2011/11/29

Barney Frank, author of Wall Street reform, to retire (Reuters)

WASHINGTON (Reuters) – Representative Barney Frank, a Democrat who helped to craft the landmark overhaul of financial regulations that bears his name, will not seek re-election in 2012, his office said on Monday.

Frank, 71, one of the most outspoken liberals in Congress, will hold a 1 p.m. EST/1800 GMT news conference to discuss the decision, according to his office.

He has represented his Massachusetts district since 1981, and is known for his detailed knowledge of banking and housing regulations, as well as his acerbic wit.

"Trying to have a conversation with you would be like trying to argue with a dining room table. I have no interest in it," he told a detractor in 2009.

He was one of the first openly gay politicians to serve at a national level.

Democrats expect to retain control of Frank's seat as they try to win back control of the House of Representatives in the November 2012 elections.

Frank has said to several aides that he did not want to die in Congress. He has indicated that he would be interested in heading up the Department of Housing and Urban Development, according to media reports.

With then-Senator Christopher Dodd, Frank led a comprehensive overhaul of Wall Street regulations following the 2007-2009 financial crisis. The Dodd-Frank Act, passed in 2010 with little Republican support, was one of the most ambitious legislative efforts of Obama's first term in office.

Frank's departure will deprive Democrats of the law's chief defender at a time when Wall Street and Republican lawmakers are trying to dilute its impact.

Republican presidential candidates argue that it is placing new burdens on the economy while the unemployment rate is stuck at 9 percent, and have vowed to repeal the law even as regulators are still putting it into effect.

Frank has fended off efforts to weaken the law's consumer protections, but has shown an openness to some of the banking industry's complaints. Earlier this year, for example, he said a new crackdown on debit-card fees was too harsh.

FEW FRIENDS ON WALL STREET

Still, he will not be missed on Wall Street.

"I think they will cheer that he has taken himself out of the running. I don't think he had many fans on the Street," said Ken Polcari, managing director of ICAP Equities.

An advocate of affordable housing, Frank would have had a hand in efforts to reshape the government-owned mortgage buyers Fannie Mae and Freddie Mac.

House Republicans have been trying to unwind the enterprises, but the administration and other policymakers have warned against removing support too quickly given the weak state of the housing market.

Representative Maxine Waters, an even more vocal critic of Wall Street, is next in line to succeed Frank as the top Democrat on the Financial Services Committee, which oversees the economy, housing finance, and the Federal Reserve and other major financial regulators.

Waters faces an ethics investigation following allegations that she broke House rules by trying in 2008 to help a bank in which her husband served on the board of directors.

Frank survived an ethics scandal in 1989 after he admitted hiring a prostitute as a personal aide. Frank apologized and said he had never used official funds.

Democrats say they expect to hold on to Frank's seat. President Barack Obama in 2008 won 61 percent of the vote in the district, which stretches from upscale Boston suburbs to Fall River, a blue-collar fishing town.

But the district has become more conservative after it was redrawn this year, and one Republican said Frank's retirement gives his party a better chance of victory in a state where all House seats are currently held by Democrats. The Massachusetts delegation will fall to nine from ten in the 2012 election.

"There is no obvious heir to the throne on the Democratic side. And on the Republican side Sean Bielat who challenged him in 2010 could make a very strong contender," Republican strategist Todd Domke said.

Frank won 54 percent of the vote in 2010 against Bielat, a political unknown.

James Segel, a former aide, said Frank felt that he had accomplished what he wanted to accomplish in Congress and enjoyed it less now that Democrats do not control the House.

Frank, who publicly acknowledged his homosexuality in 1987, told Reuters in March that he would like to write a history of the gay-rights movement.

(Additional reporting by Dave Clarke, Rachelle Younglai and Richard Cowan in Washington, Svea Herbst-Bayliss in Boston and Charles Mikolajczak in New York; Editing by Bill Trott and Vicki Allen)

Newt Gingrich: Union Leader endorsement a big boost in New Hampshire (The Christian Science Monitor)

Newt Gingrich’s presidential campaign just got a big boost in New Hampshire – the state holding the first Republican primary election.

The Union Leader, the state’s most prominent publication and a leading voice in conservatism, says it’s backing Gingrich over Mitt Romney.

Romney, who holds a commanding lead in New Hampshire polling, is still the man to beat there. But the Union Leader’s rejection of his candidacy is a blow nonetheless – particularly since Gingrich has vaulted past his GOP rivals to claim neck-and-neck status with Romney in national Republican polls as well as likely-voter surveys in other states.

RECOMMENDED: Election 101 - Ten questions about Newt Gingrich as a presidential candidate

The newspaper’s endorsement – spread across the top of the front page in the Sunday edition and signed by publisher Joseph W. McQuaid – carries a granite-like tone typical of a publication prominent in Republican politics. Four years ago, its endorsement of John McCain helped propel McCain passed Romney to a win in New Hampshire and to his party’s nomination.

"We are in critical need of the innovative, forward-looking strategy and positive leadership that Gingrich has shown he is capable of providing," the newspaper wrote in its editorial.

"We don't back candidates based on popularity polls or big-shot backers,” the paper declared in obvious reference to Romney. “We look for conservatives of courage and conviction who are independent-minded, grounded in their core beliefs about this nation and its people, and best equipped for the job.”

"We don't have to agree with them on every issue," the newspaper wrote about Gingrich, some of whose positions (on immigration, for example) have rankled conservatives. "We would rather back someone with whom we may sometimes disagree than one who tells us what he thinks we want to hear."

Writes Maggie Haberman at Politico.com: “It's the most significant and impactful endorsement in the GOP race so far, and solidifies Gingrich's standing as the alternative to Romney as the race heads into the final pre-Iowa caucuses stretch.”

While the Union Leader’s endorsement shakes things up, Romney remains the clear front-runner in New Hampshire, a state where he owns a home and where he’s well-known because of his time as governor of neighboring Massachusetts.

The WMUR-University of New Hampshire Granite State poll last week showed Romney with 42 percent support among likely Republican primary voters in New Hampshire. Gingrich came in second with 15 percent, followed by Rep. Ron Paul of Texas with 12 percent, and former Utah Gov. John Huntsman with 8 percent support.

Gingrich’s campaign nearly crashed and burned earlier this year when most of his staff quit in protest of what they saw as his lack of on-the-ground campaigning. And the former House Speaker’s effort has been dinged by reports of lucrative consulting work for mortgage giant Freddie Mac and the health care industry, his and his wife’s $500,000 line of credit at Tiffany’s, and continuing mention of his three marriages and acknowledged adultery.

But his campaign has regained strength and momentum – particularly in the critical state of New Hampshire.

Associated Press political writer Philip Elliott reports that Gingrich hired tea party leader Andrew Hemingway to lead his efforts, and his team has been contacting almost 1,000 voters a day.

“Hemingway's team of eight paid staffers in New Hampshire has been adding more than 100 volunteers each day, campaign officials said,” Elliott writes. “Gingrich's team already has lined up leaders in the major cities and has started identifying representatives in each ward in the state. Gingrich also has opened three offices in New Hampshire – in Manchester, the state's biggest city; in Dover in the eastern part of the state; and in the North Country's Littleton – and plans two more.”

The Union Leader’s endorsement by no means ensures success.

In 1999, the statewide newspaper endorsed Steve Forbes over George W. Bush (who publisher McQuaid referred to as “an empty suit”). Still, the newspaper’s backing carries significant weight, and not just in its formal endorsement.

"The Union Leader's style is we don't just endorse once," McQuaid told The Washington Post in 1999. "We endorse every damn day. We started endorsing Reagan in 1975 and never stopped."

RECOMMENDED: Election 101 - Ten questions about Newt Gingrich as a presidential candidate

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Europe scrambles to save euro (AP)

by GREG KELLER and PAN PYLAS, AP Business Writer Greg Keller And Pan Pylas, Ap Business Writer – 7?mins?ago

PARIS – European leaders raced Monday to save the euro from impending breakup, as momentum gained for a radical proposal in which countries that use the common currency would cede control of a big chunk of their budgets to a central authority.

In the run-up to the next European summit on Dec. 9, hopes were rising that, with their backs to the wall, leaders will finally come up with a solution that will once and for all bring an end to a crisis that has threatened to wreck the global economy.

A raft of hitherto taboo ideas gained sudden prominence Monday.

Chief among them: a fast-track move to a fiscal union between the 17 countries that share the euro — a proposal some say would be a big leap toward a United States of Europe. Such a move could greatly enhance European stability, but at a cost, critics say, of national sovereignty and democratic accountability.

Another plan being aired in the face of fierce German resistance is for the eurozone's six triple A rated nations to pool their resources through a joint bond to prop up some of the single currency bloc's most indebted members. Germany, the EU's richest member, rejects the idea because it fears it would be tapped for the lion's share of the bailout.

Markets rallied Monday amid optimism for a bold breakthrough.

The Stoxx 50 index of leading European shares closing up 3.6 percent and the euro rising 0.4 percent to $1.3337. Bonds yields which rose alarmingly last week stabilized.

"There appears to be a sense of greater urgency among eurozone leaders after some very worrisome developments last week," said Vassili Serebriakov, an analyst at Wells Fargo Bank.

A critical test comes Tuesday when European finance ministers meet for a summit in Brussels and Italy tries to tap markets for billions more in cash. U.S. President Barack Obama was meeting top EU officials Monday at the White House to discuss the crisis.

Whatever materializes, the euro is in grave danger — with experts saying the currency could fall apart within days without drastic action.

Such a breakup could have catastrophic effects around the global economy. Among the unappetizing prospects are massive bank runs, the seizing-up of the global financial system, and chaotic currency fluctuations for those that go back to their historic money.

Bankruptcies could cascade across the continent with euro-denominated contracts plummeting in value overnight. If Germany broke from the euro, its national currency would skyrocket, severely damaging its export-oriented economy. If struggling Greece or Italy left, their currencies would plummet — making them unable to repay their euro-based debts.

The result for the world economy could be worse than the fallout from the 2008 Lehman Brothers collapse.

"Everyone knows that if the eurozone crashes the consequences would be very dramatic and in the race after that there would no winners, just losers," said Finland's finance minister Jutta Urpilainen.

Evolution Securities economist Gary Jenkins said a series of government bond auctions this week "may determine the future of the EU."

Financial Times columnist Wolfgang Munchau wrote Monday that the common currency "has 10 days at most" to avoid collapse and big decisions need to be taken, including moves to a fiscal union and the creation of a common treasury with wide-ranging powers.

As experts predicted the endgame for the euro, Europe buzzed with talk of a central treasury authority for the eurozone — an idea that just a week ago would have seemed impossible.

Unlike the United States, which has centralized institutions in Washington D.C. for raising taxes and spending, the eurozone has 17 independent treasuries with little oversight from Brussels. That would change under the fiscal union proposal being aired ahead of the EU leaders' summit in less than two weeks.

While not explicitly backing such a move, Germany and France, the eurozone's two biggest economies, have promised to propose new measures that will make the 17 operate under strict and enforceable rules — the hope being that no country, however small, can wreak such damage again.

The idea of fiscal union is controversial not least because it raises fears among some members that economic policy around Europe will be run by the EU's biggest player: Berlin.

But with Europe on the brink, it may be a price that many nations are willing to accept.

Already, the Paris-based OECD is warning that the global economy is in for a hugely rocky road over the coming months ahead. In its half-yearly report Monday, it said the continued failure by EU leaders to stem the debt crisis that has spread from Greece to much-bigger Italy "could massively escalate economic disruption" and end in "highly devastating outcomes."

The latest bout of turmoil to afflict the eurozone came last week after Germany failed to raise all the money it wanted in a bond auction and Italy had to pay through the roof to get investors to part with their cash.

If a busy bond schedule this week meets — Italy is planning to raise euro8 billion ($10.7 billion) on Tuesday — with an equally poor reception, then the euro's countries will be in real danger of being locked out of international markets and facing the devastating prospect of defaulting on their debts.

Germany, as Europe's only powerhouse economy, would then have to decide whether to bail its partners out — or bail out itself.

As governments nervously tap bond markets, Germany appeared to be readying to ask its eurozone partners to back measures for deeper fiscal union.

"The common currency has the problem that the monetary policy is joint, but the fiscal policy is not," Germany's Finance Minister Wolfgang Schaeuble said in a meeting with foreign reporters in Berlin. "Consequently, we are working now to expand the common currency through a common stability policy."

Schaeuble said the proposal, which Chancellor Angela Merkel is to bring up during the Dec. 9 EU summit, would only require passage by the 17 eurozone member states, although the other ten EU countries, such as Poland and Sweden, would be welcome to adopt it if they wanted.

However, analysts said such a move would take a long time to come to fruition.

"We do seem to be moving slowly towards more of a fiscal union but at a pace that may result in all the components being put in place after a complete meltdown of the financial system," Evolution Securities' Jenkins said.

Many think the European Central Bank is the only institution capable of calming frayed market nerves and German Chancellor Angela Merkel's continued dismissal of a greater ECB role has frayed market nerves.

"The ECB has the means to provide a credible measure to avoid further contagion in the sovereign bond markets," the OECD's Chief Economist Carlo Padoan said. "And if you ask me if that is the lender of last resort function, I would say yes."

Potentially, the ECB has unlimited financial firepower through its ability to print money. However, Germany finds the idea of monetizing debts unappealing, warning that it lets the more profligate countries off the hook for their bad practices. In addition, it conjures up bad memories of hyperinflation in Germany in the 1920s.

So far, the ECB has been reluctant in taking on a bigger firefighting role. Current rules only allow it to buy up government bonds in the markets on condition that it sells an equivalent amount of assets.

Though figures Monday showed that it stepped up its purchases in the markets last week to euro8.6 billion ($11.48 billion) from euro8 billion ($10.68 billion) the week before, analysts think that's not enough to keep a lid on countries' borrowing rates. Italy's main ten-year bond yield stands at over 7 percent, the threshold that eventually proved too costly for Greece, Ireland and Portugal and led them to seek financial help.

One proposal that's often been touted as another key pillar of a long-term solution is the issuance of eurobonds, whereby the 17 euro nations pool together to raise money in the markets. Again though, Germany has opposed the principle of eurobonds since it would expose its taxpayers to the bad debt of weaker countries.

A variant of that emerged Monday with a report in Germany's Die Welt newspaper that the six eurozone countries with a triple A rating would issue bonds together. So-called "elite bonds" would be used to support the fiscally-endangered.

Germany's Schaeuble said the report was "completely made up."

____

Pylas reported from London. Melissa Eddy, Juergen Baetz, Kirsten Grieshaber and David Rising in Berlin, and Matti Huuhtanen in Helsinki contributed to this story.

AP IMPACT: More kids skip school shots in 8 states (AP)

ATLANTA – More parents are opting out of school shots for their kids. In eight states now, more than 1 in 20 public school kindergartners aren't getting all the vaccines required for attendance, an Associated Press analysis found.

That growing trend among parents seeking vaccine exemptions has health officials worried about outbreaks of diseases that once were all but stamped out.

The AP analysis found more than half of states have seen at least a slight rise in the rate of exemptions over the past five years. States with the highest exemption rates are in the West and Upper Midwest.

It's "really gotten much worse," said Mary Selecky, secretary of health for Washington state, where 6 percent of public school parents have opted out.

Rules for exemptions vary by state and can include medical, religious or — in some states — philosophical reasons.

Reasons for skipping some school shots vary. Some parents are skeptical that vaccines are essential. Others fear vaccines carry their own risks. Some find it easier to check a box opting out than the effort to get the shots and required paperwork schools demand. Still others are ambivalent, believing in older vaccines but questioning newer shots against, say, chickenpox.

The number of shots is also giving some parents pause. By the time most children are 6, they will have been stuck with a needle about two dozen times — with many of those shots given in infancy. The cumulative effect of all those shots has not been studied enough, some parents say.

"Many of the vaccines are unnecessary and public health officials don't honestly know what the effect of giving so many vaccines to such small children really are," said Jennifer Margulis, a mother of four and parenting book author in Ashland, Ore.

But few serious problems have turned up over years of vaccinations and several studies have shown no link with autism, a theory from the 1990s that has been widely discredited.

To be sure, childhood vaccination rates remain high overall, at 90 percent or better for several vaccines, including those for polio, measles, hepatitis B and even chickenpox. In many states, exemptions are filed for fewer than 1 percent of children entering school for the first time.

Health officials have not identified an exemption threshold that would likely lead to outbreaks. But as they push for 100 percent immunization, they worry when some states have exemption rates climbing over 5 percent. The average state exemption rate has been estimated at less than half that.

Even more troubling are pockets in some states where exemption rates much higher. In some rural counties in northeast Washington, for example, vaccination exemption rates in recent years have been above 20 percent and even as high as 50 percent.

"Vaccine refusers tend to cluster," said Saad Omer, an Emory University epidemiologist who has done extensive research on the issue.

While parents may think it does no harm to others if their kids skip some vaccines, they are in fact putting others at risk, health officials say. No vaccine is completely effective. If an outbreak begins in an unvaccinated group of children, a vaccinated child may still be at some risk of getting sick.

Studies have found communities with higher exemption rates sometimes are places where measles have suddenly re-emerged in outbreaks. Vaccinated kids are sometimes among the cases, or children too young to be vaccinated. Last year, California had more than 2,100 whooping cough cases, and 10 infants died. Only one had received a first dose of vaccine.

"Your child's risk of getting disease depends on what your neighbors do," said Omer.

And while it seems unlikely that diseases like polio and diphtheria could ever make a comeback to the U.S., immunization expert Dr. Lance Rodewald with the federal Centers for Disease Control and Prevention says it could happen.

"Polio can come back. China was polio free for two decades, and just this year, they were infected from Pakistan, and there is a big outbreak of polio China now. The same could happen here," Rodewald said in an email.

He cited outbreaks of Hib, a disease that can lead to meningitis, among the Amish who don't consistently vaccinate their children. Russia had a huge diphtheria outbreak in the early to mid-1990s, he said, because vaccine coverage declined. "Measles is just visible, but it isn't the only concern," Rodewald said.

For its review, the AP asked state health departments for kindergarten exemption rates for 2006-07 and 2010-11. The AP also looked at data states had previously reported to the federal government. (Most states don't have data for the current 2011-12 school year.)

Alaska had the highest exemption rate in 2010-11, at nearly 9 percent. Colorado's rate was 7 percent, Minnesota 6.5 percent, Vermont and Washington 6 percent, and Oregon, Michigan and Illinois were close behind.

Mississippi was lowest, at essentially 0 percent.

The AP found that vaccine exemptions rose in more than half of states, and 10 had increases over the five years of about 1.5 percentage points or more, a range health officials say is troubling.

Those states, too, were in the West and Midwest — Alaska, Kansas, Hawaii, Illinois, Michigan, Montana, Oregon, Vermont, Washington and Wisconsin. Arizona saw an increase that put that state in the same ballpark.

Exemption seekers are often middle-class, college-educated white people, but there are often a mix of views and philosophies. Exemption hot spots like Sedona, Ariz., and rural northeast Washington have concentrations of both alternative medicine-preferring as well as government-fearing libertarians.

Opposition to vaccines "is putting people together that normally would not be together," observed Elizabeth Jacobs, a University of Arizona epidemiologist looking at that state's rising exemption rates.

What many of exemption-seeking parents share, however, is a mental calculation that the dangers to their children of vaccine-preventable diseases are less important than the possible harms from vaccine. Or they just don't believe health officials, putting more stock in alternative sources — often discovered through Internet searches.

"We are being told this by every government official, teacher, doctor that we need vaccines to keep us safe from these diseases. I simply don't believe that to be true. I believe all the diseases in question were up to 90 percent in decline before mass vaccines ever were given. I don't think vaccines are what saved the world from disease. I think effective sewer systems, nutrition, and handwashing (are the reasons)," said Sabrina Paulick, of Ashland, Ore. She's part-time as a caregiver for elderly people in their homes and a mother of a 4-year-old daughter.

Parents say they'd like to reserve the right to decide what vaccinations their children should get, and when. Health officials reply that vaccinations are recommended at an early age to protect children before they encounter a dangerous infection. "If you delay, you're putting a child at risk," said Gerri Yett, a nurse who manages Alaska's immunization program.

Analyzing vaccination exemptions is difficult. States collect data differently; some base their exemption rates on just a small sample of schools — Alaska, for example — while others rely on more comprehensive numbers. So the AP worked with researchers at CDC, which statistically adjusted some states' 2010-11 data for a better comparison.

It's also not clear when an exemption was invoked against all vaccines and when it was used to excuse just one or two shots. CDC officials think the second scenario is more common.

Also, states differ on some of the vaccines required and what's needed to get an exemption: Sometimes only a box on a form needs to be checked, while some states want letters or even signed statements from doctors.

Meanwhile, some parent groups and others have pushed legislators to make exemptions easier or do away with vaccination requirements altogether. The number of states allowing philosophical exemptions grew from 15 to 20 in the last decade.

Some in public health are exasperated by the trend.

"Every time we give them evidence (that vaccines are safe), they come back with a new hypothesis" for why vaccines could be dangerous, said Kacey Ernst, another University of Arizona researcher.

The exemption increases have come during a time when the government has been raising its estimates of how many children have autism and related disorders. Some experts suggest that parents have listened intently to that message, with some believing the growing roster of recommended shots must somehow be related.

"I don't understand how other people don't see that these two things are related," said Stacy Allan, a Summit, N.J., mother who filed religious exemptions and stopped vaccinating her three children.

Several parents said that while they believe many health officials mean well, their distrust of the vaccine-making pharmaceutical industry only continues to grow.

"I wouldn't be one to say I am absolutely certain these things are hurting our children," said Michele Pereira, an Ashland mother of two young girls. She is a registered nurse and married to an anesthesiologist. While her daughters have had some vaccinations, they have not had the full recommended schedule.

"I feel like there are enough questions out there that I don't want to take the chance," she said.

___

Associated Press writer Jeff Barnard in Grants Pass, Ore., contributed to this report.

2011/11/28

NYC judge rejects $285M SEC-Citigroup agreement (AP)

NEW YORK – A federal judge in New York has struck down a $285 million settlement that Citigroup reached with the Securities and Exchange Commission, citing a need for truth about the financial markets.

Judge Jed Rakoff rejected the settlement Monday. The deal would have imposed penalties on Citigroup even as it allowed the company to deny allegations that it misled investors on a complex mortgage investment. The SEC has accused the bank of betting against the investment in 2007 and making $160 million, while investors lost millions.

The judge wrote that there is an overriding public interest in knowing the truth about the financial markets. He set a July 16 trial date for the case.

Citi says it is reviewing the decision and declined to comment.

Attorney: there was 'culture of hazing' at FAMU (AP)

LITHONIA, Ga. – Florida A&M University had a "culture of hazing" that led to the recent death of a marching band member, an attorney for the student's family said Monday.

Attorney Christopher Chestnut said the family plans to file a lawsuit in the death of 26-year-old Robert Champion, who was found Nov. 19 on a bus parked outside an Orlando, Fla., hotel after the school's football team lost to rival Bethune-Cookman.

Police say Champion, a clarinet player who recently was named drum major, had been vomiting and complained he couldn't breathe shortly before he collapsed. Police suspect hazing but have not released any more details about what may have led to Champion's death. Chestnut also refused to talk about any specifics of the death.

"We are confident from what we've learned that hazing was a part of his death. We've got to expose this culture and eradicate it," he said. "There's a patterns and practice of covering up this culture."

Champion's parents said their son never told them about any troubles with the band.

"He loved the band, and every band he's been in. He loved performing in the band," said Champion's mother, Pam Champion. "My thing is to make sure this does not happen to anyone else, let people know this is real."

Since Champion's death, the school has shuttered the famed Marching 100 band and the rest of the music department's performances, and the longtime band director, Julian White, was fired. Florida Gov. Rick Scott has said state investigators would join the probe and the college announced an independent review led by a former state attorney general.

The Marching 100 — whose rich history includes performing at several Super Bowls and representing the U.S. in Paris at the 200th anniversary of the French Revolution — was scheduled to perform at the fall commencement on Dec. 16.

IMF denies in Italy aid talks (Reuters)

By James Mackenzie and Francesca Landini James Mackenzie And Francesca Landini – Mon?Nov?28, 3:56?am?ET

ROME (Reuters) – Italy's prime minister faces a testing week as he seeks to shore up the country's strained public finances, with an IMF mission expected in Rome and market pressure building to a point where outside help may be needed to stem a full-scale debt emergency.

However, an IMF spokesperson poured cold water on a report in the Italian daily La Stampa that said up to 600 billion euros could be made available at a rate of between 4-5 percent to give Italy breathing space for 18 months.

"There are no discussions with the Italian authorities on a program for IMF financing," an IMF spokesperson said.

Adding to international pressure on euro zone leaders to stem the debt crisis, U.S. President Barack Obama will press senior European Union officials in Washington on Monday to reach a solution to the emergency that Moody's said now threatens the credit standing of all European government bond ratings.

After slumping last week, Asian shares and the euro rose on Monday on hopes that some measures may emerge this week to ease the crisis.

Euro zone finance ministers will meet on Tuesday to consider detailed rules to boost the impact of a 440-billion-euro rescue fund.

Germany and France are also exploring radical ways to secure deeper and more rapid fiscal integration among the bloc's 17 countries to shore up the region's defenses against the debt crisis.

Italian Prime Minister Mario Monti is expected to unveil measures on December 5 that could include a revamped housing tax, a rise in sales tax and accelerated increases in the pension age. But pressure from the markets could force him to act more quickly.

One source with knowledge of the matter said contacts between the International Monetary Fund and Rome had intensified in recent days as concern has grown that German opposition to an expanded role for the European Central Bank could leave Italy without a financial backstop if one were needed.

The IMF inspection team is expected to visit Rome in the coming days but no date has been announced.

EYE OF THE STORM

Italy is in the eye of the euro zone debt storm after its borrowing costs returned to the levels that triggered the collapse of former Prime Minister Silvio Berlusconi's center-right government. Yields on 10-year bonds ended last week at more than 7.3 percent.

Italian yields are now in the territory that forced Greece, Ireland and Portugal to seek international bailouts and an auction on Tuesday of up to 8 billion euros of BTP bonds will be a crucial test.

On Friday, Italy paid a euro lifetime high yield of 6.5 percent to sell new six-month paper, a level that analysts said cannot be maintained for long without pushing a public debt amounting to 120 percent of gross domestic product out of control.

European Central Bank member Christian Noyer said on Monday that Italy's economy was fundamentally sound and Rome should be able to restore market confidence if it shows fiscal discipline.

"Italy should not be considered a weak economy," Noyer told reporters on a visit to Tokyo.

Italy, the euro zone's third biggest economy, would be far too big for existing bailout mechanisms and default on its 1.8 trillion euro debt would cause a banking and financial crisis that would probably destroy the single currency.

It has more than 185 billion euros of bonds falling due between December and the end of April. Obama was due to hold talks on Monday with European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso, although no breakthroughs were expected.

The president was expected to reiterate he was confident that Europe's leaders could handle the crisis, which is emerging as a major worry for the 2012 U.S. elections, if they show political leadership.

Moody's warned in a report that it may take a series of shocks before the political impetus for a resolution to the debt crisis finally emerges. The crisis had deepened in recent weeks, it said.

"The probability of multiple defaults (in addition to Greece's private sector involvement program) by euro area countries is no longer negligible," it said.

Civil servants from Germany and France were exploring ways for more rapid fiscal integration after the realization that getting an agreement among all 27 countries in the EU will be difficult any time soon.

An agreement among just the euro zone countries is one option.

"The goal is for the member states of the common currency to create their own Stability Union and to concentrate on that," German Finance Minister Wolfgang Schaeuble told ARD television on Sunday.

Another option being explored is a separate agreement outside the EU treaty that could involve a core of around 8-10 euro zone countries, officials say.

PRESSURE

Monti outlined the broad thrust of his reform plans earlier this month, promising a mix of budget rigor and reforms to stimulate economic growth, and has stuck to Berlusconi's pledge to balance the budget by 2013.

But with growing signs that Italy's chronically sluggish economy could be entering recession, he has come under pressure to provide concrete details quickly.

The measures outlined so far are broadly in line with directions previously given by the ECB, but there have been no detailed discussions with international bodies on the kinds of conditions normally attached to IMF assistance programs.

As well as loosening job protection measures, privatizing local services and opening up professions to more competition, additional budget measures estimated by Italian media at up to 15 billion euros could be announced.

Monti can take some comfort from surveys showing broad popular support for his technocrat government, but austerity measures have yet to bite deeply and surveys also show a mixed picture on individual austerity measures.

On pensions, the government is expected to bring forward an already-planned increase in retirement ages, with a wider reform possible in the coming weeks.

Monti may reintroduce a housing tax that was scrapped by Berlusconi in a last-minute campaign pledge before the 2008 election. The move cost the Treasury an estimated 3.5 billion euros a year.

Other ideas under consideration include raising the value-added tax band in bars and restaurants, which currently stands at 10 percent.

(Additional reporting by Gavin Jones and Steve Scherer and Lesley Wroughton in Washington; Ian Chua in Sydney and Stanley White and Rie Ishiguro in Tokyo; Editing by David Stamp, Alessandra Rizzo and Alex Richardson)

After extending olive branch, Los Angeles posts eviction notice on Occupy LA camp (The Christian Science Monitor)

ATLANTA – Arguably the most peaceful and orderly large Occupy Wall Street encampment – a nearly 500-tent occupation on two flanks of Los Angeles City Hall – is scheduled to be evicted at 12:01 a.m. Monday.

While police in cities from Oakland to New York City have clashed, sometimes violently, with the grassroots economic justice movement that sprang up near-spontaneously in October, Los Angeles has until now extended an olive branch. Mayor Antonio Villaraigosa, a former community organizer, has proclaimed that the movement has "awakened the country's conscience."

But even after City Council president Eric Garcetti originally told protesters to "stay as long as you need to," the city has now withdrawn that invitation, citing destruction to the City Hall lawn as one reason to evict protesters.

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"The movement is at a crossroads," Mr. Villaraigosa said on Friday. "It is time for Occupy LA to move from holding a particular patch of park land to spreading the message of economic justice and signing more people up for the push to restore the balance to American society."

Compared to images of a campus cop at the University of California-Davis pepper-spraying a subdued row of protesters, the injuring of an Iraq War vet in Oakland, and other ugly clashes, Los Angeles has taken a "let's be cool" approach where police have largely ignored an encampment which has seen some internal divides, including heated debate over whether pot smoking should be tolerated.

One reason for the hands-off approach is that the stakes are particularly high for the City of Angels. Los Angeles has a long and complicated history of tension between police and citizens, symbolized by the Rodney King beating in 1991, which led to massive riots.

But in more recent years, reforms and improvements have turned the Los Angeles Police Department into a more professional outfit, albeit with occasional missteps. Four years ago, Villaraigosa had to cut short a trade trip to El Salvador to deal with the aftermath of a May Day immigration rally where police beat demonstrators.

Meanwhile, even the de facto founder of the Occupy movement, Canadian magazine editor Kalle Lasn, has called for the protests to disperse next month and come back together when the weather improves in the spring.

But given the congenial southern California climate and largely sympathetic politicians, Los Angeles' protesters have had few incentives to leave, and have given officials few official reasons – like crime or sanitation problems – to act. Indeed, the camp itself has largely steered clear of the kinds of small-time crimes, drug overdoses, and even shootings that have tainted other camps, and which have given other mayors public backing to close down the camps and tear down tents.

It wasn't clear why Villaraigosa chose this moment to act. At the Friday press conference, the mayor and Police Chief Charlie Beck wouldn't say how far police would go to clear protesters – or whether tear gas and rubber bullets would be used.

"The goal is to do this as peacefully as possible," Chief Beck said.

But some Occupy protesters have already indicated that they will resist eviction from the City Hall park.

"Elected leaders should be more concerned about enforcing regulations on banks than enforcing park rules," spokesman Jacob Hay tells the Los Angeles Times. "They should be busy creating jobs, not creating conflict with peaceful protesters."

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Pakistan PM: No more "business as usual" with U.S. (Reuters)

ISLAMABAD (Reuters) – Pakistan's Prime Minister Yusuf Raza Gilani ruled out "business as usual" with the United States on Monday after a NATO attack killed 24 Pakistani soldiers, and the army threatened to curtail cooperation with Washington on Afghanistan drastically.

Saturday's incident on Pakistan's border with Afghanistan has complicated U.S. attempts to ease a crisis in relations with Islamabad and stabilize the region before foreign combat troops leave Afghanistan.

"Business as usual will not be there," Gilani told CNN when asked if the relationship with the United States would continue. "We have to have something bigger so as to satisfy my nation."

Gilani's comments reflect the fury of the Pakistani government and military, and the pressure they are under from their own people. "You cannot win any war without the support of the masses," he said. "We need the people with us."

The relationship, he said, would continue only if based on "mutual respect and mutual interest." Asked if Pakistan was receiving that respect, Gilani replied: "At the moment, not."

Gilani's comments cap a day of growing pressure from the Pakistani military, which threatened to reduce cooperation on peace efforts in Afghanistan.

"This could have serious consequences in the level and extent of our cooperation," military spokesman Major General Athar Abbas told Reuters.

Pakistan has a long history of ties to militant groups in Afghanistan so it is uniquely positioned to help bring about a peace settlement, a top foreign policy and security goal for the Obama administration.

Washington believes Islamabad can play a critical role in efforts to pacify Afghanistan before all NATO combat troops pull out in 2014, and cannot afford to alienate its ally.

Pakistan shut down NATO supply routes into Afghanistan in retaliation for the weekend shooting incident, the worst of its kind since Islamabad allied itself with Washington in 2001.

"We have been here before. But this time it's much more serious," said Farzana Sheikh, associate fellow of the Asia program at Chatham House in London.

"The government has taken a very stern view. It's not quite clear at this stage what more Pakistani authorities can do, apart from suspending supplies to NATO forces in Afghanistan."

Adding a new element to tensions, and a diplomatic boost for Islamabad, Pakistan's ally China said it was "deeply shocked" by the incident and expressed "strong concern for the victims and profound condolences for Pakistan.

Russia, which has been seeking warmer relations with Pakistan as worry grows over the NATO troop pullout in Afghanistan, said it was "unacceptable" to violate the sovereignty of states even when hunting "terrorists."

On Saturday, NATO helicopters and fighter jets attacked two military outposts in northwest Pakistan, killing the 24 soldiers and wounding 13 others, the army said.

"TRAGIC, UNINTENDED"

NATO described the killings as a "tragic, unintended incident" and said an investigation was underway. A Western official and an Afghan security official who requested anonymity said NATO troops were responding to fire from across the border.

Pakistan's military denied NATO forces had come under fire before launching the attack, saying the strike was unprovoked and reserving the right to retaliate.

Abbas said the attack lasted two hours despite warnings from Pakistani border posts. "They were contacted through the local hotline and also there had been contacts through the director-general of military operations. But despite that, this continued," he said.

After a string of deadly incidents in the largely lawless and confusing border region, NATO and Pakistan set up the hotline that should allow them to communicate in case of confusion over targets and avoid "friendly fire."

Both the Western and Pakistani explanations are possibly correct: that a retaliatory attack by NATO troops took a tragic, mistaken turn in harsh terrain where differentiating friend from foe can be difficult.

An Afghan Taliban commander, Mullah Samiullah Rahmani, said the group had not been engaged in any fighting with NATO or Afghan forces in the area when the incident took place. But he added that Taliban fighters control several Afghan villages near the border with Pakistan.

A similar cross-border incident on September 30, 2010, which killed two Pakistani service personnel, led to the closure of one of NATO's supply routes through Pakistan for 10 days.

The attack was the latest perceived provocation by the United States, which infuriated and embarrassed Pakistan's powerful military in May with a unilateral special forces raid that killed al Qaeda leader Osama bin Laden.

OBAMA EFFIGY BURNED

The main Pakistani association that delivers fuel to NATO forces in Afghanistan said it would not resume supplies soon in protest against the NATO strike.

In the Mohmand region, where the attack took place, hundreds of angry tribesmen yelled "Death to America." About 200 lawyers protested in Peshawar city, some burning an effigy of U.S. President Barack Obama.

Newspaper editorials were strident. "We have to send a clear and unequivocal message to NATO and America that our patience has run out. If even a single bullet of foreign forces crosses into our border, then two fires will be shot in retaliation," said the mass-circulation Urdu language Jang newspaper.

The NATO strike has shifted attention away from what critics say is Pakistan's failure to go after militants.

Pakistan joined the U.S. global war on militancy launched after al Qaeda's September 11, 2001, attacks on the United States, and won billions of dollars in aid in return.

But the unstable, nuclear-armed country has often been described as an unreliable ally, and the United States has resorted to controversial drone aircraft strikes against militants on Pakistani territory to pursue its aims.

U.S. frustrations grew so much that Obama ordered the raid that killed bin Laden in Pakistan be kept secret, knowing it could make the United States even more unpopular in Pakistan.

(Additional reporting by Zeeshan Haider and Rebecca Conway in ISLAMABAD, Izaz Mohmand, Jibran Ahmad and Faris Ali in PESHAWAR, and William Maclean in LONDON; Writing by Michael Georgy; Editing by David Stamp)

Egypt's post-Mubarak poll peaceful, high turnout (Reuters)

CAIRO (Reuters) – Egyptians voted on Monday in the first election since a popular revolt toppled Hosni Mubarak's one-man rule, showing new-found faith in the ballot box that may sweep long-banned Islamists into parliament even as army generals cling to power.

Voters swarmed to the polls in a generally peaceful atmosphere despite the unrest that marred the election run-up, when 42 people were killed in demonstrations demanding an immediate transition from military to civilian rule.

"We want to make a difference, although we are depressed by what the country has come to," said Maha Amin, a 46-year-old pharmacy lecturer, before she voted in an upscale Cairo suburb.

The ruling army council, which has already extended polling to a second day, said voting stations would stay open two extra hours until 9 p.m. "to accommodate the high voter turnout."

The Muslim Brotherhood's party and other Islamists expect to do well in the parliamentary election staggered over the next six weeks, but much remains uncertain in Egypt's complex and unfamiliar voting system of party lists and individuals.

Political transformation in Egypt, traditional leader of the Arab world, will reverberate across the Middle East, where a new generation demanding democratic change has already toppled or challenged the leaders of Tunisia, Libya, Syria and Yemen.

Parliament's lower house will be Egypt's first nationally elected body since Mubarak's fall and those credentials alone may enable it to dilute the military's monopoly of power.

A high turnout throughout the election would give it legitimacy. Despite a host of reported electoral violations and lax supervision exploited by some groups, election monitors reported no systematic Mubarak-style campaign to rig the polls.

"We are very happy to be part of the election," said first-time Cairo voter Wafa Zaklama, 55. "What was the point before?"

In the northern city of Alexandria, 34-year-old engineer Walid Atta rejoiced in the occasion. "This is the first real election in 30 years. Egyptians are making history," he said.

ISLAMISTS SCENT POWER

Oppressed under Mubarak, the Muslim Brotherhood and other Islamist parties have stood aloof from those challenging army rule in Cairo's Tahrir Square and elsewhere, unwilling to let anything obstruct a vote that may bring them closer to power.

In the Nile Delta city of Damietta, some voters said they would punish the Brotherhood for its perceived opportunism.

"The Brotherhood has lost more in the past three months than it built in the last three decades," said tour operator Ayman Soliman, 35, who favors the moderate Islamist Wasat Party.

Nevertheless, the Brotherhood has formidable advantages that include a disciplined organization, name recognition among a welter of little-known parties and years of opposing Mubarak.

Brotherhood organizers stood near many polling stations with laptops to help people find where they should vote, printing out a paper with their Freedom and Justice Party candidate's name and symbol on the back.

"At least they are not giving people fruit inside the polling station," said Mouna Zuffakar, of the Egyptian Organization for Human Rights, noting widespread violations of a ban on campaigning near polling stations.

Many voters engaged in lively political debate as they waited patiently in long queues.

"Aren't the army officers the ones who protected us during the revolution?" one woman asked loudly at a polling station in Cairo's Nasr City, referring to the army's role in easing Mubarak from power. "What do those slumdogs in Tahrir want?"

One man replied: "Those in Tahrir are young men and women who are the reason why a 61-year-old man like me voted in a parliamentary election for the first time in his life today."

The world is closely watching the election, keen for stability in Egypt, which has a peace treaty with Israel, owns the Suez Canal linking Europe and Asia, and which in Mubarak's time was an ally in countering Islamist militants in the region.

Washington and its European allies have urged the generals to step aside swiftly and make way for civilian rule.

SEGREGATED VOTING

In Alexandria, Egypt's second city, men and women voted in separate queues. Posters for Islamist parties, such as the Brotherhood's FJP, the Salafi Nour Party and the moderate Wasat Party adorned the streets.

The segregated voting for men and women in Alexandria and many other places was a reminder of the conservative religious fabric of Egypt's mainly Muslim society, where Coptic Christians comprise 10 percent of a population of more than 80 million.

Myriad parties have emerged since the fall of Mubarak, who rigged elections to ensure his now-defunct National Democratic Party dominated parliament. The NDP's headquarters, torched in the popular revolt, still stands like a tombstone by the Nile.

Under the complex electoral system, voters pick both party lists and individual candidates.

Individual winners are to be announced on Wednesday, but many contests will go to a run-off vote on December 5. List results will not be declared until after the election ends on January 11.

About 17 million Egyptians are eligible to vote in the first two-day phase of three rounds of polling for the lower house.

Egyptians seemed enthused by the novelty of a vote where the outcome was, for a change, not a foregone conclusion.

"We are seeing clear signs of voter excitement and participation, as evidenced by long lines at polling stations, and it appears to be a genuine contest," said Les Campbell, of the Washington-based National Democratic Institute.

The army council has promised civilian rule by July after the parliamentary vote and a presidential poll, now expected in June -- much sooner than previously envisaged.

But army council member General Mamdouh Shahin said on Sunday the new parliament would have no right to remove a cabinet appointed by the army using its "presidential" powers.

On Friday, the army named Kamal Ganzouri to form a new government, a move quickly rejected by protesters in Tahrir Square demanding that generals step aside immediately in favor of a civilian body to oversee the transition to democracy.

Ganzouri said he had met the ruling army council on Monday to discuss forming a "civilian advisory committee" to work with his new cabinet, which he said could be unveiled by Thursday.

(Additional reporting by Edmund Blair, Maha El Dahan and Tom Perry in Cairo, Marwa Awad in Alexandria, Shaimaa Fayed in Damietta, Yusri Mohamed in Port Said and Jonathan Wright in Fayoum; Writing by Alistair Lyon; Editing by Peter Millership)

Tobey Maguire, others settle over poker winnings (AP)

By ANTHONY McCARTNEY, AP Entertainment Writer Anthony Mccartney, Ap Entertainment Writer – 14?mins?ago

LOS ANGELES – Tobey Maguire has decided to fold `em and settle a lawsuit over his winnings from a convicted con man during high-stakes Hollywood poker games.

The "Spider-Man" star agreed to pay $80,000 to settle the lawsuit filed over more than $311,000 he was paid by a convicted Ponzi scheme operator in Texas Hold `Em matches that included celebrities, businessmen and others, court documents state.

If approved by a judge next month, Maguire will pay the money to a bankruptcy trustee who is trying to recoup money that former hedge fund operator Bradley Ruderman bilked from investors to finance his lavish lifestyle.

The money will be used to repay victims of the scheme, which Maguire and other players were unaware of.

Court records show that 14 of the 22 people sued to recoup poker winnings have settled their cases. Howard Ehrenberg, the bankruptcy trustee who sued the group, said Monday the poker settlements total more than $1.7 million.

Ehrenberg said Maguire's payout to resolve the case is in the same range as others who agreed to settlements.

"He did not end up with any better settlement than the others," Ehrenberg said.

Maguire's settlement states he "strongly disputes that he violated any laws, rules or regulations in regard to participating in the poker games" but was agreeing to the payment to avoid fighting the case, which would be costly.

The actor signed the settlement on Nov. 22 and it was filed a day later with a bankruptcy court handling the lawsuits.

The trustee alleged Maguire and others had no right to keep their winnings from the unlicensed poker games held at upscale hotels and private residences. Maguire and others have denied there was anything improper about the matches.

In court filings, Maguire noted that he lost $168,500 to Ruderman, who is currently serving a 10 year federal prison sentence after pleading guilty to two counts of wire fraud, two counts of investment adviser fraud and willful failure to file taxes.

Several of those sued are fighting the cases, most notably actor-director Nick Cassavetes. His attorney has said the games were not illegal and the statute of limitations has long passed for pursuing any criminal charges for the games held between 2006 and 2009.

Ehrenberg said he expects the remaining cases will be resolved before trial.

Filings show that billionaire Alec Gores and "Welcome Back, Kotter" star and poker aficionado Gabe Kaplan have also settled cases filed against them.

Gores, who along with his brother attempted to buy Miramax films last year, has agreed to pay $49,908 to settle a $445,500 lawsuit over Ruderman's poker payments.

Kaplan has agreed to pay $26,900 after he was sued to try to recoup nearly $63,000 in winnings.

Ehrenberg filed the lawsuits in late March, attempting to recoup money on behalf of people who invested in the scheme by Ruderman.

___

Follow Anthony McCartney at http://twitter.com/mccartneyAP

Rep. Barney Frank announced retirement (AP)

By BOB SALSBERG and DAVID ESPO, Associated Press Bob Salsberg And David Espo, Associated Press – 26?mins?ago

NEWTON, Mass. – Democratic Rep. Barney Frank of Massachusetts says he does not intend to seek re-election in 2012.

Frank spoke Monday at a news conference in his hometown of Newton

Frank said he originally intended to run for one more term, but that his decision was partially due to the fact that the state's new redistricting map will include many people he has never represented before.

Frank said he has had a "busy and stressful" four years dealing with financial reform after the recession.

He says he plans to write and stay involved in public policy decisions.

The 71-year-old Frank, and a lifelong liberal, won a House seat in 1980 was one of the first lawmakers to announce that he is gay.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

Democratic Rep. Barney Frank of Massachusetts does not intend to seek re-election in 2012, his office said Monday, closing out a career of more than three decades in Congress capped by last year's passage of legislation imposing new regulations on Wall Street.

Frank, 71 and a lifelong liberal, won a House seat in 1980 was one of the first lawmakers to announce that he is gay.

He scheduled an early afternoon news conference in Newton, Mass., to make a formal announcement of his retirement plans.

Sixteen other Democrats have announced plans not to seek new House terms in 2012, compared with six Republicans.

As chairman of the House Financial Services Committee, Frank was instrumental in passage of the Dodd-Frank bill, which contained the stiffest restrictions on banks and Wall Street since the Great Depression. The measure clamped down on lending practices and expanded consumer protections to prevent a repeat of the 2008 meltdown that knocked the economy to its knees.

Over the years, Frank consistently came down on the liberal side of public issues, opposing the war in Iraq and bills to cover its expenses.

More than two decades ago, Frank was reprimanded by the House for using his congressional status on behalf of a male prostitute whom he had employed as a personal aide, including seeking dismissal of 33 parking tickets.

"I should have known better. I do now, but it's a little too late," Frank said at the time.

Democrats rebuffed Republican calls for Frank's expulsion, and instead, the Massachusetts Democrat resumed a career that far outlasted many of those who had sought his ouster.

2011/11/15

Angry over spying, Muslims say: 'Don't call NYPD' (AP)

By EILEEN SULLIVAN and CHRIS HAWLEY, Associated Press Eileen Sullivan And Chris Hawley, Associated Press – Mon?Nov?14, 10:53?am?ET

NEW YORK – Fed up with a decade of police spying on the innocuous details of the daily lives of Muslims, activists in New York are discouraging people from going directly to the police with their concerns about terrorism, a campaign that is certain to further strain relations between the two groups.

Muslim community leaders are openly teaching people how to identify police informants, encouraging them to always talk to a lawyer before speaking with the authorities and reminding people already working with law enforcement that they have the right to change their minds. Some members of the community have planned a demonstration for next week.

Some government officials point to this type of outreach as proof that Muslims aren't cooperating in the fight against terrorism, justifying the aggressive spy tactics, while many in the Muslim community view it as a way to protect themselves from getting snared in a secret police effort to catch terrorists.

As a result, one of America's largest Muslim communities — in a city that's been attacked twice and targeted more than a dozen times — is caught in a downward spiral of distrust with the nation's largest police department: The New York City Police Department spies on Muslims, which makes them less likely to trust police. That reinforces the belief that the community is secretive and insular, a key reason that current and former NYPD officials cite for spying in the first place.

The outreach campaign follows an Associated Press investigation that revealed the NYPD had dispatched plainclothes officers to eavesdrop in Muslim communities, often without any evidence of wrongdoing. Restaurants serving Muslims were identified and photographed. Hundreds of mosques were investigated, and dozens were infiltrated. Police used the information to build ethnic databases on daily life inside Muslim neighborhoods.

Many of these programs were developed with the help of the CIA.

At a recent "Know Your Rights" session for Brooklyn College students, someone asked why Muslims who don't have anything to hide should avoid talking to police.

"Most of the time it's a fishing expedition," answered Ramzi Kassem, a law professor at the City University of New York, who supervises an advocacy organization that does such community presentations. "So the safest thing you can do for yourself, your family, and for your community is not to answer."

New York Republican Rep. Peter King said this kind of reaction from the Muslim community is "disgraceful."

Muslim groups have previously organized educational programs around the country describing a person's legal rights, such as when they must present identification to a police officer and when they can refuse to answer police questions. A California chapter of a national Muslim organization posted a poster on its website that warned Muslims not to talk to the FBI. The national organization ultimately asked the California branch to remove the poster from the website.

In New York, the AP stories about the NYPD and internal police documents have outraged some Muslims and provided evidence of tactics that they suspected were being used to watch them all along. These disclosures have intensified the outreach campaigns in New York.

A recently distributed brochure from an advocacy organization at the City University of New York Law School warns people to be wary when confronted by someone who advocates violence against the U.S., discusses terror organizations, is overly generous or is aggressive in their interactions. The brochure said that person could be a police informant.

"Be very careful about involving the police," the brochure said. "If the individual is an informant, the police may not do anything ... If the individual is not an informant and you report them, the unintended consequences could be devastating."

Sweeping skepticism of police affects community relations at all levels of law enforcement on a wide range of issues, not just the NYPD's counterterrorism programs. Interactions with a real terror operative could go unreported to law enforcement out of an assumption that the operative is actually working for the NYPD. A victim of domestic abuse or street violence may not trust the police enough to call for help.

Retired New York FBI agent Don Borelli said intelligence gathering is key to police work, not just in terrorism cases. But he said it can backfire when people feel their rights are being violated.

"When they do, these kinds of programs are actually counterproductive, because they undermine trust and drive a wedge between the community and police," said Borelli, now a security consultant with the Soufan Group.

Kassem said the activists' presentations are intended to "inform citizens about their legal rights when law enforcement comes to their doorstep." He said the goal is not to dissuade citizens from contacting authorities when they have concerns about a crime.

Since the 2001 terror attacks, the NYPD, city government officials and federal law enforcement have spent years building relationships with the New York Muslim community, assuring many Muslims that they are considered partners in the city's fight against terrorism. But in some cases, community members who have been hailed as partners and even dined with Mayor Michael Bloomberg were secretly followed by the NYPD or worked in mosques that the department had infiltrated, according to secret NYPD documents obtained by the AP.

"There's not a reference here to the fact that New York is the No. 1 target of Islamic terrorists, that the NYPD and the FBI have protected New York," King said, referring to one of the recent brochures about detecting police informants.

King, chairman of the House Homeland Security Committee, has held a series of hearings about the threat of radicalization within American Muslim communities and the level of cooperation members of the community provide to law enforcement. Muslim and civil rights advocacy groups have decried the hearings and pointed to terror cases around the country in which members of the Muslim community helped law enforcement foil plots.

New York Muslim community groups say they've held dozens of meetings for people who are worried about police surveillance and the NYPD's counterterrorism programs. In one instance, an audience of college students watched as a law student played out the role of a police informant and another played the role of the person the informant was targeting. The goal was to teach people to spot informants.

"Stay away from these people. That's one of the most powerful things you can do," said Robin Gordon-Leavitt, a member of an advocacy organization Creating Law Enforcement Accountability and Responsibility.

At another meeting, organized by the Council on American-Islamic Relations, students watched a film of two actors portraying FBI agents talking their way into a young Muslim's home and interrogating him. At the meeting, students were warned not to speak with police even if their parents, imams or Muslim clerics urge them to cooperate.

"You'll even hear imams saying, `As long as I obey the law, I have nothing to worry about.' But that's not how it plays out on the ground," said Cyrus McGoldrick, CAIR New York's civil rights manager.

CAIR has had a strained relationship with law enforcement and was named an unindicted co-conspirator in a terrorist financing case.

The Muslim community wants an independent commission to investigate all NYPD and CIA operations in the Muslim community.

___

Sullivan reported from Washington. Associated Press writers Matt Apuzzo and Adam Goldman contributed to this report from Washington.


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Europe could be in worst hour since WWII: Merkel (Reuters)

LEIPZIG, Germany (Reuters) – German Chancellor Angela Merkel said on Monday that Europe could be living through its toughest hour since World War Two as new leaders in Italy and Greece rushed to form governments and limit the damage from the euro zone debt crisis.

A rally on financial markets sparked by the appointment of respected European technocrats in Rome and Athens soon stalled. Analysts warned that daunting obstacles could hinder decisive action needed to breathe new life into their ailing economies.

Italy had to pay a euro-lifetime record yield of 6.3 percent to sell five-year bonds with investors wary of buying its debt until prime minister-designate Mario Monti can undertake profound economic reforms.

In a first sign of trouble for new Greek Prime Minister Lucas Papademos, the leader of the main conservative party rejected any toughening of austerity and refused to sign a letter sought by European authorities pledging support for a new 130 billion euro bailout.

Merkel dramatized the situation facing the euro zone in an attempt to rally her conservative party behind the government at a congress in Leipzig.

"Europe is in one of its toughest, perhaps the toughest hour since World War Two," she told her Christian Democrats (CDU), saying she feared Europe would fail if the euro failed and vowing to do anything to stop this from happening.

In a one-hour address, Merkel called for closer European political union but offered no new ideas for resolving the crisis that has forced bailouts of Greece, Ireland and Portugal, raising fears about the survival of the 17-state currency zone.

European Union governments have until a summit on December 9 to come up with the outlines of a much bolder and more convincing strategy, with some form of massive, visible financial backing.

Prospects are uncertain as the German government, the Bundesbank and hardliners in the European Central Bank have blocked key policy options. These include issuing common euro zone bonds, mutualising the euro zone's debt stock, letting the ECB create money to fight the crisis, or act as a lender of last resort, directly or via the euro zone rescue fund.

HIGH DRAMA IN ROME

In weekend drama, Italy's president asked Monti, a former European commissioner, to form a government to reverse a disastrous collapse of market confidence in an economy whose debt burden is too big for the euro bloc to bail out.

Italians sang, danced and drank champagne in the streets to celebrate the resignation of scandal-plagued billionaire Silvio Berlusconi, and an impromptu orchestra near the presidential palace played the Hallelujah chorus from Handel's Messiah.

The ECB has been buying troubled euro zone governments' bonds episodically to try to stabilize markets. But figures released on Monday showed it halved its weekly bond buy at the height of the Italian government crisis last week, suggesting it was no longer willing to help Berlusconi.

After a tumultuous week, when Italy's borrowing costs rose to the kind of levels that saw Ireland and Greece forced to seek international bailouts, initial market reaction was positive on Monday, with both stocks and bond markets lifted.

But in a sign of the fragile state of confidence, the trend was reversed after the Italian bond auction, and the release of figures showing industrial production slumped by 2 percent in the euro zone in September, raising the specter of recession.

"(Monti) is perceived to be a positive change for the country," said Annalisa Piazza, rate strategist at Newedge.

"Cautiousness on the future developments in Italy is fully justified. Credibility has been lost and it will take a while for market participants to believe that the country is back on the right track."

Monti held talks with political parties on Monday before separate meetings with trade unions and employers on Tuesday, as he moves to appoint what is expected to be a relatively small cabinet made up of experts from outside parliament.

He went to work after a frenetic weekend in which Italy's parliament approved a package of economic reforms agreed with European leaders, clearing the way for Berlusconi to resign.

"Monti spoke about a significant program with many sacrifices," Francesco Nucara, a lawmaker from one of the myriad tiny parliamentary groups involved in the talks, said after meeting the prime minister designate.

"IT DOESN'T END HERE"

But some were skeptical about the strategy to reverse the collapse of market confidence in Italy.

"It doesn't end here" read a headline in Libero, a fiercely pro-Berlusconi daily which said that "the Left and its newspapers may have uncorked the champagne too early".

While Italy's problems and the long-drawn-out departure of Berlusconi have pushed the collapse of the much smaller Greek economy backstage, IMF and European leaders will keep Papademos under pressure to implement radical reforms.

Papademos succeeded George Papandreou, whose proposal to hold a referendum on the bailout terms prompted EU leaders to raise the threat of a Greek exit from the currency bloc.

The new premier, who oversaw Greece's entry to the euro zone in 2002, must win a confidence vote on Wednesday before meeting euro zone finance ministers in Brussels on Thursday.

The Herculean task facing Papademos was illustrated on Monday when New Democracy leader Antonis Samaras said he would not vote for new austerity measures, adding that the policy mix of spending cuts and tax rises agreed with international lenders should be changed in favor of economic growth.

"I agree with the goals to cut government spending ... to reduce debt, to erase the deficit, to make structural changes. I do not agree with whatever stunts growth," he told party MPs.

Inspectors for Greece's international lenders, known as the troika, were due to meet the new administration of Papademos following Wednesday's confidence ballot but uncertainty surfaced over whether they would indeed come.

DISRUPTIVE DEMONSTRATIONS

Most Greeks hailed Papademos's appointment, but thousands of people angry at more than a year of austerity are expected to rally on Thursday, the anniversary of a 1973 student uprising that helped to bring down a 1967-1974 military junta.

That could complicate talks between the troika and the new cabinet, as the demonstration is expected to shut down central Athens and could be the biggest rally in months of protests that have at times erupted into bloody clashes.

"They may come at the end of the week but nothing is fixed," Carlos Martin Ruiz de Gordejuela, spokesman for the European Commission's mission in Greece, said of the troika team, which had been expected to arrive early in the week.

Monday's euro zone industrial production figures pointed to a sharp contraction toward the end of the year and the risk of a double-dip recession.

The slide in output at factories in the 17 nations sharing the single currency was the biggest fall since February 2009 -- when the economy was reeling from the worst financial crisis since the 1930s.

"It clearly doesn't bode well for the future," said Francois Cabau, an economist at Barclays Capital. "If we don't see some resolution of the euro zone sovereign debt crisis, business confidence could go even lower."

(Additional reporting by Philip Pullella and James Mackenzie in Rome, Ben Harding and Harry Papachristou in Athens, Eva Kuehnen in Frankfurt, Alexandra Hudson in Berlin and Robin Emmott in Brussels, writing by Peter Millership; Editing by Paul Taylor)


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Supreme Court will hear health care case this term (AP)

By JESSE J. HOLLAND and MARK SHERMAN, Associated Press Jesse J. Holland And Mark Sherman, Associated Press – 44?mins?ago

WASHINGTON – The Supreme Court said Monday it will hear arguments next March over President Barack Obama's health care overhaul — a case that could shake the political landscape as voters are deciding if Obama deserves another term.

This decision to hear arguments in the spring sets up an election-year showdown over the White House's main domestic policy achievement. And it allows plenty of time for a decision in late June, just over four months before Election Day.

The justices announced they will hear an extraordinary five-and-a-half hours of arguments from lawyers on the constitutionality of a provision at the heart of the law and three other related questions about the act. The central provision in question is the requirement that individuals buy health insurance starting in 2014 or pay a penalty.

In the modern era, the last time the court allotted anywhere near this much time for arguments was in 2003 for consideration of the McCain-Feingold campaign finance reform. That case consumed four hours of argument. This argument may spread over two days, as the justices rarely hear more than two or three hours a day.

The 2010 health care overhaul law aims to extend insurance coverage to more than 30 million Americans, through an expansion of Medicaid, the requirement that individuals buy health insurance starting in 2014 or pay a penalty and other measures. The court's ruling could decide the law's fate, but the justices left themselves an opening to defer a decision if they choose, by requesting arguments on one lower court's ruling that a decision must wait until 2015, when one of the law's many deferred provisions takes effect.

A White House spokesman said, "We are pleased that the court has agreed to hear this case."

"We know the Affordable Care Act is constitutional and are confident the Supreme Court will agree," communications direct Dan Pfeiffer said in a statement.

Senate Republican Leader Mitch McConnell of Kentucky called the law an "unprecedented and unconstitutional expansion of the federal government into the daily lives of every American."

"In both public surveys and at the ballot box, Americans have rejected the law's mandate that they must buy government-approved health insurance, and I hope the Supreme Court will do the same," McConnell said.

Republicans have called the Patient Protection and Affordable Care Act unconstitutional since before Obama signed it into law in March 2010. But only one of the four federal appeals courts that have considered the health care overhaul has struck down even a part of the law.

The federal appeals court in Atlanta said Congress exceeded its power under the Constitution when it adopted the mandate. The federal appeals court in Cincinnati upheld the entire law, as did appellate judges in Washington, DC, in recent days.

The case could become the high court's most significant and political ruling since its 5-4 decision in the Bush v. Gore case nearly 11 years ago effectively sealed George W. Bush's 2000 presidential election victory.

In addition to deciding whether the law's central mandate is constitutional, the justices will also determine whether the rest of the law can take effect even if that central mandate is held unconstitutional. The law's opponents say the whole thing should fall if the individual mandate falls.

The administration counters that most of the law still could function, but says that requirements that insurers cover anyone and not set higher rates for people with pre-existing conditions are inextricably linked with the mandate and shouldn't remain in place without it.

The court also will look at the expansion of the joint federal-state Medicaid program that provides health care to poorer Americans, even though no lower court called that provision into question. Florida and the 25 other states say the law goes too far in coercing them into participating by threatening a cutoff of federal money. The states contend that the vast expansion of the joint federal-state Medicaid program and the requirement that employers offer health insurance violate the Constitution. No appeals court has agreed.

"The court recognized the seriousness of these vitally important constitutional challenges by allocating an extraordinary amount of time for oral argument," Florida Attorney General Pam Bondi said.

Lastly, the justices will consider whether arguments over the law's validity are premature because a federal law generally prohibits challenges to taxes until the taxes are paid. The federal appeals court in Richmond, Va., ruled earlier this year reasoned that the penalty for not purchasing insurance will not be paid before federal income tax returns are due in April 2015, therefore it was too early for a court to make a ruling on the law.

The administration agreed to seek prompt Supreme Court review of the health care overhaul, though it had options for trying to delay the court's consideration of the law until after the election. The Justice Department passed up the chance to ask the appeals court in Atlanta to reconsider its decision. It is common for the Justice Department to seek review by the full appeals court when a three-judge panel rules against the government.

Early on, at the district court level, rulings followed political affiliation. Judges appointed by Democratic presidents upheld the law, while Republican appointees struck it down.

But party lines blurred at three federal appeals courts. In Atlanta, Judge Frank Hull, a Clinton appointee, joined with a Republican colleague in striking down the mandate. In Cincinnati, Judge Jeffrey Sutton, a Bush appointee, was the deciding vote in upholding the law. And in the District of Columbia, Senior Judge Laurence Silberman, named to the bench by President Ronald Reagan, and Senior Judge Harry Edwards, a Carter appointee, voted together to uphold the law.

Legal experts have offered a range of opinions about what the high court might do. Many prominent Supreme Court lawyers believe that the law will be upheld by a lopsided vote, with Republican and Democratic appointees ruling in its favor. Still others predict a close outcome, with Justice Anthony Kennedy, a Republican who sometimes joins his four Democratic colleagues, holding the deciding vote.

Six separate appeals have been filed with the high court. Three come from the Atlanta court, where the administration, the states and the National Federation of Independent Business appealed different aspects of the court ruling. From Richmond, Liberty University and Virginia appealed decisions turning back their challenges to the law. The Thomas More Law Center of Ann Arbor, Mich., appealed a ruling by the Cincinnati-based court upholding the law.

Ultimately, the court chose the Atlanta court's ruling as the primary case to review. That decision means that the highly regarded former Bush administration solicitor general, Paul Clement, is likely to argue on behalf of the challengers. The current Solicitor General, Donald Verrilli Jr., is expected to defend the law before the justices.

Two justices, conservative Clarence Thomas and liberal Elena Kagan, who had been asked by advocacy groups to withdraw from the case, are going to take part in it. The court's practice is for justices who are staying out of a case to say so when the case is accepted and no one has announced a recusal. Thomas's wife, Virginia, has worked for a group that has advocated against the health care overhaul, and Kagan served as solicitor general in the Obama administration when the law was being formulated.


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Buffett sheds tech aversion with big IBM investment (Reuters)

(Reuters) – Warren Buffett has always made his distaste for technology investments clear, but on Monday he changed his ways in spectacular fashion.

The Berkshire Hathaway chief executive said he has bought nearly $11 billion of International Business Machines Corp stock in the last eight months, building a roughly 5.5 percent stake that potentially makes him the largest shareholder in the company.

It was a surprise reversal for Buffett, who has always said he would not invest in technology because he largely did not understand it. But in an interview on cable television network CNBC, Buffett said he was struck by IBM's ability to retain corporate clients, which made it indispensable in a way that few other services are.

"It's a company that helps IT departments do their job better. It is a big deal for a big company to change auditors, change law firms" or to switch to a new technology vendor, Buffett said.

"I don't know of any large company that really has been as specific on what they intend to do and how they intend to do it as IBM," said Buffett, who teased CNBC's anchors for a few minutes with a guessing game about what the major investment was before unveiling the IBM news.

IBM shares, which have a market value of about $220 billion, were up 0.2 percent to $187.79 in afternoon trading. Earlier they hit $189.84, nearing the all-time high of $190.53 that the stock touched in mid-October.

Buffett, known as one of the best value investors of all time, appeared to have come to IBM late in the game -- a year ago the stock was a third lower than it is now. Buffett himself said he should have paid more attention to IBM five years ago.

Yet technology analysts said he had still gotten a good deal.

"Maybe he could have gotten a better price ... but if you look at Warren Buffett's investment policy I would assume this is a long term investment," said Collins Stewart analyst Louis Miscioscia. "This is not your father's IBM; the management has done a good job of cost control, returning cash to shareholders."

CHANGE OF PLANS

Though it seems like a contrarian move, one long-time Berkshire investor speculated that Buffett was buying IBM for its services business rather than its technology platform.

"It's going to be one of the four or five 'generals' in the portfolio," said Steve Check, chief investment officer of Check Capital Management, a California firm.

Another long-standing Berkshire shareholder said the investment was also a global play.

"More confirm(ation) that he sees international as more important," said Michael Yoshikami, chief executive of wealth manager YCMNET Advisers, which manages about $1 billion and holds Berkshire shares.

The investment fits with Buffett's desire to make big bets. Earlier this year, in his annual letter to investors, he joked about having a loaded elephant gun ready to make big deals.

He has followed through on that, buying chemicals company Lubrizol, investing $5 billion in Bank of America Corp and taking the IBM position.

Though Berkshire started buying IBM shares in March, Buffett's comments suggested the firm did not cross reporting thresholds on the investment until the third quarter, which let him keep the stake secret until Monday.

Buffett has also previously asked for, and received, the right to keep some investments temporarily confidential on the grounds that, given his notoriety, if his trades were to be known, masses of investors might try to pile in as well.

The IBM stake was so confidential, in fact, that the company had no idea Buffett was investing in it until he disclosed that he had bought 64 million shares on TV on Monday. An IBM spokesman declined to comment.

According to Thomson Reuters data, Buffett's 5.5 percent position in IBM would tie him with State Street Corpinvestment management affiliate State Street Global Advisors for the largest stake in the company.

During the third quarter, IBM shares traded in a range of $157.14 to $185.61, suggesting that no matter when Buffett bought, he is still up on his investment at least $160 million.

The median analyst price target for the stock is $200, with 14 of 28 analysts rating it a "strong buy" or "buy" and the rest rating it a "hold," according to Thomson Reuters data.

NOT BUYING EUROPE

One thing Buffett is not buying is European banks.

Buffett comes up whenever there is talk of a large European bank needing to raise capital, particularly in the current environment of writedowns on sovereign debt.

But he told CNBC that he would need to understand European banks better before investing, and that he has not yet seen an investment opportunity there in which he wants to take part.

The "Oracle of Omaha" and Berkshire Hathaway chief executive said he expects Europe's economy to show improvement 10 years from now, but getting there will be difficult.

In a three-hour interview, Buffett also disclosed that he was interviewed by the U.S. Securities and Exchange Commission in June about David Sokol, his former heir apparent who left Berkshire amid scandal earlier this year.

Sokol left the company after it emerged he had bought shares in Lubrizol while trying to convince Buffett to acquire it.

Buffett said he had an informal interview with the SEC, which was not a deposition and was not transcribed by a court reporter. He told CNBC the SEC had questions it wanted answered, and he and Berkshire were cooperating.

The Sokol episode turned into a major scandal for Berkshire earlier this year, with Buffett conceding at the company's annual meeting that he had handled the matter poorly.

(Reporting by Ben Berkowitz in New York, additional reporting by Nicola Leske in New York and Jim Finkle in Boston; Editing by Tiffany Wu and Gerald E. McCormick)


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2011/11/14

House GOP leader says deficit deal likely (AP)

WASHINGTON – The No. 2 Republican in the House says he's still confident that a bipartisan deficit "supercommittee" will be able to reach agreement even though there's little more than a week to go before its deadline.

Majority Leader Eric Cantor said he knows the panel is under great pressure but he believes its members can succeed by Nov. 23.

The panel is charged with coming up with at least $1.2 trillion worth of deficit cuts over the coming decade but has been deadlocked over taxes and cuts to benefit programs. Failure would trigger automatic spending cuts to the Pentagon budget and a wide range of domestic programs.

The Virginia Republican declined to otherwise comment on the committee's work, including last week's GOP proposal for revenue hikes.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

Despite prodding from President Barack Obama, members of Congress' supercommittee concede no deal is in sight to meet their goal of $1.2 trillion or more in deficit savings over the next decade.

Instead, with only 10 days remaining until a Nov. 23 deadline, the panel is divided along partisan lines and Rep. James Clyburn, D-S.C., said Sunday the six committee members of his own party "have not coalesced around a plan."

Despite the difficulties, Clyburn and Republicans on the deficit panel all said they haven't given up hope of a deal by the deadline.

"But if this was easy, the president of the United States and the speaker of the House would have gotten it done themselves," said Rep Jeb Hensarling of Texas, the Republican chairman of the committee.

Obama mentioned his own unsuccessful negotiations with Speaker John Boehner in passing at a news conference in Hawaii on Sunday where he urged the members of the committee to show more flexibility. "It feels as if people continue to try to stick with their rigid positions rather than solve the problem," he said.

"There's no magic formula. There are no magic beans that you can toss on the ground and suddenly a bunch of money grows on trees," Obama added. "We got to just go ahead and do the responsible thing."

Despite some concessions, the two sides remain divided over the same basic issues that thwarted earlier deficit reduction efforts — finding a mutually agreeable blend of tax increases and cuts in the largest government benefit programs.

Democrats on the supercommittee say they are willing to make significant reductions in programs such as Social Security, Medicare and Medicaid only after Republicans agree to higher tax revenue, including a larger bite out of the income of the wealthy.

Republicans say that the soaring deficits result from too much spending, and not from a shortage of revenue to the Treasury, and tax increases would crimp efforts to create jobs.

In an offer they said marked a significant concession, GOP members on the panel offered last week to raise taxes by $250 billion over a decade as part of an overhaul of the tax code that simultaneously would cut the top rate from 35 percent to 28 percent.

Democrats swiftly rejected that as a tax cut for the wealthy in disguise, and separately jettisoned an earlier proposal that would have slowed the growth in cost of living increases under Social Security.

There has been little, if any, indication of progress in the talks since then.

But Hensarling seemed to suggest in an interview Sunday that the two parties could find a way around the fast-approaching Thanksgiving deadline by coming to a general understanding with respect to raising new revenue, without actually having to agree on a process or specific remedy.

"There could be a two-step process that would hopefully give us pro-growth tax reform, which by the way, every other bipartisan effort that has said that some revenues have to be raised in this method," he told CNN in an interview. "That is again broaden the base, historically this is how we both produce jobs and more revenues for the government."

For the most part, however, officials in both parties seem to be positioning themselves publicly for political advantage in case the talks falter.

Hensarling said the panel has a goal of cutting deficits by $1.2 trillion, but added it also has a duty.

"The duty is to put forth legislation that actually addresses long-term structural debt. Now the president himself has said that the drivers of our debt are Medicare, Medicaid and health care. Nothing else comes close," he said, adding that Republicans have done that.

But Obama described the situation differently at a news conference after wrapping up an economic summit with leaders of Pacific-region nations.

"If we've got to raise money, it makes sense for us to start by asking the wealthiest among us to pay a little bit more before we start asking seniors, for example, to pay a lot more for their Medicare," he said.

Nor do the two sides agree about a fallback plan already in place to make sure deficits are reduced even if the panel fails to reach an agreement.

Obama said twice over the weekend Congress shouldn't count on being able to change the automatic spending cuts that would take effect beginning on Jan. 1, 2013.

About $450 billion in cuts would come from defense and the same amount from domestic accounts, with savings on interest payments making up the balance of a $1.2 trillion total.

Republicans, joined by Defense Secretary Leon Panetta, say the Pentagon couldn't sustain reductions of that magnitude, and Sen. Pat Toomey, R-Pa., said there would be a "lively debate" in Congress on changing which programs the cuts would affect.

Clyburn and Toomey appeared on Fox. Hensarling was interviewed on CNN.

_____

AP reporter Erica Werner in Hawaii contributed to this story.


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Press probe says more papers may have phone-hacked (Reuters)

LONDON (Reuters) – Other tabloids besides Rupert Murdoch's News of the World may have hacked phones, a London court heard on Monday as it began an investigation into newspaper practices that could lead to tougher regulation of the entire UK press.

The Leveson inquiry, expected to take about a year, was set up by Prime Minister David Cameron after it was revealed in July that the News of the World ordered hacking of the voicemail of missing schoolgirl Milly Dowler, who was later found murdered.

"The inquiry is beginning to receive evidence to indicate that phone hacking was not limited to that organization," said Robert Jay, counsel to the inquiry.

He said Glenn Mulcaire, who was jailed for phone-hacking in 2007 along with the News of the World's royal reporter Clive Goodman, had written the words "Daily Mirror" and "The Sun" in his notebooks, referring to other tabloids.

Jay said the names of 27 other News of the World reporters besides that of Goodman, long scapegoated by News Corp's British newspaper arm as a lone "rogue" reporter, had been found in Mulcaire's notebooks.

As police work through a list of 5,800 potential hacking victims, including actor Hugh Grant, Harry Potter author J.K. Rowling and ex-soccer star Paul Gascoigne, the scale of the scandal at and beyond the News of the World is still unclear.

News Corp executive James Murdoch, son of Chief Executive Rupert Murdoch and executive chairman of the group's British newspaper arm, is meantime fighting for his credibility as heir to the media empire.

James Murdoch has testified twice to a British parliamentary committee that he knew nothing of the scale of phone-hacking at the once best-selling tabloid, which he closed down in July in an attempt to limit the damage.

Neville Thurlbeck, a former chief correspondent at the tabloid whose name appears in a key piece of evidence, told Reuters on Monday he believed Murdoch had indeed been kept in the dark.

CHILLING

Murdoch's claims to have cleaned up the newspaper's culture, however, have been undermined by the News of the World's recent admission that it ordered surveillance of figures including lawyers representing hacking victims as early as this year.

Last week, Murdoch apologized to members of the parliamentary committee for the fact that the News of the World had monitored their activities.

Louise Mensch, a member of the committee, asked on Monday: "What possible public interest could there be in that? It is chilling, it's terrifying. It sort of says: 'Don't mess with us because we'll come to get you.'

"If it is true, I want to know who did the authorization, when, and on what basis, and I certainly want to see any reports that were compiled about myself and my colleagues," the Conservative member of parliament told Sky News.

Labour MP Tom Watson, the most aggressive member of the committee, pulled out of an industry event on Monday to discuss what he described as fresh evidence that News Corp spied on his colleagues.

"Under the circumstances, I have to spend the day seeking advice from the Speaker (of parliament) and discussing the matter with fellow members of the DCMS Select Committee as to our legal and constitutional position," he said.

Jay said none of the instances of phone-hacking that had so far come to light, which include eavesdropping on crime victims and relatives of war dead, came close to being justified on public-interest grounds.

"What can be justified in the public interest and how can it be justified lies at the very epicenter of this inquiry," Jay said in his opening statement.

He cited the Guardian's dogged reporting on the phone-hacking scandal, the Telegraph's exposure of members of parliament fiddling expense claims, and the Sunday Times's 1960s campaign for compensation for thalidomide victims as instances in which underhand reporting methods had been justified.

But he said the press too often went on "fishing expeditions" without any idea of what they would find, fuelling a view of the press as ruthless, unscrupulous and willing to do anything to boost circulation.

Britain's press is currently self-regulated by the Press Complaints Commission, a voluntary body with little funding and no legal powers.

Its chairperson at the time of the hacking fallout, Peta Buscombe, announced after the Milly Dowler revelations that she would step down.

The PCC is not expected to survive in its current form, and the conclusions of the Leveson Inquiry, being held at London's Royal Courts of Justice, will be important in deciding what should replace it.

"The press provides an essential check on all aspects of public life. That is why any failure in the media affects all of us," Judge Brian Leveson, who is in charge of the inquiry, said in his opening statement.

"At the heart of this inquiry therefore may be one simple question: Who guards the guardians?"

(Additional reporting by Kate Holton; Editing by Andrew Heavens)


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