display during sporting and major news events, which have provided some of the biggest viewership moments for both broadcasters and the social media company.
During the Summer Olympics in London, Twitter set up a page for the event that displayed photos from inside an event venue or athletes' tweets to complement what was being broadcast on NBC. Advertisers like Procter & Gamble Co, for instance, which advertised heavily during the Games, tried to bridge the two mediums by airing an ad on TV, then sending out a tweet soliciting viewer feedback about the ad.
As news organizations tallied votes on election night in the United States on November 6, worldwide Twitter chatter hit a peak of more than 327,000 per minute, the company said this month.

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Florida man sentenced to 10 years in "hackerazzi" case

A Florida man who pleaded guilty to hacking into the email accounts of celebrities to gain access to nude photos and private information was sentenced to 10 years in prison by a federal judge in Los Angeles on Monday.
Former office clerk Christopher Chaney, 36, said before the trial that he hacked into the accounts of film star Scarlett Johansson and other celebrities because he was addicted to spying on their personal lives.
Prosecutors said Chaney illegally gained access to email accounts of more than 50 people in the entertainment industry, including Johansson, actress Mila Kunis, and singers Christina Aguilera and Renee Olstead from November 2010 to October 2011.
Chaney, who was initially charged with 28 counts related to hacking, struck a plea deal with prosecutors in March to nine felony counts, including wiretapping and unauthorized access to protected computers.
"I don't know what else to say except I'm sorry," Chaney said during his sentencing. "This will never happen again."
Chaney was ordered to pay $66,179 in restitution to victims.
Prosecutors recommended a 71-month prison for Chaney, who faced a maximum sentence of 60 years.
TEARFUL JOHANSSON
Prosecutors said Chaney leaked some of the private photos to two celebrity gossip websites and a hacker.
Johansson said the photos, which show her topless, were taken for her then-husband, actor Ryan Reynolds.
In a video statement shown in U.S. District Court in Los Angeles, a tearful Johansson said she was "truly humiliated and embarrassed" when the photos appeared online, asking Judge S. James Otero to come down hard on Chaney.
Prosecutors said Chaney also stalked two unnamed Florida women online, one since 1999 when she was 13 years old.
Chaney, a native of Jacksonville, Florida, was arrested in October 2011 after an 11-month FBI investigation dubbed "Operation Hackerazzi" and he continued hacking after investigators initially seized his personal computers.
Shortly after his arrest, Chaney told a Florida television station that his hacking of celebrity email accounts started as curiosity and later he became "addicted."
"I was almost relieved months ago when they came in and took my computer ... because I didn't know how to stop," he said.

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Massachusetts fines Morgan Stanley over Facebook IPO

 Morgan Stanley , the lead underwriter for Facebook Inc's initial public offering, will pay a $5 million fine to Massachusetts for violating securities laws governing how investment research can be distributed.
Massachusetts' top securities regulator, William Galvin, charged on Monday that a top Morgan Stanley banker had improperly coached Facebook on how to disclose sensitive financial information selectively, perpetuating what he calls "an unlevel playing field" between Wall Street and Main Street.
Morgan Stanley has faced criticism since Facebook went public in May for revealing revised earnings and revenue forecasts to select clients before the media company's $16 billion initial public offering.
This is the first time a case stemming from Morgan Stanley's handling of the Facebook offering has been settled.
Facebook had privately told Wall Street research analysts about softer forecasts because of less robust mobile revenues. A top Morgan Stanley banker coached Facebook executives on how to get the message out, Galvin said.
A Morgan Stanley spokeswoman said on Monday the company is "pleased to have reached a settlement" and that it is "committed to robust compliance with both the letter and the spirit of all applicable regulations and laws." The company neither admitted nor denied any wrongdoing.
Galvin, who has been aggressive in policing how research is distributed on Wall Street ever since investment banks reached a global settlement in 2003, said the bank violated that settlement. He fined Citigroup $2 million over similar charges in late October.
"The conduct at Morgan Stanley was more egregious," he said in an interview explaining the amount of the fine. "With it we will get their attention and begin to take steps in restoring some confidence for retail investors to invest."
Galvin also said that his months-long investigation into the Facebook IPO is far from over and that he continues to review the other banks involved. Goldman Sachs and JP Morgan also acted as underwriters. The underwriting fee for all underwriters was reported to be $176 million at the time, or 1.1 percent of the proceeds.
As lead underwriter, Morgan Stanley took in $68 million in fees from the IPO, according to a Thomson Reuters estimate.
Massachusetts did not name the Morgan Stanley banker in its documents but personal information detailed in the matter suggest it is Michael Grimes, a top technology banker who was instrumental in the Facebook IPO.
The report says the unnamed banker joined Morgan Stanley in 1995 and became a managing director in 1998, dates that correlate with Grimes' career at the firm. It also says the banker works in Morgan Stanley's Menlo Park, California, office, where Grimes also works.
Grimes did not immediately respond to a request for comment, and was not accused of any wrongdoing by name.
The state said the banker helped a Facebook executive release new information and then guided the executive on how to speak with Wall Street analysts about it. The banker, Galvin said, rehearsed with Facebook's Treasurer and wrote the bulk of the script Facebook's Treasurer used when calling the research analysts.
A number of Wall Street analysts cut their growth estimates for Facebook in the days before the IPO after the company filed an amended prospectus.
Facebook's treasurer then quickly called a number for Wall Street analysts providing even more information.
The banker "was not allowed to call research analysts himself, so he did everything he could to ensure research analysts received new revenue numbers which they then provided to institutional investors," Galvin said.
Galvin's consent order also says that the banker spoke with company lawyers and then to Facebook's chief financial officer about how to prove an update "without creating the appearance of not providing the underlying trend information to all investors."
The banker and all others involved with the matter at Morgan Stanley are still employed by the company, a person familiar with the matter said.
Retail investors were not given any similar information, Galvin said, saying this case illustrates how institutional investors often have an edge over retail investors.

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ARM security improvement to speed mobile e-commerce

British chip designer ARM Holdings and its partners Gemalto and Giesecke & Devrient have launched a new security standard for smartphones that can speed up e-commerce transactions.
Trustonic, a joint venture between the companies formed in April, said the security standard could be built into every level of a device, from the chip through the operating system to applications.
Ben Cade, Trustonic's chief executive, said it would eliminate the need for third-party devices, like bank card readers and secure ID tags, and enable content to be shared easily between devices.
He said the technology could reduce the time needed for an e-commerce transaction on a smartphone to seven seconds from the two and a half minutes typical today.
"It will enable us to trust our smart connected devices to protect us as they deliver essential services and innovative user experiences," he said.
Security is becoming increasingly important for smartphone users as more operations move from PCs to mobile devices.
Trustonic has signed up partners ranging from chipmakers NVIDIA and Samsung Electronics to payments company Mastercard and content provider 20th Century Fox Home Entertainment, Cade said.

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Online shopping to breathe new life into run-down sheds

Owners of run-down warehouses on the edge of European cities could be sitting on goldmines because online shopping will force firms to seek distribution sites closer to customers who think speedy delivery is the norm.
In an increasingly fierce market where the likes of Amazon and Tesco pledge next-day or same-day delivery in specific time slots, warehouse rents could rise 40 percent over the next decade, property consultant CBRE said.
"Your industrial estate (near heavily populated areas) is the high street of the future," said Jonathan Holland, senior manager of Legal & General Property's industrial fund, which has 770 million pounds ($1.25 billion) under management.
"We are very much looking at owning warehouses around major conurbations."
Some 43 percent of European Union citizens shop online, the European Commission said in February, up from 26 percent six years ago. They were expected to fuel a 12-15 percent growth in online sales across the region over the next five years, Forrester Research predicted.
Meanwhile, falling sales in austerity-hit Britain have forced retail property values down 28 percent since end-2007, data from Investment Property Databank showed. Values in euro zone countries fell 5 percent over the same period, CBRE said.
The yield, or annual rent as a percentage of the property value, on an industrial warehouse in a good location in Europe was 7.8 percent at the end of September compared with 5.8 percent for offices and 5.2 percent for shops, CBRE said.
Industrial yields depend more on lease length and the financial strength of the tenant than location, compared with offices or shops, and would "edge downwards" where demand from retailers was strong, CBRE said.
Retailers currently favor large sites in locations away from big population centers but with good transport links.
Amazon's huge warehouses include sites in Dunfermline, Scotland and Rheinberg, Germany while Marks & Spencer will open a warehouse the size of 11 soccer fields in Castle Donington, Leicestershire, next year.
That is changing, said Amaury Gariel, managing director of CBRE's European industrial logistics team.
Places such as Croydon, 16 kilometers south of central London, strewn with empty office blocks and suffering high unemployment, and Créteil, a scruffy suburb 19 km southeast of Paris, are examples of areas that could be targeted as they are close to major highways and large local workforces, Gariel said.
Warehouse rents at such sites could rise 20-40 percent over the next decade, he said, citing the greatest demand in areas near the biggest European cities such as Amsterdam, London and Paris for sites that have typically been used by mail delivery firms and food distributors.
A tendency by governments to prioritize such areas for homes would squeeze supply and push prices higher, he said.
Retailers and property investors are at "a tipping point" in waking up to the changing real estate map for distribution points in Europe, Holland said.
Amazon is on the hunt for about 20 sheds close to British cities while Asda and Tesco are opening so-called 'dark stores' - distribution centers which look like supermarkets on the inside but are closed to customers - across Britain.
Industrial developer Prologis has bought a significant number of such sites near large towns and cities, such as Milton Keynes in Britain and Hannover in Germany, to meet future demand, European president Philip Dunne told Reuters.
Retailers face obsolescence unless they recognize how the type of property they rent needs to change, Gariel said.
"We are on the first page of the story regarding new ways to distribute goods. What happens if retailers do not recognize it? Just look at what happened to the fax and the telegram.

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Home prices rose in ninth straight month: S&P

Single-family home prices rose in October for nine months in a row, reinforcing the view the domestic real estate market is improving and should bolster the economy in 2013, a closely watched survey showed on Wednesday.
The S&P/Case Shiller composite index of 20 metropolitan areas gained 0.7 percent in October on a seasonally adjusted basis, stronger than the 0.5 percent rise forecast by economists polled by Reuters.
"Looking over this report, and considering other data on housing starts and sales, it is clear that the housing recovery is gathering strength," David Blitzer, chairman of the index committee at Standard & Poor's, said in a statement.
While record low mortgage rates and modest job growth should keep the housing recovery on track, analysts cautioned home prices face downward pressure from a likely pickup in the sales of foreclosed and distressed properties and reduced buying investors and speculators.
Prices in the 20 cities rose 4.3 percent year over year, beating expectations for a rise of 4.0 percent.
Las Vegas posted the biggest monthly rise on a seasonally adjusted basis at 2.4 percent, followed by a 1.7 percent increase in San Diego, the latest Case-Shiller data showed.
"Higher year-over-year price gains plus strong performances in the Southwest and California, regions that suffered during the housing bust, confirm that housing is now contributing to the economy," Blitzer said.
Housing contributed 10 percent to the overall U.S. economic growth in the third quarter, while the sector represented less than 3 percent of gross domestic product, he said.
Last week, the government said U.S. GDP expanded at a stronger-than-expected 3.1 percent annualized pace in the third quarter.
Excluding seasonal factors, however, home prices in 12 of the 20 cities fell in October from September as home values tend to decline in fall and winter, Blitzer said.
Chicago experienced the largest non-seasonally adjusted decline at 1.5 percent, followed by a 1.4 percent fall in Boston.

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US economy could handle short fall over 'cliff'

The economic threat that's kept many Americans on edge for months is nearing reality — unless the White House and Republicans cut a budget deal by New Year's Day.
Huge tax increases. Deep cuts in domestic and defense programs. The likelihood of sinking stock prices, reduced consumer spending and corporate layoffs. The risk of a recession within months.
Still, the start of 2013 may turn out to be far less bleak than feared. For one thing, the two sides may strike a short-term agreement before New Year's that postpones spending cuts until spring. President Barack Obama and members of Congress return to Washington Thursday.
Even if New Year's passed with no deal, businesses and consumers would not likely panic as long as some agreement seemed imminent. The $671 billion in tax increases and spending cuts could be retroactively repealed.
And the impact of the tax increases would be felt only gradually. Most people would receive slightly less money in each paycheck.
"The simple conclusion that going off the cliff necessarily means a recession next year is wrong," says Lewis Alexander, an economist at Nomura Securities. "It will ultimately depend on how long the policies are in place."
It's always possible that negotiations between President Obama and Republican congressional leaders will collapse in acrimony. The prospect of permanent tax increases and spending cuts could cause many consumers and businesses to delay spending, hiring or expanding.
Without any agreement at all for months, the fiscal cliff would cause the U.S. economy to shrink 0.5 percent in the first half of 2013 and fall into recession, the Congressional Budget Office estimates.
But most economists expect a deal, if not by New Year's then soon after. Businesses and consumers will likely remain calm as long as negotiators seem to be moving toward an agreement.
"The atmosphere is more important than whether the talks spill" into next year, said Paul Ashworth, an economist at Capital Economics.
Here's why many are optimistic that a brief fall over the cliff wouldn't derail the economic recovery:
— Though the fiscal cliff would boost taxes by $586 billion for all of 2013, the tax hit for most people would be modest at first. The expiration of Social Security and income tax cuts would be spread throughout 2013. For taxpayers with incomes of $40,000 to $65,000, paychecks would shrink an average of about $1,500 next year. That would be a significant bite over the full year, but the initial hit would be just $130 in January, according to the nonpartisan Tax Policy Center.
— About a third of the tax increases wouldn't touch most Americans. Some would hit businesses. Others, such as higher taxes on investment income and estates, and the expiration of middle-income tax credits, wouldn't come due until Americans filed their 2013 taxes in 2014.
— The Internal Revenue Service has delayed any increases in tax withholding that would otherwise kick in. Without a deal, the top income tax rate for single people with taxable income between about $36,000 and $88,000 would rise from 25 percent to 28 percent. But that won't start to reduce Americans' paychecks in early January, even if no deal is reached by then.
— About $85 billion in spending cuts to defense and domestic programs would take weeks or longer to take effect. That means government agencies wouldn't cut jobs right away.
If a short-term agreement is struck, some taxes would probably still go up. These would include a 2 percentage point cut in Social Security taxes that's been in place for two years. Its expiration would cost the typical household about $1,000 a year. With income gains sluggish, that could dampen consumer spending.
A temporary deal that delays some hard decisions could reduce business and consumer confidence. It would also mean:
— Extended unemployment benefits would end for 2 million people. The federal government's program pays for about 32 weeks of extra benefits, on average, on top of the 26 weeks most states provide. Weekly unemployment checks average about $320 nationwide.
— The stock market would probably drop, though maybe not by much. Many Wall Street analysts expect a partial deal of some kind. "There is starting to become a little bit of an acceptance that we fall off the fiscal cliff," said J.J. Kinahan, a strategist for TD Ameritrade.
— The expiration of the Social Security tax cut and the end of emergency unemployment benefits would likely shave 0.7 percentage point off economic growth next year, the CBO estimates. The economy is now growing at about a 2 percent annual pace.
If no deal at all was reached by January and budget talks dragged on, many businesses might put off investment or hiring. That's why most economists say it would be crucial to reach a deal within roughly the first two months of 2013.
In addition, many more people would be affected if something called the alternative minimum tax isn't fixed.
The financially painful AMT was designed to prevent rich people from exploiting loopholes and deductions to avoid any income tax. But the AMT wasn't indexed for inflation, so it has increasingly threatened middle-income taxpayers. Congress has acted each year for a decade to prevent the AMT from hitting many more people.
If it isn't fixed again, roughly 33 million taxpayers, including married couples with income as low as $45,000 — down from $74,450 in 2011— could face the AMT. Previously, only 5 million taxpayers had to pay it. Taxpayers subject to the AMT must calculate their tax under both the regular system and the AMT and pay the larger amount. Without a fix, a middle-income household would pay an average of $1,231 more, according to the Tax Policy Center.
The IRS has said it assumes Congress and the White House will fix the AMT in a deal to avoid the cliff. If they don't, the IRS will need weeks to reprogram computers and make other adjustments. In the meantime, about 100 million taxpayers couldn't file tax returns early next year because they couldn't determine whether they owe the AMT. Refunds would be delayed.
The gravest scenario would be if the budget talks collapsed and the tax increases and spending cuts appeared to be permanent.
In that case, Macroeconomic Advisors warns that the Dow could plunge up to 2,000 points within days. Businesses would turn gloomier in anticipation of Americans paying higher taxes and spending less.
The economy would shrink at an annual rate of 0.6 percent in the first three months of 2013, estimates Joel Prakken, an economist at Macroeconomic Advisors. That compares with an estimated 1.9 percent growth rate if a deal is reached. CBO forecasts that the unemployment rate would rise to 9.1 percent from the current 7.7 percent.
Last week, Obama and House Speaker John Boehner narrowed their differences on income tax increases and spending cuts. But with the two sides deadlocked, Boehner scheduled a vote on a bill to prevent taxes from rising on those earning less than $1 million a year. Opposition from anti-tax conservatives, and Democrats, forced him to cancel the vote.
The gridlock caused stocks to fall Friday. The Dow Jones industrial average dropped 121 points.
Obama called for a vote on a stripped-down agreement that would raise taxes only on the wealthiest 2 percent of Americans and extend emergency unemployment benefits. Automatic spending cuts would be postponed.
Whatever the outcome, some trends could offset part of the economic damage. The average retail price for gasoline has dropped 15 percent this fall, for example. Lower gas prices give consumers more money to spend elsewhere.
And if the crisis is resolved, as many expect, the boost to business and consumer confidence would encourage more hiring and spending.
"We could end up with a much more robust recovery than anybody's envisioned" if a deal is reached, said David Cote, CEO of Honeywell International.
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Egypt's contentious Islamist constitution becomes law

 President Mohamed Mursi admitted on Wednesday that Egypt's economy faces serious problems after he enacted a new, bitterly contested constitution that is supposed to help end political unrest and allow him to focus on the financial crisis.
The president said the economy also had great opportunities to grow, but earlier the Egyptian pound tumbled to its weakest level in almost eight years as ever more people rushed to buy dollars and withdraw their savings from banks.
Mursi, catapulted into power by his Islamist allies this year, believes that adopting the constitution quickly and holding elections to a permanent new parliament soon will help to end the long period of turmoil that has wrecked the economy.
The presidency announced on Wednesday that Mursi had formally approved the constitution, which was drafted by his Islamist allies, the previous evening, shortly after results showed that Egyptians had backed it in a referendum.
Keen to be seen as tough but fair, Mursi said it was time for all political forces to put aside their differences and start working together to bring economic stability.
"I will make all efforts, together with you, to push forward the economy which faces huge challenges and has great opportunities to grow," Mursi said in his first address to the nation since the adoption of the constitution.
The text won about 64 percent in a two-stage referendum, paving the way for a new parliamentary vote in about two months.
The main opposition group, which has until now boycotted all rounds of national unity talks led by Mursi's office, said it had not changed its position.
"The ongoing talks are farcical and theatrical," Hussein Abdel Ghani, an opposition spokesman, told reporters. He called on Egyptians to demonstrate against the new constitution on January 25, the second anniversary of Egypt's revolution.
He added that the opposition would stick to its policy of peaceful protest against Mursi's government, which he said sought to use religion as a tool to create an oppressive state.
ANOTHER ISLAMIST VICTORY
The referendum result marked yet another electoral victory for the Islamists since veteran autocrat Hosni Mubarak was toppled in 2011, following parliamentary elections last year and the presidential vote that brought Mursi to power this year.
The charter states that the principles of sharia, Islamic law, are the main source of legislation and that Islamic authorities will be consulted on sharia - a source of concern to the Christian minority and others.
Mursi's government, which has accused opponents of damaging the economy by prolonging the political upheaval, now faces the tough task of building a broad consensus as it prepares to impose hugely unpopular austerity measures.
In his speech, Mursi said he would introduce incentives to make Egypt - once a darling of emerging market investors - an attractive place for business once again, and he would consider making changes in the cabinet as part of his plan.
He also appeared keen to seem tolerant of those who voted "no" in this month's referendum.
"This is their right," he said. "Those who said 'no' and those who said 'yes', I thank you both because we do not want to return to the era of one opinion or fake majorities."
CRISIS ATMOSPHERE
The atmosphere of crisis deepened this week after the Standard & Poor's agency downgraded Egypt's long-term credit rating and warned of a possible further cut. The government has imposed currency restrictions to reduce capital flight.
In Cairo's bustling center, people appeared nervous, openly expressing their frustration with economic instability as they went about their daily business.
"The country's going to the pits. Everything is a mess," Hamdy Hussein, a 61-year-old building janitor, said angrily. "It's worse than ever. Mubarak was better than now. People were living and there was security."
Ashraf Mohamed Kamal, 30, added: "The economic situation will be a mess in the next few years. It already is. People will get hungrier. People are now begging more."
The pound traded as low as 6.1775 against the dollar on Wednesday, close to its all-time low of 6.26 hit on October 14, 2004, on concerns that the government might devalue or tighten restrictions on currency movements.
"All customers are rushing to buy dollars after the downgrading," said a dealer at a Cairo-based bank. "We'll have to wait to see how the market will operate with the U.S. dollar, because as you know there is a rush at the moment."
The government is now in talks with business figures, trade unions and other groups to persuade them of the need for tax increases to resolve the crisis. Mursi has committed to such austerity measures to receive a $4.8 billion loan from the International Monetary Fund.
However, Al-Mal newspaper quoted Planning Minister Ashraf al-Araby as saying the government would not implement the tax increases until it had completed the dialogue with different parts of society.
Mursi's government argues the constitution offers enough protection to all groups, and that many Egyptians are fed up with street protests that have prevented a return to normality.
The charter gives Egypt's upper house of parliament, which is dominated by Islamists, full legislative powers until the vote for a new lower house is held.
Mursi is also due to address the upper house on Saturday in a speech likely to be dominated by economic policy.
Sharpening people's concerns, the authorities imposed currency controls on Tuesday to prevent capital flight. Leaving or entering Egypt with more than $10,000 in cash is now banned.
Adding to the government's long list of worries, Communications Minister Hany Mahmoud has resigned citing his "inability to adapt to the government's working culture".

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Washington stirs for "fiscal cliff" talks as Obama heads home

 Efforts to prevent the U.S. economy from going over a "fiscal cliff" stirred back to life on Wednesday with less than a week to go before potentially disastrous tax hikes and spending cuts kick in at the New Year.
In a sign that there may be a way through deadlock in Congress, Republican House of Representatives Speaker John Boehner urged the Democrat-controlled Senate to act to pull back from the cliff and offered to at least consider any bill the upper chamber produced.
President Barack Obama will try to revive budget crisis talks - which stalled last week - when he returns to Washington on Thursday after cutting short his Christmas holiday in Hawaii.
But the White House and Republicans are still far apart, as hopes for legislation to prevent the economy from tumbling off the fiscal cliff switch to the Senate.
Democrats control a majority in that chamber but still need some support from Republicans across the aisle for a likely attempt to raise taxes on the wealthy.
A senior administration official told reporters traveling with Obama in Hawaii that senior Republican leaders in Congress, Senator Mitch McConnell and Boehner, should step up to head off the looming tax and spending hit.
"It's up to the Senate Minority Leader not to block a vote, and it's up the House Republican leader, the Speaker of the House ... to allow a vote," the official said.
Months of congressional gridlock on how reduce the deficit and rein in the nation's $16 trillion federal debt have begun to affect ordinary Americans.
Shoppers might have spent less this holiday season for fear of looming income tax increases and reports of lackluster retail holiday sales added to the urgency for a deal. U.S. stocks fell on Wednesday, dragged lower by shares of retail companies.
TREASURY BUYING TIME
To avoid defaulting on the national debt if the budget crisis spins out of control, the Treasury Department announced measures essentially designed to buy time to allow Congress to resolve its differences and raise the debt borrowing limit.
Obama flies back from Hawaii overnight and is due in the White House on Thursday morning.
Starbucks Chief Executive Howard Schultz is urging workers in the company's roughly 120 Washington-area coffee shops to write "come together" on customers' cups on Thursday and Friday to tell politicians to end the crisis.
"We're paying attention, we're greatly disappointed in what's going on and we deserve better," Schultz told Reuters.
Boehner and his House Republican leadership team said in a statement that "the Senate must act first."
That puts the ball in the court of the Democrats in the Senate, which is likely to base any legislation on a bill it passed earlier this year to continue tax breaks for households with incomes below $250,000.
A spokesman for Senate Majority Leader Harry Reid issued a strongly worded statement calling on Republicans to "drop their knee-jerk obstruction."
"The Senate bill could pass tomorrow if House Republicans would simply let it come to the floor," the spokesman said.
A Senate bill would likely contain an extension of expiring unemployment benefits for those who have been out of work for extended periods.
With the 435 members scattered throughout the country because the House is in recess, House Republican leaders scheduled a conference call for Thursday with members to possibly discuss bringing the chamber back into session to deal with the fiscal cliff.
The budget fight is not just about taxes, however.
The country faces $109 billion in across-the-board spending cuts starting in January unless a deal is reached to either replace or delay them. Democrats want to switch the spending cuts to tax increases for the most part.
House Republicans have passed a bill to stop the military portion of the spending cuts and place the entire burden on domestic activities, including some social safety net programs.
But the main focus is on how to stop tax hikes on January 1.
"This is the (emergency) scenario that we have long believed would rise in probability the closer we go to December 31, which essentially calls for extending all the rates for those individuals making under $200K and households under $250K and does not address the debt ceiling or the deficit," analyst Chris Krueger of Guggenheim Securities wrote in a research note.
Republican Senator Kay Bailey Hutchison of Texas, who is retiring at year's end, told MSNBC that $250,000 "is too low of a threshold" for raising income taxes.
RAISING TAX THRESHOLD
She said that in conversations she has had with some Senate Democrats, "they are saying maybe more in the $400,000 to $500,000 category."
Obama himself recently offered to raise the threshold to $400,000, before negotiations with Boehner broke off.
Boehner and other Republican leaders said in a statement that if the Senate sends the House new fiscal cliff legislation, "The House will then consider whether to accept the bills ... or to send them back to the Senate with additional amendments.
"The House will take this action on whatever the Senate can pass, but the Senate first must act."
But even if a handful of Senate Republicans support Democrats on a measure to avoid the worst of the fiscal cliff, time is short. When the Senate returns on Thursday it is due to work on a disaster aid bill to help New York and New Jersey recover from Superstorm Sandy and other measures.
All 191 House Democrats might have to team up with at least 26 Republicans to get a majority if the bill included tax hikes on the wealthiest Americans, as Obama is demanding.
Some of those votes could conceivably come from among the 34 Republican members who are either retiring or were defeated in the November elections and no longer have to worry about the political fallout.
An alternative is for Congress to let income taxes go up on everyone as scheduled. Then, during the first week of January, lawmakers would strike a quick deal to reduce them except on people in the highest brackets.
They could also pass a measure putting off the $109 billion in automatic spending cuts that most lawmakers want to avoid.
Once the clock ticks past midnight on December 31, no member of Congress would have to vote for a tax increase on anyone - taxes would have risen automatically - and the only votes would be to decrease tax rates for most Americans back to their 2012 levels.

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Asian markets rise amid optimism over Japan

 Japanese stocks surged to their highest level this year as Asian markets rose Thursday on optimism a new Japanese government will stimulate its sluggish economy.
Oil gained in Asian trading to stay above $90 a barrel as markets in Hong Kong and Australia reopened after a two-day Christmas break.
Tokyo's benchmark Nikkei 225 index rose 1.3 percent to 10,368.5. That added to Wednesday's 1.5 percent gain and took the Nikkei to a 22 percent increase for the year. Hong Kong's Hang Seng gained 0.6 percent to 22,677.7, while Shanghai climbed 0.2 percent to 2,223.95.
Incoming Japanese Prime Minister Shinzo Abe has called for more public works spending to reinvigorate the economy. He wants the Bank of Japan to raise its inflation target from 1 to 2 percent to drag the country out of two decades of deflation, or steadily declining prices that have deadened economic activity.
To help exporters, Abe also has urged the central bank to take steps to dampen Japan's yen. A strong currency has hurt big exporters such as Toyota by making Japanese products more expensive overseas.
"The message from Japan is clear at the moment, the incoming government will do everything in its power to weaken the yen and stimulate the economy," Australia's IG Markets said in a report.
Elsewhere in Asia, Taiwan's Taiex gained 0.2 percent to 7,648.92 and Sydney's S&P ASX 200 added 0.2 percent to 4,645.3.
Singapore, Malaysia and the Philippines also rose. South Korea's Kospi was the only major decliner, shedding 0.1 percent to 1,979.39.
On Wednesday, U.S. stocks fell for a third session as trading resumed after the Christmas break. Disappointing holiday sales weighed heavy on retail companies and investors worried about the impending "fiscal cliff" — automatic tax and spending cuts due to take effect if the White House and Congress fail to agree on a budget deal. Economists worry that could push the economy into recession.
The Dow Jones industrial average slipped 24.49 points to 13,114.59. The Standard & Poor's 500 index fell 6.83 to 1,419.83 and the Nasdaq composite lost 22.44 to 2,990.16.
Benchmark oil for February delivery rose 9 cents to $90.89 in electronic trading on the New York Mercantile Exchange. The contract closed down 5 cents to $88.61 a barrel on the Nymex on Monday.
In currencies, the euro rose to $1.3230. The dollar gained to 85.68 yen.

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Japan's Abe set for second term, to tap allies for cabinet

 Shinzo Abe will be voted in as prime minister by parliament's lower house on Wednesday, giving the hawkish lawmaker a second chance at Japan's top job as the country battles deflation and confronts a rising China.
Abe, 58, has promised aggressive monetary easing by the Bank of Japan and big fiscal spending by the debt-laden government to slay deflation and weaken the yen to make Japanese exports more competitive.
The grandson of a former prime minister, Abe has staged a stunning comeback five years after abruptly resigning as premier in the wake of a one-year term troubled partly by scandals in his cabinet and public outrage over lost pension records.
His Liberal Democratic Party (LDP) surged back to power in this month's election.
"I want to learn from the experience of my previous administration, including the setbacks, and aim for a stable government," Abe told reporters as he entered parliament, where he will be voted in later in the day as Japan's seventh prime minister in six years.
Abe looks set to pick a slate of close allies leavened by some LDP rivals to fend off the criticism of cronyism that dogged his first administration.
Japanese media have said Abe will name former prime minister Taro Aso, 72, as finance minister, ex-trade and industry minister Akira Amari as minister in charge of a new economic revival headquarters and policy veteran Toshimitsu Motegi as trade minister. Motegi will also be tasked with formulating energy policy in the aftermath of the Fukushima nuclear disaster last year.
Loyal Abe backer Yoshihide Suga is expected to become chief cabinet secretary, a key post combining the job of top government spokesman with responsibility for coordinating among ministries.
Others who share Abe's agenda to revise the pacifist constitution and rewrite Japan's wartime history with a less apologetic tone have also been floated for posts.
"These are really LDP right-wingers and close friends of Abe," said Sophia University professor Koichi Nakano. "It really doesn't look very fresh at all."
CHINA TIES, JULY ELECTION
The yen has weakened about 9.8 percent against the dollar since Abe was elected LDP leader in September. On Wednesday, it hit a 20-month low of 85.38 yen against the greenback on expectations of aggressive monetary policy easing.
Abe has threatened to revise a law guaranteeing the Bank of Japan's (BOJ) independence if it refuses to set a 2 percent inflation target.
BOJ minutes released on Wednesday showed the central bank was already pondering policy options in November, concerned about looming risks to the economy. The BOJ stood pat at its November rate review meeting but eased this month in response to intensifying pressure from Abe.
Abe also promised during the election campaign to take a tough stance in territorial rows with China and South Korea over separate chains of tiny islands, while placing priority on strengthening Japan's alliance with the United States.
Japanese media said Abe would appoint two low-profile officials to the foreign and defense portfolios.
Itsunori Onodera, 52, who was senior vice foreign minister in Abe's first cabinet, will become defense minister while Fumio Kishida, 55, a former state minister for issues related to Okinawa island - host to the bulk of U.S. forces in Japan - will be appointed to the top diplomatic post, the reports said.
Abe, who hails from a wealthy political family, made his first overseas visit to China to repair chilly ties when he took office in 2006, but has said his first trip this time will be to the United States.
He may, however, put contentious issues that could upset key trade partner China and fellow-U.S. ally South Korea on the backburner to concentrate on boosting the economy, now in its fourth recession since 2000, ahead of an election for parliament's upper house in July.
The LDP and its small ally, the New Komeito party, won a two-thirds majority in the 480-seat lower house in the December 16 election. That allows the lower house to enact bills rejected by the upper house, where the LDP-led block lacks a majority.
But the process is cumbersome, so the LDP is keen to win a majority in the upper house to end the parliamentary deadlock that has plagued successive governments since 2007.
"It's the economy, the economy, the economy," an LDP source close to Abe told Reuters. The new government plans to submit an extra budget for the fiscal year to March 31 in late January.
Financial markets expect a budget worth about 10 trillion yen ($117.93 billion), but the source said no more than half of that would be spent on public works projects, a traditional staple of LDP economic stimulus packages.

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U.S. moves to sell advanced spy drones to South Korea

 The Obama administration formally proposed a controversial sale of advanced spy drones to help South Korea bear more of its defense from any attack by the heavily armed North.
Seoul has requested a possible $1.2 billion sale of four Northrop Grumman Corp RQ-4 "Global Hawk" remotely piloted aircraft with enhanced surveillance capabilities, the Pentagon's Defense Security Cooperation Agency said in a statement dated on Monday and distributed on Tuesday.
South Korea needs such systems to assume top responsibility for intelligence-gathering from the U.S.-led Combined Forces Command as scheduled in 2015, the security agency said in releasing a notice to U.S. lawmakers.
"The proposed sale of the RQ-4 will maintain adequate intelligence, surveillance, and reconnaissance capabilities and will ensure the alliance is able to monitor and deter regional threats in 2015 and beyond," the notice said.
The United States has agreed with Seoul to turn over the wartime command of Korean troops later this decade. Current arrangements grew from the U.S. role in the 1950-1953 Korean War that repelled a North Korean takeover of the South.
Seoul has shown interest in the high-altitude, long-endurance Global Hawk platform for at least four years. The system, akin to Lockheed Martin Corp's U-2 spy plane, may be optimized to scan large areas for stationary and moving targets by day or night and despite cloud cover.
It transmits imagery and other data from 60,000 feet at near real-time speed, using electro-optical, infrared and radar-imaging sensors built by Raytheon Co.
The possible sale has been held up by discussions involving price, aircraft configuration and a go-slow on release of such technology subject to a voluntary 34-nation arms control pact.
The Defense Department began informally consulting Congress on the possible Global Hawk sale in the summer of 2011, only to withdraw it pending further work on the make-up of the proposed export to Seoul amid lawmakers' arms-control concerns.
The formal notification to Congress came less than two weeks after a North Korean space launch of a satellite atop a multi-stage rocket, a first for the reclusive state, widely seen as advancing its ballistic missile program.
A White House statement denounced the December 12 launch as a "highly provocative act" that would bear consequences for violations of United Nations resolutions. The North is banned from testing missile or nuclear technology under international sanctions imposed after its 2006 and 2009 nuclear weapons tests.
In October 2008, then-U.S. Defense Secretary Robert Gates told reporters that the United States was "very sympathetic" to South Korea's interest in Global Hawk. But he cited issues that had to be overcome because of the so-called Missile Technology Control Regime, or MTCR.
The pact, established in 1987, has been credited with slowing the spread of ballistic missiles and other unmanned delivery systems that potentially could be used for chemical, biological and nuclear attacks.
Pact members, including the United States, agree to curb their exports of systems capable of carrying a 500-kilogram (1,102-pound) payload at least 300 kilometers (186 miles). The Global Hawk falls under a strong presumption against export under MTCR guidelines.
The notification to Congress did not mention that a U.S. government waiver for such an export would be required.
Arms-control advocates fear that this could fuel instability and stir regional arms-race dynamics as well as provide diplomatic cover for an expansion of such exports by Russia, China and others.
The Obama administration agreed earlier this year to let South Korea, a treaty ally, stretch the range of its ballistic missile systems to cover all of North Korea, going beyond the voluntary pact's 300 km (186 miles).
The congressional notification is required by U.S. law and does not mean that a deal has been concluded.
If a sale takes place, it would be for the third generation of Global Hawk drones known as Block 30, the security agency's notice to Congress said.
The Pentagon, in its fiscal 2013 budget request, proposed mothballing its own Block 30 Global Hawks and ending plans to buy more of that generation. Doing so would have no effect on the administration's plans to acquire other versions of the long-range drone.
South Korea's possible Global Hawk purchase would mark the system's first sale in the Asia-Pacific region. It has already been sold to the North Atlantic Treaty Organization (NATO).
Australia, Japan and Singapore each have shown interest in buying Global Hawk systems, Northrop Grumman officials have said. Company representatives had no comment on the Christmas holiday on the proposed sale to Seoul.

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Pope's Christmas message focuses on Mideast, China

 In his Christmas message to the world Tuesday, Pope Benedict XVI called for an end to the slaughter in Syria and for more meaningful negotiations between Israelis and Palestinians, while encouraging more religious freedom under China's new leaders.
Delivering the traditional speech from the central balcony of St. Peter's Basilica, Benedict also encouraged Arab spring nations, especially Egypt, to build just and respectful societies.
The pope prayed that China's new leadership may "esteem the contribution of the religions, in respect for each other" to help build a "fraternal society for the benefit of that noble people."
It was a clear reference to the Chinese government's often harsh treatment of Catholics loyal to the pontiff instead of to the state-sanctioned church. Earlier this month, the Vatican refused to accept the decision by Chinese authorities to revoke the title of a Shanghai bishop, who had been appointed in a rare show of consensus between the Holy See and China.
As the 85-year-old pontiff, bundled up in an ermine-trimmed red cape, gingerly stepped foot on the balcony, the pilgrims, tourists and Romans below backing St. Peter's Square erupted in cheers.
Less than 12 hours earlier, Benedict had led a two-hour long Christmas Eve ceremony in the basilica. He sounded hoarse and looked weary as he read his Christmas message and then holiday greetings in 65 languages.
In his "Urbi et Orbi" speech, which traditionally reviews world events and global challenges, Benedict prayed that "peace spring up for the people of Syria, deeply wounded and divided by a conflict that does not spare even the defenseless and reaps innocent victims."
He called for easier access to help refugees and for "dialogue in the pursuit of a political solution to the conflict."
Benedict prayed that God "grant Israelis and Palestinians courage to end long years of conflict and division, and to embark resolutely on the path to negotiation."
Israel, backed by the United States, opposed the Palestinian statehood bid, saying it was a ploy to bypass negotiations, something the Palestinians deny. Talks stalled four years ago.
Senior Palestinian official Saeb Erekat said that in a meeting with the pope last week, Palestinian President Mahmoud Abbas "emphasized our total readiness to resume negotiations." The Palestinians have not dropped their demand that Israel first stop settlement activities before returning to the negotiating table.
Hours earlier, in the ancient Bethlehem church built over the site where tradition holds Jesus was born, candles illuminated the sacred site and the joyous sound of prayer filled its overflowing halls.
Overcast skies and a cold wind in the Holy Land didn't dampen the spirits of worshippers in the biblical West Bank town. Bells pealed and long lines formed inside the fourth-century Church of the Nativity complex as Christian faithful waited to see the grotto that is Jesus' traditional birthplace.
Duncan Hardock, 24, a writer from MacLean, Virginia, traveled to Bethlehem from the republic of Georgia, where he had been teaching English. After passing through the separation barrier Israel built to ward off West Bank attackers, he walked to Bethlehem's Manger Square where the church stands.
"I feel we got to see both sides of Bethlehem in a really short period of time," Hardock said. "On our walk from the wall, we got to see the lonesome, closed side of Bethlehem ... But the moment we got into town, we're suddenly in the middle of the party."
Bethlehem lies 10 kilometers (6 miles) south of Jerusalem. Entry to the city is controlled by Israel, which occupied the West Bank in 1967.
For those who couldn't fit into the cavernous Bethlehem church, a loudspeaker outside broadcast the Christmas day service to hundreds of faithful in the square.
Their Palestinian hosts, who welcome this holiday as the high point of their city's year, were especially joyous this season, proud of the United Nations' recognition of an independent state of Palestine just last month.
"From this holy place, I invite politicians and men of good will to work with determination for peace and reconciliation that encompasses Palestine and Israel in the midst of all the suffering in the Middle East," said the top Roman Catholic cleric in the Holy Land, Latin Patriarch Fouad Twal in his annual address.
Back at the Vatican, Benedict offered encouragement to countries after the Arab spring of democracy protests. He had a special word for Egypt, "blessed by the childhood of Jesus."
Without citing the tumultuous politics and clashes in the region, he urged the North African region to build societies "founded on justice and respect for the dignity of every person."
Benedict prayed for the return of peace in Mali and harmony in Nigeria, where, he recalled "savage acts of terrorism continue to reap victims, particularly among Christians."
The Vatican for decades has been worried about the well-being of its flock in China, who are loyal to the pope in defiance of the communist's government support of an officially sponsored church, and relations between Beijing and the Holy See are often tense.
Speaking about China's newly installed regime leaders, Benedict expressed hope that "they will esteem the contribution of the religions, in respect for each other, in such a way that they can help to build a fraternal society for the benefit of that noble people and of the whole world."
Acknowledging Latin America's predominant Christian population, he urged government leaders to carry out commitments to development and to fighting organized crime.
In Britain, the royal family was attending Christmas Day church services at St. Mary Magdelene Church on Queen Elizabeth II's sprawling Sandringham estate, though there were a few notable absences. Prince William is spending the holiday with his pregnant wife Kate and his in-laws in the southern England village of Bucklebury, while Prince Harry is serving with British troops in Afghanistan.
Later Tuesday, the queen delivered her traditional, prerecorded Christmas message, which for the first time was broadcast in 3D.
At Canterbury cathedral, Anglican leader Rowan Williams delivered his final Christmas day sermon as archbishop of Canterbury. He acknowledged how the church's General Synod's vote against allowing women to become bishops had cost credibility and said the faithful felt a "real sense of loss" over the decision.
In the U.S., the Rev. Jesse Jackson brought his message of anti-violence and gun control to a Chicago jail, using his traditional Christmas Day sermon at the facility to challenge inmates to help get guns off the streets.
"We've all been grieving about the violence in Newtown, Connecticut, the last few days," he told reporters after addressing inmates, referring to the Dec. 14 school shooting that killed 26 children and adults. "Most of those here today ... have either shot somebody or been shot. We're recruiting them to help us stop the flow of guns."
In Newtown, well-wishers from around the U.S. showed up on Christmas morning to hang ornaments on a series of memorial Christmas trees while police officers from around Connecticut took extra shifts to direct traffic and patrol the town to give local police a day off. In a 24-hour vigil, volunteers watched over 26 candles that had been lit at midnight in honor of those slain at the Sandy Hook Elementary School.
At a town hall memorial, Faith Leonard waved to people driving by and handed out Christmas cookies, children's gifts and hugs to anyone who needed it.
"I guess my thought was if I could be here helping out maybe one person would be able to spend more time with their family or grieve in the way they needed to," said Leonard, who drove to Newtown from Gilbert, Arizona, to volunteer on Christmas morning.
At St. Rose of Lima Roman Catholic Church, which eight of the child victims of the massacre attended, the Rev. Robert Weiss told parishioners that "today is the day we begin everything all over again."
"We know Christmas in a way we never ever thought we would know it," he said. "We need a little Christmas and we've been given it."
In a New York City neighborhood ravaged by Superstorm Sandy in late October, some holiday traditions had to go by the wayside, but Christmas was celebrated with a special sense of gratitude.
Midmorning and noon Masses were packed Tuesday at St. Francis De Sales Church in the Rockaways; the church only recently got heat restored after Sandy flooded its basement. The bells and organ still don't work, so St. Francis De Sales is making do with a keyboard for now.
"But nobody is feeling morose or down. They're just rebuilding their lives, keeping the faith and going forward," choir member Ed Quinn said. "It's not the best of circumstances, that's for sure. But we're making the best of it.

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Daiwa CEO sees 2013 Nikkei rally on Abe economy boost

 Japan's Nikkei stock average could rally nearly 30 percent in 2013 due to an aggressive push to reflate the economy under the country's new premier, the chief executive of Daiwa Securities Group told Reuters in an interview.
While securities executives are known for their bullish market predictions, the comments from Takashi Hibino reflect an optimism among business leaders that the policies of Shinzo Abe will give Japan's sluggish economy a needed jolt.
Abe, who is set to become prime minister on Wednesday after his opposition Liberal Democratic Party won this month's lower house election, is a proponent of fiscal expansion and aggressive monetary policy to defeat deflation, which has sapped the world's third-largest economy for nearly two decades.
"If the correct policies are enacted the market will rise," Hibino said in an interview on Friday. His comments were embargoed for release on December 26.
"There has not been an administration as committed to escaping deflation. And that's why this time I choose to be optimistic."
Hibino predicted that the Nikkei, which has surged 15 percent since mid-November when elections were called, would likely trade between 9,500 and 13,000 next year. The upper limit would mark a 29 percent gain on Tuesday's close of 10,080.12.
On the back of the upturn in stocks, Hibino said he was confident Japan's second-largest brokerage would generate a net profit in the current financial year through March 2013, after losing a combined 76.7 billion yen ($904.5 million) in the previous two years.
Daiwa cut more than 500 jobs overseas starting in 2011 to stem the losses. Its biggest weakness has been investment banking, where it has struggled since ending a joint venture with Sumitomo Mitsui Financial Group in 2009.
Hibino said Daiwa, whose chief rival is industry leader Nomura Holdings Inc, was not looking for a partner in investment banking, noting that speculation it could come under the umbrella of a Japanese lender had recently died down.
He said Daiwa was not planning any further headcount cuts overseas but was shifting some staffing numbers within Europe. This included putting more people in regions such as Germany where demand for banking services was strong and trimming staff elsewhere, although he did not specify where cuts would take place.
Daiwa's biggest focus will be on encouraging customers to shift more of their savings into investment products, Hibino said. This strategy hinges in part on expanding its online bank, which has amassed 2 trillion yen in assets since its launch last year.
Japanese households hold the bulk of their 1,500 trillion yen in assets in low-yielding savings accounts, and persuading them to invest more has been a long-held ambition of the securities industry that has been slow to materialize.
Hibino believes conditions are now ripe for capturing that latent demand. He said Japanese stocks have bottomed out and the decades-long strengthening of the yen came to an end last year, boding well for corporate profits.
"Savings to investment is something that has been talked about for a long time but hasn't happened. That's because the markets have been going down," he said.

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Obama to cut vacation short to deal with fiscal crisis

President Barack Obama is cutting short his Hawaiian holiday to leave for Washington on Wednesday to address the unfinished "fiscal cliff" negotiations with Congress, the White House said on Tuesday.
As the clock ticks toward a January 1 deadline, efforts to avert a sharp rise in taxes and deep spending cuts have stalled, worrying world financial markets.
Obama and congressional lawmakers left Washington on Friday for the Christmas holidays with talks to avert the fiscal disaster in limbo.
When Obama arrives back in Washington early on Thursday, the focus will shift to the U.S. Senate after Republicans in the House of Representatives failed to pass their own budget measures last week.
Obama is expected to turn to a trusted Democratic ally, Senate Majority Leader Harry Reid, to help craft a quick deal.
White House aides began discussing details of the year-end budget measure with Senate Democratic counterparts early this week, a senior administration official said on Monday
The president will also need at least tacit approval from Senate Minority Leader Mitch McConnell to insure Republicans will permit passage of what is likely to be a stripped down bill that prevents taxes from rising on all Americans.
The measure may not, however, contain difficult spending cuts both parties had sought to speed deficit reduction. It is unclear how the president will seek to address the draconian across-the-board government spending reductions set to go into effect early in the year without a deal.
McConnell, who is up for re-election in 2014, has been a cautious participant in the process. His spokesman has said it was now up to Democrats in the Senate to make the next move.
Once clear of the Senate, the fiscal cliff legislation must also win enough bipartisan support to pass the House of Representatives, which failed last week to approve Speaker John Boehner's proposal to extend tax breaks for all Americans earning less than $1 million a year.
Conservative Republicans balked at any tax increases at all and withdrew support for the measure, which never came to a vote. Some Republican votes will be needed to pass any Senate bill.
BIG DAY THURSDAY
The next session of the Senate is set for Thursday, but the issues presented by the fiscal cliff - across-the-board tax increases and indiscriminate reductions in government spending - were not on the calendar.
The House has nothing on its schedule for the week, but members have been told they could be called back with 48 hours notice, making a Thursday return a theoretical possibility.
Obama and his family arrived in Hawaii early on Saturday and have devoted their time to spending the Christmas holiday together. First Lady Michelle Obama and the couple's two daughters are to remain in Hawaii, suggesting the president hopes to rejoin them if a deal is struck
Before the talks ran into trouble, Obama had originally been expected to stay in Hawaii - where he was born - until well into the first week of January.
But many observers are pessimistic that lawmakers, who have repeatedly come close to agreement only to see negotiations collapse, can wrap up a deal in the few days left before the end-of-year cut-off point.
The impact of a blown deadline would likely be first seen in financial markets, which wobbled last week after House of Representatives Speaker John Boehner's "Plan B" tax and spending effort fell flat.
Obama had offered a deal early last week that would have let tax rates rise for those making more than $400,000 a year, a higher threshold than the $250,000 income level he originally wanted to subject to higher tax rates. However, Boehner was unimpressed with the offer and pursued his alternative instead.
The president appears to have set consideration of fiscal cliff issues aside during his four days in Hawaii. His only public events have been to attend the funeral of long-time Hawaiian Senator Daniel Inouye on Sunday and a Christmas Day visit to soldiers at a Marine Corps base near the vacation home his family is using in Kailua, Hawaii.
He has spent his time with family and friends, with excursions to play golf, exercise, go hiking or to the beach.

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No new vote in Venezuela if Chavez sworn in late: official

Venezuela will not call fresh elections if Hugo Chavez's cancer prevents him from taking office by January 10, the head of Congress said on Saturday, despite a constitutional mandate that the swearing-in take place on that date. Chavez is recovering in Cuba from a six-hour cancer operation that followed his October re-election. The socialist leader has not been heard from for nearly two weeks, raising doubts as to whether he will be fit to continue governing. Opposition leaders may pounce on the issue of the swearing-in date to demand that authorities call fresh elections because of Chavez's apparently critical state of health due to an undisclosed type of cancer in the pelvic region. A constitutional dispute over succession could lead to a messy transition toward a post-Chavez era in the South American nation with the world's largest oil reserves. "Since Chavez might not be here in on January 10, (the opposition) hopes the National Assembly will call elections within 30 days. They're wrong. Dead wrong," said Diosdado Cabello, the National Assembly's president and one of Chavez's closest allies, during a ceremony to swear in a recently elected governor. "That's not going to happen because our president is named Hugo Chavez, he was reelected and is in the hearts of all Venezuelans." He suggested Chavez may need more time to recover from his surgery. Officials in recent weeks have recognized his condition was serious, and the garrulous leader's unusual silence has built up alarm even among supporters. The constitution says "the elected candidate will assume the Presidency of the Republic on January 10th of the first year of their constitutional term, via swearing-in by the National Assembly." It says new elections are to be called if the National Assembly determines a "complete absence" of the president because of death, physical or mental impairment or abandoning the job. The opposition believes it would have a better shot against Chavez's anointed successor, Vice President Nicolas Maduro, than against the charismatic former soldier who for 14 years has been nearly invincible at the ballot box. Chavez allies want to avoid a public debate over the president's health because his cancer has been treated as a state secret. His treatment in communist Cuba has helped keep his condition under wraps, and the Venezuelan government has given only terse and cryptic statements about his post-operation recovery. Constitutional lawyer Jose Vicente Haro said he expects the Supreme Court, which is controlled by Chavez allies, will rule that Chavez may extend his existing term without having to be sworn in with the expectation that he will eventually recover. "What they are doing is taking the debate over succession from the National Assembly, which is where it belongs, and moving it to the Supreme Court where behind closed doors they can decide the next steps are," said Haro, a Chavez critic and constitutional law professor as the Universidad Catholic Andres Bellow. Chavez has vastly expanded presidential powers and built a near-cult following among millions of poor Venezuelans, who love his feisty language and oil-financed social welfare projects. Opposition leaders are smarting from this month's governors elections in which Chavez allies won 20 of 23 states. They are trying to keep attention focused on day-to-day problems from rampant crime to power outages.

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FDA approves Aegerion's cholesterol drug with strongest warning

Aegerion Pharmaceuticals Inc said the U.S. health regulator approved its drug as an alternative treatment for patients who have a genetic predisposition to high cholesterol. The drug, Juxtapid, would carry a boxed warning -- the strongest label warning -- and will be available only through a restricted program due to risk of liver damage. Shares of the company fell nearly 4 percent to $24.76 in early trade on the Nasdaq on Monday. Aegerion will also conduct a post-approval study to test the long-term safety and efficacy of Juxtapid, the company said on a conference call. It plans to launch the drug in January. Juxtapid, Aegerion's first approved product, was backed by an advisory panel of independent experts on October 17. The panel looks at a drug's approval application and advises the FDA on whether it should be approved. The panel also recommended a drug from Sanofi SA and Isis Pharmaceutical Inc, Kynamro, to treat the same disorder on Oct 18. Aegerion's shares were down 2 percent at $25.15 in morning trade. The stock has gained about 23 percent since the FDA panel's report to Friday's close.

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S.Africa's Mandela to remain in hospital for Christmas

Former South African President Nelson Mandela, who is 94, continues to respond to treatment more than two weeks after being taken to hospital in Pretoria and will remain there for Christmas Day, the presidency said on Monday. President Jacob Zuma said in a statement that the anti-apartheid hero, who has been treated for a lung infection and gallstones after being hospitalised on December 8, "will recover from this episode with all our support."

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South Africa's Mandela to remain in hospital for Christmas

Former South African President Nelson Mandela continues to respond to treatment more than two weeks after being taken to hospital in Pretoria and will remain there for Christmas Day, the presidency said on Monday. The 94-year-old anti-apartheid hero and Nobel Peace laureate has been treated for a lung infection and gallstones after being hospitalized on December 8. President Jacob Zuma said in a statement that Mandela "will recover from this episode with all our support... We also humbly invite all freedom loving people around the world to pray for him." It will be the first Christmas that Mandela has spent away from home since 1989, when he was still in prison. He was jailed for almost three decades for his role in the struggle against white minority rule. He was released in 1990 and went on to use his prestige to push for reconciliation between whites and blacks as the bedrock of the post-apartheid "Rainbow Nation". Mandela was elected South Africa's first black president in 1994. He stepped down five years later after one term in office and has been largely removed from public life for the last decade.

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Apps to help achieve New Year's resolutions

Whether it is improving health or managing finances better, about 87 percent of Americans will make resolutions for 2013 and there are plenty of apps to help them achieve their goals. Nearly half of New Year's resolutions are about setting health-related goals, which is the most popular category, according to a recent survey by online broker TD Ameritrade. Rather than jumping into a rigorous fitness routine, a new app called 5K Runner suggests it might be better to ease into things slowly and focus on building sustainable habits. The iPhone app helps couch potatoes ramp up their running distance to 5 km over the course of eight weeks. "You're slowly building this routine into your daily life with a lot of success and after eight weeks you're literally running 5K, which is pretty big if (initially) you're not running at all," said David-Michel Davies, the executive director of The Webby Awards, an annual ceremony honoring Internet companies. The app guides runners through each run, alternating periods of running and walking for 35 minutes. Davies also recommends Nike+ Running and RunKeeper, two popular and free fitness apps, which use GPS to track distance traveled, speed and calories burned. Both apps are available for iOS and Android devices. Diet is another component of good health and a focus of many apps. Fooducate is an iPhone and Android app that helps shoppers make healthier purchases at the supermarket by allowing them to scan the barcodes of products and get insight into how healthy the product is. Their database, which contains over 200,000 products, displays a grade for the product and information on its contents. It can show whether there are hidden additives or the probability of containing genetically modified ingredients. "There are a lot of healthy people out there who unknowingly buy products that have an inordinate amount of salt in them," Davies said. DietBet is an app for people with a competitive streak. Available for iPhone and on the Web, it allows its users to join in a four-week weight loss challenge to lose 4 percent of weight. Everyone bets money, which goes into a fund, and submits proof of weight lost. People who meet the challenge split the money. "It comes back again to how people get motivated," Davies said. "Gamification is something that technology has really enabled and for some people it really works." To stay on top of finances, Davies recommends Mint, which provides a visual view of all financial accounts and is available for iOS, Android and on the Web.

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Inside David Lynch's Paris art-studio hideaway

Behind the doors of a 19th-century printworks in south-central Paris, filmmaker and painter-by-training David Lynch takes a cigarette break after hours of etching abstract shapes and twisted limbs onto stone and wood. Although best known for dark, surreal movies such as "Eraserhead", "Blue Velvet" and "Mulholland Drive", Lynch was an artist before he began filmmaking and since 2007 has been using the Idem workshop as his studio in Paris, creating some 170 lithographs and engravings. As three workshop staff clamber onto one of the six giant mechanical presses to print up a fresh design, Lynch - dressed in a blue apron and sporting his trademark white, bouffant hairdo - explains that there is something uniquely inspiring about the Parisian printworks. "This is totally Parisian. In people's dream of Paris, this place would fit in that dream perfectly," the 66-year-old tells Reuters, speaking above the noise of the whirling cogs and hand-operated cranks that he says remind him of the twisted, industrial world of his debut feature film "Eraserhead". "Everybody that comes to this place, they feel it...I can feel the past. I can feel the whole art of life going on here." Artists such as Picasso, Matisse, Chagall and Miro all had their prints produced at the site, a two-floor workshop built in 1880 that is still in use today by artists including Lynch. Encircled by piles of engraving-stones and the odd stuffed toy panther, the presses can also print from digital files. Lynch's prints - which he says he etches from scratch after "catching" an idea in his mind - vary from Keith Haring-esque red-and-white squiggles and doodles to ghostly Edvard Munch-like humans stranded in desolate landscapes, with titles like "Things In Air Over City" or "Oh, A Bad Dream Comes". They seem to combine the black-and-white, nightmarish imagery of "Eraserhead" and "The Elephant Man" with the abstract, surreal narratives of Lynch's last two movies, 2001's "Mulholland Drive" and 2006's "Inland Empire". Lynch has explored other media over the past decade, creating a series of animated shorts posted online called "Dumbland", directing a Duran Duran concert streamed on YouTube and even recording his own solo album called "Crazy Clown Time". He has even adapted his trademark palette of dark tones and surreal shapes to French tastes, designing a limited edition of Dom Perignon champagne bottles as well as an underground nightclub in the center of Paris called "Silencio". Despite his obvious enthusiasm for trying out new things, Lynch's affection for Paris comes from its protection of tradition. "I like the way the French people live. They protect the arts more than any other country," he says. "Here, almost every avenue of life is like an art form." In a seemingly upside-down world where governments and bankers are suffering from the financial crisis but where big-name artists are fetching higher prices than ever before, Lynch says that he can still separate the urge to make money from the urge to make art. "It's like Hollywood versus the art way," he says. "I love money for getting things to work and to live. But it's not the reason in my mind to make a film or to make anything." Asked what his next move is going to be, Lynch says he will continue to work on music and art but adds that there is a movie idea also in the pipeline. "Music and painting and maybe cinema, but we'll have to wait and see," he says. "Maybe it's going to happen but you need to be deeply in love and, you know...I'm falling in love.

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A Minute With: Director Peter Jackson on shooting "The Hobbit"

After bringing J.R.R. Tolkien's "The Lord of the Rings" trilogy to life, filmmaker Peter Jackson is back in the world of Middle Earth with the author's prequel, "The Hobbit." The three-film series is due to open in U.S. theaters on Friday with "The Hobbit: An Unexpected Journey." The Oscar-winning director, 51, told Reuters about the 3D film, including the 48 frames per second (fps) format he used, which was widely debated by fans and critics. Q: You originally intended "The Hobbit" to only be two parts. Why stretch it out to three? A: "Back in July, we were near the end of our shoot and we started to talk about the things that we had to leave out of the movies. There's material at the end of ‘The Return of the King' (the final part of 'The Lord of the Rings' trilogy) in the appendices that takes place around the time of ‘The Hobbit.' "We were thinking, this is our last chance because it's very unlikely we're ever going to come back to Middle Earth as filmmakers. So we talked to the studio and next year we're going to be doing another 10 to 12 weeks of shooting because we're now adapting more of Tolkien's material." Q: At what point did you decide you would direct the film yourself after originally handing it to Guillermo del Toro? A: "At the time (we wrote the script), I was worried about repeating myself and worried that I was competing with myself. I thought it would be interesting to have another director with a fresh eye coming in and telling the story. But after Guillermo left, having worked on script and the production for well over a year at that stage, I was very emotionally attached to it. I just thought, this is an opportunity I'm not going to say no to." Q: You hired Gollum actor Andy Serkis to do second unit directing on the film, something he has never done before. What made you hand the task to a novice? A: "I know how strongly Andy has been wanting to direct. One of the problems with second unit is that you tend to have conservative footage given to you by the director. They play it safe. I knew that I wouldn't get that from Andy because he's got such a ferocious energy. He goes for it and doesn't hold back. I knew that if Andy was the director I would be getting some interesting material, that it would have a life and energy to it." Q: What inspired you to make a film in 48 fps? A: "Four years ago I shot a six or seven minute King Kong ride for Universal Studios' tram ride in California. The reason we used the high frame rate was that we didn't want people to think it's a movie. You want that sense of reality, which you get from a high frame rate, of looking in to the real world. At the time, I thought it would be so cool to make a feature film with this process." Q: Not everyone has embraced "The Hobbit" in 48 fps. A: "For the last year and a half there's been speculation, largely negative, about it and I'm so relieved to have gotten to this point. I've been waiting for this moment when people can actually see it for themselves. Cinephiles and serious film critics who regard 24 fps as sacred are very negative and absolutely hate it. Anybody I've spoken to under the age of 20 thinks it's fantastic. I haven't heard a single negative thing from the young people, and these are the kids that are watching films on their iPads. These are the people I want to get back in the cinema." Q: Why all the hoopla over a frame rate? A: "Somehow as humans, we have a reaction to change that's partly fear driven. But there are so many ways to look at movies now and it's a choice that a filmmaker has. To me as a filmmaker, you've got to take the technology that's available in 2012, not the technology we've lived with since 1927, and say how can we enhance the experience in the cinema? How can we make it more immersive, more spectacular?" Q: George Lucas sold Lucasfilm to Disney for $4 billion. Do you think you will sell your New Zealand facility Weta someday? A: "I would if I want to retire at some stage and want to have a nice easy life, which will hopefully happen one day. But in the foreseeable future, the fact that I'm an owner of my own digital effects facility is a fantastic advantage for me." Q: How so? A: "When we asked the studio if we could shoot ‘The Hobbit' at 48 fps, we promised the budget would be the same. But it actually does have a cost implication because you've got to render twice as many frames and the rendering takes more time. The fact that we owned Weta and could absorb that in-house was actually part of the reason we were able to do the 48 frames."

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Legendary Indian sitarist, composer Ravi Shankar dead at 92

Sitarist and composer Ravi Shankar, who helped introduce the sitar to the Western world through his collaborations with The Beatles, died in Southern California on Tuesday, his family said. He was 92. Shankar, a three-time Grammy winner with legendary appearances at the 1967 Monterey Festival and at Woodstock, had been in fragile health for several years and last Thursday underwent surgery, his family said in a statement. "Although it is a time for sorrow and sadness, it is also a time for all of us to give thanks and to be grateful that we were able to have him as a part of our lives," the family said. "He will live forever in our hearts and in his music." In India, Prime Minister Manmohan Singh's office posted a Twitter message calling Shankar a "national treasure and global ambassador of India's cultural heritage." "An era has passed away with ... Ravi Shankar. The nation joins me to pay tributes to his unsurpassable genius, his art and his humility," the Indian premier added. Shankar had suffered from upper respiratory and heart issues over the past year and underwent heart-valve replacement surgery last week at a hospital in San Diego, south of Los Angeles. The surgery was successful but he was unable to recover. "Unfortunately, despite the best efforts of the surgeons and doctors taking care of him, his body was not able to withstand the strain of the surgery. We were at his side when he passed away," his wife Sukanya and daughter Anoushka said. Shankar lived in both India and the United States. He is also survived by his daughter, Grammy-winning singer Norah Jones, three grandchildren, and four great-grandchildren. Shankar performed his last concert with his daughter Anoushka on November 4 in Long Beach, California, the statement said. The night before he underwent surgery, he was nominated for a Grammy for his latest album "The Living Room Sessions, Part 1." 'NORWEGIAN WOOD' TO 'WEST MEETS EAST' His family said that memorial plans will be announced at a later date and requested that donations be made to the Ravi Shankar Foundation. Shankar is credited with popularizing Indian music through his work with violinist Yehudi Menuhin and The Beatles in the late 1960s, inspiring George Harrison to learn the sitar and the British band to record songs like "Norwegian Wood" (1965) and "Within You, Without You" (1967). His friendship with Harrison led him to appearances at the Monterey and Woodstock pop festivals in the late 1960s, and the 1972 Concert for Bangladesh, becoming one of the first Indian musicians to become a household name in the West. His influence in classical music, including on composer Philip Glass, was just as large. His work with Menuhin on their "West Meets East" albums in the 1960s and 1970s earned them a Grammy, and he wrote concertos for sitar and orchestra for both the London Symphony Orchestra and the New York Philharmonic. Shankar served as a member of the upper chamber of the Parliament of India, from 1986 to 1992, after being nominated by then Indian Prime Minister Rajiv Gandhi. A man of many talents, he also wrote the Oscar-nominated score for 1982 film "Gandhi," several books, and mounted theatrical productions. He also built an ashram-style home and music center in India where students could live and learn, and later the Ravi Shankar Center in Delhi in 2001, which hosts an annual music festival. Yet his first brush with the arts was through dance. Born Robindra Shankar in 1920 in India's holiest city, Varanasi, he spent his first few years in relative poverty before his eldest brother took the family to Paris. For about eight years, Shankar danced in his brother's Indian classical and folk dance troupe, which toured the world. But by the late 1930s he had turned his back on show business to learn the sitar and other classical Indian instruments. Shankar earned multiple honors in his long career, including an Order of the British Empire (OBE) from Britain's Queen Elizabeth for services to music, the Bharat Ratna, India's highest civilian award, and the French Legion d'Honneur.

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Actor Depardieu's Belgium move "pathetic": French PM

Actor Gerard Depardieu's decision to establish residency in Belgium, which does not have a wealth tax, by buying a house just over the border with France, is "pathetic" and unpatriotic, French Prime Minister Jean-Marc Ayrault said on Wednesday. Depardieu has become the latest wealthy Frenchman after luxury magnate Bernard Arnault to look for shelter outside his native country following tax hikes by Socialist President Francois Hollande. "Going just over the border, I find that fairly pathetic," Ayrault said on France 2 television. "Being a Frenchman means loving your country and helping it to get back on its feet." The "Cyrano de Bergerac" star bought a house in the Belgian village of Nechin near the border with France, where 27 percent of the population is composed of French nationals, local mayor Daniel Senesael told French media on Sunday. Depardieu also enquired about procedures for acquiring Belgian residency, he said. Yann Galut, a Socialist member of parliament, condemned the actor and proposed that France copy U.S. practice by adopting a law that would force exiles to pay full tax dues or risk being stripped of their nationality. "It is scandalous and shameful," Galut told Reuters in an interview. "The country's in dire straits. This man owes everything he has to France - the accolades, the subsidies that helped produce his films, the schools where he was educated. At the end of a career that made him extremely rich he wants nothing to do with national solidarity." Belgian residents do not pay wealth tax, which in France is now slapped on individuals with assets over 1.3 million euros ($1.70 million), nor do they pay capital gains tax on share sales. France has also imposed a 75-percent tax on incomes exceeding 1 million euros. The tax hikes have been welcomed by left-wingers who say the rich must do more to help redress public finances but attacked by some wealthy personalities and foreign critics, who say it will increase tax flight and dampen investment. Depardieu's move comes three months after Arnault, chief executive of luxury giant LVMH, caused an uproar by seeking to establish residency in Belgium - a move he said was not motivated by tax reasons. The left-leaning Liberation daily reacted with a front-page headline next a photograph of Arnault telling him to "Get lost, you rich jerk", prompting luxury advertisers including LVMH to withdraw their advertisements. Ayrault said he did not support the idea floated by Galut, and the call was also partially disowned by the leader of the Socialist group in the lower house of parliament. "I'd rather appeal to people's intelligence, to their hearts," Ayrault said. Undeterred, Galut said tax dodging may be costing the state as much as 6 to 8 billion euros ($7.8 to 10.4 billion) a year in lost income and that such amounts were "far from negligible" at a time when France is at pains to reduce a bloated debt. "Everyone is being asked to chip in, private individuals and companies alike. It's inadmissible that people who made fortunes in France refuse to share their part of the burden," he said. Galut said he was asked on Wednesday to set up a parliamentary panel that would look into the question of tax exiles, saying he would like to see action taken when parliament broaches a budget bill for 2014.

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Mick Jagger love letters fetch $300,000 at auction

A collection of love letters written by Rolling Stones frontman Mick Jagger to American singer Marsha Hunt, believed to be the inspiration for the band's hit single "Brown Sugar", sold at Sotheby's on Wednesday for 187,250 pounds ($301,000). The 10 letters, dating from the summer of 1969, had been expected to fetch 70-100,000 pounds, according to the auctioneer. "The passage of time has given these letters a place in our cultural history," Hunt said after the London sale. "1969 saw the ebbing of a crucial, revolutionary era, highly influenced by such artists as The Beatles, The Rolling Stones, James Brown and Bob Dylan. "Their inner thoughts should not be the property of only their families, but the public at large, to reveal who these influential artists were - not as commercial images, but their private selves." Hunt, with whom Jagger had his first child, Karis, told Britain's Guardian newspaper last month that she was selling the letters, written in July and August 1969, because she had been unable to pay her bills. "I'm broke," Hunt, who lives in France, told the newspaper. Jagger wrote them to Hunt while filming the Tony Richardson movie "Ned Kelly" in Australia. They showed a sensitive side of the then-young singer, who wrote about the poetry of Emily Dickinson, meeting author Christopher Isherwood and an unrealized multimedia project. Jagger's relationship with Hunt, who is African-American, was kept under wraps until 1972. Hunt has said she was the inspiration for Brown Sugar, which Jagger wrote while in Australia. The rock star also cites in the letters the disintegration of his relationship with singer Marianne Faithfull, whom he was also dating at the time, and the death of Rolling Stones' guitarist Brian Jones. There has been a surge in interest in the rock band this year, as Jagger and his three surviving bandmates celebrate the 50th anniversary of the Stones with a series of concerts, a photo book and a greatest hits album.

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Politico financier Joe L. Allbritton dies at 87

Joe L. Allbritton, the millionaire founder of Politico's parent company, died Wednesday of heart ailments in a Houston hospital. He was 87. The founder of Allbritton Communications, which launched Politico and owns several television stations, built the Washington, D.C.-based media empire after controversy-fraught years as the chief of Riggs National Bank. Born in Mississippi and raised in Texas, Allbritton was a self-made businessman, who dabbled in real estate, mortuaries and banking before entering the news business in 1974, when he purchased the struggling Washington Star newspaper. He revived the paper. Six years later, federal regulations regarding cross ownership of newspaper and television stations forced him to sell his $35 million investment. Time Inc. bought it for $217 million. Allbritton held on to his more lucrative media properties, including WJLA, an ABC affiliate in Washington, D.C. that took his initials, and helped launch NewsChannel 8, also in Washington, one of the country's first 24-hour news channels. The company he founded, which is now run by his son, Robert, has made inroads into the internet world - founding Politico in 2007 and TBD, a short-lived internet news site that the company shuttered in 2012. Though Politico is his son's creation, the elder Allbritton bankrolled the publication and has been accused of excessively involving himself in its editorial affairs. But, for all of Allbritton's successes and wealth, his career was marred by a nationwide recession in the early 1990s that Forbes magazine said brought the bank to the brink of insolvency. The economic slump left Riggs with bad loans on drastically devalued real estate, but Allbritton was also blamed by analysts for ignoring the growing suburban banking market which took business away from Riggs. Despite these woes, he refused to give up his private jet at Riggs, even as shareholders urged him to sell the Gulfstream. He was also criticized for his eagerness to do business with some shady customers He personally courted Chilean dictator Augusto Pinochet, whom human rights groups accused of killing more than 3,000 of his own citizens during his 17-year reign. And - in a 2001 letter to Teodoro Obiang Nguema, the dictator of oil-rich Equatorial Guinea - Allbritton praised the west African strongman's "reputation for prudent leadership." Obiang deposited hundreds of millions of dollars in banks controlled by Allbritton. But little of this criticism appeared in Politico's glowing, three-page obituary on its financier. The piece, bylined by editor-in-chief John F. Harris and reporter James Hohmann, makes a brief, passing mention of a federal inquiry into Allbritton's dealings with Pinochet. There is no mention of Obiang. The man, whom the Washington Post noted - in the headline of its obituary - led once-venerable Riggs to "disrepute" is praised by Politico with a laundry list of accomplishments. "He would wear Politico baseball caps and T-shirts while playing with his grandchildren. Sometimes, he would quiz executives at the company on business and editorial matters, sometimes pretending caustically to second-guess their decisions," Harris and Hohmann wrote of the former boss. "It took the publisher, adept at reading his father's sense of humor, to assure people that he was just kidding; his main involvement in the new publication was as cheerleader." It wasn't the only time Allbritton was accused of involving himself in Politico's coverage. In 2007, five months after the news agency's christening, Glenn Greenwald, then a columnist at Salon, accused Politico of having a conservative bias, pointing to Allbritton's appointment of Frederick J. Ryan Jr., a one-time assistant to President Ronald Reagan, as president and CEO of Politico. "There is nothing wrong per se with hard-core political operatives running a news organization. Long-time Republican strategist Roger Ailes oversees Fox News, of course," Greenwald wrote. "But it seems rather self-evident that a news organization run by someone with such clear-cut political biases ought to have a hard time holding itself out as some sort of politically unbiased source of news.

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Obama Wins 2012 Election: Why Your Taxes Are Going Up

When President Obama and the new Congress begin to tackle important legislation and federal policy in January, one of the key issues will be how to reform America's byzantine tax code. Obama campaigned on a platform to raise taxes on the wealthiest Americans, declaring that millionaires and billionaires need to "pay their fair share." The president proposed the highly controversial "Buffett Rule," which would make sure those individuals earning more than $1 million a year would pay at least 30% of their income in federal taxes. Related: Do the Rich Have a Moral Obligation to Pay Higher Taxes? Gov. Jerry Brown Says 'Yes' The top individual tax rate is currently 35% but few U.S. households and individuals actually pay that much; various tax deductions and loopholes reduce one's tax burden. According to the Obama campaign, the richest 400 taxpayers in 2008 (who each made more than $110 million that year) paid an average income tax rate of just 18%. In 2009 over 20,000 U.S. households with more than $1 million in income paid a federal tax rate of less than 15%. Obama has vowed to raise the top income tax rate for individuals to 39.6% and let the Bush-era tax breaks end for the highest income earners. The majority of Americans — those who are lower to middle class — could also see a 2% tax increase if Congress allows the temporary payroll tax holiday to expire at the end of the year. Related: Here's Why Your Taxes Are Going Up 2% Next Year: Just Explain It Nearly half of voters support raising taxes on incomes over $250,000, according to Tuesday night's exit polls. Len Burman, a professor of public affairs at Syracuse University and a co-founder of the bipartisan Tax Policy Center, believes higher tax rates play just a small role in resolving the nation's budget woes. "In the long term [Obama] is going to need to raise taxes on more than just the rich," Burman says in an interview with The Daily Ticker. "The budget problem isn't going to be solved without broader-based tax increases, preferably done in the context of tax reform and also serious entitlement reform. We're not going to be able to solve this on the tax side alone." Burman, who recently co-wrote the new book "Taxes in America: What Everyone Needs to Know," says tax rates do not need to be raised for any income group if Congress and the White House would agree on one simple change: raising the capital gains rate, i.e. the profits from the sale of an investment. Assets, such as stocks, art or real estate, that are held for at least a year are currently taxed at a special 15% rate; Obama wants to raise that to 20%. "The problem with a low tax rate on capital gains is not that it allows Mitt Romney and Warren Buffett to pay very low taxes but that it creates this huge opportunity for tax sheltering," he notes. "There's a whole industry that's devoted to coming up with these schemes. [Raising capital gains rates] could make the tax system more progressive and allow for lower tax rates" and a reduction in the deficit Burman says. Obama's tax proposal also targets the Alternative Minimum Tax, the Estate Tax and as well as many personal tax credits and itemized deductions. Obama would make permanent the 2007 AMT patch and index it for inflation. He would raise the estate tax to 45% from 35% on estates worth more than $3.5 million. He would lower the corporate tax rate to 28% from 35% and provide a refundable $3,000 credit per added employee for companies that expand their workforce. He would tax carried interest as ordinary income. Related: Corporate Tax Loopholes=Corporate Socialism: Pulitzer Prize Winner David Cay Johnston A divided Congress refused to compromise with Obama during his first term and could very well dismiss the president's tax reforms for the next four years. Republicans are loathe to raise taxes by even a penny and Obama has said he would veto any budget bills that did not include tax increases. Neither party wants to raise taxes in a weak economy. But the options available for reducing the deficit and generating new revenue are few and far between.

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