Obama Still an 'Optimist' on Cliff Deal

Mandel Ngan/AFP/Getty Images

WASHINGTON D.C. – Ten days remain before the mandatory spending cuts and tax increases known as the “fiscal cliff” take effect, but President Obama said he is still a “hopeless optimist” that a federal budget deal can be reached before the year-end deadline that economists agree might plunge the country back into recession.

“Even though Democrats and Republicans are arguing about whether those rates should go up for the wealthiest individuals, all of us – every single one of us -agrees that tax rates shouldn’t go up for the other 98 percent of Americans, which includes 97 percent of small businesses,” he said.

He added that there was “no reason” not to move forward on that aspect, and that it was “within our capacity” to resolve.

The question of whether to raise taxes on incomes over $250,000 remains at an impasse, but is only one element of nuanced legislative wrangling that has left the parties at odds.

For ABC News’ breakdown of the rhetoric versus the reality, click here.

At the White House news conference this evening, the president confirmed he had spoken today to Senate Majority Leader Harry Reid, D-Nev., and House Speaker John Boehner, R-Ohio, although no details of the conversations were disclosed.

The talks came the same day Speaker Boehner admitted “God only knows” the solution to the gridlock, and a day after mounting pressure from within his own Republican Party forced him to pull his alternative proposal from a prospective House vote. That proposal, ”Plan B,” called for extending current tax rates for Americans making up to $1 million a year, a far wealthier threshold than Democrats have advocated.

Boehner acknowledged that even the conservative-leaning “Plan B” did not have the support necessary to pass in the Republican-dominated House, leaving a resolution to the fiscal cliff in doubt.

“In the next few days, I’ve asked leaders of Congress to work towards a package that prevents a tax hike on middle-class Americans, protects unemployment insurance for 2 million Americans, and lays the groundwork for further work on both growth and deficit reduction,” Obama said. ”That’s an achievable goal.  That can get done in 10 days.”

Complicating matters: The halls of Congress are silent tonight. The House of Representatives began its holiday recess Thursday and Senate followed this evening.

Meanwhile, the president has his own vacation to contend with. Tonight, he was embarking for Hawaii and what is typically several weeks of Christmas vacation.

However, during the press conference the president said he would see his congressional colleagues “next week” to continue negotiations, leaving uncertain how long Obama plans to remain in the Aloha State.

The president said he hoped the time off would give leaders “some perspective.”

“Everybody can cool off; everybody can drink some eggnog, have some Christmas cookies, sing some Christmas carols, enjoy the company of loved ones,” he said. “And then I’d ask every member of Congress, while they’re back home, to think about that.  Think about the obligations we have to the people who sent us here.

“This is not simply a contest between parties in terms of who looks good and who doesn’t,” he added later. “There are real-world consequences to what we do here.”

Obama concluded by reiterating that neither side could walk away with “100 percent” of its demands, and that it negotiations couldn’t remain “a contest between parties in terms of who looks good and who doesn’t.”

Boehner’s office reacted quickly to the remarks, continuing recent Republican statements that presidential leadership was at fault for the ongoing gridlock.

“Though the president has failed to offer any solution that passes the test of balance, we remain hopeful he is finally ready to get serious about averting the fiscal cliff,” Boehner said. “The House has already acted to stop all of the looming tax hikes and replace the automatic defense cuts. It is time for the Democratic-run Senate to act, and that is what the speaker told the president tonight.”

The speaker’s office said Boehner “will return to Washington following the holiday, ready to find a solution that can pass both houses of Congress.”

Read More..

Urban Byzantine monks gave in to temptation

WHO ate all the pies? In 6th-century Jerusalem, the Byzantine monks were greedy gobblers - despite strict rules that they should eat mainly bread and water.

Most early Byzantine monasteries were located in remote deserts, but St Stephen's monastery thrived in Jerusalem. Wondering how urban living affected the monks, Lesley Gregoricka at the University of South Alabama in Mobile took bone samples from 55 skeletons buried under the monastery.

The ratios of various isotopes of carbon and nitrogen in the bones confirmed that the monks ate a lot of common cereals like wheat, as well as fruit and vegetables. But many bones were rich in the heavy isotope nitrogen-15, suggesting the monks ate lots of animal protein. That could mean meat, or dairy products such as cheese (Journal of Anthropological Archaeology, doi.org/jzt).

"The rules on issues such as poverty, chastity and obedience were certainly known and could not be easily ignored," says Peter Hatlie of the University of Dallas's Rome Program in Frattocchie, Italy. "Only fallen, weak, mad and demonic monks ate meat."

If you would like to reuse any content from New Scientist, either in print or online, please contact the syndication department first for permission. New Scientist does not own rights to photos, but there are a variety of licensing options available for use of articles and graphics we own the copyright to.

All comments should respect the New Scientist House Rules. If you think a particular comment breaks these rules then please use the "Report" link in that comment to report it to us.

If you are having a technical problem posting a comment, please contact technical support.

Read More..

Asian markets retreat as US fiscal cliff fears grow

HONG KONG: Asian markets mostly fell on Friday after Republicans scrapped a vote on putting in place a back-up plan if talks on averting the US fiscal cliff end in failure.

The news out of Washington late Thursday cancelled out a rally on Wall Street and upbeat data on the US economy, while it also hit currency traders, who have sent the safe-haven yen higher despite more Bank of Japan monetary easing.

Tokyo fell 0.99 per cent, or 99.27 points to 9,940.06, Seoul shed 0.95 per cent, or 19.08 points, to 1,980.42 and Sydney was 0.23 per cent lower, losing 10.5 points to end at 4,623.6.

Hong Kong slid 0.68 per cent, fell 153.49 points to close at 22,506.29, while Shanghai lost 0.69 per cent, or 15.04 points, to end at 2,153.31.

With just under two weeks to go before huge tax hikes and spending cuts are due to kick in -- and likely tip the economy into recession -- US lawmakers are still unable to reach a compromise that will avert the fiscal cliff.

Late Thursday in Washington Republican House Speaker John Boehner scrapped a vote on a bill that would have extended tax cuts for all Americans earning less than $1 million even if a wider deal could not be struck.

The move, which he described as his "Plan B", was dropped because he did not have enough support. Boehner said his party would recess until after Christmas.

The measure had been blasted by President Barack Obama's Democrats as a diversionary tactic that would never have passed in the Senate, where they hold a majority.

Now both parties must come up with a budget that will cut the country's deficit with less painful measures before the start of January, when they take effect.

Wall Street ended in positive territory on Thursday, however, lifted by fresh data further indicating the US economy is getting back on its feet.

The Commerce Department said the economy grew 3.1 per cent in the third quarter, up from the estimates of 2.7 per cent and 2.0 per cent previously stated.

The figure reflects upward revisions to consumer spending, exports and government outlays, and a downward revision to imports.

Also Thursday the National Association of Realtors said existing home sales rose 5.9 per cent month-on-month in November to their highest level in three years.

The Dow rose 0.45 per cent, the S&P 500 gained 0.55 per cent and the Nasdaq climbed 0.20 per cent.

Thursday's delay in Washington sent the yen higher in Asian trade. The dollar bought 84.05 yen against 84.38 yen in New York late Thursday. The euro was at $1.3204 and 111.00 yen compared with $1.3241 and 111.72 yen.

However, the Japanese unit is still being pressured after the country's central bank announced fresh monetary easing Thursday, while dealers expect further measures in the new year when the new government is in control.

Oil prices fell, with New York's main contract, light sweet crude for delivery in February down $1.00 to $89.13 a barrel and Brent North Sea crude for February falling 53 cents to $109.67.

Gold was at $1,648.01 at 1045 GMT compared with $1,668.30 late Thursday.

In other markets:

-- Taipei fell 0.99 per cent, or 75.53 points, to 7,519.93.

Taiwan Semiconductor Manufacturing Co. was 1.25 per cent lower at NT$94.8 while leading smartphone maker HTC rose 1.63 per cent to NT$280.0.

-- Manila closed 0.45 per cent higher, adding 26.20 points to 5,823.94.

Metropolitan Bank and Trust rose 2.06 per cent to 101.70 pesos and Philippine Long Distance Telephone gained 1.18 per cent to 2,570 pesos.

-- Wellington fell 0.51 per cent, or 20.71 points, to 4,054.74.

Air New Zealand was down 0.78 per cent at NZ$1.28, Fletcher Building shed 2.37 per cent to NZ$8.25 and Telecom eased 2.59 per cent to NZ$2.26.

-- Singapore closed up 0.54 per cent, or 16.95 points, at 3,175.52.

Singapore Telecom rose 0.60 per cent to S$3.37 and DBS Group gained 0.54 per cent to S$14.99.

-- Bangkok shed 0.07 per cent or 1.00 points to close at 1,377.40.

Coal producer Banpu fell 1.42 per cent or 6.00 baht to 418.00 baht while PTT Plc was unchanged at 333.00 baht.

-- Jakarta ended down 21.04 points, or 0.49 per cent, at 4,254.82.

Carmaker Astra International fell 2.60 per cent to 7,500 rupiah, cigarette maker Gudang Garam lost 2.73 per cent to 57,000 rupiah, while palm oil producer Astra Agro Lestari decreased 1.62 per cent to 18,250 rupiah.

-- Kuala Lumpur shares gained 4.96 points, or 0.30 per cent, to close at 1,670.60.

British American Tobacco added 1.7 per cent to 60.50 ringgit, DiGi.com rose 1.5 per cent to 5.36 and Axiata climbed 1.2 per cent to 6.68.

-- Mumbai fell 1.09 per cent or 211.92 points at 19,242.0 points.

Jet Airways slid 7.03 per cent to 566.5 rupees while Jindal Steel fell 3.52 per cent to 454.25 rupees.

- AFP/ck

Read More..

Web media: The 5 biggest stories of 2012

Kim DotCom's arrest and subsequent legal fight was one of the biggest stories in digital media during the past year. Check out the rest of them.

(Credit:
Kim DotCom; Greg Sandoval/CNET)

Fun, fun, fun!

That's what digital movies, music, and books are supposed to be about. But for the people who create and sell the stuff, it's been all crumbs, crumbs, crumbs.

The past year was another tough one for the sale of entertainment media on the Web. The irony is that as more entertainment fare is sold online, the less profitable the businesses become.

Few, if any, online music services are profitable. In Web movie distribution, download sales are dismal. Even Netflix, the Web's top video rental service, saw a slow down in the rate it added subscribers. But the sector also saw some triumphs. Here's our list of the most important stories of 2012.

1. The MegaUpload bust

The biggest story in online entertainment this year began with the thumping sound of helicopter blades beating the air. In January, choppers carried New Zealand police, armed with semi-automatic weapons, to the grounds of the mansion leased by MegaUpload founder Kim DotCom. He and other members of the company's management were arrested.

In an indictment, the United States Attorney accused the group of encouraging people across the globe to store pirated media in MegaUpload's digital lockers. This allowed managers to generate more than $175 million from the sale of ads and subscriptions. The defendants were charged with criminal copyright infringement.

The amount of force used in the police raid stunned the tech world. Typically copyright disputes are settled in civil court -- not at the point of a gun. The bust quickly prompted some of MegaUpload's competitors to shut their doors. DotCom and the other defendants say they're innocent and are fighting U.S. attempts to extradite them.

2. Netflix struggles to win back customers' faith

For most of this year, Netflix trudged down the same rocky path it ended 2011 on. CEO Reed Hastings was once a Silicon Valley star, but last year investors and customers lost confidence in his leadership when he botched a price increase and then stoked the anger of already bitter customers by trying to spin off the company's DVD operations. This year, Netflix fell short of projections for adding new customers and was again criticized for offering a stale streaming library. Customers asked where all the newer titles were.

In addition, some of what were likely embarrassing details about Hastings' past goofs, such as how he alienated some top lieutenants and his fib about where the idea for Netflix came from, were revealed in a CNET story as well as in "Netflixed," a book by author Gina Keating. But Hastings and company may finally be ready to break out of their slump.

Earlier this month, Netflix stunned the digital entertainment world by signing an exclusive deal with Disney to distribute the studio's new movie releases right after they're made available for sale on DVD and by download. This distribution window is typically reserved for pay-TV channels. Netflix climbed into that window and became the first Web subscription service ever to deliver films during the period.

3. Apple, book publishers accused of fixing e-book prices

Apple and five of the country's largest book publishers conspired to fix e-book prices and in the process betrayed consumers, according to a complaint filed in April by the U.S. Department of Justice. The DOJ accused Apple of convincing Hachette, Macmillan, Penguin, Simon & Schuster, and HarperCollins to swap the industry's decades-old business model for one that would enable them, instead of retailers, to control e-book prices. The DOJ contends that the plot was hatched to hobble Amazon, which had discounted prices heavily and owned about 90 percent market share.

The accused publishers raised prices nearly in unison and that was just one of the reasons the government's case appeared strong from the beginning. Then, HarperCollins, Hachette, and Simon & Schuster (owned by CBS, parent company of CNET) quickly settled. Those three publishers agreed to give back control of pricing to retailers and pledged not to share information with each other. They also stopped guaranteeing that Apple would offer the lowest prices available online. Apple, Penguin, and Macmillan deny wrongdoing and are fighting the DOJ in court.

Alexis Ohanian, an activist and co-founder of Reddit, the social-news Web site, is photographed during a protest against the Stop Online Piracy Act in January 2012.

(Credit:
Greg Sandoval/CNET)

4. Entertainment sector's antipiracy effort suffers blow when SOPA gets crushed

In 2011, the entertainment sector labored to win support in Congress for legislation known as the Stop Online Piracy Act (SOPA). Backers said the bill would give law enforcement officials a freer hand in shutting down accused pirate sites. In January 2012, the tech sector rose up and easily snuffed out any chance of the bill passing.

Some of the most trafficked Internet sites, such as Google and Wikipedia, helped generate opposition to SOPA by urging users to request that their representatives on Capitol Hill vote no. Not only did many former Congressional supporters reverse course but President Barack Obama also distanced himself from SOPA.

At one time, the trade groups of the big music labels and film studios cast big shadows in Washington. The SOPA defeat, however, was a sign that the tech sector has begun to eclipse them. The talk coming from the big media companies now is about building consensus with tech companies on piracy issues. SOPA is dead.

5. Aereo challenges big TV

Tick off the different major media categories -- newspapers, video games, music, movies, books, radio, and TV -- and they're all online save one.

Live television is the last holdout, and the companies with huge investments in live TV are trying to keep it that way. In a story that's been under-reported, New York-based Aereo is being sued for distributing live, over-the-air broadcast signals to subscribers via the Internet. ABC, CBS, NBC, PBS, and Fox have filed lawsuits and accuse Aereo of violating their copyrights and owing them retransmission fees.

Aereo, backed by former television executive Barry Diller, says it doesn't owe a cent because it doesn't retransmit. The signals that Aereo provides come from dime-size antennas that the company's customers control with help from the Web. It is they who are capturing the signals and Aereo argues that they have every right to access the freely available broadcasts. Aereo prevailed in district court against an attempt to shut the service down earlier this year, but the broadcasters have appealed. Stay tuned.

Read More..

Hollies Get Prickly for a Reason

With shiny evergreen leaves and bright red berries, holly trees are a naturally festive decoration seen throughout the Christmas season.

They're famously sharp. But not all holly leaves are prickly, even on the same tree. And scientists now think they know how the plants are able to make sharper leaves, seemingly at will. (Watch a video about how Christmas trees are made.)

A new study published in the Botanical Journal of the Linnean Society suggests leaf variations on a single tree are the combined result of animals browsing on them and the trees' swift molecular response to that sort of environmental pressure.

Carlos Herrera of the National Research Council of Spain led the study in southeastern Spain. He and his team investigated the European holly tree, Ilex aquifolium. Hollies, like other plants, can make different types of leaves at the same time. This is called heterophylly. Out of the 40 holly trees they studied, 39 trees displayed different kinds of leaves, both prickly and smooth.

Five holly leaves from the same tree.

Photographs by Emmanuel Lattes, Alamy

Some trees looked like they had been browsed upon by wild goats and deer. On those trees, the lower 8 feet (2.5 meters) had more prickly leaves, while higher up the leaves tended to be smooth. Scientists wanted to figure out how the holly trees could make the change in leaf shape so quickly.

All of the leaves on a tree are genetic twins and share exactly the same DNA sequence. By looking in the DNA for traces of a chemical process called methylation, which modifies DNA but doesn't alter the organism's genetic sequence, the team could determine whether leaf variation was a response to environmental or genetic changes. They found a relationship between recent browsing by animals, the growth of prickly leaves, and methylation.

"In holly, what we found is that the DNA of prickly leaves was significantly less methylated than prickless leaves, and from this we inferred that methylation changes are ultimately responsible for leaf shape changes," Herrera said. "The novelty of our study is that we show that these well-known changes in leaf type are associated with differences in DNA methylation patterns, that is, epigenetic changes that do not depend on variation in the sequence of DNA."

"Heterophylly is an obvious feature of a well-known species, and this has been ascribed to browsing. However, until now, no one has been able to come up with a mechanism for how this occurs," said Mike Fay, chief editor of the Botanical Journal of the Linnean Society and head of genetics at the Kew Royal Botanic Gardens. "With this new study, we are now one major step forward towards understanding how."

Epigenetic changes take place independently of variation in the genetic DNA sequence. (Read more about epigenetics in National Geographic magazine's "A Thing or Two About Twins.")

"This has clear and important implications for plant conservation," Herrera said. In natural populations that have their genetic variation depleted by habitat loss, the ability to respond quickly, without waiting for slower DNA changes, could help organisms survive accelerated environmental change. The plants' adaptability, he says, is an "optimistic note" amidst so many conservation concerns. (Related: "Wild Holly, Mistletoe, Spread With Warmer Winters.")

Read More..

Fiscal Cliff 'Plan B' Is Dead: Now What?

Dec 20, 2012 11:00pm

The defeat of his Plan B — Republicans pulled it when it became clear it would be voted down — is a big defeat for Speaker of the House John Boehner.  It demonstrates definitively that there is no fiscal cliff deal that can pass the House on Republican votes alone.

Boehner could not even muster the votes to pass something that would only allow tax rates on those making more than $1 million to go up.

Boehner’s Plan B ran into opposition from conservative and tea party groups -including Heritage Action, Freedom Works and the Club for Growth – but it became impossible to pass it after Senate Democrats vowed not to take up the bill and the president threatened to veto it.  Conservative Republicans saw no reason to vote for a bill conservative activists opposed – especially if it had no hopes of going anywhere anyway.

Plan B is dead.

Now what?

House Republicans say it is now up to the Senate to act.  Senate Democrats say it is now up to Boehner to reach an agreement with President Obama.

Each side is saying the other must move.

The bottom line:  The only plausible solution is for President Obama and Speaker Boehner to do what they have failed repeatedly to do:  come up with a truly bi-partisan deal.

The prospects look grimmer than ever. It will be interesting to see if the markets react.

SHOWS: This Week

Read More..

The top 10 science books of 2012

New Scientist's pick of books published this year that you should not miss

Connectome by Sebastian Seung
Allen Lane/Houghton Mifflin Harcourt
£20/$27

What holds the essence of who we are? It's all in the way our 100 billion neurons link up, says computational neuroscientist Sebastian Seung.

Gravity's Engines by Caleb Scharf
Allen Lane/Farrar, Straus & Giroux
£20/$26

Natural selection operates at a cosmic level, as this book reveals, with black holes driving the universe's evolution.

Hallucinations by Oliver Sacks
Picador/Knopf
£18.99/$26.95

The neurologist and prolific author aims to dispel the stigma that often surrounds hallucinations, and shares his own bewildering experiences - including a chat he had with a spider.

Immortality by Stephen Cave
Biteback/Crown
£20/$25

Death both fascinates and frightens us. It is also a force for progress, says Stephen Cave, who argues that our desire to live forever spurs ingenuity.

Like a Virgin by Aarathi Prasad
Oneworld
£12.99/$19.95

How feasible is virgin birth? Aarathi Prasad looks to the animal kingdom and our history of biological tinkering to suggest that conception without sex or pregnancy could soon be a real possibility.

Pieces of Light by Charles Fernyhough
Profile
£14.99

In this lyrical exploration of our powers of recall, psychologist and novelist Charles Fernyhough argues that our memories are worth cherishing - even though some of what we think we remember is, in fact, fiction.

Regenesis by George Church and Ed Regis
Basic Books
$28

Synthetic biology could extend life and even revive extinct species, but as this book reveals, we must face up to the ethical issues it brings, and soon.

The (Honest) Truth About Dishonesty by Dan Ariely
HarperCollins
£16.99/$26.99

Why do people lie and cheat? Dan Ariely explores how we all have an "acceptable" level of dishonesty dictated by our own unique balance between rationality and its opposite.

The Hour Between Dog and Wolf by John Coates
Fourth Estate/Penguin
£20/$27.95

Was a hormone to blame for the financial collapse of 2008? In this book, neuroscientist and former trader John Coates makes a compelling case that testosterone may have been a major force on the road from risk to ruin.

The Particle at the End of the Universe by Sean Carroll
Oneworld/Dutton
£16.99/$27.95

Being in the headlines for weeks has not made the Higgs boson any easier to understand - so allow yourself to be filled in by this fascinating book, in which cosmologist Sean Carroll does not shy away from the difficult stuff.

WIN a set of these books! For a chance to win all 10, go to: newscientist.com/bestbooks2012

Follow @CultureLabNS on Twitter

Like us on Facebook

Read More..

Stocks likely to continue being investors' favourite

SINGAPORE: Stocks may continue to be a favourite asset for investors next year.

Improving corporate earnings and attractive valuations are expected to drive stock prices higher.

Experts said investor sentiment may also get a lift on hopes of a recovery in the Chinese and US economies.

Equities are among the star performers in financial markets this year.

In the US, key stock indices like the S&P 500 and Dow Jones Industrial Average has gained 15% and 9.3% respectively since the start of the year.

Meanwhile, the technology-laden Nasdaq rose 17.3% in the same period. In Asia, Japan's Nikkei rose 20.2%, Hong Kong's Hang Seng Index advanced 22.7% and Singapore's STI index gained 19.4% year to date.

Experts said this asset class may repeat its stellar performance again in 2013.

They added that a favourable macroeconomic outlook may also prompt some investors to switch out of bonds and back to investing in stocks.

"Valuations are not excessive at this juncture, liquidity is supportive of the equity markets," said Vasu Menon, vice president of wealth management in Singapore at OCBC Bank.

"Going forward, we could see some rotational money moving out of bond markets which have been favoured over the last two, three years into equity markets especially given the fact that economic growth is starting to pick up and we will see a modest recovery in the global economy in 2013."

Analysts are more upbeat of stock prospects in the North Asia region - particularly China.

They said companies there have stronger fundamentals, steady balance sheets and the stock markets have ample liquidity.

Experts added that they are positive on Chinese equities within this region, which have underperformed over the last three years - in view of a turnaround of the Chinese economy in the first half of 2013.

The Shanghai stock exchange composite index fell 1.7% year to date and the Shenzhen composite index decline 5.1% in the same period.

"The Chinese positioning is becoming more normalised from where we were before to something that is more sustainable going forward. On top of that, we've already seen the policies start to come through from the new regime, which is supportive to opening up China's market to foreign investors," said Jason Hughes, head of premium client management at IG Markets.

"We now have the stock market opened up to the institutional investors more so than before."

Among the sectors that may take the limelight next year are commodities and real estate investment trusts.

A pick up in global growth and the weaker US dollar will give commodities demand a boost , hence pushing gold prices higher.

Others expect property and financial names to lead the way like they did in 2012 - thanks to China's accommodating policies towards infrastructure and development of their own local economy.

Steve Brice, chief investment strategist at Standard Chartered Bank said: "One can make the case that REITs are overvalued and possibly, they are in a normalised environment. But we're not in a normalised environment, we have very low interest rates and that search for yield is still a very dominant theme and that should keep REITs very well supported going through at least the first half of 2013, and possibly into the second half."

Still, experts warn of looming risks such as the US fiscal cliff and the upcoming European elections that may dampen investor sentiment next year.

"Probably something more for the second half of 2013, is the risk of the fed withdrawing some of the monetary stimulus from markets," said Menon.

"If the economy of the US is growing at a faster than expected pace, and if unemployment starts falling below the 7% level then the markets will price in the possibility of the fed withdrawing the stimulus. The expectation of that alone may actually cause markets to pull back."

- CNA/xq

Read More..

Facebook in 2012: 5 ways its IPO changed the social giant

Now that was a year Mark Zuckerberg will never forget -- even if he didn't celebrate each moment on Facebook, as he wants the rest of the world to do. Sure, he turned 28 and married longtime girlfriend, Priscilla Chan, in a backyard ceremony at the couple's home in Palo Alto, Calif. But that's the stuff of ordinary men. Make no mistake: 2012 will go down as the year in which Zuckerberg came out from under his hoodie and tried to prove himself as leader of one of the titans of consumer tech.

Is he succeeding? So far, sure, and more so as the year went on. While plenty of people like to complain about Facebook -- it's a time soak, a privacy nightmare -- plenty of others, as in hundreds of millions, clearly love it. Which is why Wall Street was in a tizzy when Facebook finally went public, an event that forever changed Facebook, making it far and away the most important development at Facebook this year.

1. Facebook's faceplant

Not since the Internet mania of the 1990s had we seen such hype and expectation over an IPO. And why not? This was Facebook, after all, a new kind of media company that had amassed hundreds of millions of passionate users and was already turning a profit on $4 billion in revenue by the time it filed to go public. This one was going to make armchair investors everywhere rich, and fast.

We all know what happened: The hype -- and the $100 billion-plus valuation Wall Street bankers awarded Facebook -- was all too much. Way too much. Sure, Facebook pulled off the biggest Internet IPO in history, which was great for Facebook, but then its shares began their speedy descent. Lawsuits were filed around the handling the IPO. Some even called for Zuckerberg's head, although Zuckerberg structured the company in way that makes firing him impossible. And the whole mess quashed hopes of a return to 1999-style Internet mania.

The upshot: Facebook's botched IPO sent fears across startup land and even now venture capitalists are cutting fewer checks to Zuckerberg wannabes since the possibility of a big IPO exit -- at least for consumer Internet companies -- is grim for now. (To be fair, IPO duds Groupon and Zynga also played a big role on this front). Despite all this, Facebook's stock, while still far from its IPO price of $38 a share, ended the year on a tear as Zuckerberg and team began to show they were serious about making money, especially from mobile.

2. Zuckerberg buys Instagram
Almost everything we hear about from Facebook these days has to do with mobile, and how the company has been restructured to emphasis "mobile first." And nothing shows just how concerned Zuckerberg was about the great mobile migration then when he singlehandedly struck a deal with Instagram cofounder Kevin Systrom to buy his two-year-old startup in a stock-and-cash deal worth $1 billion. Istagram had amassed 33 million users, and Zuckerberg knew that it was both a threat and the future. So he pounced -- just a month before Facebook's May IPO.

The critics pounced. Why spend $1 billion for a money losing startup without a business model? But Zuckerberg didn't care. And when Facebook amended its IPO filing with the SEC -- just over a week before the IPO -- to emphasize how the shift of its users to mobile devices was threatening its long-term ad revenue, it all all started to make sense. Zuckerberg needed more mobile juice, at any cost. By the time the Instagram deal finally closed in October, the price came in at $715 million due to Facebook's sagging stock. Instagram is still on fire. It reached 100 million users in September, and, by one account, people are spending more time on it than on Twitter.

Then -- and this arguably deserves its own entry among top stories for 2012 -- management blundered badly in mid-December when it unveiled Instagram's new terms of service, which said that the company could sell your photos or use them in advertisements. You have to wonder who signed off on this one. Unsurprisingly, the backlash was swift. Instagram co-founder and chief executive Kevin Systrom apologized, backpedaled and said the company is "working on updated language."

3. Speaking of a billion...
This was the year when, with great fanfare, Facebook crossed the billion member mark. No consumer Internet company -- heck, no company, period -- has ever done that. Not bad for what began as a side project in Zuckerberg's Harvard dorm room eight years earlier. It's worth pointing out that these are "monthly active users," measured as people who log on to Facebook at least once a month. Still, that's one seventh of the entire world population. And Facebook's daily active user number is hardly shabby. That metric averaged 584 million in September, a 28 percent jump from the period year. As for mobile? Monthly active mobile users soared 61 percent to 604 million.

Zuckerberg and his team aren't satisfied with one billion, of course. Around five billion people are expected to be online by the end of the decade -- largely via phones -- and Facebook wants all of them conducting their Internet lives through Facebook. Growth has slowed in the U.S, but the company has its sights on all pockets of the globe, as evidenced by its reworked instant messenger app released in early December.

4. I'm talking to you, Wall Street
The rap against Zuckerberg, at least from Wall Street, had been that he didn't care about the money side of the business. In September, he sat for his first live interview (at the TechCrunch Distrupt conference) since the IPO and worked hard to disabuse the world that notion, arguing that Facebook can be a great place for users and can make a ton of money. This will go down as the day Zuckberg took control of the narrative and his messaging to Wall Street. This was also when he began preaching that mobile wasn't a problem for Facebook, but an opportunity -- a talking point that clearly went out to all Facebook execs, who now love talking about mobile, mobile and more mobile.

In September, Zuckerberg started talking about the huge mobile opportunity

(Credit:
Daniel Terdiman/CNET)

Soon after that, Zuckerberg showed it was more than talk. Facebook started inserting ads -- called "Sponsored Stories" -- on its mobile apps in March, its first effort to make money from mobile. And the results started to show up this fall. When Facebook reported its third-quarter earnings, it said that mobile ads made up 14 percent of its total ad revenue -- largely putting to an end to the biggest worry among Wall Street since Facebook went public.

5. Buy your friend a drink
It's hard to pinpoint one money-making tactic that Facebook launched in 2012 as most important. The company did go all out in this regard. A few examples: It launched Facebook Exchange, an ad-bidding system that lets advertisers better target users on Facebook by tracking what else they do across the Web; it started letting users pay $7 to promote a post to ensure it'll land in a lot of News Feeds; it began charging business for Facebook Offers, a way for merchants to send Groupon-like deals to your News Feed.

But here's one that's unlike the others: The launch of Facebook Gifts, which lets you easily buy a Facebook friend a gift -- from an
iTunes gift card, to an item from Baby Gap or even a bottle of wine that gets shipped to your home. This is a huge move. It helps Facebook get credit card numbers on files -- important for future products -- and marks Facebook's march into commerce. Arguably, Facebook Gifts isn't yet about the money -- it's more about keeping people using Facebook -- but that'll change quickly.

And when that happens, that will certainly give Zuckerberg and his team something they can all drink to.

Read More..

Obama Invokes Newtown on 'Cliff' Deal

Invoking the somber aftermath of the school massacre in Newtown, Conn., President Obama today appealed to congressional Republicans to embrace a standing "fair deal" on taxes and spending that would avert the fiscal cliff in 13 days.

"If there's one thing we should have after this week, it should be a sense of perspective about what's important," Obama said at a midday news conference.

"I would like to think that members of that [Republican] caucus would say to themselves, 'You know what? We disagree with the president on a whole bunch of things,'" he said. "'But right now what the country needs is for us to compromise.'"

House Speaker John Boehner's response: "Get serious."

Boehner announced at a 52-second news conference that the House will vote Thursday to approve a "plan B" to a broad White House deal -- and authorize simply extending current tax rates for people earning less than $1 million a year and little more.

"Then, the president will have a decision to make," the Ohio Republican said. "He can call on Senate Democrats to pass that bill or he could be responsible for the largest tax increase in American history."

Fiscal Cliff Negotiations: Trying to Make a Deal Watch Video

House Speaker John Boehner Proposes 'Plan B' on Taxes Watch Video

'Fiscal Cliff' Negotiations: Deal Might Be Within Reach Watch Video

Unless Congress acts by Dec. 31, every American will face higher income tax rates and government programs will get hit with deep automatic cuts starting in 2013.

Obama and Boehner have been inching closer to a deal on tax hikes and spending cuts to help reduce the deficit. But they have not yet had a breakthrough on a deal.

Obama's latest plan would raise $1.2 trillion in new tax revenue over 10 years, largely through higher tax rates on incomes above $400,000. He also proposes roughly $930 billion in spending cuts, including new limits on entitlement spending, such as slower annual cost-of-living increases for Social Security beneficiaries.

Boehner has agreed to $1 trillion in new tax revenue, with a tax rate hike for households earning over $1 million. He is seeking more than $1 trillion in spending cuts, with significant changes to Medicare and Social Security.

The president said today that he remains "optimistic" about reaching a broad compromise by Christmas because both sides are "pretty close," a sentiment that has been publicly shared by Boehner.

But the speaker's backup plan has, at least temporarily, stymied talks, with no reported contact between the sides since Monday.

"The speaker should return to the negotiating table with the president because if he does I firmly believe we can have an agreement before Christmas," said Sen. Chuck Schumer, D-N.Y., a White House ally.

Schumer said Obama and Boehner are "not that far apart" in the negotiations.

"If they were to come to an agreement by Friday, they could write this stuff over the Christmas break and then we'd have to come back before the New Year and pass it," Schumer said.

Obama said he is "open to conversations" and planned to reach out to congressional leaders over the next few days to try to nudge Republicans to accept a "fair deal."

"At some point, there's got to be, I think, a recognition on the part of my Republican friends that -- you know, take the deal," he told reporters.

"They keep on finding ways to say no, as opposed to finding ways to say yes," Obama added. "At some point, you know, they've got take me out of it and think about their voters and think about what's best for the country."

Read More..