Wall Street Week Ahead: Holiday "on standby" as clock ticks on cliff

NEW YORK (Reuters) - The last two weeks of December are traditionally quiet for stocks, but traders accustomed to a bit of time off are staying close to their mobile devices, thanks to the "fiscal cliff."

Last-minute negotiations in Washington on the so-called fiscal cliff - nearly $600 billion of tax increases and spending cuts set to take effect in January that could cause a sharp slowdown in growth or even a recession - are keeping some traders and analysts from taking Christmas holidays because any deal could have a big impact on markets.

"A lot of firms are saying to their trading desks, 'You can take days off for Christmas, but you are on standby to come in if anything happens.' This is certainly different from previous years, especially around this time of the year when things are supposed to be slowing down," said J.J. Kinahan, chief derivatives strategist at TD Ameritrade in Chicago.

"Next week is going to be a Capitol Hill-driven market."

With talks between President Barack Obama and House Speaker John Boehner at an apparent standstill, it was increasingly likely that Washington will not come up with a deal before January 1.

Gordon Charlop, managing director at Rosenblatt Securities in New York, will also be on standby for the holiday season.

"It's a 'Look guys, let's just rotate and be sensible" type of situation going on," Charlop said.

"We are hopeful there is some resolution down there, but it seems to me they continue to walk that political tightrope... rather than coming up with something."

Despite concerns that the deadline will pass without a deal, the S&P 500 has held its ground with a 12.4 percent gain for the year. For this week, though, the S&P 500 fell 0.3 percent.

BEWARE OF THE WITCH

This coming Friday will mark the last so-called "quadruple witching" day of the year, when contracts for stock options, single stock futures, stock index options and stock index futures all expire. This could make trading more volatile.

"We could see some heavy selling as there is going to be a lot of re-establishing of positions, reallocation of assets before the year-end," Kinahan said.

RETHINKING APPLE

Higher tax rates on capital gains and dividends are part of the automatic tax increases that will go into effect next year, if Congress and the White House don't come up with a solution to avert the fiscal cliff. That possibility could give investors an incentive to unload certain stocks in some tax-related selling by December 31.

Some market participants said tax-related selling may be behind the weaker trend in the stock price of market leader Apple . Apple's stock has lost a quarter of its value since it hit a lifetime high of $705.07 on September 21.

On Friday, the stock fell 3.8 percent to $509.79 after the iPhone 5 got a chilly reception at its debut in China and two analysts cut shipment forecasts. But the stock is still up nearly 26 percent for the year.

"If you owned Apple for a long time, you should be thinking about reallocation as there will be changes in taxes and other regulations next year, although we don't really know which rules to play by yet," Kinahan said.

But one indicator of the market's reduced concern about the fiscal cliff compared with a few weeks ago, is the defense sector, which will be hit hard if the spending cuts take effect. The PHLX Defense Sector Index <.dfx> is up nearly 13 percent for the year, and sits just a few points from its 2012 high.

(Reporting by Angela Moon; Additional reporting by Chuck Mikolajczak; Editing by Jan Paschal)

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In Brazil, Caves Would Be Lost in Mining Project

Lalo de Almeida for The New York Times

A speleologist from Vale, the Brazilian mining giant, in October at a cave in the Carajás Mountains, where it plans to expand an iron-ore mining complex.

CARAJÁS NATIONAL FOREST, Brazil — Archaeologists must climb tiers of orchid-encrusted rain forest, where jaguars roam and anacondas slither, to arrive at one of the Amazon’s most stunning sights: a series of caves and rock shelters guarding the secrets of human beings who lived here more than 8,000 years ago.

Almost anywhere else, these caves would be preserved as an invaluable source of knowledge into prehistoric human history. But not in this remote corner of the Amazon, where Vale, the Brazilian mining giant, is pushing forward with the expansion of one of the world’s largest iron-ore mining complexes, a project that will destroy dozens of the caves treasured by scholars.

The caves, and the spectacular mineral wealth in their midst, have presented Brazil with a dilemma. The iron ore from Carajás, exported largely to China where it is used to make steel, is a linchpin of Brazil’s ambitions of reviving a sluggish economy, yet archaeologists and other researchers contend that the emphasis on short-term financial gains imperils an unrivaled window into a nebulous past.

“This is a crucial moment to learn about the human history of the Amazon, and by extension the peopling of the Americas,” said Genival Crescêncio, a caver and historian in Pará State, which includes Carajás. “We should be preserving this unique place for science, but we are destroying it so the Chinese can open a few more car factories.”

As Brazil embarks on a frenzied effort to increase mining and improve infrastructure, work crews in the Amazon and beyond are unearthing one startling discovery after another. In Rio de Janeiro, archaeologists are examining a slave market and cemetery where thousands of Africans were buried. The discoveries have complicated the upgrade of the harbor and public transportation network ahead of the 2016 Olympic Games.

Brazilian courts can require companies to preserve archaeological sites, or at least transfer archaeological material to universities or museums where it can be studied, before work continues. In some cases, rulings have stalled huge projects, as Anglo American, the mining giant, discovered this year when prosecutors halted work on a large mining project in Minas Gerais State over concerns that an archaeologically significant cave could be damaged.

Scholars say that the caves of Carajás, which archaeologists began exploring in the 1980s, offer coveted insight into what may be the earliest known stages of human settlement in the world’s largest tropical rain forest, helping to piece together the puzzle of how the Americas came to be inhabited.

Pieces of ceramic vessels and tools made of amethyst and quartz are among the signs of human occupation from thousands of years ago. Such artifacts, along with the abundance of the caves and rock shelters themselves, make Carajás one of the Amazon’s most important places for the study of prehistoric humans.

The Amazon is already a hotbed of archaeological investigation, as researchers find evidence that far more people might have lived in the region than once considered possible. While the Amazon was once thought incapable of supporting large, sophisticated societies, researchers now contend that the region might have been home to thriving urban centers before the arrival of Columbus.

Before those cities were carved out of the forest, people lived in the Amazon’s caves. At Pedra Pintada, a cave that, like those in Carajás, is also in Pará, Anna C. Roosevelt, an American archaeologist, has shown that hunter-gatherers moved to the region 10,900 to 11,200 years ago, far earlier than once thought, about the same time people in North American were hunting mammoths.

Outside the Amazon, remarkable discoveries have been announced in recent months at other Brazilian sites. At Lapa do Santo, a rock shelter near the city of Belo Horizonte, archaeologists said this year that they had found the New World’s oldest known figurative petroglyph. The rock art, a drawing of a man with an oversize phallus, is thought to have been made 10,500 to 12,000 years ago.

To reach the caves of Carajás, researchers must drive hours along washboard roads cut through the jungle, before scaling escarpments with spectacular views of the Carajás Mountains, a range of canopied peaks rising out of the forest. Macaws fly overhead and bats swirl inside the earth cavities in which hunting tribes once found shelter.

Some of the caves, substantially cooler inside their openings than the surrounding forest, are large enough for more than a dozen people; others might have provided just enough space for two or three people.

Vale, then a state-owned company, began developing the iron ore deposits here after they were discovered in 1967 by a Brazilian geologist on assignment to find manganese for the U.S. Steel Corporation. Vale has since been privatized, but the government still controls big equity stakes.

Thanks largely to its Carajás complex, where thousands of workers labor 24 hours a day amid the clamor of digging machines, Vale accounts for 16 percent of Brazil’s total exports. As Vale grapples with a sharp decline in profits this year and delays at projects outside Brazil, Carajás is expected to become more important.

Vale has said it plans to create 30,000 jobs in the expansion of iron-ore mining at Carajás, a $20 billion project called Serra Sul, which is already luring thousands of migrants from around Brazil to this frenetic part of the Amazon.

Read More..

RIM shows how BlackBerry 10 touch screen keys could rival even its traditional keyboards [video]

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Donald Faison Marries Cacee Cobb

By Lesley Messer

12/15/2012 at 08:25 PM EST

Cacee Cobb and Donald Faison

Dr. Billy Ingram/WireImage

It's official!

After six years together, Donald Faison and Cacee Cobb were married Saturday night at the Los Angeles home of his Scrubs costar Zach Braff.

Cobb's friend Jessica Simpson was a bridesmaid. Sister Ashlee Simpson also attended.

"What a happy day," Tweeted groomsman Joshua Radin, a singer, who posted a photo of himself with Faison and Braff in their tuxedos.

The couple got engaged in August 2011. At the time, Faison Tweeted, "If you like it then you better put a Ring on it," and Cobb replied, "If she likes it then she better say YES!!"

Since then, the couple had been hard at work planning their wedding. On Nov. 12, Faison, who currently stars on The Exes, Tweeted that they were tasting cocktails to be served on the big day.

"Alcohol tasting for the wedding!" he wrote, adding a photo of the drinks. "The [sic] Ain't Say It Was Going To Be Like This!!!"

This is the first marriage for Cobb. Faison was previously married to Lisa Askey, with whom he has three children. (He also has a son from a previous relationship.)

Read More..

Fewer health care options for illegal immigrants

ALAMO, Texas (AP) — For years, Sonia Limas would drag her daughters to the emergency room whenever they fell sick. As an illegal immigrant, she had no health insurance, and the only place she knew to seek treatment was the hospital — the most expensive setting for those covering the cost.

The family's options improved somewhat a decade ago with the expansion of community health clinics, which offered free or low-cost care with help from the federal government. But President Barack Obama's health care overhaul threatens to roll back some of those services if clinics and hospitals are overwhelmed with newly insured patients and can't afford to care for as many poor families.

To be clear, Obama's law was never intended to help Limas and an estimated 11 million illegal immigrants like her. Instead, it envisions that 32 million uninsured Americans will get access to coverage by 2019. Because that should mean fewer uninsured patients showing up at hospitals, the Obama program slashed the federal reimbursement for uncompensated care.

But in states with large illegal immigrant populations, the math may not work, especially if lawmakers don't expand Medicaid, the joint state-federal health program for the poor and disabled.

When the reform has been fully implemented, illegal immigrants will make up the nation's second-largest population of uninsured, or about 25 percent. The only larger group will be people who qualify for insurance but fail to enroll, according to a 2012 study by the Washington-based Urban Institute.

And since about two-thirds of illegal immigrants live in just eight states, those areas will have a disproportionate share of the uninsured to care for.

In communities "where the number of undocumented immigrants is greatest, the strain has reached the breaking point," Rich Umbdenstock, president of the American Hospital Association, wrote last year in a letter to Obama, asking him to keep in mind the uncompensated care hospitals gave to that group. "In response, many hospitals have had to curtail services, delay implementing services, or close beds."

The federal government has offered to expand Medicaid, but states must decide whether to take the deal. And in some of those eight states — including Texas, Florida and New Jersey — hospitals are scrambling to determine whether they will still have enough money to treat the remaining uninsured.

Without a Medicaid expansion, the influx of new patients and the looming cuts in federal funding could inflict "a double whammy" in Texas, said David Lopez, CEO of the Harris Health System in Houston, which spends 10 to 15 percent of its $1.2 billion annual budget to care for illegal immigrants.

Realistically, taxpayers are already paying for some of the treatment provided to illegal immigrants because hospitals are required by law to stabilize and treat any patients that arrive in an emergency room, regardless of their ability to pay. The money to cover the costs typically comes from federal, state and local taxes.

A solid accounting of money spent treating illegal immigrants is elusive because most hospitals do not ask for immigration status. But some states have tried.

California, which is home to the nation's largest population of illegal immigrants, spent an estimated $1.2 billion last year through Medicaid to care for 822,500 illegal immigrants.

The New Jersey Hospital Association in 2010 estimated that it cost between $600 million and $650 million annually to treat 550,000 illegal immigrants.

And in Texas, a 2010 analysis by the Health and Human Services Commission found that the agency had provided $96 million in benefits to illegal immigrants, up from $81 million two years earlier. The state's public hospital districts spent an additional $717 million in uncompensated care to treat that population.

If large states such as Florida and Texas make good on their intention to forgo federal money to expand Medicaid, the decision "basically eviscerates" the effects of the health care overhaul in those areas because of "who lives there and what they're eligible for," said Lisa Clemans-Cope, a senior researcher at the Urban Institute.

Seeking to curb expenses, hospitals might change what qualifies as an emergency or cap the number of uninsured patients they treat. And although it's believed states with the most illegal immigrants will face a smaller cut, they will still lose money.

The potential impacts of reform are a hot topic at MD Anderson Cancer Center in Houston. In addition to offering its own charity care, some MD Anderson oncologists volunteer at a county-funded clinic at Lyndon B. Johnson General Hospital that largely treats the uninsured.

"In a sense we've been in the worst-case scenario in Texas for a long time," said Lewis Foxhall, MD Anderson's vice president of health policy in Houston. "The large number of uninsured and the large low-income population creates a very difficult problem for us."

Community clinics are a key part of the reform plan and were supposed to take up some of the slack for hospitals. Clinics received $11 billion in new funding over five years so they could expand to help care for a swell of newly insured who might otherwise overwhelm doctors' offices. But in the first year, $600 million was cut from the centers' usual allocation, leaving many to use the money to fill gaps rather than expand.

There is concern that clinics could themselves be inundated with newly insured patients, forcing many illegal immigrants back to emergency rooms.

Limas, 44, moved to the border town of Alamo 13 years ago with her husband and three daughters. Now single, she supports the family by teaching a citizenship class in Spanish at the local community center and selling cookies and cakes she whips up in her trailer. Soon, she hopes to seek a work permit of her own.

For now, the clinic helps with basic health care needs. If necessary, Limas will return to the emergency room, where the attendants help her fill out paperwork to ensure the government covers the bills she cannot afford.

"They always attended to me," she said, "even though it's slow."

___

Sherman can be followed on Twitter at https://twitter.com/chrisshermanAP .

Plushnick-Masti can be followed on Twitter at https://twitter.com/RamitMastiAP .

Read More..

Wall St Week Ahead: Holiday "on standby" as clock ticks on cliff

NEW YORK (Reuters) - The last two weeks of December are traditionally quiet for stocks, but traders accustomed to a bit of time off are staying close to their mobile devices, thanks to the "fiscal cliff."

Last-minute negotiations in Washington on the so-called fiscal cliff - nearly $600 billion of tax increases and spending cuts set to take effect in January that could cause a sharp slowdown in growth or even a recession - are keeping some traders and analysts from taking Christmas holidays because any deal could have a big impact on markets.

"A lot of firms are saying to their trading desks, 'You can take days off for Christmas, but you are on standby to come in if anything happens.' This is certainly different from previous years, especially around this time of the year when things are supposed to be slowing down," said J.J. Kinahan, chief derivatives strategist at TD Ameritrade in Chicago.

"Next week is going to be a Capitol Hill-driven market."

With talks between President Barack Obama and House Speaker John Boehner at an apparent standstill, it was increasingly likely that Washington will not come up with a deal before January 1.

Gordon Charlop, managing director at Rosenblatt Securities in New York, will also be on standby for the holiday season.

"It's a 'Look guys, let's just rotate and be sensible" type of situation going on," Charlop said.

"We are hopeful there is some resolution down there, but it seems to me they continue to walk that political tightrope... rather than coming up with something."

Despite concerns that the deadline will pass without a deal, the S&P 500 has held its ground with a 12.4 percent gain for the year. For this week, though, the S&P 500 fell 0.3 percent.

BEWARE OF THE WITCH

This coming Friday will mark the last so-called "quadruple witching" day of the year, when contracts for stock options, single stock futures, stock index options and stock index futures all expire. This could make trading more volatile.

"We could see some heavy selling as there is going to be a lot of re-establishing of positions, reallocation of assets before the year-end," Kinahan said.

RETHINKING APPLE

Higher tax rates on capital gains and dividends are part of the automatic tax increases that will go into effect next year, if Congress and the White House don't come up with a solution to avert the fiscal cliff. That possibility could give investors an incentive to unload certain stocks in some tax-related selling by December 31.

Some market participants said tax-related selling may be behind the weaker trend in the stock price of market leader Apple . Apple's stock has lost a quarter of its value since it hit a lifetime high of $705.07 on September 21.

On Friday, the stock fell 3.8 percent to $509.79 after the iPhone 5 got a chilly reception at its debut in China and two analysts cut shipment forecasts. But the stock is still up nearly 26 percent for the year.

"If you owned Apple for a long time, you should be thinking about reallocation as there will be changes in taxes and other regulations next year, although we don't really know which rules to play by yet," Kinahan said.

But one indicator of the market's reduced concern about the fiscal cliff compared with a few weeks ago, is the defense sector, which will be hit hard if the spending cuts take effect. The PHLX Defense Sector Index <.dfx> is up nearly 13 percent for the year, and sits just a few points from its 2012 high.

(Reporting by Angela Moon; Additional reporting by Chuck Mikolajczak; Editing by Jan Paschal)

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Changing of the Guard: Chinese Opposition to Labor Camps Widens

BEIJING — It is hard to say exactly which “subversive” sentiments drew the police to Ren Jianyu, who posted them on his microblog last year, although “down with dictatorship” and “long live democracy” stand out.

In the end, Mr. Ren, 25, a college graduate from Chongqing, the southwestern metropolis, was sent without trial to a work camp based on the T-shirt that investigators found in his closet: “Freedom or death,” it said.

Last year Mr. Ren was among tens of thousands of Chinese who were dumped into the nation’s vast “re-education through labor” system, a Stalinist-inspired constellation of penal colonies where pickpockets, petitioners, underground Christian church members and other perceived social irritants toil in dismal conditions for up to four years, all without trial. With as many as 190,000 inmates at any one time, it is one of the world’s largest systems of forced labor.

But now the labor system, known by its shorthand, “laojiao,” is facing a groundswell of opposition from both inside and outside the Communist Party. Critics say the once-in-a-decade leadership transition last month, which included the demotion of the chief of the nation’s vast internal security apparatus, has created a potential opening for judicial and legal reform.

“It’s high time we demolish this unconstitutional and abusive system that violates basic human rights, fuels instability and smears the government’s image,” said Hu Xingdou, a professor at the Beijing Institute of Technology who frequently rails against the system that Mao Zedong created in the 1950s to take down suspected class enemies and counterrevolutionaries.

The calls for change go beyond longstanding advocates of political reform like Professor Hu. China’s national bar association is circulating an online petition that has been signed by thousands. Legal experts have convened seminars to denounce the system. And almost every day, it seems, the state-run news media, with the top leadership’s tacit support, report on hapless citizens ensnared by the arbitrary justice that the local police impose with the wave of a hand.

Mr. Ren’s case would probably have gone unnoticed if not for China’s increasingly emboldened human rights defenders, who showcased his plight on the Internet. Evidently prodded by the torrent of news coverage, Chongqing officials cut short his two-year sentence and freed him.

“It was a depressing, dreadful experience,” Mr. Ren said in a telephone interview this month, describing long days spent in the camp’s wire-coiling workshop.

Other examples abound. A migrant worker from Inner Mongolia was sent away for quarreling with an official at a restaurant. A mother from Hunan Province was given an 18-month sentence after she publicly protested that the men who had raped and forced her 11-year-old daughter into prostitution had been treated too leniently.

This month an 80-year-old Korean War veteran with Parkinson’s disease sobbed on national television as he described spending 18 months in a labor camp as punishment for filing local corruption complaints.

People’s Daily, the Communist Party’s mouthpiece, took aim at the system last month, saying it had become “a tool of retaliation” for local officials. In October the head of a government judicial reform committee noted a broad consensus in favor of addressing the system’s worst abuses.

And in a widely circulated recent essay, the vice president of the Supreme People’s Court, Jiang Bixin, argued that the government must act within the law if it is to survive. “Only with constraints on public power can the rights and freedoms of citizens be securely realized,” he wrote.

China’s incoming president, Xi Jinping, has not yet weighed in on the issue, but reform advocates are encouraged by a speech he gave this month talking up the widely ignored protections afforded by China’s Constitution, which include freedom from unlawful detention and the right to an open trial. “We must establish mechanisms to restrain and supervise power,” Mr. Xi said.

Until now, China’s powerful security establishment has staved off any erosion of its authority, warning of calamity if the police lose their ability to detain perceived troublemakers without the interference of judges or defense lawyers.

The Ministry of Public Security has other reasons to preserve the status quo. The system, which employs tens of thousands of people, is a gold mine for local authorities, who earn money from the goods produced by detainees. Officials also covet the bribes offered to reduce sentences, critics say, and the payments families make to ensure a loved one is properly fed while in custody.

Patrick Zuo contributed research.

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Microsoft, Motorola file to keep patent case details private

SEATTLE (Reuters) – Microsoft Corp and Google Inc‘s Motorola Mobility unit have requested a federal judge in Seattle to keep secret from the public various details from their recent trial concerning the value of technology patents and the two companies’ attempts at a settlement.

Microsoft and Motorola, acquired by Google earlier this year, are preparing post-trial briefs to present to a judge as he decides the outcome of a week-long trial last month to establish what rates Microsoft should pay Motorola for use of standard, essential wireless technology used in its Xbox game console and other products.

The case is just one strand of litigation in an industry-wide dispute over ownership of the underlying technology and the design of smartphones, which has drawn in Apple Inc, Samsung Electronics Co Ltd, Nokia and others.

In a filing with the Western District of Washington federal court in Seattle on Friday, Microsoft and Motorola asked the judge to allow them to file certain parts of their post-trial submissions under seal and redact those details in the public record.

The details concern terms of Motorola‘s licenses with third parties and Microsoft‘s business and marketing plans for future products. During the trial, which ran from November 13-20, U.S. District Judge James Robart cleared the court when such sensitive or trade secret details were discussed.

“For the same compelling reasons that the court sealed this evidence for purposes of trial, it would be consistent and appropriate to take the same approach in connection with the parties’ post-trial submissions,” the two companies argued in the court filing.

The judge has so far been understanding of the companies’ desire to keep private details of their patent royalties and future plans, although that has perplexed some spectators who believe trials in public courts should be fully open to the public.

In addition, Motorola asked the judge to seal some documents relating to settlement negotiations between the two companies, arguing that keeping those details secret would encourage openness in future talks and make a settlement more likely.

Judge Robart is not expected to rule on the case until the new year.

The case in U.S. District Court, Western District of Washington is Microsoft Corp. vs. Motorola Inc., 10-cv-1823.

(Reporting by Bill Rigby; Editing by Richard Chang)

Tech News Headlines – Yahoo! News

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Gunman's Father and Brother Are 'in Shock,' Says a Source

By Diane Herbst

12/14/2012 at 08:50 PM EST

State police personnel lead children to safety away from the Sandy Hook Elementary School

Shannon Hicks/Newtown Bee/Reuters/Landov

The father and older brother of the gunman who was blamed for the Connecticut school shooting are being questioned by authorities but are not suspects, a law enforcement source tells PEOPLE.

The Associated Press reports that the gunman has been identified as 20-year-old Adam Lanza.

His unidentified father, who lives in New York City, and his older brother, Ryan, 24, of Hoboken, N.J., are "in shock," the law enforcement source tells PEOPLE.

They were being questioned by the FBI in the Hoboken police station but "are not suspects, they have no involvement," the source says.

"Imagine the 24 year old – he's lost his mother. Imagine the father, his son killed 20 kids," the source says."   

As for Adam, "It looks like there's mental history there," the law enforcement source says.

Adam Lanza died at the scene of the shooting that killed 20 children and six adults at the Sandy Hook Elementary School in Newtown, Conn.

His mother, Nancy Lanza, was found dead at her home, according to CNN.

The source describes the weapons used by Lanza as "legitimate." According to CNN, Lanza used two hand guns that were registered to his mother and a rifle.

Adam's parents were no longer together, the source says.   

Read More..

Fewer health care options for illegal immigrants

ALAMO, Texas (AP) — For years, Sonia Limas would drag her daughters to the emergency room whenever they fell sick. As an illegal immigrant, she had no health insurance, and the only place she knew to seek treatment was the hospital — the most expensive setting for those covering the cost.

The family's options improved somewhat a decade ago with the expansion of community health clinics, which offered free or low-cost care with help from the federal government. But President Barack Obama's health care overhaul threatens to roll back some of those services if clinics and hospitals are overwhelmed with newly insured patients and can't afford to care for as many poor families.

To be clear, Obama's law was never intended to help Limas and an estimated 11 million illegal immigrants like her. Instead, it envisions that 32 million uninsured Americans will get access to coverage by 2019. Because that should mean fewer uninsured patients showing up at hospitals, the Obama program slashed the federal reimbursement for uncompensated care.

But in states with large illegal immigrant populations, the math may not work, especially if lawmakers don't expand Medicaid, the joint state-federal health program for the poor and disabled.

When the reform has been fully implemented, illegal immigrants will make up the nation's second-largest population of uninsured, or about 25 percent. The only larger group will be people who qualify for insurance but fail to enroll, according to a 2012 study by the Washington-based Urban Institute.

And since about two-thirds of illegal immigrants live in just eight states, those areas will have a disproportionate share of the uninsured to care for.

In communities "where the number of undocumented immigrants is greatest, the strain has reached the breaking point," Rich Umbdenstock, president of the American Hospital Association, wrote last year in a letter to Obama, asking him to keep in mind the uncompensated care hospitals gave to that group. "In response, many hospitals have had to curtail services, delay implementing services, or close beds."

The federal government has offered to expand Medicaid, but states must decide whether to take the deal. And in some of those eight states — including Texas, Florida and New Jersey — hospitals are scrambling to determine whether they will still have enough money to treat the remaining uninsured.

Without a Medicaid expansion, the influx of new patients and the looming cuts in federal funding could inflict "a double whammy" in Texas, said David Lopez, CEO of the Harris Health System in Houston, which spends 10 to 15 percent of its $1.2 billion annual budget to care for illegal immigrants.

Realistically, taxpayers are already paying for some of the treatment provided to illegal immigrants because hospitals are required by law to stabilize and treat any patients that arrive in an emergency room, regardless of their ability to pay. The money to cover the costs typically comes from federal, state and local taxes.

A solid accounting of money spent treating illegal immigrants is elusive because most hospitals do not ask for immigration status. But some states have tried.

California, which is home to the nation's largest population of illegal immigrants, spent an estimated $1.2 billion last year through Medicaid to care for 822,500 illegal immigrants.

The New Jersey Hospital Association in 2010 estimated that it cost between $600 million and $650 million annually to treat 550,000 illegal immigrants.

And in Texas, a 2010 analysis by the Health and Human Services Commission found that the agency had provided $96 million in benefits to illegal immigrants, up from $81 million two years earlier. The state's public hospital districts spent an additional $717 million in uncompensated care to treat that population.

If large states such as Florida and Texas make good on their intention to forgo federal money to expand Medicaid, the decision "basically eviscerates" the effects of the health care overhaul in those areas because of "who lives there and what they're eligible for," said Lisa Clemans-Cope, a senior researcher at the Urban Institute.

Seeking to curb expenses, hospitals might change what qualifies as an emergency or cap the number of uninsured patients they treat. And although it's believed states with the most illegal immigrants will face a smaller cut, they will still lose money.

The potential impacts of reform are a hot topic at MD Anderson Cancer Center in Houston. In addition to offering its own charity care, some MD Anderson oncologists volunteer at a county-funded clinic at Lyndon B. Johnson General Hospital that largely treats the uninsured.

"In a sense we've been in the worst-case scenario in Texas for a long time," said Lewis Foxhall, MD Anderson's vice president of health policy in Houston. "The large number of uninsured and the large low-income population creates a very difficult problem for us."

Community clinics are a key part of the reform plan and were supposed to take up some of the slack for hospitals. Clinics received $11 billion in new funding over five years so they could expand to help care for a swell of newly insured who might otherwise overwhelm doctors' offices. But in the first year, $600 million was cut from the centers' usual allocation, leaving many to use the money to fill gaps rather than expand.

There is concern that clinics could themselves be inundated with newly insured patients, forcing many illegal immigrants back to emergency rooms.

Limas, 44, moved to the border town of Alamo 13 years ago with her husband and three daughters. Now single, she supports the family by teaching a citizenship class in Spanish at the local community center and selling cookies and cakes she whips up in her trailer. Soon, she hopes to seek a work permit of her own.

For now, the clinic helps with basic health care needs. If necessary, Limas will return to the emergency room, where the attendants help her fill out paperwork to ensure the government covers the bills she cannot afford.

"They always attended to me," she said, "even though it's slow."

___

Sherman can be followed on Twitter at https://twitter.com/chrisshermanAP .

Plushnick-Masti can be followed on Twitter at https://twitter.com/RamitMastiAP .

Read More..

AMR pilots union meets company CEO, still backs USAir merger: spokesman

(Reuters) - American Airlines' pilots union still supports a merger with US Airways Group, a union spokesman said on Thursday, unmoved by a pitch from AMR Chief Executive Tom Horton that the company should exit Chapter 11 as an independent carrier.

Next week, US Airways CEO Doug Parker is expected to meet with the board of the Allied Pilots Association, spokesman Dennis Tajer said.

Horton, who became CEO of American parent AMR Corp as the company filed for bankruptcy protection in November 2011, requested the meeting with the pilots union leadership and met with the board for about three hours on Thursday, Tajer said.

"The case was made for the standalone plan, and APA leadership gave the standalone plan pitch due consideration but after the meeting continued to believe that a merger is best for the longtime interest of our pilots and our airline," the spokesman added.

American Airlines met with the union to thank it for its leadership in reaching a new labor contract, "discuss the next steps in our evaluation of strategic alternatives and exchange information," according to a statement from spokesman Mike Trevino.

US Airways declined to comment.

US Air has been pushing for a merger with American all year, and its plan has the support of unions that represent American's flight attendants and ground workers, in addition to the pilots union. The two carriers combined would be on par with current No. 1 United Continental Holdings in scope.

"We anticipate that Mr. Parker will articulate his vision and plan for the new American Airlines next week," Tajer added.

American Airlines creditors want a potential merger with US Airways to be an all-stock deal rather than one that pays some claims in cash, people familiar with the matter said this week. Merger discussions among US Airways, AMR and its creditors are at an advanced stage, the sources said.

The pilots unions at both American and US Airways said this week they would join the merger talks with AMR creditors and the companies. The Allied Pilots Association last week approved a new labor accord with American that grants it a 13.5 percent equity stake in a reorganized AMR.

Keith Wilson, president of the pilots union, said in a message to members on Wednesday that Wall Street analysts suggest an American-US Airways merger is likely. "While I will refrain from speculation, we must be ready to move quickly toward a potential merger," Wilson said.

American Airlines shares rose 16.9 percent to 76 cents on Thursday, while US Airways rose 2.1 percent to $12.97.

(Reporting by Karen Jacobs; Editing by Dan Grebler)

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U.S. to Send 2 Missiles Batteries to Turkey to Deter Syria

WASHINGTON — The United States plans to send two Patriot missile batteries and about 400 military personnel to Turkey to defend against a possible Syrian missile attack, two allied officials said Thursday.

The American batteries will be part of a broader push to beef up Turkey’s defenses that will also include the deployment of four other Patriot batteries — two from Germany and two from the Netherlands.

All six batteries will be under NATO’s command and control, scheduled to be operational by the end of January.

Turkey, which has been supporting the Syrian opposition to President Bashar al-Assad, has been worried it is vulnerable to Syrian missiles, including Scuds that might be tipped with chemical weapons. Those concerns were heightened by reports of increased activity at some of Syria’s chemical sites, though Defense Secretary Leon E. Panetta said this week that intelligence about chemical weapons activity in Syria had “leveled off.”

The recent Scud missile attacks mounted by forces loyal to Mr. Assad against rebels in northern Syria have only added to Turkey’s concerns. The Scud missiles fired at the rebels were armed with conventional warheads, but the attacks showed that the Assad government is prepared to use missiles as it struggles to slow rebel gains.

NATO foreign ministers last week endorsed the decision to send Patriot batteries to Turkey. The details of how many each nation would send were not worked out until this week, officials said.

In preparation for the deployment, allied officials had conducted surveys of 10 potential sites, mostly in southeastern Turkey, that could be defended by one or more Patriot batteries.

But NATO nations do not have enough batteries to cover all of the sites. With tensions building with Iran and North Korea defying the United States and its Asian allies by launching a long-range rocket, American officials did not want to send more than a few Patriot batteries to Turkey, especially since it is not clear how long they will be needed.

But NATO diplomats said that the goal was to show enough of a commitment to Turkey’s defense to deter a Syrian attack.

It will take three weeks to ship and deploy the two American Patriot batteries, a Defense Department official said.

One allied official said it might be possible to speed up the deployment of the German and Dutch batteries if necessary. Each of those nations will also send up to 400 troops.

The United States, Germany and the Netherlands are the only NATO members that have the advanced PAC-3 Patriot system.

The Patriot batteries in Turkey will be linked to NATO’s air-defense system. The response by the missile batteries would be nearly automatic, firing interceptor missiles to destroy the target by ramming into it, a tactic the military calls “hit to kill.”

Syria denied Thursday that it had fired Scud missiles this week. But NATO’s secretary general, Anders Fogh Rasmussen, said that the intelligence gathered by the alliance indicated that they were Scud-type missiles. “In general, I think the regime in Damascus is approaching collapse,” he said. “I think now it’s only a question of time.”

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Facebook, Google tell the government to stop granting patents for abstract ideas

Facebook (FB), Google (GOOG) and six other tech companies have petitioned the courts to begin rejecting lawsuits that are based on patents for vague concepts rather than specific applications, TechCrunch reported. The agreement, which was cosigned by Zynga (ZNGA), Dell (DELL), Intuit (INTU), Homeaway (AWAY), Rackspace (RAX), and Red Hat (RHT), notes the only thing these abstract patents do is increase legal fees and slow innovation in the industry. The companies claim that “abstract patents are a plague in the high tech sector” and force innovators into litigation that results in huge settlements or steep licensing fees for technology they have already developed on their own, which then leads to higher prices for consumers.

“Many computer-related patent claims just describe an abstract idea at a high level of generality and say to perform it on a computer or over the Internet,” the briefing reads. “Such barebones claims grant exclusive rights over the abstract idea itself, with no limit on how the idea is implemented. Granting patent protection for such claims would impair, not promote, innovation by conferring exclusive rights on those who have not meaningfully innovated, and thereby penalizing those that do later innovate by blocking or taxing their applications of the abstract idea.”

The companies conclude, “It is easy to think of abstract ideas about what a computer or website should do, but the difficult, valuable, and often groundbreaking part of online innovation comes next: designing, analyzing, building, and deploying the interface, software, and hardware to implement that idea in a way that is useful in daily life. Simply put, ideas are much easier to come by than working implementations.”

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The X Factor Reveals Season 2 Finalists

TV Watch

The X Factor

12/13/2012 at 09:10 PM EST

Carly Rose Sonenclar, Emblem3, Tate Stevens and Fifth Harmony

Ray Mickshaw/FOX (4)

Sparks will fly at the finale!

On Thursday, The X Factor revealed its top three acts, who will perform next week in the final night of competition – in hopes of taking home the $5 million recording contract.

Simon Cowell said it would take a miracle to get his girl group, Fifth Harmony, to the finale after they performed Shontelle's "Impossible" and Ellie Goulding's "Anything Could Happen" on Wednesday. Keep reading to find out if their dream came true ...

Apparently, miracles do happen! Fifth Harmony was the first act to be sent through to the finale.

They will compete against departing judge L.A. Reid's country singer, Tate Stevens, and Britney Spears's only remaining contestant, Carly Rose Sonenclar.

That means Simon's promising boy band, Emblem3, are out of the running for the big prize.

"This is the way it goes on competitions," Simon said. "I'm gutted really for them ... But it happens."

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Study: People worldwide living longer, but sicker

LONDON (AP) — Nearly everywhere around the world, people are living longer and fewer children are dying. But increasingly, people are grappling with the diseases and disabilities of modern life, according to the most expansive global look so far at life expectancy and the biggest health threats.

The last comprehensive study was in 1990 and the top health problem then was the death of children under 5 — more than 10 million each year. Since then, campaigns to vaccinate kids against diseases like polio and measles have reduced the number of children dying to about 7 million.

Malnutrition was once the main health threat for children. Now, everywhere except Africa, they are much more likely to overeat than to starve.

With more children surviving, chronic illnesses and disabilities that strike later in life are taking a bigger toll, the research said. High blood pressure has become the leading health risk worldwide, followed by smoking and alcohol.

"The biggest contributor to the global health burden isn't premature (deaths), but chronic diseases, injuries, mental health conditions and all the bone and joint diseases," said one of the study leaders, Christopher Murray, director of the Institute of Health Metrics and Evaluation at the University of Washington.

In developed countries, such conditions now account for more than half of the health problems, fueled by an aging population. While life expectancy is climbing nearly everywhere, so too are the number of years people will live with things like vision or hearing loss and mental health issues like depression.

The research appears in seven papers published online Thursday by the journal Lancet. More than 480 researchers in 50 countries gathered data up to 2010 from surveys, censuses and past studies. They used statistical modeling to fill in the gaps for countries with little information. The series was mainly paid for by the Bill & Melinda Gates Foundation.

As in 1990, Japan topped the life expectancy list in 2010, with 79 for men and 86 for women. In the U.S. that year, life expectancy for men was 76 and for women, 81.

The research found wide variations in what's killing people around the world. Some of the most striking findings highlighted by the researchers: — Homicide is the No. 3 killer of men in Latin America; it ranks 20th worldwide. In the U.S., it is the 21st cause of death in men, and in Western Europe, 57th.

— While suicide ranks globally as the 21st leading killer, it is as high as the ninth top cause of death in women across Asia's "suicide belt," from India to China. Suicide ranks 14th in North America and 15th in Western Europe.

— In people aged 15-49, diabetes is a bigger killer in Africa than in Western Europe (8.8 deaths versus 1 death per 100,000).

— Central and Southeast Asia have the highest rates of fatal stroke in young adults at about 15 cases per 100,000 deaths. In North America, the rate is about 3 per 100,000.

Globally, heart disease and stroke remain the top killers. Reflecting an older population, lung cancer moved to the 5th cause of death globally, while other cancers including those of the liver, stomach and colon are also in the top 20. AIDS jumped from the 35th cause of death in 1990 to the sixth leading cause two decades later.

While chronic diseases are killing more people nearly everywhere, the overall trend is the opposite in Africa, where illnesses like AIDS, malaria and tuberculosis are still major threats. And experts warn again shifting too much of the focus away from those ailments.

"It's the nature of infectious disease epidemics that if you turn away from them, they will crop right back up," said Jennifer Cohn, a medical coordinator at Doctors Without Borders.

Still, she acknowledged the need to address the surge of other health problems across Africa. Cohn said the agency was considering ways to treat things like heart disease and diabetes. "The way we treat HIV could be a good model for chronic care," she said.

Others said more concrete information is needed before making any big changes to public health policies.

"We have to take this data with some grains of salt," said Sandy Cairncross, an epidemiologist at the London School of Hygiene and Tropical Medicine.

He said the information in some of the Lancet research was too thin and didn't fully consider all the relevant health risk factors.

"We're getting a better picture, but it's still incomplete," he said.

___

Online:

www.lancet.com

http://healthmetricsandevaluation.org

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Asian shares rise, yen falls after Fed's stimulus steps

TOKYO (Reuters) - Asian shares extended gains for a seventh day on Thursday, after the U.S. Federal Reserve took new stimulus steps to bolster the economy, pressuring the yen with expectations the Japanese central bank will follow suit with more easing next week.

While stocks gained, oil and gold fell from post-Fed rallies, as investors took profits ahead of the year-end.

Despite the Fed's fresh dose of liquidity-pumping measures, the upside for stocks was also contained by concerns about the lack of breakthrough in U.S. budget talks to avert the "fiscal cliff," some $600 billion of tax hikes and spending cuts scheduled to start in January.

Failure to reach a compromise by the end of the year risks pushing the U.S. economy into recession and has stoked fears that a fragile recovery trend emerging in China and some other countries would be stifled.

U.S. stocks ended little changed on Wednesday, giving up most of the day's gains after Fed Chairman Ben Bernanke warned of damage from the "fiscal cliff", and as U.S. House of Representatives Speaker John Boehner said "serious differences" remain with President Barack Obama.

MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> added 0.3 percent to a 16-month peak, having hit successive 16-month highs since December 5. South Korean shares <.ks11> hit a two-month high and were last up 0.5 percent.

"The Fed's easing measures met the market's expectations, while the setting of clear inflation and unemployment targets exceeded hopes and will clear uncertainty on the monetary front," said Kim Yong-goo, an analyst at Samsung Securities.

The U.S. central bank, cut its forecasts for economic growth and inflation next year, committed to monthly purchases of $45 billion in Treasuries on top of the $40 billion per month in mortgage-backed bonds it started buying in September.

But it also took the unprecedented step of indicating interest rates would remain near zero until unemployment falls to at least 6.5 percent.

YEN WEAKNESS CONTINUES

The dollar advanced to its loftiest in nearly nine months against the yen, touching a high of 83.44 yen. The yen's slump boosted Japan's Nikkei share average <.n225> up 1.6 percent and above 9,700 for the first time in eight months. <.t/>

The Bank of Japan meets December 19-20 and is widely expected to further ease monetary policy to support its weak economy.

The Fed's latest move to make the jobless rate a target for its monetary policy could have a longer-term implication on the BOJ.

"While the BOJ's ultimate goal is to pull Japan out of deflation, the Fed's latest move could prompt Japanese politicians or the government to urge the BOJ to also commit itself to growth, not just price stability," said Chotaro Morita, chief fixed income strategist at Barclays.

Morita said that market consensus is for the BOJ to expand its asset-buying and lending program, currently at 91 trillion yen ($1.1 trillion), by another 5-10 trillion yen, and put off taking bolder steps until after a new cabinet is formed.

Japan holds an election on Sunday, with opinion surveys showing conservative former Prime Minister Shinzo Abe's opposition Liberal Democratic Party and its smaller ally heading for a resounding victory.

Abe wants to step up aggressive monetary easing along with heavy public works spending, policy prescriptions dubbed "Abenomics" by the media, and while his threat to curtail the BOJ's independence has unsettled investors, investors reckon the responsibility of power will prevent Abe taking excessive risks that could lead to a bond market meltdown.

The euro was relatively less volatile compared to the dollar and the yen, steadying around $1.3066 after reaching a high of $1.3098 on Wednesday.

Greece's foreign lenders welcomed a bond buyback even though it narrowly fell short of a target to cut the country's debt, paving the way for Athens to get long-delayed aid to avoid bankruptcy.

In Italy, another debt-straddled euro zone country, Silvio Berlusconi offered to stand back and make way for Mario Monti as Italy's next leader if the outgoing technocrat premier agreed to run as the candidate for a center-right coalition. Monti's intention to resign has raised concerns that his austerity policies may not be carried out.

Oil prices retreated from overnight rises, with U.S. crude futures easing 0.3 percent to $86.48 a barrel and Brent falling 0.5 percent to $109.01.

Gold tumbled more than 1 percent on stop-loss selling, after the Fed's announcement of a fresh round of bond buying lifted prices to their highest levels in nearly two weeks. Spot gold dropped 1 percent to $1,694.16.

($1 = 82.9300 Japanese yen)

(Additional reporting by Somang Yang in Seoul; Editing by Jacqueline Wong)

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Another Editor Steps Down in News Corp. Shake-Up

News Corporation’s British newspaper unit, embroiled in the aftermath of a phone hacking scandal, lost another high-ranking executive on Wednesday when the editor of The Times of London announced he would step down.

The executive, James Harding, considered by many a golden boy of British journalism, said he would depart his post at The Times amid pressure from News Corporation’s senior leadership.

He called the corporation’s chief executive, Rupert Murdoch, early Wednesday to offer his resignation, the second in two weeks at News International, the British newspaper subsidiary of News Corporation. On Dec. 2, Tom Mockridge, chief executive of News International, announced his resignation.

“It has been made clear to me that News Corporation would like to appoint a new editor of The Times,” Mr. Harding told his staff. “I have therefore agreed to stand down.”

The same day that Mr. Harding said he would depart, regulatory filings showed that Rebekah Brooks, a former chief executive of News International, had received a $17.6 million severance package that included “compensation for loss of office” and “various ongoing benefits.”

Ms. Brooks, who had served as editor of the News of the World and Sun tabloids, both accused of widespread phone hacking, is expected to stand trial in September over accusations of illegal payments to public officials. She has also been charged with conspiracy to intercept voice mail messages and conspiracy to pervert the course of justice. She has denied the accusations.

The settlement agreement, reached during Ms. Brooks’s departure in July 2011 at the height of the phone hacking scandal at The News of the World, stipulates that she would be required to return much of her compensation if she were found guilty.

Mr. Harding took over as editor of The Times in 2007 at 38, making him one of the youngest to hold the job in the broadsheet’s 227-year history. His counterpart at The Sunday Times, John Witherow, was widely expected to replace him. News International declined to comment.

Mr. Murdoch bought The Times in 1981, adding prestige and influence to his stable of British tabloids. In October, the paper’s weekday circulation was down 7.82 percent from the same month last year, to 403,770 readers, according to Britain’s Audit Bureau of Circulations.

Under Mr. Harding’s leadership, The Times took a relatively critical stance against its parent company’s handling of the hacking scandal, and speculation arose that the spirited coverage had led to his ouster.

“In uniquely difficult circumstances I hope we have covered the story that has swirled around us with the integrity and independence that readers of The Times expect of us,” Mr. Harding told his staff.

In a statement, Mr. Murdoch said, “James has been a distinguished editor for The Times” and helped lead the paper “through difficult times.”

News Corporation is readying itself to split off its publishing assets into a separate publicly traded entity. The new company will be led by Robert Thomson, currently the managing editor of The Wall Street Journal and editor in chief of Dow Jones.

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New Flickr iPhone app to compete with Instagram and Twitter with 16 filters

Hot on the heels of its email redesign, Yahoo (YHOO) announced on Wednesday that it has completely redesigned the Flickr iPhone app. The new app borrows heavily from Instagram and focuses on what makes Flickr special: photos and communities. Yahoo’s new Flickr app also includes 16 filters with their own fancy names to go head-on with Instagram and Twitter’s recently updated app that added eight filters. Users can now access the Flickr app with numerous accounts including Facebook (FB) and Google (GOOG) and photos can be shared to Facebook, Twitter, Tumblr or via email. The new Flickr app is available for free on iPhone but to our disappointment, there isn’t an iPad-optimized version.

Ellis Hamburger from The Verge penned an interesting editorial on how Twitter misses the mark by simply adding filters to its app without having the close community that makes Instagram so addictive. Led by CEO Marissa Mayer, Yahoo seems aware that mobile apps thrive on the communities that sprout up. The new Flickr app’s emphasis on how the images are displayed and shared in visually appealing and digestible thumbnails suggests Yahoo finally understands mobile.

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Tevin Hunte Is 'So Happy' After His Voice Elimination

TV Watch

The Voice

By Jessica Herndon and Julia Haskins

12/12/2012 at 07:45 PM EST

Team Cee Lo's Trevin Hunte was eliminated on Tuesday's episode of The Voice, but the soulful singer isn't letting the end of this journey hold him back.

"I feel like the best person on the planet Earth. I am so happy and excited to be honest," Hunte told PEOPLE after the show. I feel like a weight has been lifted. Being away from family and friends and what you're used to was definitely a hard thing for me."

Hunte is looking forward to his mom's cooking and seeing his friends back home, and he won't waste a second wondering what if he'd made it further.

"I have no regrets. I am glad that I took a leap of faith and auditioned," he said. "I auditioned for American Idol and told my family I didn't have the strength to do it again. But I am definitely happy and excited that I made it this far."

And he still has a long way to go. "I'm only 18," he said. "I'm just really excited."

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Congress examines science behind HGH test for NFL

WASHINGTON (AP) — A congressional committee has opened a hearing to examine the science behind a human growth hormone test the NFL wants to start using on its players.

Nearly two full seasons have passed since the league and the players' union signed a labor deal that set the stage for HGH testing.

The NFL Players Association won't concede the validity of a test that's used by Olympic sports and Major League Baseball, and the sides haven't been able to agree on a scientist to help resolve that impasse.

Among the witnesses before the House Oversight and Government Reform Committee on Wednesday is Pro Football Hall of Fame member Dick Butkus. In his prepared statement, Butkus writes: "Now, let's get on with it. The HGH testing process is proven to be reliable."

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HSBC became bank to drug cartels, pays big for lapses

(Reuters) - In February 2008, Mexican authorities told the CEO of HSBC Holdings Plc's Mexico unit that a local drug lord referred to the bank as the "place to launder money," U.S. prosecutors said on Tuesday, as they announced a record $1.92 billion settlement with the British bank.

Lax money laundering controls at HSBC allowed two cartels - one each in Mexico and Colombia - to move $881 million in drug proceeds through the bank over the second half of the last decade, according to prosecutors and federal court documents.

So rampant was the practice, prosecutors said, that on some days drug traffickers deposited hundreds of thousands of dollars at HSBC Mexico accounts. To speed things along, the criminals even designed "specially shaped boxes" that fit the size of teller windows at HSBC branches, according to the documents.

Prosecutors said a multi-year, multi-agency probe into such transactions revealed how HSBC had degenerated into the "preferred financial institution" for drug traffickers and money launderers. And on Tuesday, that culminated in a far-reaching deferred prosecution agreement with HSBC.

An HSBC spokesman declined to discuss specific transactions or clients. But as part of the agreement, the bank acknowledged major lapses in compliance and ignoring red flags. It also acknowledged enabling clients to avoid U.S. sanctions that prohibit dealings with countries such as Iran, Libya, Sudan, Myanmar and Cuba.

The bank agreed to take steps to fix problems, forfeit $1.256 billion, and retain a compliance monitor. It also agreed to pay $665 million in civil penalties to resolve regulatory actions by the U.S. Office of the Comptroller of the Currency, the Federal Reserve, the Treasury Department and others.

"We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organization from the one that made those mistakes," HSBC Chief Executive Stuart Gulliver said.

The settlement, the largest penalty ever paid by a bank, had been expected.

In November, the bank told investors its penalty could exceed $1.5 billion. And many of the details of the bank's lapses that allowed shadowy money to sluice through HSBC were contained in a U.S. Senate investigative report in July.

HSBC shares closed up 0.6 percent in London on Tuesday, and its Hong Kong-listed shares were up about 0.25 percent by late morning on Wednesday.

MONEY LAUNDERING AND WASHING MACHINES

Top U.S. law-enforcement officials, standing sternly at a news conference in Brooklyn, New York, gave new details on Tuesday of how the bank was used. They pointed to flow charts decorated with green dollar bills showing how cartels used HSBC accounts to move money through Mexico, Colombia and elsewhere.

In one type of money-laundering transaction, the documents show how millions of dollars of drug money flowed through HSBC as Colombian drug cartels used the so-called Black Market Peso Exchange to convert U.S. dollars to Colombian pesos.

In a multi-step laundering process, middlemen - referred to as peso brokers - used U.S. dollars from drug cartels to buy consumer goods such as washing machines and then exported them to Colombia, where they were sold, according to the documents and a source familiar with the situation. Part of the sale proceeds, now in Colombian pesos, was then given back to the drug cartels, the documents show.

Other transactions involved Mexican drug cartels, prosecutors said.

After the February 2008 meeting with Mexican authorities, HSBC conducted an internal inquiry that found a small number of Mexican clients accounted for a large percentage of the U.S. dollars moving through HSBC, according to the documents, which include a "statement of facts" that HSBC has agreed to.

A significant sum ultimately was traced to the city of Culiacan in the rugged Mexican state of Sinaloa, home to one of Mexico's powerful drug gangs that is directed by the country's most-wanted man, Joaquin "Shorty" Guzman, the documents show. In 2001, Guzman escaped from a maximum security prison in a laundry cart.

HSBC closed the suspected accounts, but the bank kept accepting dollar deposits in Sinaloa. Between 2006 and 2008, HSBC's Mexican unit moved $1.1 billion from Sinaloa to the bank's U.S. branches, according to the documents.

Drug cartels earn an estimated $60 billion a year from trafficking in the United States, according to the United Nations. Half of that money is routed back to Mexico to pay off politicians, fund private arsenals and fuel violence that killed more than 60,000 people over the past six years.

Loretta Lynch, the U.S. Attorney in Brooklyn, said that compliance at HSBC was "woefully inadequate."

HSBC's compliance employees were vastly outnumbered, according to prosecutors. Less than a handful of bank employees, for example, were charged with reviewing 13,000 to 15,000 suspicious alerts generated monthly, they said.

FIXING PROBLEMS

Prosecutors agreed to a deferred prosecution deal, which means that HSBC avoids being criminally charged. They also decided against charging any individuals.

Lanny Breuer, chief of the Justice Department's criminal division, defended the move, saying, "HSBC is paying a heavy price for its conduct."

Later, he said that while HSBC permitted itself to be an essential element in money laundering, it was not the mastermind. "They are not the Sinaloa cartel," he said.

HSBC said it had increased spending on anti-money laundering systems by about nine times between 2009 and 2011, exited business relationships and clawed back bonuses for senior executives. As evidence of its determination to change, it cited the hiring last January of Stuart Levey, a former top U.S. Treasury Department official, as chief legal officer.

Under the five-year agreement with the Justice Department, HSBC has agreed to have an independent monitor evaluate its progress in improving its compliance.

It also said that as part of the overhaul of its controls, it has launched a global review of its "Know Your Customer" files, which will cost an estimated $700 million over five years. The files are designed to ensure that banks do not unwittingly act as conduits for criminal funds.

There is already some evidence that the crackdown on HSBC has slowed the flow of illegal cash.

In 2009, HSBC began exiting a business that moves bulk cash through the global financial system and a year later, the Office of the Comptroller of the Currency ordered the bank to improve its compliance.

Since then, the repatriation of U.S. dollars from Mexico has fallen to less than $5 billion in 2011 compared with $12 billion in 2008, according to Donald Semesky, a former Drug Enforcement Administration official who provided the data last month at an anti-money laundering conference in Washington.

(Additional reporting by Aruna Viswanatha in Washington, Jessica Dye in New York, Brett Wolf and Steve Slater in London and Lawrence White and Michael Flaherty in Hong Kong; Editing by Eddie Evans, Paritosh Bansal and Ken Wills)

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Bahrain Court Upholds Activist’s Conviction

CAIRO — A court in Bahrain on Tuesday mainly upheld the conviction and prison sentence of a prominent human rights activist in a case that exposed the government to international criticism and was seen as a crucial test of the monarchy’s repeated pledges to allow greater political freedom.

The activist, Nabeel Rajab, was sentenced in August to three years in prison on charges of inciting antigovernment protests. On Tuesday, a judge dismissed one of the charges against Mr. Rajab, who has been incarcerated since August, reducing the overall sentence to two years from three, Mr. Rajab’s brother Ammar said.

“It is very disappointing,” said the brother, who suggested that the decision originated with Bahrain’s rulers rather than with its judiciary. “The leadership of the country are not allowing him to go out of prison.”

Mr. Rajab is among the leading figures in an opposition movement that has worked to ease the monarchy’s hold on political life, and he has been a regular critic of members of the ruling family. The government forcefully repressed a popular uprising last year, and the conflict has settled into a stalemate, transforming what had been one of the region’s most politically vibrant societies into an incubator of resentment and sectarian rifts.

The court decision came two days after Bahrain, in a rare opening, hosted international visitors, including journalists, at a security conference, the Manama Dialogue. A ban on public protests was temporarily lifted to allow Bahrain’s biggest opposition group to hold a rally, and the foreign minister, appearing at the conference, spoke of progress in the reform agenda and a focus on making the judiciary more independent.

Visiting dignitaries, including Senator John McCain, Republican of Arizona, met with opposition figures and human rights activists.

But the government’s opponents were skeptical that the opening represented any lasting change, pointing out that three opposition politicians who had been invited to the conference were abruptly asked by the organizers not to attend, after pressure from the government.

On the day the conference ended, a prominent antigovernment activist, Zainab al-Khawaja, was arrested for protesting in a public hospital over the treatment of a young man who had been badly injured by the security forces.

Mr. Rajab’s family said before the day of the hearing that it had little expectation of a favorable verdict but nonetheless hoped that recent signs of international pressure — from the United States as well as from President François Hollande of France, who recently mentioned Mr. Rajab publicly — might make a difference.

French and American representatives were in the courtroom on Tuesday, listening as Mr. Rajab defended himself, his brother said. “It’s like the judge never heard him,” he said.

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Facebook helps FBI bust cybercriminals blamed for $850 million losses

SAN FRANCISCO (Reuters) – Investigators led by the Federal Bureau of Investigation and aided by Facebook Inc, have busted an international criminal ring that infected 11 million computers around the world and caused more than $ 850 million in total losses in one of the largest cybercrime hauls in history.

The FBI, working in concert with the world’s largest social network and several international law enforcement agencies, arrested 10 people it says infected computers with “Yahos” malicious software, then stole credit card, bank and other personal information.

Facebook’s security team assisted the FBI after “Yahos” targeted its users from 2010 to October 2012, the U.S. federal agency said in a statement on its website. The social network helped identify the criminals and spot affected accounts, it said.

Its “security systems were able to detect affected accounts and provide tools to remove these threats,” the FBI said.

According to the agency, which worked also with the U.S. Department of Justice, the accused hackers employed the “Butterfly Botnet”. Botnets are networks of compromised computers that can be used in a variety of cyberattacks on personal computers.

The FBI said it nabbed 10 people from Bosnia and Herzegovina, Croatia, Macedonia, New Zealand, Peru, the United Kingdom, and the United States, executed numerous search warrants and conducted a raft of interviews.

It estimated the total losses from their activities at more than $ 850 million, without elaborating.

Hard data is tough to come by, but experts say cybercrime is on the rise around the world as PC and mobile computing become more prevalent and as more and more financial transactions shift online, leaving law enforcement, cybersecurity professionals and targeted corporations increasingly hard-pressed to spot and ward off attacks.

(Reporting By Edwin Chan; Editing by Matt Driskill)

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Hugh Hefner's Engagement Ring to Crystal Harris Revealed

By Mike Fleeman

12/11/2012 at 07:00 PM EST

The wedding's back on – though it may be a good idea to save that gift receipt.

Hugh Hefner, 86, officially confirms that he is once again engaged to Crystal Harris, 26, telling his Twitter followers, "I've given Crystal Harris a ring. I love the girl."

And to prove it, Harris posted photos of the big diamond sparkler, calling it "my beautiful ring."

Neither announced a wedding date, though sources tell PEOPLE they're planning to tie the knot at the Playboy Mansion in Los Angeles on New Year's Eve.

Whether that still happens remains to be seen.

This is the plan they had in 2011 – a wedding at the mansion – except that Harris called it off just days before the nuptials were scheduled to happen in front of 300 invited guests.

Hugh Hefner and Crystal Harris

David Livingston / Getty

The onetime Playmate of the Month then ripped Hef's bedroom skills, calling him a two-second man, to which Hefner replied, "I missed a bullet" by not marrying her.

A year later, Hefner's "runaway bunny" bounded back to him.

• Reporting by JENNIFER GARCIA

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DA investigating Texas' troubled $3B cancer agency

AUSTIN, Texas (AP) — Turmoil surrounding an unprecedented $3 billion cancer-fighting effort in Texas worsened Tuesday when its executive director offered his resignation and the state's chief public corruption prosecutor announced an investigation into the beleaguered agency.

No specific criminal allegations are driving the latest probe into the Cancer Prevention and Research Institute of Texas, said Gregg Cox, director of the Travis County district attorney's public integrity unit. But his influential office opened a case only weeks after the embattled agency disclosed that an $11 million grant to a private company bypassed review.

That award is the latest trouble in a tumultuous year for CPRIT, which controls the nation's second-largest pot of cancer research dollars. Amid the mounting problems, the agency announced Tuesday that Executive Director Bill Gimson had submitted his letter of resignation.

"Unfortunately, I have also been placed in a situation where I feel I can no longer be effective," Gimson wrote in a letter dated Monday.

Gimson said the troubles have resulted in "wasted efforts expended in low value activities" at the agency, instead of a focused fight against cancer. Gimson offered to stay on until January, and the agency's board must still approve his request to step down.

His departure would complete a remarkable house-cleaning at CPRIT in a span of just eight months. It began in May, when Dr. Alfred Gilman resigned as chief science officer in protest over a different grant that the Nobel laureate wanted approved by a panel of scientists. He warned it would be "the bomb that destroys CPRIT."

Gilman was followed by Chief Commercialization Officer Jerry Cobbs, whose resignation in November came after an internal audit showed Cobbs included an $11 million proposal in a funding slate without a required outside review of the project's merits. The lucrative grant was given to Dallas-based Peloton Therapeutics, a biomedical startup.

Gimson chalked up Peloton's award to an honest mistake and has said that, to his knowledge, no one associated with CPRIT stood to benefit financially from the company receiving the taxpayer funds. That hasn't satisfied some members of the agency's governing board, who called last week for more assurances that no one personally profited.

Cox said he has been following the agency's problems and his office received a number of concerned phone calls. His department in Austin is charged with prosecuting crimes related to government officials; his most famous cases include winning a conviction against former U.S. House Majority Leader Tom DeLay in 2010 on money laundering charges.

"We have to gather the facts and figure what, if any, crime occurred so that (the investigation) can be focused more," Cox said.

Gimson's resignation letter was dated the same day the Texas attorney general's office also announced its investigation of the agency. Cox said his department would work cooperatively with state investigators, but he made clear the probes would be separate.

Peloton's award marks the second time this year that a lucrative taxpayer-funded grant authorized by CPRIT instigated backlash and raised questions about oversight. The first involved the $20 million grant to M.D. Anderson Cancer Center in Houston that Gilman described as a thin proposal that should have first been scrutinized by an outside panel of scientific peer-reviewers, even though none was required under the agency's rules.

Dozens of the nation's top scientists agreed. They resigned en masse from the agency's peer-review panels along with Gilman. Some accused the agency of "hucksterism" and charting a politically-driven path that was putting commercial product-development above science.

The latest shake-up at CPRIT caught Gilman's successor off-guard. Dr. Margaret Kripke, who was introduced to reporters Tuesday, acknowledged that she wasn't even sure who she would be answering to now that Gimson was stepping down. She said that although she wasn't with the agency when her predecessor announced his resignation, she was aware of the concerns and allegations.

"I don't think people would resign frivolously, so there must be some substance to those concerns," Kripke said.

Kripke also acknowledged the challenge of restocking the peer-review panels after the agency's credibility was so publicly smeared by some of the country's top scientists. She said she took the job because she felt the agency's mission and potential was too important to lose.

Only the National Institutes of Health doles out more cancer research dollars than CPRIT, which has awarded more than $700 million so far.

Gov. Rick Perry told reporters in Houston on Tuesday that he wasn't previously aware of the resignation but said Gimson's decision to step down was his own.

Joining the mounting criticism of CPRIT is the woman credited with brainstorming the idea for the agency in the first place. Cathy Bonner, who served under former Texas Gov. Ann Richards, teamed with cancer survivor Lance Armstrong in selling Texas voters in 2007 on a constitutional amendment to create an unprecedented state-run effort to finance a war on disease.

Now Bonner says politics have sullied an agency that she said was built to fund research, not subsidize private companies.

"There appears to be a cover-up going on," Bonner said.

Peloton has declined comment about its award and has referred questions to CPRIT. The agency has said the company wasn't aware that its application was never scrutinized by an outside panel, as required under agency rules.

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Follow Paul J. Weber on Twitter: www.twitter.com/pauljweber

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Lawyer says Goldman failed speech software "geniuses"

BOSTON (Reuters) - Goldman Sachs bankers failed to raise red flags about Lernout & Hauspie's accounting irregularities more than a decade ago, costing speech recognition software pioneers at Dragon Systems nearly all of their life's work and about $600 million, a lawyer told a jury on Monday in federal court.

"They were relying on Goldman to take care of them and whether or not they should be worried about these questions," plaintiffs' lawyer Alan Cotler said in his opening statement.

He kicked off what is expected to be a two-month courtroom battle in U.S. District Court in Boston.

The trial pits Janet and James Baker, a suburban Boston husband-and-wife team that launched Dragon from the living room of their home with $30,000, against Goldman Sachs, the iconic Wall Street bank whose reputation has been tarnished in more recent years on allegations it has treated some clients shabbily.

In the case brought by the Bakers, Goldman Sachs Group Inc denies civil claims that include gross negligence and breach of fiduciary duty. Opening statements from Goldman's legal team could come later on Monday or early Tuesday when the trial resumes.

In 2000, just months after Belgium-based Lernout & Hauspie acquired Dragon for $580 million in an all-stock deal, the company collapsed in an accounting scandal that sent it reeling into bankruptcy.

The Bakers owned 51 percent of Dragon, but only sold a few million dollars worth of their stock because of restrictions, Cotler told a jury. He added that the couple later received a $70 million settlement from a group of companies that advised Lernout & Hauspie in the transaction with Dragon.

The Bakers and two other early Dragon employees are seeking at least several hundred million dollars in damages.

In 1999, Dragon Systems hired Goldman as its financial adviser. The company, started in 1982 in West Newton, Massachusetts, was struggling and Lernout & Hauspie emerged as a buyer when another suitor decided not to pursue a deal, according to Goldman's defense in the case.

Cotler said a team of four Goldman bankers, led by Richard Wayner, gave favorable and positive advice about Lernout & Hauspie in the weeks before the deal closed. Goldman was about to earn $5 million for its work, court papers show.

Goldman's team, however, had concerns about L&H's exponential revenue growth in Asia. Cotler said Goldman did not even take one of most preliminary steps in vetting L&H's revenue claims -- contacting L&H customers in Asia.

In fact, the Goldman team internally was not satisfied with the answers it was getting from L&H on deal-critical red flag issues, particularly the company's Asia revenue growth, Cotler said.

Still, during a conference call with Goldman's Lernout & Hauspie expert in London, further positive assurances were given to Dragon's leadership, Cotler said.

Only years later did the Goldman analyst from that call admit he wasn't aware of the extent of Lernout & Hauspie's Asian revenue growth. Had he known, he would have been skeptical, Cotler said.

"These were salt of the earth people who are geniuses at what they do," Cotler said, describing the key figures at Dragon. But the world of Wall Street and high finance was unfamiliar terrain for them. It was the reason why they put their faith in Goldman, the best and biggest investment bank in the world, he added.

(Reporting By Tim McLaughlin; Editing by Nick Zieminski)

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