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

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

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

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

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

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

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

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

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

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

BEWARE OF THE WITCH

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

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

RETHINKING APPLE

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

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

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

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

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

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

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U.S., rebels urge gloomy Moscow to help oust Assad

BEIRUT (Reuters) - Syria's rebel leadership and the United States seized on Russian pessimism over President Bashar al-Assad's future to urge Moscow to help push its ally into ceding power and end the battles closing in around his capital.

"We want to commend the Russian government for finally waking up to the reality and acknowledging that the regime's days are numbered," the U.S. State Department spokeswoman said after a senior Kremlin envoy conceded publicly on Thursday that Assad's opponents could win the 20-month-old civil war.

"The question now is, will the Russian government join those of us in the international community who are working with the opposition to try to have a smooth democratic transition?" U.S. spokeswoman Victoria Nuland added in Washington.

In Marrakech, where his new coalition won recognition from other international powers as the legitimate leadership of Syria, rebel political leader Mouaz al-Khatib said he believed Russia, ally and arms supplier to the Assad dynasty since Soviet times, was looking for ways out of its support for a lost cause.

"I believe that the Russians have woken up and are sensing that they have implicated themselves with this regime, but they don't know how to get out," al-Khatib told Reuters. He held them "particularly responsible" for helping Assad with arms but said Moscow need not "lose everything" in Syria if it changed tack.

Under President Vladimir Putin, wary since last year's Libyan war of what Russia sees as a Western drive to use the United Nations to overthrow national leaders it dislikes, Russia has blocked U.N. efforts to squeeze Assad, who has also had strong support from his long-time sponsor Iran.

But Mikhail Bogdanov, a deputy foreign minister and the Kremlin's special envoy for Middle East affairs, was quoted as saying in Moscow: "One must look the facts in the face."

"Unfortunately, the victory of the Syrian opposition cannot be ruled out." The Syrian government, he said, was "losing control of more and more territory" and Moscow was preparing to evacuate Russian citizens if necessary.

Nuland said Bogdanov's comments demonstrated that Moscow now "sees the writing on the wall" on Syria and said Russia should now rally behind U.N. efforts to prevent a wider bloodbath.

"They can withdraw any residual support for the Assad regime, whether it is material support (or) financial support," she said. "They can also help us to identify people who might be willing, inside of Syria, to work on a transitional structure."

DIPLOMACY

International envoy Lakhdar Brahimi, who has met Russian and U.S. officials twice in the past week, is seeking a solution based on an agreement reached in Geneva in June that called for the creation of a transitional government in Syria.

But Russia has repeated warnings that recognition of al-Khatib's coalition, notably by the United States, is undermining diplomacy, and rejected U.S. contentions that the Geneva agreement sent a clear message that Assad should step down.

Nuland said the Brahimi meetings could lay the framework for a political structure to follow Assad:

"We've said all along to the Russians that we are concerned that the longer that this goes on, and the longer it takes us to get to an alternative political path for Syria, the only path is going to be the military one and that is just going to bring more violence.

"We all ought to be working together."

Bogdanov, whose government has suggested that Assad himself should be allowed to see through a transition he has promised, suggested the rebels and their allies were set on a military solution and he gave little hint of detente with Washington.

"The fighting will become even more intense and (Syria) will lose tens of thousands and, perhaps, hundreds of thousands of civilians," Bogdanov was quoted as saying. "If such a price for the removal of the president seems acceptable to you, what can we do? We, of course, consider it absolutely unacceptable."

The head of NATO, Anders Fogh Rasmussen, said elsewhere: "I think the regime in Damascus is approaching collapse."

A U.S. official said: "Assad probably still believes that Syria is his and illusions can die hard. But Assad and those closest to him have got to be feeling the psychological strain of fighting a long war that is not going their way."

DAMASCUS BATTLES

But Al-Khatib, who played down Western concerns of sectarian Sunni Islamists in rebel ranks, warned that the fighting was far from over, even as it has begun to rattle the heart of Assad's power in Damascus. On Wednesday, a car bomb killed at least 16 people in a nearby town which is home to many military families.

"The noose is tightening around the regime," al-Khatib said.

"(But) the regime still has power. People think that the regime is finished, but it still has power left, but it is demoralized and however long it lasted its end is clear."

Day and night, Damascenes can hear the thunderous sound of bombardment aimed at rebel-held and contested neighborhoods.

The city's streets have now turned into a labyrinth of checkpoints and road blocks, with several major roads permanently closed off to traffic by concrete barriers.

"We escape from one place and trouble follows," said one grandmother, Um Hassan, as she described to Reuters her family's flight from one neighborhood to another as fighting seeps into the capital. "I don't know where we can keep running to."

Nonetheless, al-Khatib played down demands for their allies to provide heavier weaponry - a request long resisted by governments wary of anti-aircraft missiles and other hardware reaching Islamist rebels who might turn them against the West.

"The Syrian people ... no longer need international forces to protect them," he said, not specifying whether he meant a no-fly zone, arms supplies or other military support.

The opposition chief said he was willing to listen to proposals for Assad to escape with his life - "The best thing is that he steps down and stops drinking the blood of the Syrian people" - and outlined three scenarios for a change of power:

Al-Khatib ruled out the Russian proposal suggesting Assad hand over power to a transitional government while remaining president, saying it was "disgraceful for a slaughtered nation to accept to have a killer and criminal at its head".

The British-based Syrian Observatory said war planes bombed rebel-held eastern suburbs of Damascus on Thursday and artillery was hitting Daraya and Moadamiyeh, southwestern areas near the centre where rebels have been fighting for a foothold.

Syria has relied on war planes and helicopters to bombard rebel districts but Damascus denied accusations by U.S. and NATO officials that it had fired Scud missiles in recent days. The foreign ministry said the long-range missiles were not used against "terrorist groups," a term it uses for the rebels.

At least 40,000 people have been killed in Syria's uprising, which started in March 2011 with street protests which were met with gunfire by Assad's security forces, and which spiraled into the most enduring and destructive of the Arab revolts.

(Additional reporting by Steve Gutterman in Moscow and Andrew Quinn in Washington; Writing by Alastair Macdonald; Editing by Michael Roddy) For an interactive look at the uprising in Syria, please click on http://link.reuters.com/rut37s

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Xbox 720 and PlayStation 4 might not launch until 2014

Nintendo (NTDOY) says its kickstarted the next generation of video game consoles with the Wii U. But considering its graphics and processing power are comparable to Microsoft’s (MSFT) Xbox 360 and Sony’s (SNE) PlayStation 3, hardcore gamers are holding out for the next Xbox, tentatively dubbed “Xbox 720,” and next-generation PlayStation, tentatively called PS4. Rumors insist Microsoft and Sony will both launch their next consoles in the fall of 2013, but SemiAccurate, the website that first reported the next Xbox could see a delay, says there is a bit of confusion over how the consoles are progressing and when they’ll arrive.

According to SemiAccurate, the next Xbox is currently code-named “Kryptos” and not “Durango” anymore, and the next PlayStation is now code-named “Thebes” rather than “Orbis.” The PS4 will reportedly have a 28-nanometer AMD chipset and will be produced by IBM or Global Foundries.

SemiAccurate says the PS4 could be released in spring of 2014 or fall 2014 and the Xbox 720 could still see the delay from fall 2013 to 2014.

Xbox World claimed last month that the next Xbox will have a Blu-ray disc drive, Kinect 2.0, directional audio, TV output and input, an “innovative controller” and support for augmented reality glasses – all packaged in a magnesium alloy shell that will supposedly use the same patented “VaporMg” process found on the Surface tablet.

Not only that, but Microsoft is also working on an “Xbox Lite,” according to reports from earlier this year.

As for PS4 details, VG247 reported in November that Sony has already sent out various developer kits with specs including 16GB of RAM and 256GB of storage.

Sony and Microsoft are expected to reveal their next consoles at E3 2013 this coming June.

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Gaming News Headlines – Yahoo! News

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Dozens Reported Dead in Connecticut Elementary School Shooting

Breaking News

By Stephen M. Silverman

UPDATED
12/14/2012 at 01:55 PM EST

• Originally published 12/14/2012 at 01:00 PM EST

State police personnel lead children from the Sandy Hook Elementary School

Shannon Hicks/Newtown Bee/Reuters/Landov

A massive, deadly shooting broke out Friday morning at the Sandy Hook Elementary School in Newtown, Conn., about 65 miles northeast of New York City.

A federal official tells PEOPLE that 26 people were killed, including 18 children.

"The shooter is deceased inside the building. The scene is secure," Lt. J. Paul Vance of the Connecticut State Police deparatment said in a press conference Friday afternoon. "Many agencies are working together to answer questions about what happened ... the public is not in danger."

CNN reports that one alleged shooter's body was discovered in a classroom, though it is not known if he died by his own hand, by police, or some other means.

According to the Associated Press, the gunman is a 20-year-old man with ties to the school. An official said the gun used in the attacks was a .223-caliber rifle.

Early reports that there was a second gunman remain unconfirmed. Car-to-car searches in the area are taking place, reports ABC News.

The tragedy began just after 9:40 a.m., when police reported that a shooter was in the main office of Sandy Hook Elementary School. One person in a room suffered "numerous gunshot wounds," police told the Hartford Courant.

A photo taken on the scene shows distressed students as they were led away from the school by state police. Nearby Danbury Hospital, which is receiving victims of the shooting, is on lockdown, according to its Facebook page.

"Out of abundance of caution and not because of any direct threat Danbury Hospital is under lockdown," says the statement. "This allows us simply to focus on the important work at hand."

A young girl after being evacuated from Sandy Hook Elementary School

Michelle McLoughlin / Reuters / Landov

FBI agents, SWAT teams and ambulances are on the scene, according to state emergency management officials.

Also under lockdown are all of the area's schools. Newtown Public School District secretary of superintendent Kathy June said in a statement, "The district is taking preventive measures by putting all schools in lockdown until we ensure the safety of all students and staff."

Some reports are calling this the worst school massacre in American history. At Colorado's Columbine High School in 1999, 15 were killed, including the two shooters. The 2007 Virginia Tech massacre claimed 32 victims.

Sandy Hook Elementary School in Newtown, Conn.

Google / AP

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APNewsBreak: Texas cancer probe draws NCI scrutiny

AUSTIN, Texas (AP) — The National Cancer Institute confirmed Friday that federal officials are taking a closer look at a troubled $3 billion cancer-fighting effort in Texas that is under a criminal investigation over a lucrative taxpayer-funded grant awarded by the state agency.

The Cancer Prevention and Research Institute of Texas has coveted status as an NCI-approved funding entity — an exclusive group headlined by the nation's most prominent cancer organizations. The list is fewer than two dozen and includes the American Cancer Society, Susan G. Komen for the Cure and federal entities like the Center for Disease Control and Prevention.

The designation is a federal seal-of-approval that signals high peer review standards and conflict of interest policies. Yearlong turmoil within the Texas institute, or CPRIT, reached a new peak this week when the agency's beleaguered chief executive asked to resign and prosecutors opened cases following an $11 million grant to a private company that was revealed to have bypassed an independent review.

NCI spokeswoman Aleea Farrakh Khan told The Associated Press that officials are "evaluating recent events" at CPRIT. She said officials have not made decisions or contacted the agency directly.

Members of CPRIT's governing board did not immediately return an email seeking comment.

NCI designation is not required for CPRIT to continue running the nation's second-largest pot of cancer research dollars, Khan said. But jeopardizing that status — and especially losing it — would be a severe blow to CPRIT's reputation, which already has been battered by sweeping resignations, internal accusations of politics trumping science and now a criminal investigation.

A recent internal audit at CPRIT discovered an $11 million funding request from Dallas-based Peloton Therapeutics was approved without the agency ever scrutinizing the proposal's merits. The revelation came only months after two Nobel laureates and other top scientists left the agency in protest over a $20 million grant some accused of being rushed to approval without a proper peer review.

While CPRIT is funded by taxpayers, donors to cancer nonprofits might look to an NCI designation for assurance that their money is in good hands.

"It says, 'If I'm donating money to this agency, if NCI is approving them, that means NCI says it's handling its money well,'" Khan said.

Khan added that CPRIT's inclusion on the list does not mean all of its funding mechanisms are NCI-approved.

An entire page of CPRIT's website is devoted to boasting its NCI designation. The agency says the status is important because it means cancer centers in Texas seeking its own NCI designation — so as to reassure patients or bolster recruitment — can include CPRIT research dollars in their calculations to maintain levels needed to be NCI approved.

"This enhances Texas' ability to leverage additional federal funding for cancer research and raises Texas' profile as a center for cancer research," according to the website.

Executive Director Bill Gimson submitted his resignation letter Tuesday but offered to stay on through January. He has described Peloton's improper funding as an honest mistake and said no one associated with CPRIT stood to personally profit from the company's award.

Prosecutors have not made any specific criminal allegations. Launching separate investigations into CPRIT are the Texas attorney general's office and the Travis County district attorney's public integrity unit, which investigates criminal misconduct within state government.

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

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Wall Street drops as Apple falls, "cliff" looms

NEW YORK (Reuters) - Stocks fell on Friday, with the Nasdaq weighed down by another drop in shares of Apple, and as the overhang of "fiscal cliff" negotiations kept buying to a premium.

Apple slid 4 percent to $508.75 after UBS cut its price target on the stock to $700 from $780. The most valuable U.S. company has seen its stock hit hard in the last three months, and it fell on Friday after a tepid reception for iPhone 5 in China.

The S&P Information Technology Index <.gspt> dropped 0.9 percent as Apple fell and Jabil Circuit Inc lost 6.2 percent to $17.38 after UBS cut its price target.

The possibility of a "fiscal cliff" deal not taking place until early 2013 is rising. The back-and-forth negotiations over the fiscal cliff in Washington have kept markets on hold in what would already be a quiet period for stocks.

"We're faced with uncertainty ... and that's going to continue now into January. It basically puts everybody on hold, and (you) just have the markets kind of thrash around," said Larry Abruzzi, senior equity trader at Cabrera Capital Markets Inc in Boston.

President Barack Obama and House of Representatives Speaker John Boehner held a "frank" meeting on Thursday at the White House to discuss how to avoid the tax hikes and spending cuts set to kick in early in 2013.

The S&P 500 dropped 0.6 percent on Thursday after six straight positive sessions. Investors are concerned that going over the cliff could tip the economy back into recession. While a deal is expected to ultimately be reached, a drawn-out debate - like the one seen over 2011's debt ceiling - can erode confidence.

"The markets are not being reactionary right now, though we lost ground yesterday," said Stephen Carl, head equity trader at the Williams Capital Group in New York.

"It doesn't look like anything has been resolved, or is leaning one way or another."

Still, expectations of an eventual agreement have helped the S&P 500 bounce back over the last month, and on Wednesday, the index hit its highest intraday level since late October. For the year, the S&P has advanced more than 12 percent.

The Dow Jones industrial average <.dji> slipped 24.09 points, or 0.18 percent, to 13,146.63. The Standard & Poor's 500 Index <.spx> lost 4.81 points, or 0.34 percent, to 1,414.64. The Nasdaq Composite Index <.ixic> fell 15.50 points, or 0.52 percent, to 2,976.66.

Best Buy Co Inc slid 15.5 percent to $11.93 after the electronics retailer agreed to extend the deadline for the company's founder to make a bid. Shares jumped as much as 19 percent on Thursday after initial reports of a bid this week from founder Richard Schulze.

Consumer prices fell in November for the first time in six months, indicating U.S. inflation pressures were muted. A separate report showed manufacturing grew at its swiftest pace in eight months in December.

Data out of China was encouraging, as Chinese manufacturing grew at its fastest pace in 14 months in December. The news was seen as helping U.S. materials companies, including U.S. Steel , which rose 6.3 percent to $23.73.

(Editing by Bernadette Baum and Jan Paschal)

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Russia says Syrian rebels might win

MOSCOW/BEIRUT (Reuters) - Syrian rebels are gaining ground and might win, Russia's Middle East envoy said on Thursday, in the starkest such admission from a major ally of President Bashar al-Assad in 20 months of conflict.

"One must look the facts in the face," Russia's state-run RIA quoted Mikhail Bogdanov as saying. "Unfortunately, the victory of the Syrian opposition cannot be ruled out."

Bogdanov, a deputy foreign minister and the Kremlin's special envoy for Middle East affairs, said the Syrian government was "losing control of more and more territory" and Moscow was preparing to evacuate Russian citizens if necessary.

Syria has relied on war planes and helicopters to bombard rebel districts but Damascus denied accusations by U.S. and NATO officials that it had fired Scud missiles in recent days.

The foreign ministry said the long-range missiles were not used against "terrorist groups," a term it uses for the rebels, who now hold an almost continuous arc of territory from the east to the southwest of Damascus.

The head of NATO said he thought Assad's government was nearing collapse and the new leader of Syria's opposition told Reuters the people of Syria no longer needed international forces to protect them.

"The horrific conditions which the Syrian people endured prompted them to call on the international community for military intervention at various times," said Mouaz al-Khatib, a preacher who heads Syria's National Coalition.

"Now the Syrian people have nothing to lose. They handled their problems by themselves. They no longer need international forces to protect them," he added in the interview on Wednesday night, accusing the international community of slumbering while Syrians were killed.

He did not specify whether by intervention he meant a no-fly zone that rebels have been demanding for month, a ground invasion - which the opposition has warned against - or arms.

He said the opposition would consider any proposal from Assad to surrender power and leave the country, but would not give any assurances until it saw a firm proposal.

In the latest blow to the government, a car bomb killed at least 16 men, women and children in Qatana, a town about 25 km (15 miles) southwest of Damascus where many soldiers live, activists and state media said.

The explosion occurred in a residential area for soldiers in Qatana, which is near several army bases, said Rami Abdelrahman, head of the pro-opposition Syrian Observatory for Human Rights.

He put the death toll as 17, including seven children and two women. State news agency SANA said 16 people had died.

State television showed soldiers walking by a partly collapsed building, with rubble and twisted metal on the road.

The pro-government Al-Ikhbariya TV said a second car bomb in the Damascus suburb of al-Jadideh killed eight, most of them women and children.

Apart from gaining territory in the outskirts of Damascus in recent weeks, rebels have also made hit-and-run attacks or set off bombs within the capital, often targeting state security buildings or areas seen as loyal to Assad, such as Jaramana, where twin bombs killed 34 people in November.

The Pakistani Foreign Office said security concerns had prompted it to withdraw the ambassador and all Pakistani staff from the embassy in the central suburb of East Mezzeh, a couple miles from the Interior Ministry.

BACK TO THE WALL

With his back to the wall, Assad was reported to be turning ever deadlier weapons on his adversaries.

"I think the regime in Damascus is approaching collapse," NATO Secretary-General Anders Fogh Rasmussen said on Thursday.

Human Rights Watch said some populated areas had been hit by incendiary bombs, containing flammable materials such as napalm, thermite or white phosphorous, which can set fire to buildings or cause severe burns and respiratory damage.

The British-based Syrian Observatory said war planes were bombing rebel-held eastern suburbs of Damascus on Thursday and artillery was hitting Daraya and Moadamiyeh, southwestern areas near the centre where rebels have been fighting for a foothold.

At least 40,000 people have been killed in Syria's uprising, which started in March 2011 with street protests which were met with gunfire by Assad's security forces, and which spiraled into the most enduring and destructive of the Arab revolts.

The United States, European powers and Arab states bestowed their official blessing on Syria's newly-formed opposition coalition on Wednesday, despite increasing signs of Western unease at the rise of militant Islamists in the rebel ranks.

Western nations at "Friends of Syria" talks in Marrakech, Morocco rallied around a new opposition National Coalition formed last month under moderate Islamist cleric al-khatib.

Russia, which along with China has blocked any U.N. Security Council measures against Assad, criticized Washington's decision to grant the coalition formal recognition, saying it appeared to have abandoned any effort to reach a political solution.

Bogdanov's remarks were the clearest sign yet that Russia is preparing for the possible defeat of Assad's government.

"We are dealing with issues of preparations for an evacuation. We have mobilization plans and are clarifying where our citizens are located," Bogdanov said.

A British Foreign Office spokesperson said the Russian position remained largely unchanged but the situation on the ground gave Moscow an interest in finding an agreed solution, even if the chances of such a solution remained slim.

"If Russia's position on Syria had been a brick wall, it is now a brick wall with a crack in it," the spokesperson said.

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Selling flak jackets in the cyberwars

SAN FRANCISCO (Reuters) – When the Israeli army and Hamas trade virtual blows in cyberspace, or when hacker groups like Anonymous rise from the digital ether, or when WikiLeaks dumps a trove of classified documents, some see a lawless Internet.

But Matthew Prince, chief executive at CloudFlare, a little-known Internet start-up that serves some of the Web’s most controversial characters, sees a business opportunity.

Founded in 2010, CloudFlare markets itself as an Internet intermediary that shields websites from distributed denial-of-service, or DDoS, attacks, the crude but effective weapon that hackers use to bludgeon websites until they go dark. The 40-person company claims to route up to 5 percent of all Internet traffic through its global network.

Prince calls his company the “Switzerland” of cyberspace – assiduously neutral and open to all comers. But just as companies like Twitter, YouTube and Facebook have faced profound questions about the balance between free speech and openness on the Internet and national security and law enforcement concerns, CloudFlare‘s business has posed another thorny question: what kinds of services, if any, should an American company be allowed to offer designated terrorists and cyber criminals?

CloudFlare’s unusual position at the heart of this debate came to the fore last month, when the Israel Defense Forces sought help from CloudFlare after its website was struck by attackers based in Gaza. The IDF was turning to the same company that provides those services to Hamas and the al-Quds Brigades, according to publicly searchable domain information. Both Hamas and al-Quds, the military wing of the Palestinian Islamic Jihad, are designated by the United States as terrorist groups.

Under the USA Patriot Act, U.S. firms are forbidden from providing “material support” to groups deemed foreign terrorist organizations. But what constitutes material support – like many other facets of the law itself – has been subject to intense debate.

CloudFlare’s dealings have attracted heated criticism in the blogosphere from both Israelis and Palestinians, but Prince defended his company as a champion of free speech.

“Both sides have an absolute right to tell their story,” said Prince, a 38-year old former lawyer. “We’re not providing material support for anybody. We’re not sending money, or helping people arm themselves.”

Prince noted that his company only provides defensive capabilities that enable websites to stay online.

“We can’t be sitting in a role where we decide what is good or what is bad based on our own personal biases,” he said. “That’s a huge slippery slope.”

Many U.S. agencies are customers, but so is WikiLeaks, the whistle-blowing organization. CloudFlare has consulted for many Wall Street institutions, yet also protects Anonymous, the “hacktivist” group associated with the Occupy movement.

Prince‘s stance could be tested at a time when some lawmakers in the United States and Europe, armed with evidence that militant groups rely on the Web for critical operations and recruitment purposes, have pressured Internet companies to censor content or cut off customers.

Last month, conservative political lobbies, as well as seven lawmakers led by Ted Poe, a Republican from Texas, urged the FBI to shut down the Hamas Twitter account. The account remains active; Twitter declined to comment.

MATERIAL SUPPORT

Although it has never prosecuted an Internet company under the Patriot Act, the government’s use of the material support argument has steadily risen since 2006. Since September 11, 2001, more than 260 cases have been charged under the provision, according to Fordham Law School’s Terrorism Trends database.

Catherine Lotrionte, the director of Georgetown University’s Institute for Law, Science and Global Security and a former Central Intelligence Agency lawyer, argued that Internet companies should be more closely regulated.

“Material support includes web services,” Lotrionte said. “Denying them services makes it more costly for the terrorists. You’re cornering them.”

But others have warned that an aggressive government approach would have a chilling effect on free speech.

“We’re resurrecting the kind of broad-brush approaches we used in the McCarthy era,” said David Cole, who represented the Humanitarian Law Project, a non-profit organization that was charged by the Justice Department for teaching law to the Kurdistan Workers’ Party, which is designated by the United States as a terrorist group. The group took its case to the Supreme Court but lost in 2010.

The material support law is vague and ill-crafted, to the point where basic telecom providers, for instance, could be found guilty by association if a terrorist logs onto the Web to plot an attack, Cole said.

In that case, he asked, “Do we really think that AT&T or Google should be held accountable?”

CloudFlare said it has not been contacted about its services by the U.S. government. Spokespeople for Hamas and the Palestinian Islamic Jihad, told Reuters they contracted a cyber-security company in Gaza that out-sources work to foreign companies, but declined to comment further. The IDF confirmed it had hired CloudFlare, but declined to discuss “internal security” matters.

CloudFlare offers many of its services for free, but the company says websites seeking advanced protection and features can see their bill rise to more than $ 3,000 a month. Prince declined to discuss the business arrangements with specific customers.

While not yet profitable, CloudFlare has more than doubled its revenue in the past four months, according to Prince, and is picking up 3,000 new customers a month. The company has raked in more than $ 22 million from venture capital firms including New Enterprise Associates, Venrock and Pelion Venture Partners.

Prince, a Midwestern native with mussed brown hair who holds a law degree from the University of Chicago, said he has a track record of working on the right side of the law.

A decade ago, Prince provided free legal aid to Spamhaus, an international group that tracked email spammers and identity thieves. He went on to create Project Honey Pot, an open source spam-tracking endeavor that turned over findings to police.

Prince’s latest company, CloudFlare, has been hailed by groups such as the Committee to Protect Journalists for protecting speech. Another client, the World Economic Forum, named CloudFlare among its 2012 “technology pioneers” for its work. But it also owes its profile to its most controversial customers.

CloudFlare has hosted 4Chan, the online messaging community that spawned Anonymous. LulzSec, the hacker group best known for targeting Sony Corp, is another customer. And since last May, the company has propped up WikiLeaks after a vigilante hacker group crashed the document repository.

Last year, members of the hacker collective UgNazi, whose exploits include pilfering user account information from eBay and crashing the CIA.gov website, broke into Prince’s cell phone and email accounts.

“It was a personal affront,” Prince said. “But we never kicked them off either.”

Prince said CloudFlare would comply with a valid court order to remove a customer, but that the Federal Bureau of Investigation has never requested a takedown. The company has agreed to turn over information to authorities on “exceedingly rare” occasions, he acknowledged, declining to elaborate.

“Any company that doesn’t do that won’t be in business long,” Prince said. But in an email, he added: “We have a deep and abiding respect for our users’ privacy, disclose to our users whenever possible if we are ordered to turn over information and would fight an order that we believed was not proper.”

Juliannne Sohn, an FBI spokeswoman, declined to comment.

Michael Sussmann, a former Justice Department lawyer who prosecuted computer crimes, said U.S. law enforcement agencies may in fact prefer that the Web’s most wanted are parked behind CloudFlare rather than a foreign service over which they have no jurisdiction.

Federal investigators “want to gather information from as many sources as they can, and they’re happy to get it,” Sussmann said.

In an era of rampant cyber warfare, Prince acknowledged he is something of a war profiteer, but with a wrinkle.

“We’re not selling bullets,” he said. “We’re selling flak jackets.”

(Reporting By Gerry Shih in San Francisco and Nidal al-Mughrabi in Gaza; editing by Jonathan Weber and Claudia Parsons)

Internet News Headlines – Yahoo! News

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American Idol: Has Nicki Minaj and Mariah Carey's Feud Fizzled?

TV Watch

American Idol

12/13/2012 at 02:45 PM EST

Nicki Minaj and Mariah Carey

Frank Micelotta/FOX (2)

Fans hoping to see new American Idol judges Mariah Carey and Nicki Minaj battle it out in an epic feud may be disappointed. The new panelists, along with host Ryan Seacrest, took a break from filming Hollywood week to chat with the press on Wednesday, and by (almost) all accounts season 12 is steeped in mutual admiration, sunshine and rainbows.

Despite her and Carey's heated exchange during auditions in Charlotte, N.C., Minaj had nothing but kind words for her fellow judges.

"We've jelled really, really well as a group," she told reporters. "We have a great chemistry. We have a great rhythm now together, and we really are taking it serious. ... We really are rooting for the contestants and we want to find a great American Idol."

For Idol veteran Randy Jackson, that means he'll play the hard-to-please role vacated by Simon Cowell.

"Nicki is mad funny, and Mariah is mad funny, and Keith is very quick-witted and funny," Jackson said. "We're all kind of silly, but I guess maybe I'm the harsh one. I'm the quickest to say no."

Keith Urban happily boasted about the "synergy" that he has found with his "very different" costars and admitted that his reported role as referee is really nothing more than keeping his fellow judges focused on the task at hand.

"I'm just trying to bring the drama down so that we can stay on point," he told PEOPLE.

Seacrest said the drama has a way of working itself out. "I don't really have to play peacekeeper," he said. "The peace finds itself. They find the peace ... eventually"

But Carey, resplendent in a floor-length red gown and diamond earrings, hinted that perhaps the claws haven't been fully retracted. She heaped praise upon her long-time friend Jackson, called Urban an "expert" of country music and said of the group, "I think this panel is great because of the diversity." But she dodged a question about what Minaj brings to the show.

"You know, I wouldn't feel comfortable commenting on that," she said with a smile. "But thank you for the question."

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Study: People worldwide living longer, but sicker

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Online:

www.lancet.com

http://healthmetricsandevaluation.org

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