Private equity pours money into India primary healthcare

MUMBAI (Reuters) - Private equity funds quadrupled their investment in India's primary healthcare, betting the sick and ailing will stop seeing family doctors in often cramped and dingy quarters and check into modern chains sprouting up across Asia's No.3 economy.
Goldman Sachs Group Inc, Warburg Pincus LLC, Sequoia Capital and the Government of Singapore Investment Corp are among investors that pumped $520 million into India's basic healthcare industry this year, compared with $137 million in 2011, according to Thomson Reuters data. Some analysts predict investment will surpass $1 billion in 2013.
Organized healthcare providers including Apollo Hospitals Enterprise Ltd and Fortis Healthcare Ltd are betting that growing numbers of patients will be willing to pay two or three times more for better-equipped clinics - all under a model that can be replicated fast and offers investors the potential for quick returns.
"The family doctor concept is slowly phasing out as migrants in cities look out for a brand rather than visiting a general physician next door," said Santanu Chattopadhyay, CEO of NationWide Primary Healthcare Services, in which U.S.-based Norwest Venture Partners has invested $4.6 million.
The opportunity is vast: India's unorganized primary healthcare system is worth $30 billion and is growing at least 25 percent a year. The challenge will be convincing the sick to give up their trusted family doctors.
The country's primary healthcare sector will draw at least $1 billion annually in private equity investment over the next couple of years, said Shantanu Deb Mookerjea, executive director at Mumbai-based advisory firm LSI Financial Services.
"Single-specialty chains and diagnostic laboratories will be the game changer," he said, adding that they are easy to set up and expand to suit demand.
Another attraction is that primary healthcare providers such as outpatient clinics and diagnostic centers are not capital-intensive, so investors don't have to write out big checks.
Also, unlike many restrictive Indian industries, from insurance to real estate and telecoms, there are no limits on foreign ownership in healthcare.
THINK LIKE RESTAURANTS
Healthcare, like restaurant chains, is a play on rising spending power in India, although valuations tend to be lower than the retail sector. Investors pay single-digit multiples on price-to-earnings in primary healthcare, compared with 15 to 18 for food and other consumer chains.
Valuations could improve if private healthcare operators also adopted a restaurant franchise model.
Under such a model, a healthcare operator would allow a franchisee to use its brand and provide expertise and support in exchange for a fee. The franchisor would avoid forking out money to set up new clinics - investments that will be borne by the franchisee.
"We would prefer to value our company based on our franchisee consumer model like a pizza (chain) rather than as a pill made by a drugmaker," said Atul Bhide, director of finance at Mumbai-based Vaidya Sane Ayurved Laboratories, which operates 160 clinics providing traditional ayurvedic treatment.
As a result, healthcare has been a rare bright spot for private equity in India, where overall investment fell 17 percent this year to about to $3.3 billion.
"From small hospital chains and specialized treatment facilities, we are witnessing increased institutionalized activity, which could attract a lot of institutional investment interest," said Vishakha Mulye, CEO of ICICI Venture, the private equity arm of ICICI Bank Ltd.
Last year, Mulye's fund sold its stake in diagnostic chain Metropolis Healthcare to Warburg Pincus for 3.92 billion rupees ($72 million), a 10-fold return on its 350-million-rupee investment in 2006.
CONVINCING PATIENTS
The biggest challenge will be convincing patients such as Chandrashekhar Khandke, a 30-year-old software professional at IBM in the western city of Pune, who said he has visited modern clinics a few times but still prefers his family doctor.
"If I buy grains from a grocery store or from a supermarket, it doesn't make much of a difference but when it comes to health, a family doctor matters a lot," he said.
Overcoming the draw of a trusted doctor may prove harder than it seems, even in a country where healthcare infrastructure is poor, electronic medical records are rare, and the quality of doctors and other medical professionals is patchy.
"Although branded clinics have potential, they find it tough to pull patients from a strong local doctor. Also, if there is a big hospital in the vicinity, then they lose out on patients," said Deepak Malik, analyst at Mumbai-based brokerage Emkay Global Financial Services Ltd.
While fees at modern clinics range from 150 to 600 rupees for treatment of routine illness, sole general practitioners charge patients anything between 50 and 300 rupees per visit.
"While these chains have a unique brand, a trusted doctor is even a bigger brand," said Anil Advani, a doctor who operates an old but modest 800-square-foot (75-square-metre) clinic in Thane, outside Mumbai.

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Fed's Plosser sees lasting blow to potential growth rate

SAN DIEGO (Reuters) - The United States economy likely suffered a lasting decline in its trend potential growth rate as a result of the severe 2007-2009 U.S. recession, a top official of the Federal Reserve said on Friday.
"Any of you who have looked at the data of the most recent ... recession, it certainly looks like we've had a permanent shock," Charles Plosser, president of the Philadelphia Federal Reserve Bank, told a panel at the annual meeting of the American Economic Association. "The problem is we won't know the answer to that for many years to come."
Fed Chairman Ben Bernanke also recently voiced the possibility that the harm done by the recession might have trimmed the United States' growth potential, which gauges how fast the economy can grow over time without hitting inflationary speed bumps.
Plosser is one of the more hawkish members of the Fed's policy-setting committee and has warned about the inflation risks posed by the U.S. central bank's current aggressive policy to spur the country's growth.
Hawks warn a decline in the rate of U.S. trend potential growth means the Fed ought be careful in trying to push the economy to grow much faster, although some economists say that the dip may only be temporary.
"If it is not permanent, it is very persistent," Plosser told reporters on the sidelines of the meeting, adding, "That has consequences for ... monetary policies' ability to do something about the shock."
The Fed last month voted to maintain mortgage-backed and Treasury bond purchases at an $85 billion monthly pace and to keep expanding its balance sheet via these quantitative easing measures until there is a substantial improvement in the outlook for the labor market.
The Labor Department on Friday reported that U.S. unemployment remained stuck at 7.8 percent in December. The Fed has committed to hold interest rates near zero until unemployment declines to 6.5 percent, provided inflation remains beneath 2.5 percent.
Plosser, who expects unemployment to drop to between 6.8 percent and 7.0 percent by end-2013, said he hoped the Fed would stop buying bonds before the 6.5 percent threshold, implying he anticipated the asset purchases would halt this year.
A danger of guessing wrong about trend growth is that it would throw off estimates about the size of the U.S. output gap, which is used to describe the amount of slack in the economy, and how much faster it can grow without sparking inflation.
The Fed's latest quarterly summary of policymakers' economic projections was for trend growth of 2.3 percent to 2.5 percent, unchanged from their estimate in September.
"One of the reasons we made the mistakes we made in the 1970s...was they mis-estimated the gap. Potential was a lot lower than they thought it was," Plosser said, referring to the period when the Fed accommodated a massive rise in inflation.
One reason that trend growth had slowed, he said, was the collapse of the housing bubble, which destroyed massive levels of U.S. wealth that families are now trying to restore by saving more, dampening their spending.

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U.S. public schools cut 11,000 jobs in December

WASHINGTON (Reuters) - Local U.S. governments cut jobs for the fourth straight month in December, including 11,000 in public schools, dragging down the nation's fragile economic recovery, jobs data showed on Friday.

Local government jobs are now at their lowest level since October 2005, with the bulk of the decline coming from layoffs of teachers and other school employees, according to the Labor Department.

For more than a year, persistent declines in public sector employment - particularly at the city, county and school district level - have stood in contrast to steady job gains in the private sector.

Jan Eberly, the U.S. Treasury assistant secretary for economic policy, said recent improvements in state budgets may start to reverse some of the declines next year.

"There is some expectation that state and local budgets will start to improve as the economy is picking up, and we're seeing improvements in many states, though not in all states," Eberly told reporters on Friday.

Overall government employment in the United States fell by 13,000 last month, the Labor Department said. Those jobs were almost all lost in public schools. Local governments shed 11,000 school jobs, and local agencies outside of schools had 2,200 more job losses.

State governments, meanwhile, added 4,000 jobs while federal government jobs fell by 3,000 in December, according to the report.

State and local government spending grew at a 0.3 percent annual rate in the third quarter, after 11 straight quarters of contraction, the Commerce Department reported last month. But many states, cities and counties are planning to keep spending flat as they continue to face uncertainty about federal funding levels and revenues.

Since August 2008, local governments have shed some 300,000 teaching and other school jobs, raising fears the layoffs could hurt students' education. Typically, schools try to avoid cutting jobs in the middle of the school year, and make most of their staffing changes in the summer.

The figures are also a worrisome sign that local budgets are still stuck in a slump. State governments have added 24,000 jobs since last December, but local governments have cut more than double that number in the past year.

The 2009 federal economic stimulus measure helped offset states' budget gaps resulting from the recession. But with the money now gone, state aid squeezed and tax revenues low, states have chipped away at their public safety and education workforces.

"(We) remain hopeful that President (Barack) Obama and the 113th Congress, as well as governors, will prioritize our students and public education and work hard to stave off further cuts," said Dennis Van Roekel, the president of the National Education Association, the largest U.S. teachers' union.

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Colombia firm makes armored clothes for kids

BOGOTA, Colombia (AP) — A Colombian firm that makes bulletproof vests is now creating armored clothing for children.
Factory owner Miguel Caballero said he never thought about making protective clothes for kids until requests came in following the deadly attack on Sandy Hook Elementary in Connecticut last month.
"After the tragedy in Connecticut, we started getting emails from customers asking for protected (clothing) because they were afraid to take their kids to school," Caballero said.
"We have received messages from all over the United States," seeking the protective gear, added Giovanni Cordero, the company's marketing director.
Products include child-sized armored vests, protective undershirts and backpacks with ballistic protection that can be used as shields.
The products are designed for children ages 8-16 years old and cost $150-$600 depending on the complexity of their construction. Each piece weighs 2-4 pounds.
"The products were created with the American market in mind, not for the Latino market," said Caballero. "All the designs and colors, everything is thought out with them in mind."
Caballero performed a test on a pink-and-yellow striped bulletproof backpack attached to a pale blue protective vest, firing a 9mm pistol and a machine gun to show it could withstand a barrage of bullets.
He said the backpack-vest combo and other protective gear have already been ordered by a U.S. distributor, although he would not identify it.
About 250 people work at Caballero's factory, which has been making armored vests for adults for more than 20 years. Colombia suffers from an internal conflict that has killed thousands of people over the last half-century.
Outside Colombia, the vests for adults are sold in some 20 countries, including Ecuador, Costa Rica and Mexico. They are also marketed in parts of Europe, Asia and the Middle East.
Twenty first-graders and six educators were killed in the Dec. 14 attack at Sandy Hook Elementary in Newtown, Conn. The 20-year-old gunman, Adam Lanza, also shot and killed his mother inside their home before driving to the school and shooting his way inside. He committed suicide as police were closing in.
After the Newtown shooting, at least three American companies that were already making backpacks designed to shield children reported a spike in sales.
Massachusetts-based Bullet Blocker reported it was selling 50 to 100 bulletproof backpacks a day after the shooting, up from about 10 to 15 in an average week. The children's backpacks, which are designed to be used as shields, cost more than $200 each.
Most of the children killed in the Sandy Hook Elementary massacre were shot at close range and likely would not have been saved by armored backpacks. At any rate, children don't usually wear their backpacks at their desks or while walking around school.

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Chile: Couple dies defending home against Indians

An elderly couple whose family's vast landholdings have long been targeted by Mapuche Indians in southern Chile were killed in an arson attack early Friday while trying to defend their home. The president quickly flew to the scene and announced new security measures, including the application of Chile's tough anti-terrorism law and the creation of a special police anti-terror unit backed by Chile's military.
No one claimed responsibility for the attack, which some Mapuche Indians repudiated Friday as senseless and abhorrent. But Chile's interior minister said pamphlets condemning police violence and demanding the return of Mapuche lands were left at the scene. The presidentially appointed governor of the remote southern region of Araucania, Andres Molina, called the attackers "savages."
"This attack affects the entire country and causes gigantic damage, for the pain and the delays that it means for thousands of families who want to live in peace," Pinera said. "This government is united in its effort to combat terrorism that affects the region. We will not hesitate to apply the full weight of the law."
"It should be completely clear," Pinera added, "that this fight is not against the Mapuche people. It's with a minority of violent terrorists who must be fought with everything the law allows."
Werner Luchsinger, 75, fired a weapon in self-defense, and struck a man from the nearby Mapuche community of Juan Quintrupil before his home burned to the ground, regional police chief Ivan Bezmalinovic said.
Luchsinger's wife Vivian McKay called relatives for help during the attack, but when they arrived just 15 minutes later the house was already in flames and she didn't answer her phone, according to the victim's cousin, Jorge Luchsinger.
The attack began Thursday night as one of many political protests around Chile commemorating the death five years ago of Mapuche activist Matias Catrileo, who was shot in the back by an officer who served a minor sentence and then rejoined the police. The Indians scattered pamphlets related to the anniversary while on the Luchsinger property, Interior Minister Andres Chadwick said.
The victims' Lumahue ranch is just 16 miles (25 kilometers) from the spot where Catrileo was killed on Jan. 3, 2008.
Celestino Cordova Transito, 26, was detained near the scene early Friday. Police have him under arrest in a hospital in Temuco, where he was being treated for a gunshot wound in the neck, the chief said.
Gov. Molina said that Werner Luchsinger's gunshot, by enabling police to capture the wounded suspect, may help solve not only the couple's death but previous arson attacks as well.
"I want to thank Don Werner, because probably thanks to him we're closer to finding these savages who have done such damage to Araucania," he said.
Pinera also met briefly with the Luchsinger family as well as other local landowners next to the burned-out home, but Chile's El Mercurio said the meeting was cut short when some fled due to a false rumor that Mapuche activists were targeting their properties even as the president spoke. Other landowners shouted out in anger, asking for tougher security measures, and then briefly blocked the main highway in protest. Pinera's security detail then ushered him away, the newspaper reported.
Jorge Luchsinger said earlier Friday that masked Indians have repeatedly attacked his and other relatives' properties as well, despite the considerable police presence in the area. "It's obvious that the authorities are completely overwhelmed," he told radio Cooperativa.
Many of Chile's Mapuche activist groups were silent Friday about the murders, repeating instead their complaints about continuing police violence of the kind that killed Catrileo years ago.
But Venancio Conuepan, who described himself as a law student who comes from a long line of Mapuche leaders, wrote an editorial Friday condemning the violence, rejecting the idea that armed conflict can win their demands, and calling for the killers to be identified and tried in court. He said the vast majority of the Mapuche people agree with him.
"Enough of people using violence in the name of the Mapuche people. Our grandfathers never covered their faces. The Mapuche created parliaments, and always put dialogue first," wrote Conuepan on Radio BioBio's web site, titling his editorial, "Although you don't believe me, I'm Mapuche and I'm not a Terrorist."
The Luchsinger family has been among the most outspoken in defending the property rights of the region's landowners against ancestral land claims by the Mapuche. But Jorge said his cousin had taken a lower profile and refused police protection.
Lorena Fries, the director of Chile's official Human Rights Institute, warned Friday against cracking down using the anti-terror law, which allows for holding suspects in isolation without charges, using secret witnesses and other measures that have been discredited by Chile's courts in previous cases of Mapuche violence. Instead, she said Pinera should reach out to the Indians, and honor their demands for self-governance and the recovery of ancestral land. "Something has to be done so that everyone puts an end to the violence," she said.
The Mapuches' demands for land and autonomy date back centuries. They resisted Spanish and Chilean domination for more than 300 years before they were forced south to Araucania in 1881. Many of the 700,000 Mapuches who survive among Chile's 17 million people still live in Araucania. A small fraction have been rebelling for decades, destroying forestry equipment and torching trees. Governments on the left and right have sent in police while offering programs that fall far short of their demands.
The Luchsinger family also arrived in Araucania in the late 1800s, from Switzerland, and benefited from the government's colonization policies for decades thereafter, becoming one of the largest landowners in Chile's Patagonia region. Their forestry and ranching companies now occupy vast stretches of southern Chile, and impoverished Mapuches live on the margins of their properties.

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Chile: Couple dies defending home amid protests

SANTIAGO, Chile (AP) — An elderly couple whose family's vast landholdings have long been targeted by Mapuche Indians in southern Chile were killed in an arson attack early Friday while trying to defend their home. The president quickly flew to the scene and announced new security measures, including the application of Chile's tough anti-terrorism law and the creation of a special police anti-terror unit backed by Chile's military.
No one claimed responsibility for the attack, which some Mapuche Indians repudiated Friday as senseless and abhorrent. But Chile's interior minister said pamphlets condemning police violence and demanding the return of Mapuche lands were left at the scene. The presidentially appointed governor of the remote southern region of Araucania, Andres Molina, called the attackers "savages."
"This attack affects the entire country and causes gigantic damage, for the pain and the delays that it means for thousands of families who want to live in peace," Pinera said. "This government is united in its effort to combat terrorism that affects the region. We will not hesitate to apply the full weight of the law."
"It should be completely clear," Pinera added, "that this fight is not against the Mapuche people. It's with a minority of violent terrorists who must be fought with everything the law allows."
Werner Luchsinger, 75, fired a weapon in self-defense, and struck a man from the nearby Mapuche community of Juan Quintrupil before his home burned to the ground, regional police chief Ivan Bezmalinovic said.
Luchsinger's wife Vivian McKay called relatives for help during the attack, but when they arrived just 15 minutes later the house was already in flames and she didn't answer her phone, according to the victim's cousin, Jorge Luchsinger.
The attack began Thursday night as one of many political protests around Chile commemorating the death five years ago of Mapuche activist Matias Catrileo, who was shot in the back by an officer who served a minor sentence and then rejoined the police. The Indians scattered pamphlets related to the anniversary while on the Luchsinger property, Interior Minister Andres Chadwick said.
The victims' Lumahue ranch is just 16 miles (25 kilometers) from the spot where Catrileo was killed on Jan. 3, 2008.
Celestino Cordova Transito, 26, was detained near the scene early Friday. Police have him under arrest in a hospital in Temuco, where he was being treated for a gunshot wound in the neck, the chief said.
Gov. Molina said that Werner Luchsinger's gunshot, by enabling police to capture the wounded suspect, may help solve not only the couple's death but previous arson attacks as well.
"I want to thank Don Werner, because probably thanks to him we're closer to finding these savages who have done such damage to Araucania," he said.
Pinera also met briefly with the Luchsinger family as well as other local landowners next to the burned-out home, but Chile's El Mercurio said the meeting was cut short when some fled due to a false rumor that Mapuche activists were targeting their properties even as the president spoke. Other landowners shouted out in anger, asking for tougher security measures, and then briefly blocked the main highway in protest.
Jorge Luchsinger said earlier Friday that masked Indians have repeatedly attacked his and other relatives' properties as well, despite the considerable police presence in the area. "It's obvious that the authorities are completely overwhelmed," he told radio Cooperativa.
Many of Chile's Mapuche activist groups were silent Friday about the murders, repeating instead their complaints about continuing police violence of the kind that killed Catrileo years ago.
But Venancio Conuepan, who described himself as a law student who comes from a long line of Mapuche leaders, wrote an editorial Friday condemning the violence, rejecting the idea that armed conflict can win their demands, and calling for the killers to be identified and tried in court. He said the vast majority of the Mapuche people agree with him.
"Enough of people using violence in the name of the Mapuche people. Our grandfathers never covered their faces. The Mapuche created parliaments, and always put dialogue first," wrote Conuepan on Radio BioBio's web site, titling his editorial, "Although you don't believe me, I'm Mapuche and I'm not a Terrorist."
The Luchsinger family has been among the most outspoken in defending the property rights of the region's landowners against ancestral land claims by the Mapuche. But Jorge said his cousin had taken a lower profile and refused police protection.
Lorena Fries, the director of Chile's official Human Rights Institute, warned Friday against cracking down using the anti-terror law, which allows for holding suspects in isolation without charges, using secret witnesses and other measures that have been discredited by Chile's courts in previous cases of Mapuche violence. Instead, she said Pinera should reach out to the Indians, and honor their demands for self-governance and the recovery of ancestral land. "Something has to be done so that everyone puts an end to the violence," she said.
The Mapuches' demands for land and autonomy date back centuries. They resisted Spanish and Chilean domination for more than 300 years before they were forced south to Araucania in 1881. Many of the 700,000 Mapuches who survive among Chile's 17 million people still live in Araucania. A small fraction have been rebelling for decades, destroying forestry equipment and torching trees. Governments on the left and right have sent in police while offering programs that fall far short of their demands.
The Luchsinger family also arrived in Araucania in the late 1800s, from Switzerland, and benefited from the government's colonization policies for decades thereafter, becoming one of the largest landowners in Chile's Patagonia region. Their forestry and ranching companies now occupy vast stretches of southern Chile, and impoverished Mapuches live on the margins of their properties.

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Venezuela's Chavez fighting severe lung infection

CARACAS, Venezuela (AP) — Venezuelan lawmakers will meet Saturday in a session that could shed light on what steps may be taken if President Hugo Chavez is too sick to be sworn in for a new term next week.
Legislators will choose a president, two vice presidents and other leaders of the National Assembly, which is controlled by a pro-Chavez majority. Whoever is elected National Assembly president could end up being the interim president of Venezuela if Chavez is unable to be inaugurated on Thursday as scheduled.
Brewing disagreements over how to handle a possible transition of power also could be aired at the session, coming just five days before the scheduled inauguration day specified in the constitution. Chavez's health crisis has raised contentious questions ahead of the swearing-in, including whether the inauguration could legally be postponed.
The government revealed this week that Chavez is fighting a severe lung infection and receiving treatment for "respiratory deficiency" more than three weeks after undergoing cancer surgery in Cuba. The announcement suggests a deepening crisis for the 58-year-old president and has fed speculation that he likely is not well enough to travel to Caracas for the inauguration.
National Assembly President Diosdado Cabello called on Chavez backers to show up for the legislative session and demonstrate their support.
"This National Assembly is revolutionary and socialist. It will remain beside the people and our commander," Cabello said in one of several messages on his Twitter account. "If the opposition thinks it will find a space in the National Assembly to conspire against the people, it's mistaken once again. It will be defeated."
Opposition leaders have demanded that the government provide more specific information about Chavez's condition, and say a new election should be held within 30 days if the president doesn't return to Venezuela by inauguration day.
Some Chavez allies say the inauguration date is not a hard deadline, and argue that the president should be given more time to recover from his surgery if necessary.
Chavez hasn't spoken publicly or been seen since his Dec. 11 operation in Cuba. In a Thursday night update, the government for the first time described the president's respiratory infection as "severe," the strongest confirmation yet that Chavez is having serious trouble breathing after days of rumors about his condition worsening.
"Chavez has faced complications as a result of a severe respiratory infection. This infection has led to respiratory deficiency that requires Commander Chavez to remain in strict compliance with his medical treatment," Information Minister Ernesto Villegas said Thursday night, reading a statement on television.
The government's characterization raised the possibility that Chavez might be breathing with the assistance of a machine. But the government did not address that question and didn't give details of the president's treatment.
Independent medical experts consulted by The Associated Press said the government's account indicated a potentially dangerous turn in Chavez's condition, but said it's unclear whether he is attached to a ventilator.
"It appears he has a very severe pneumonia that he suffered after a respiratory failure. It is not very specific," said Dr. Alejandro Rios-Ramirez, a pulmonary specialist in Puerto Vallarta, Mexico.
Dr. Gustavo Medrano, a lung specialist at the Centro Medico hospital in Caracas, said he has seen similar cases in cancer patients who have undergone surgery, and "in general it's very bad, above all after a surgery like the one they performed on him."
"I don't know the magnitude of the infection he has, how much of his lungs have been compromised, how much other organs are being affected. That's not clear," Medrano said.
"What's most likely is that he's on mechanical ventilation," Medrano added. However, he said, while respiratory deficiency means there is an abnormally low concentration of oxygen in the blood, depending on the severity it can be treated in various ways.
Dr. Michael Pishvaian, an oncologist at Georgetown University's Lombardi Cancer Center in Washington, agreed that such respiratory infections can run the gamut from "a mild infection requiring antibiotics and supplemental oxygen to life-threatening respiratory complications."
"It could be a very ominous sign," Pishvaian said. He said it's possible Chavez could be on "life support," but added it's impossible to be sure without more details.
The government expressed confidence in Chavez's medical team and condemned what it called a "campaign of psychological warfare" in the international media regarding the president's condition. Officials have urged Venezuelans not to heed rumors about Chavez's condition.
Opposition leaders have blamed vague information coming from the government for the rumors, and demanded a full medical report.
The Venezuelan newspaper El Nacional criticized what it called an "information vacuum" in an editorial on Friday, saying Venezuelans are in the dark because "no one speaks clearly from the government." The newspaper called the situation reminiscent of secrecy that surrounded the deaths of Josef Stalin in the former Soviet Union and Mao Zedong in China.
State television repeatedly played video of a song in which rappers encourage Venezuelans to pray, saying of Chavez: "You will live and triumph." A recording of a speech by Chavez appears during the song, saying: "I will be with you always!"
Chavez has undergone four cancer-related surgeries since June 2011 for an undisclosed type of pelvic cancer. He also has undergone chemotherapy and radiation treatment.
He was re-elected in October to another six-year term, and two months later announced that the cancer had returned. Chavez said before the operation that if his illness prevented him from remaining president, Vice President Nicolas Maduro should be his party's candidate to replace him in a new election.
This week, Cabello and the president's elder brother Adan joined a parade of visitors who saw Chavez in Havana, and then returned to Caracas on Thursday along with Maduro.
Brazil's state-run Agencia Brasil news agency reported Friday that President Dilma Rousseff's top international adviser, Marco Aurelio Garcia, made a one-day visit to Cuba and spoke with Venezuelan and Cuban officials about Chavez's health. It was unclear if Garcia actually saw Chavez, or what day he visited Cuba.
Telephone calls placed after hours to Brazil's Foreign Ministry and presidential offices were not immediately answered.
The Venezuelan Constitution says the presidential oath should be taken Jan. 10 before the National Assembly. Government officials have raised the possibility that Chavez might not be well enough to do that, without saying what will happen if he can't. The constitution also says that if the president is unable to be sworn in before the National Assembly, he may take the oath office before the Supreme Court.
The constitution says that if a president or president-elect dies or is declared unable to continue in office, presidential powers should be held temporarily by the president of the National Assembly and a new election should be held within 30 days.
On the streets of Caracas, some of Chavez's supporters say they're still holding out hope he can recover.
"He's the only leader of the revolution," said Miriam Bolivar, who belongs to a grassroots pro-Chavez group. "We can't imagine life without him. He's our life. This is one more battle and we have faith that he'll come out it unscathed once again."
Other Chavez supporters say they're unsure what to believe about his condition and express misgivings about the president's lieutenants.
"We hope that what they're telling us is true," said Ricardo Maya, a supporter who was reading a newspaper in a city square. "Chavez has all my confidence. He always speaks the truth. I can't say the same about the people around him."

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Venezuela VP: Chavez could be sworn in by court

CARACAS, Venezuela (AP) — Venezuelan President Hugo Chavez could be sworn in by the Supreme Court later on if he's not able to take the oath of office before lawmakers next week because of his struggle with cancer, his vice president said Friday.
The stance announced by Vice President Nicolas Maduro conflicts with the argument by some opposition leaders that the president of the National Assembly would have to take over as interim president if Chavez were unable to attend his inauguration as scheduled next Thursday.
Maduro's remarks sent the strongest signal yet that the government may seek to postpone Chavez's inauguration due to his delicate condition after surgery in Cuba. His position appeared likely to generate friction between the government and opposition over the legality of putting off the swearing-in, which the constitution says should occur on Thursday before the National Assembly.
Maduro says Chavez, as a re-elected president, remains in office beyond the inauguration date stipulated in the constitution, and could be sworn in if necessary before the Supreme Court at a later date to be determined.
"The formality of his swearing-in can be resolved before the Supreme Court of Justice, at the time (the court) deems in coordination with the head of state, Commander Hugo Chavez," Maduro said in a televised interview.
As for the opposition, Maduro said, "they should respect our constitution." The vice president held up a small blue copy of the constitution and read aloud passages relating to such procedures.
Opposition leaders have demanded that the government provide more specific information about Chavez's condition, and say that if the president doesn't return to Venezuela by inauguration day, the president of the National Assembly should take over the presidency on an interim basis. But Maduro echoed other Chavez allies in suggesting the inauguration date is not a firm deadline, and that the president should be given more time to recover from his cancer surgery if needed.
"Maduro's comments are not surprising. The government holds all the cards in the current situation, particularly given the compassion for Chavez's serious illness. It has interpreted the constitution loosely, to its own political advantage," said Michael Shifter, president of the Inter-American Dialogue think tank in Washington. "In this way Maduro is able to buy some time, assert his authority, and rally support within Chavismo. He puts the opposition on notice and throws it off balance."
As for Chavez, Maduro reiterated that the president is fighting a "complex" health battle but expressed hope that eventually "we'll see him and we'll hear him."
"He has a right to rest and tranquility, and to recuperate," Maduro said on state television, speaking with Information Minister Ernesto Villegas.
"The president right now is the exercising president. He has his government formed," Maduro said. He read a portion of the constitution detailing procedures for declaring an "absolute absence" of the president, which would trigger a new election within 30 days, and declared that "none of these grounds can be raised by the Venezuelan opposition."
The Venezuelan Constitution says the presidential oath should be taken Jan. 10 before the National Assembly. It also says that if the president is unable to be sworn in before the National Assembly, he may take the oath office before the Supreme Court, and some legal experts have noted that the sentence mentioning the court does not mention a date.
Others disagree. Ruben Ortiz, a lawyer and opposition supporter, argued that Maduro is wrong and that under the constitution the inauguration date can't be postponed.
If Chavez is not in Caracas to be sworn in on Thursday, Ortiz said in a phone interview, "the president of the National Assembly should take charge." He added that "there is a formal separation between one term and the other."
But Shifter said the opposition is on the defensive, with its only tactic being to insist that Jan. 10 is the established date.
"Chavez controls all the key institutions, and it's doubtful that most Venezuelans will get too upset about defying what seems a fairly minor constitutional provision," Shifter said. "Attacking the government because it has no objection to the Supreme Court swearing in Chavez after Jan. 10 is not exactly a winning political strategy for the opposition."
A delay also serves the government's purposes, Shifter said. "The government wants more time, whether to see if Chavez gets better, or to consolidate their ranks and further splinter and demoralize the opposition."
Venezuelan lawmakers will meet Saturday in a session that could shed more light on what steps Chavez's allies plan to take.
Legislators will choose a president, two vice presidents and other leaders of the National Assembly, which is controlled by a pro-Chavez majority. Whoever is elected National Assembly president could eventually end up being the interim president of Venezuela under some circumstances.
Brewing disagreements over how to handle a possible transition of power could also be aired at the session.
"If the opposition thinks it will find a space in the National Assembly to conspire against the people, it's mistaken once again. It will be defeated," National Assembly President Diosdado Cabello said in a message on Twitter, saying the legislature will stand with Chavez.
The government revealed this week that Chavez is fighting a severe lung infection and receiving treatment for "respiratory deficiency" more than three weeks after undergoing cancer surgery in Cuba.
Chavez hasn't spoken publicly or been seen since his Dec. 11 operation in Cuba, and the latest announcement suggests a deepening crisis for the 58-year-old president.
But Maduro criticized rumors surrounding Chavez's condition, saying: "He has a right to his privacy, and to recover."
The government's account of Chavez's complications raised the possibility that he might be breathing with the assistance of a machine. But the government did not address that question and didn't give details of the president's treatment.
Independent medical experts consulted by The Associated Press said the government's account indicated a potentially dangerous turn in Chavez's condition, but said it's unclear whether he is attached to a ventilator.
Dr. Gustavo Medrano, a lung specialist at the Centro Medico hospital in Caracas, said he has seen similar cases in cancer patients who have undergone surgery, and "in general it's very bad, above all after a surgery like the one they performed on him."
"I don't know the magnitude of the infection he has, how much of his lungs have been compromised, how much other organs are being affected. That's not clear," Medrano said.
"What's most likely is that he's on mechanical ventilation," Medrano added. However, he said, while respiratory deficiency means there is an abnormally low concentration of oxygen in the blood, depending on the severity it can be treated in various ways.
Dr. Michael Pishvaian, an oncologist at Georgetown University's Lombardi Cancer Center in Washington, agreed that such respiratory infections can run the gamut from "a mild infection requiring antibiotics and supplemental oxygen to life-threatening respiratory complications."
"It could be a very ominous sign," Pishvaian said. He said it's possible Chavez could be on "life support," but added it's impossible to be sure without more details.
Opposition leaders have blamed vague information coming from the government for persistent rumors about Chavez's condition, and demanded a full medical report.
Chavez has undergone four cancer-related surgeries since June 2011 for an undisclosed type of pelvic cancer. He also has undergone chemotherapy and radiation treatment.
He was re-elected in October to another six-year term, and two months later announced that the cancer had returned. Chavez said before the operation that if his illness prevented him from remaining president, Maduro should be his party's candidate to replace him in a new election.
The Venezuelan newspaper El Nacional criticized what it called an "information vacuum" in an editorial on Friday, saying Venezuelans are in the dark because "no one speaks clearly from the government." The newspaper called the situation reminiscent of secrecy that surrounded the deaths of Josef Stalin in the former Soviet Union and Mao Zedong in China.
State television repeatedly played video of a song in which rappers encourage Venezuelans to pray, saying of Chavez: "You will live and triumph." A recording of a speech by Chavez appears during the song, saying: "I will be with you always!"

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Lunch meat maker Hormel orders up Skippy sandwich

 Hormel Foods apparently has a hankering for a peanut butter and bacon sandwich. The company primarily known for Spam and other cured, smoked and deli meats said Thursday that it's buying Skippy, the country's No. 2 peanut butter brand, in its biggest-ever acquisition.
Skippy, which was introduced in 1932 and is a staple in American pantries, is intended to increase Hormel's presence in the center of the supermarket where nonperishable foods are sold. It also gives the Austin, Minn.-based company a stronger footing in international markets. Skippy is sold in about 30 countries and is the leading peanut butter brand in China, where Hormel has been trying to build up its Spam business for the past several years.
Hormel, which also makes canned chili, sausages and pepperoni, currently gets the vast majority of its sales in the U.S., with only about 4 percent of revenue coming from abroad. Now the company is hoping that Skippy, which it's buying from Unilever for $700 million, will help it expand at home and overseas.
In a conference call with analysts, CEO Jeffrey Ettinger noted that peanuts and peanut oil are popular in China. And although peanut butter is not yet a household staple there, he said it is growing rapidly.
Back at home, Ettinger said peanut butter is already regarded as a convenient and affordable source of protein and that Hormel would apply its innovation skills and "take Skippy out of the jar" for use in other products such as packaged snack foods.
For example, he noted that the company recently introduced pepperoni sticks as part of a push to grow its snacks business. With Spam, the company is testing shelf-stable, microwavable meals, such as jambalaya made with Spam. It's also considering a variety of macaroni and cheese made with Spam.
"That concept of taking (Skippy) out of the jar echoes a similar concept we're trying with taking Spam out of the can," Ettinger said in an interview.
For now, there are 11 varieties of Skippy in the U.S., including low-fat and natural varieties. Hormel noted that Skippy is the leading brand in the faster-growing subcategory of natural peanut butter. Overall, Skippy has about 17 percent of the U.S. peanut butter market, according to Euromonitor International. Jif, owned by J.M. Smucker Co., is the largest brand with about 37 percent of the market.
Although Skippy is "a good fit" with its other packaged foods, Ettinger said Hormel still needs to figure out how to handle its merchandising of Skippy in stores, such as whether to display it next to other items.
Swings in peanut butter prices have made growth volatile in recent years, but Skippy sales on average have increased about 4 percent annually on a normalized basis, according to a spokesman for Unilever. The American Peanut Council estimates that Americans eat an average of nearly 4 pounds of peanut butter a year.
Hormel expects annual Skippy sales of about $370 million, with almost $100 million of that from outside the U.S. Ettinger expects Skippy sales to grow in the low single digits domestically and in the high single digits overseas.
The deal includes Skippy manufacturing plants in Little Rock, Ark., and Weifang, China. Hormel Foods Corp. said that it expects the deal to modestly add to its fiscal 2013 results and add 13 cents to 17 cents per share to fiscal 2014 earnings.
The transaction, which still needs regulatory approval, is expected to close in two parts. The domestic closing is expected by the second quarter and the China business is expected to close by the end of the year.
As Hormel continues to grow, Ettinger said future acquisitions could be larger than they have been in recent years. "It's an $8 billion company now. You have to move the needle," he said.
Unilever, based in the Netherlands and the U.K., is one of the largest consumer products companies in the world. It makes Vaseline, Dove soaps and Lipton tea. The company had indicated last year it was considering selling Skippy as part of a strategic review.
Hormel shares rose $1.19, or 3.7 percent, to close at $33.20 Thursday.

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Economy, year-end sales help auto industry in 2012

DETROIT (AP) — A steadily improving economy and strong December sales lifted the American auto industry to its best performance in five years in 2012, especially for Volkswagen and Japanese-brand vehicles, and experts say the next year should be even better.
Carmakers on Thursday announced their final figures, which totaled 14.5 million — 13 percent better than 2011.
More than three years after the federal government's $62 billion auto-industry bailout, Americans had plenty of incentive to buy new cars and trucks in the year just ended.
Unemployment eased. Home sales and prices rose. And the average age of a car topped 11 years in the U.S., a record that spurred people to trade in old vehicles. Banks made that easier by offering low interest rates and greater access to loans, even for buyers with lousy credit.
"The U.S. light vehicle sales market continues to be a bright spot in the tremulous global environment," said Jeff Schuster, senior vice president of forecasting for LMC Automotive, a Detroit-area industry forecasting firm.
Sales were far better than the bleak days after the U.S. economy tanked and GM and Chrysler sought bankruptcy protection. Back then, sales fell to a 30-year low of 10.4 million, and they are still far short of the recent peak of around 17 million set in 2005.
The best part of 2012 came at the end, when special deals on pickup trucks and the usual round of sparkling holiday ads helped December sales jump 9 percent to more than 1.3 million, according to Autodata Corp. That translates to an annual rate of 15.4 million, making December the strongest month of the year.
Volkswagen led all major automakers with sales up a staggering 35 percent, led by the redesigned Passat midsize sedan. VW sold more than five times as many Passats last year as it did in 2011.
Jesse Toprak, vice president of industry trends for TrueCar, said VW has the right mix of value and attractive vehicles and called the company "the force to watch in the next several years in the U.S. market."
Toyota, which has recovered from the earthquake and tsunami in Japan that crimped its factories two years ago, saw sales jump 27 percent for 2012. December sales were up 9 percent. Unlike 2011, the company had plenty of new cars on dealer lots for most of last year.
Honda sales rose 24 percent for the year. Nissan and Infiniti sales were up nearly 10 percent as the Nissan brand topped 1 million in annual sales for the first time. Hyundai sales rose 9 percent for the year to just over 703,000, the Korean automaker's best year in the U.S.
Chrysler, the smallest of the Detroit carmakers, had the best year among U.S. companies. Its sales jumped 21 percent for the year and 10 percent in December. Demand was led by the Jeep Grand Cherokee SUV, Ram pickup and Chrysler 300 luxury sedan.
But full-year sales at Ford and General Motors lagged. Ford edged up 5 percent and GM rose only 3.7 percent for the year. For December, Ford was up 2 percent and GM up 5 percent.
GM executives said the company has the oldest model lineup in the industry, yet it still posted a sales increase and commanded high prices for cars and trucks. The company plans to refurbish 70 percent of its North American models in the next 18 months and expects to boost sales this year.
North American President Mark Reuss said the company won't give away cars and trucks with discounts like it has in the past, especially in the midst of its biggest product update ever.
"Give us 18 months and you're going to see the whole portfolio turned," Reuss said.
Even though the congressional deal to avoid the fiscal cliff deal raised tax rates on the wealthiest Americans, Ford said it doesn't see a huge impact on auto sales.
Its chief economist, Ellen Hughes-Cromwick, said only 2 percent of new-vehicle buyers have income in that upper tax bracket, and they tend to purchase even if there is a change in after-tax income.
She said Ford is more concerned about an increase in the payroll tax, which is scheduled to climb to 6.2 percent this year from 4.2 percent in 2011 and 2012. That amounts to a $1,000 to $1,500 tax increase per household, she said.
"We will look at that closely because it will crimp spending in the months ahead," she said.
December featured year-end deals on GM's big pickup trucks. The company offered discounts up to $9,000 to help clear growing inventory, and it worked. GM cut its full-size pickup supply by more than 20,000 in December to about 222,000.
Overall, though, analysts said the industry eased up on promotions such as rebates and low-interest financing. Car and truck buyers paid an average of $31,228 per vehicle last month, up 1.8 percent from December 2011.
The Polk auto research firm predicted even stronger U.S. sales for 2013, forecasting 15.3 million vehicle sales as the economy continues to improve. Polk, based in Southfield, Mich., expects 43 new models to be introduced, up 50 percent from last year. New models usually boost sales.
The firm also predicts a rebound in sales of large pickups and midsize cars. All eight of the top manufacturers are introducing new vehicles, and that should bring competition and lower prices in those segments, according to Tom Libby, lead North American analyst for Polk.
But the firm's optimistic forecasts hinge on Washington reaching an agreement on government debt limits and spending cuts.

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IMF's economist: budget cuts may hurt growth less now

WASHINGTON (Reuters) - Belt-tightening in advanced economies may not be as harmful to growth now as it was during the height of the financial crisis, but governments should still be careful about drastic cuts, an International Monetary Fund research paper found on Thursday.
The IMF came under heavy criticism in October when it conceded that austerity programs it recommended during the global economic crisis were more costly than expected, causing economic damage that was as much as triple the amount forecast.
In a follow-up paper by the IMF's chief economist, Olivier Blanchard, and his colleague, Daniel Leigh, stood by their initial conclusions but said the harshest impact of those programs may be fading as economies start to recover.
The paper in October fueled critics of steep budget cuts in debt-burdened European economies, and prompted the IMF to soften its own recommendations for austerity in the euro zone crisis.
It said that now it believed forcing Greece and other debt-burdened countries to reduce their deficits too quickly would be counterproductive.
"For example, in Portugal, we have relaxed fiscal deficit targets," said Blanchard, the IMF chief economist.
But Germany said at the time that back-tracking on debt-reduction goals would only hurt market confidence.
Some economists also questioned the methodology the IMF had used in its initial research, saying the findings may have been exaggerated, or only applied to certain countries or times.
In the follow-up paper on Thursday, Blanchard and Leight said their research held-up for most advanced economies during the height of the financial crisis in 2009-10. While their views do not represent those of the Fund, the chief economist has a heavy hand in shaping the IMF's economic thinking.
"Forecasters have underestimated fiscal multipliers, that is, the short-term effects of government spending cuts or tax hikes on economic activity," the paper wrote.
The paper found that every dollar of deficit reduction subtracted "substantially" more than a dollar from economic growth, as much at $1.70. Economists had previously estimated that a dollar in government cuts would drain only 50 cents from the economy.
But during the past two years, the negative effect of government cuts on growth may have shrunk as the economy improved and people and businesses were able to borrow more money, making government spending less crucial, the researchers found.
"A decline in actual multipliers ... could reflect an easing of credit constraints faced by firms and households, and less economic slack in a number of economies relative to 2009-10," the paper said.
Blanchard and Leigh said the effect of government spending on the economy could vary depending on the country and the state of the economy. They cautioned that governments should not necessarily delay austerity, but should take into account its negative impact on growth.

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Transocean to pay $1.4 billion for role in BP oil spill

 Transocean Ltd agreed to pay $1.4 billion to settle U.S. government charges over BP Plc's massive Gulf of Mexico oil spill in 2010 and the rig contractor admitted that its crew on the Deepwater Horizon was partly responsible.
Transocean, which employed nine of the 11 workers killed in the accident, had set aside $1.5 billion for the U.S. Department of Justice out of a $1.95 billion Macondo loss provision. The settlement, unveiled on Thursday by the DoJ, includes $1 billion in civil penalties and $400 million in criminal penalties.
Still looming is a settlement with the plaintiffs committee that represents more than 100,000 individuals and business owners claiming economic and medical damages. So the ultimate cost of Macondo to Transocean could end up being more than $4 billion, UBS analyst Angie Sedita said. Last year, BP reached a $7.8 billion plaintiffs liability settlement.
The shares of Switzerland-based Transocean rose 6.4 percent to close at $49.21 in New York on the lower-than-expected DoJ payout, with Barclays having expected a settlement of $2.5 billion. The cost of insuring Transocean debt fell sharply.
"The bottom line to me is they now can put away the big black cloud that has been hanging over them," said Phil Weiss, an oil analyst at Argus Research.
BP and its contractors have sought to push blame on to each other since the 2010 well explosion caused the largest-ever U.S. offshore oil spill. Lawyers and analysts see the federal settlements with BP, and now Transocean, as a solid legal framework to start putting the disaster behind them.
Halliburton Co, which performed cementing work on the Macondo well, remains the only one not to have settled. Daniel Becnel, a Louisiana lawyer representing spill-related claimants, believes that settlement is merely a matter of time because none of the three really wants to fight it out in court.
The BP-contracted Deepwater Horizon was drilling the mile-deep well on April 20, 2010, when a surge of methane gas caused a blowout. The accident led to a months-long U.S. deepwater ban and intense scrutiny of the offshore drilling industry, which is now booming worldwide despite lingering public concerns.
Of the $400 million in Transocean criminal fines, $150 million will help protect the Gulf of Mexico, while another $150 million will fund spill prevention and response efforts there, the DoJ said. Transocean must also implement court-enforceable measures to improve safety and emergency response on U.S. rigs.
"From what I have read, they (Transocean) played a part, but BP is the lion's share and ought to pay $15 billion dollars." said Tony Kennon, mayor of Orange Beach, Alabama.
The U.S. Chemical Safety Board found that BP and Transocean both had "safety management system deficiencies that contributed to the Macondo incident," and neither had adequate safety rules.
The DoJ said that in agreeing to plead guilty to violating the Clean Water Act, Transocean admitted that members of its crew, acting at BP's direction, were negligent in failing fully to investigate indications that the Macondo well was not secure.
"Unfortunately, Halliburton continues to deny its significant role in the accident, including its failure to adequately cement and monitor the well," BP said in a statement.
Halliburton said it had substantial legal arguments against any liability, including an indemnity in its contract with BP. Halliburton shares closed 1.7 percent higher at $36.31.
BP agreed in November to a DoJ settlement of its own worth $4.5 billion, including the largest criminal fine ever at $1.256 billion. The London-based oil company also agreed to plead guilty to obstruction of Congress, a felony.
New York-traded shares of BP closed 2 percent higher on Thursday.
Attention now turns to any possible settlements ahead of a Macondo-related trial due to start on February 25 in New Orleans, including for Clean Water Act (CWA) violations that may cost BP $21 billion if it is found grossly negligent.
"That's where fairness will be found - or lost," National Audubon Society CEO David Yarnold said of BP's CWA case, since most of the fines would go toward restoring the Gulf of Mexico.

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U.S. ends long Google probe with only mild reprimand

WASHINGTON (Reuters) - In a major victory for Google Inc, U.S. regulators on Thursday ended their investigation into the giant Internet company and concluded that it had not manipulated its Web search results to hurt rivals.
The Federal Trade Commission did, however, win promises from Google that it would end the practice of "scraping" reviews and other data from rivals' websites for its own products, and to allow advertisers to export data to independently evaluate advertising campaigns.
Google also agreed to no longer request sales bans when suing companies which infringe on patents that are essential to ensuring interoperability, also known as standard essential patents, the FTC said on Thursday.
Microsoft Corp and other Google competitors have pressed the FTC to bring a broad antitrust case against Google similar to the sweeping Justice Department litigation against Microsoft in the 1990s.
Meanwhile smaller Internet companies such as Nextag have complained about Google tweaking its Web search results to give prominence to its own products, pushing down competitors' rankings and making them more difficult for customers to find.
At a press conference, FTC Chairman Jon Leibowitz anticipated criticism of the agency's decision to not further pursue Google on the so-called subject of search bias.
"Even though people would like us to bring a big search bias case, the facts aren't there," he said.
"The changes Google have agreed to make ensure that consumers continue to reap the benefits of competition in the online marketplace and in the market for innovative wireless devices they enjoy," said Leibowitz.
The commission voted 4 to 1 to settle the patent investigation into Google's injunction requests. It voted 5 to 0 to end the probe of Google's search practices.
The news had little impact on Google shares, which closed up 42 cents at $723.67, as most investors had expected the FTC probe to conclude without inflicting major damage.
"I never saw any real likelihood that the feds were going to insert themselves between one of the most popular brands in the world and the constituency that adores it," said Whit Andrews, an analyst for Gartner Inc.
RIVALS DISAPPOINTED
Yelp, which operates the social networking/user review website yelp.com, had complained about scraped reviews, and said it was disappointed with the result of the FTC probe.
"The closure of the commission's investigation into search bias by Google without action ... represents a missed opportunity to protect innovation in the Internet economy," wrote Yelp spokesman Vince Sollitto in an email. "We look for the regulatory bodies continuing their investigation to have greater success."
Microsoft had no immediate comment, but Dave Heiner, its deputy general counsel, complained in a blog post on Wednesday about "Google's misconduct," specifically blocking a fully featured YouTube, which Google owns, from the Windows Phone.
Gary Reback, who represents a group of Google's critics including Nextag, said he thought the investigation was inadequate since the FTC failed to respond to his clients' assertions that they had been hurt by Google and asked few questions in its civil subpoenas.
"They talked about how thorough and exhaustive the investigation was but that's really rubbish," said Reback, who is with the law firm Carr & Ferrell LLP and is best known for his work against Microsoft in the 1990s. "I've never seen anything as shallow and incomplete as this was."
Microsoft was embroiled in antitrust probes and litigation from 1990 when the FTC began an investigation until 2011, when the final consent decree finally expired.
Leibowitz defended the commission's investigation into Google, saying the agency had scoured through some 9 million pages of documents and taken sworn testimony from key Google executives. "This was an incredibly thorough and careful investigation by the commission, and the outcome is a strong and enforceable set of agreements," he said.
Google's David Drummond, the company's chief legal officer, said the FTC announcement on Thursday meant that "Google's services are good for users and good for competition."
Thomas Rosch, who is leaving the commission this month, suggested the investigation fell short.
"After promising an elephant more than a year ago, the commission instead has brought forth a couple of mice," said Rosch, a Republican.
The FTC broke with its usual practice of requiring a consent decree to settle an investigation. Instead it allowed Google to write a letter pledging to implement the agreed-upon changes in the search portion of the probe.
That prompted some sharp questions about whether Google would live up to its pact.
"I have no reason to think that Google won't honor their commitment; I think they will," said Leibowitz, noting financial penalties if Google failed to do so.
One Google competitor seemed to think the FTC agreement with Google would be a small boon to competitors.
"The concessions that the FTC extracted on review scraping, patents, and data are real, but not game changers by any means," said Oren Etzioni, co-founder of Decide.com, a product website that advises shoppers when prices may change or new versions of gadgets may come out.
Some of Google's critics, anticipating a weak conclusion to the FTC's investigation, said in December that they may be ready to take their grievances to the Justice Department.
The European Union, based in Brussels, is conducting a parallel probe of Google. It announced on December 18 that it was giving the company a month to come up with proposals to resolve its probe.
The European Commission has been examining informal settlement proposals from Google since July but has not sought feedback from the complainants, suggesting it is not convinced by what Google has put on the table so far.
Google is also being looked at by a group of state attorneys general, led by Texas.
In August, Google was forced to pay $22.5 million to settle charges it bypassed the privacy settings of customers using Apple Inc's Safari browser. The practice was in violation of a 2011 consent decree with the FTC over a botched rollout of the now defunct social network Buzz.

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Android-powered Ouya console now shipping to 1,200 developers [video]

The Ouya console is no longer vaporware. The company announced on its blog on Friday that 1,200 Ouya console developer kits are boxed up and ready to be shipped out to awaiting programmers. Each kit includes a frosted translucent Ouya console that is about the size of a coffee mug, two frosted translucent controllers with batteries, an HDMI cable, a power cable and a Micro USB cable. As Ouya CEO Julie Uhrman explains in the unboxing video below, the console’s design might still be tweaked and the feel of the controller will undergo a few minor changes before it ships to consumers in March.

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10 Tech-Industry Predictions for 2013

If you have followed our Big Picture column for the past year, you will know that as industry analysts and observers, we study this industry and the markets that compose it on a daily basis. Because of that, we often get asked about our thoughts concerning trends in the coming year. So we thought we would do a joint column sharing our predictions for the tech industry in 2013.
Tim’s Predictions
Each year about this time, I put out a list of predictions for the coming year. I have been doing this for 23 years, and over that time I have had a reasonable level of success with these predictions. I have had some spectacular failed ones too, like the year I said Microsoft would buy RIM.
Because of our work and research, we get to see a lot of technologies in the works behind the scenes. Looking at the data, we can make some educated deductions about tech trends for the new year.
With that in mind, here are my top predictions for 2013.
(MORE: The Top 5 Tech Biz Stories of 2012)
1. Augmented reality will go mainstream.
Companies like Zappar and Aurasma have some great technology that adds an AR touch to published content, posters and physical places. AR technology has been in the works for many years, but the demos I have seen from these two companies have me believing that 2013 is the year that AR becomes very important to the mobile world. More important, many of these AR companies have created great relationships with movie studios, gamemakers, publishers and more, and their technology is already showing up in many of their products. I wrote about these two companies recently, so check out some of the examples I have at the end of this column to get a visual sense of why I think AR will be big in 2013.
2. Google’s Chromebooks will get more consumer attention, gaining traction in 2013.
Google Chromebooks built by Acer and Samsung are priced around $250 and have become an attractive alternative for consumers, as price continues to be a real issue with this market segment. I know that these machines only work while online, but the proliferation of public wi-fi makes this less of an issue going forward. We all know that a Web browser as an operating system will someday happen, and these Chromebooks are a good first step. Buyers of these laptops will also serve as an important test bed for industry watchers in 2013, giving us important hints about how this market will develop over the next five years.
3. Hybrids and convertibles will see high interest from IT departments.
In our discussions with IT directors recently, we have heard that they are quite interested in hybrids or convertibles — also known as laptop-tablet combo devices. Today, with tablets part of the BYOD (bring your own device) trend, as well as the purchases of tablets for their own specific internal use, these IT managers are now forced to support three types of devices: PCs, tablets and smart phones.
The idea of just having to support a convertible or hybrid, instead of a separate laptop and tablet, is quite attractive to them. The first generation of these products, such as Lenovo’s Yoga, HP’s Elitebook convertible and Dell’s XPS DUO, are being bought in good numbers from IT types who are starting to test them inside their organizations, and newer models that are even more powerful will be out by Q3. All this points to the potential growth of hybrids and convertibles within IT beginning in 2013.
(MORE: This Dumb Year: The 57 Lamest Moments in Tech 2012)
4. 7-in. tablets will dominate tablet sales.
Given the prices of 7-in. tablets — which can be as low as $79 but mostly hover around $199 — it’s not a stretch to believe that this form factor will dominate the market in 2013. But what’s not obvious is how they’ll impact the PC market. The problem for consumers with 10-in. tablets is that with a cheap Bluetooth keyboard, these tablets almost become mini-laptops. Also, since many consumers can do about 80% of what they do on a PC by using a tablet instead, many consumers are either extending the life of their current PC, or if they buy a new one, they purchase a cheaper model since they see it sitting idle most of the time. The traditional PC won’t go away because it’s still needed for heavier computing tasks like managing media, creating digital movies and other tasks.
However, if consumers begin to adopt 7-in. tablets in big numbers, they may go back to buying new laptops since 7-in. tablets are mainly for consumption. They are not good at all for traditional productivity tasks. Many industry execs hope this theory is right because it could actually help laptop sales grow in 2013 instead of shrink, as many have suggested it will. I believe that in 2013, consumers will sort out which tablets are best for them, and in doing so will finally determine the role the PC will play in the future.
5. Apple will create a hybrid tablet-laptop.
I am going out on a limb with this last prediction, but one of the more interesting developments with 10-in. tablets is that if you add Bluetooth keyboards, they become like mini-laptops. The Android and Windows sides of the tech market are moving quickly to create tablet-laptop combo devices, and business and consumers alike are showing interest in them. If these types of products gain serious traction, I believe Apple may need to respond to this growth threat in the same way it entered the 7-in.-tablet market — despite the fact that Steve Jobs told everyone that Apple would never make a 7-in. tablet.
But imagine a sleekly designed hybrid that perhaps has the design lines of the MacBook Air, but with an iPad screen that detaches from its ultra-thin keyboard. For lack of a better term, I call it the MacBook AirPad or iPad Air. I know Tim Cook has denounced this type of design, suggesting it is like attaching a “toaster to a refrigerator,” but a sleek and elegant iPad-keyboard device designed by Apple would appeal to a lot of people, myself included.
Ben’s Predictions
The theme for my 2013 predictions is “going vertical.” The writing on the wall has been seen for some time now, and I believe 2013 is the year we will see it officially come to fruition: there is absolutely no denying the success of Apple’s vertical model.
In a mature consumer market — and if executed properly — being vertical is simply the most sustainable model by way of differentiation, competitive advantage and a host of other long-term strategic reasons. Many parallel industries and the vertical nature of their businesses illuminate the way for this reality.
(LIST: Best Inventions of the Year 2012)
1. Samsung will invest in its own future.
Right now, Samsung is the most dominant Android smart-phone manufacturer. However, the company does not fully control or dictate the directions or agenda of Google as it relates to Android. Because of this, Samsung is dependent, to a degree, upon Google for future success. In a quickly verticalizing industry, this is a point of concern for Samsung. Samsung once invested in its own Bada operating system, but I believe it will further invest in owning its own software platform in order to fully unify its screen strategy. The most logical candidate is the Tizen operating system Samsung has been working on but has yet to release.
2. Microsoft will get into smart-phone hardware.
Microsoft signaled its intent to be a PC hardware company when it launched the Surface tablet. By doing so, Microsoft strained relationships with its existing hardware partners and went down a path that is hard to turn back from at this point. The next logical step is for Microsoft to get into the smart-phone hardware business — or acquire a company like Nokia or HTC — and begin controlling the hardware for the Windows Phone platform. I believe Microsoft will officially get into the smart-phone hardware game in 2013.
3. Apple will make a large investment in its supply chain.
In the personal-computing landscape, Apple is more vertical than any company right now. Others have some of the parts but have yet to go fully vertical and show that they can execute as vertical companies. Apple has already proved it is a well-oiled vertical machine, and I believe the company will further invest in that strategy by using its massive stockpile of cash to purchase key parts of its supply chain. The main reason for this will be not only to maintain its hardware margins but also to relieve many of the supply-chain bottlenecks that Apple deals with on a yearly basis. These investments could be things like owning a key display manufacturer, owning hardware-machining factories and even investing or co-investing in a foundry to manufacture its own semiconductors for all its computers.
4. Google will go fully vertical with Motorola.
Samsung is Google’s largest partner, and in many of the same ways that Samsung depends on Google, so too does Google depend on Samsung. The reality is that Android would not have the market share it does today without Samsung. So by Samsung investing more in its own future with a software platform, Android will be weakened. The only logical response is for Google to also officially go vertical with its Motorola purchase, taking its hardware future into its own hands. Google can do this by focusing Motorola on the high end with a Nexus-like strategy, or it can focus on the lower end by going for more volume than margins. I can see either scenario playing out.
(MORE: Today in TIME Tech History: Piston-Less Power (1959), IBM’s Decline (1992), TiVo (1998) and More)
5. RIM will make a modest rebound but will eventually be acquired.
To be entirely honest, I have some hope for RIM. I do think the company will make a modest rebound in 2013 with the release of its BlackBerry 10 devices. But to take back a significant share of the handheld market, RIM will need help from someone else. It makes the most sense in my mind for RIM to consolidate with a company that has the right marketing and a solid hardware vision. Perhaps Samsung could acquire RIM and make BlackBerry 10 its proprietary operating system if Tizen doesn’t work out. Any number of the growing Asian OEMs that could use better business platforms may show interest in RIM as well.
This should be a most interesting year in the world of technology. Aside from new innovations, changes in the PC landscape and mobile technology transforming the way people work, learn, communicate and play, it will also be a year of transition for many of the PC companies that have dominated the digital landscape for the past 30 years. Without strong mobile plays, their ability to compete will be diminished by the strong competitive positions of Apple, Google and Amazon. If they are to survive and thrive, they’ll need to fully embrace social media and find ways to partner with the Facebooks and Twitters of the world that are driving the next generation of social media and mobile advertising.
Indeed, 2013 will bring a lot of changes to the world of technology, along with some solid innovations that are bound to ingrain the digital lifestyle deeper into the fabric of our society.
Tim Bajarin is the president of, and Ben Bajarin is a principal at, Creative Strategies Inc., a technology-industry analysis and market-intelligence firm in Silicon Valley. They contribute to Big Picture, an opinion column that appears every Monday on TIME Tech.

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Unreleased ‘BlackBerry X10′ QWERTY phone appears again in new photos

As Research In Motion’s (RIMM) January 30th BlackBerry 10 unveiling draws closer, nearly every last detail surrounding RIM’s first two BlackBerry 10-powered smartphones will likely soon emerge. The vendor has a long history of leaks leading up to its new device announcements, and this time around RIM reps toured the world showing the phones to every carrier that would meet with them. Pictured once again over the weekend by N4BB is RIM’s first new QWERTY phone, which is code-named “N-Seriers” and expected to bear the name “BlackBerry X10” at launch. No fresh details accompany the newly leaked photos, but rumored specs from earlier reports include  a 720 x 720-pixel display with a pixel density of 330 ppi and integrated NFC. Additional images of the BlackBerry X10 follow below.

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Can Samsung survive without Android?

Samsung (005930) is the world’s top Android smartphone vendor by a staggering margin. Aside from LG (066570), which managed a small $20 million profit from its mobile division last quarter, no other global Android vendor can figure out how to make money selling Android phones. Meanwhile, Samsung posted a $6 billion profit on $47.6 billion in sales in the third quarter, thanks largely to record smartphone shipments and a massive marketing budget. Even as industry watchers turn sour on Apple, Samsung is seen steamrolling into 2013 and its stock is up nearly 50% on the year while Apple (AAPL) shares continue to fall from a record high hit in September. As unstoppable as Samsung appears right now, one key question remains: Is Samsung driving Android’s success or is Android driving Samsung’s success? Starting in 2013, we may finally begin to find out.
[More from BGR: Unreleased ‘BlackBerry X10′ QWERTY phone appears again in new photos]
Earlier this year, BGR wrote about Samsung’s effort to look beyond Android. Even with its own UI and application suite — and even with its own content services — Samsung will always rely on Google (GOOG) if it continues to base its devices on Google’s latest Android builds.
[More from BGR: RIM teases BlackBerry 10 launch with image of first BB10 smartphone]
This isn’t necessarily a bad thing, but it means Samsung will never truly control the end-to-end experience on its products. It also means Samsung will never truly own its smartphones and tablets. Instead, Samsung’s devices will deliver an experience that is an amalgamation of Google’s vision and its own.
But there are alternative options. One example is the path Amazon (AMZN) has taken. Amazon let Google do the grunt work and then took its open-source Android OS and built its own software and service layer on top. Kindle Fire users don’t sit around waiting for Android updates — many of them don’t even know they’re using an Android-powered tablet.
Samsung could do the same thing, but there is a great deal of prep work that would need to be done first. Amazon’s efforts were so successful (depending on your measure of success) because the company already had a massive ecosystem in place before it even launched its first device. Streaming movies and TV shows, eBooks, retail shopping and a stocked application store were all available on the Kindle Fire from day one.
Samsung doesn’t have this luxury. Yet.
Samsung could also take ownership of a new OS, and Tizen may or may not end up being that OS. Samsung is co-developing the new Linux-based mobile platform with Intel (INTC) and others, and a new rumor from Japan’s The Daily Yomiuri suggests Samsung plans to launch its first Tizen phone in 2013. “Samsung will probably begin selling the [Tizen] smartphones next year and they are likely to be released in Japan and other countries at around the same time,” the site’s sources claim.
This will be a slow process. If Samsung follows the same path it took with Bada, Samsung’s earlier Linux-based OS that was folded into the Tizen project, things will start out slow as Samsung launches regional devices that are restricted to a few Eastern markets. Testing the waters before dumping serious marketing dollars into the project isn’t a bad idea, especially considering the battle at the bottom of the smartphone OS food chain that will already be taking place in 2013.
But one thing is clear: Samsung is looking to broaden its strategy and move beyond a point where it relies entirely on another company for its smartphone software.

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BlackBerry Z10 with AT&T-compatible LTE uncovered ahead of January unveiling

Hang in there, American BlackBerry fans — your wait for a new device is nearly over. Engadget reports that the Federal Communications Commission has granted approval to what looks like RIM’s (RIMM) BlackBerry Z10 smartphone for use on AT&T’s (T) LTE and HSPA networks. The Z10, which will be the first device released with the new BlackBerry 10 operating system, is rumored to include a Qualcomm Snapdragon MSM8960 1.5GHz dual core processor, a 4.2-inch display with a resolution of 1,280 x 768 pixels, 2GB of RAM, up to 32GB expandable of storage and an 8-megapixel camera. RIM plans to unveil the BlackBerry Z10 along with the finished version of the BlackBerry 10 OS on January 30th.

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China official factory PMI points to steady growth revival

 China's official manufacturing purchasing managers' index held steady in December at 50.6, matching November's seven-month high, as growth in new orders was unchanged and the pace of output softened marginally.
With the main index above 50 for three straight months, the survey indicates that China's vast factory sector is expanding. The official PMI was released a day after a similar survey by HSBC suggested manufacturing activity at its strongest since May 2011.
Together the surveys support a growing consensus that economic activity in China revved up during October to December, after GDP growth had slowed for seven consecutive quarters to 7.4 percent in the third quarter. That provides a welcome sign for a global economy where both the euro area and Japan are in recession and the United States is struggling for significant growth.
"Output has stayed above the 50-mark, showing that the manufacturing industry appears to maintain growth expectations, but the rate of growth has weakened," the National Bureau of Statistics, which released the data, said in a note.
The official PMI reading was slightly below expectations in a poll of economists by Reuters last week that predicted a rise in the PMI to 51.0.
The survey showed output in oil processing, quarrying and tobacco industries slipped while food processing, auto manufacturing, textiles, steel and electronics all expanded, the bureau said.
A new export orders sub-index fell to 50 from 50.2 in November. A PMI reading below 50 suggests growth slowed, while a number above 50 indicates accelerating growth.
HSBC said its China PMI, which gathers more data from smaller, privately held firms with a strong export focus, rose in December to 51.5, its highest since May 2011.
The HSBC survey showed strong output despite a retreat in a sub-index tracking new export orders. China's export sector, a major source of growth for the economy, must combat slowing demand in its biggest markets and rising wages and costs at home.
China's official PMI generally paints a rosier picture of the factory sector than the HSBC PMI because it focuses on big, state-owned firms. The HSBC PMI targets smaller, private firms. There are also differing approaches to seasonal adjustment between the two surveys.
INVESTMENT
Some analysts caution that the pickup in economic activity in recent months may reflect renewed investment spending, rather than the consumer activity that policymakers acknowledge is needed to rebalance the economy.
"It's pretty clear that it's more driven by infrastructure and increasingly housing, that's driving heavy industry," said Zhang Zhiwei of Nomura International, speaking on Monday.
Rising land prices have prompted widespread expectations that the real estate market will be revived by an investment-driven recovery that would offset weak export markets, even though the central government had pledged to maintain investment and purchasing restrictions to try to control prices.
Railway spending delayed from earlier in 2012 was being rushed out before the end of the year, and rising prices for land purchased by state-owned developers could point to a relaxation in property market curbs that has yet to be made official, Zhang argued.
Steel futures recently hit a five-month high, after a dismal year in which lackluster demand contributed to overcapacity at debt-ridden mills and traders.
China was expected to achieve economic growth of 7.7 percent in 2012, forecasts in a benchmark Reuters poll show. That would mark the slowest full-year expansion since 1999.
While that is way above the world's other major economies, it is below the roughly 10 percent annual growth in China seen for most of the last 30 years.
The government has relied on fine-tuning its policy settings to try to combat the worst downturn China has faced since the 2008-2009 global financial crisis, studiously avoiding any hint of repeating a 4 trillion yuan ($640 billion) stimulus package it launched back then, which led to a debt-fuelled spending binge by local governments.
Measures to boost growth included reducing bank reserve levels and interest rates. More lately, they included injecting liquidity into the financial system through money market operations and accelerating approval of infrastructure projects.
The head of the influential Development Research Centre called for appropriate base money growth in 2013, including more cuts in banks' reserve requirement ratios (RRR), and a wider floating range for the yuan to make it more flexible, in comments published on Monday.
The central bank reiterated on Monday that China would stick with a prudent monetary policy in 2013, the latest sign that Beijing will not change policy direction when the new government takes over this year.

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FDA approves 1st new tuberculosis drug in 40 years

The Food and Drug Administration on Monday approved a Johnson & Johnson tuberculosis drug that is the first new medicine to fight the deadly infection in more than four decades.
The agency approved J&J's pill, Sirturo, for use with older drugs to fight a hard-to-treat strain of tuberculosis that has not responded to other medications. However, the agency cautioned that the drug carries risks of potentially deadly heart problems and should be prescribed carefully by doctors.
Roughly one-third of the world's population is estimated to be infected with the bacteria causing tuberculosis. The disease is rare in the U.S., but kills about 1.4 million people a year worldwide. Of those, about 150,000 succumb to the increasingly common drug-resistant forms of the disease. About 60 percent of all cases are concentrated in China, India, Russia and Eastern Europe.
Sirturo, known chemically as bedaquiline, is the first medicine specifically designed for treating multidrug-resistant tuberculosis. That's a form of the disease that cannot be treated with at least two of the four primary antibiotics used for tuberculosis.
The standard drugs used to fight the disease were developed in the 1950s and 1960s.
"The antibiotics used to treat it have been around for at least 40 years and so the bacterium has become more and more resistant to what we have," said Chrispin Kambili, global medical affairs leader for J&J's Janssen division.
The drug carries a boxed warning indicating that it can interfere with the heart's electrical activity, potentially leading to fatal heart rhythms.
"Sirturo provides much-needed treatment for patients who have don't have other therapeutic options available," said Edward Cox, director of the FDA's antibacterial drugs office. "However, because the drug also carries some significant risks, doctors should make sure they use it appropriately and only in patients who don't have other treatment options."
Nine patients taking Sirturo died in company testing compared with two patients taking a placebo. Five of the deaths in the Sirturo group seemed to be related to tuberculosis, but no explanation was apparent for the remaining four.
Despite the deaths, the FDA approved the drug under its accelerated approval program, which allows the agency to clear innovative drugs based on promising preliminary results.
Last week, the consumer advocacy group Public Citizen criticized that approach, noting the drug's outstanding safety issues.
"The fact that bedaquiline is part of a new class of drug means that an increased level of scrutiny should be required for its approval," the group states. "But the FDA had not yet answered concerns related to unexplained increases in toxicity and death in patients getting the drug."
The FDA said it approved the drug based on two mid-stage studies enrolling 440 patients taking Sirturo. Both studies were designed to measure how long it takes patients to be free of tuberculosis.
Results from the first trial showed most patients taking Sirturo plus older drugs were cured after 83 days, compared with 125 days for those taking a placebo plus older drugs. The second study showed most Sirturo patients were cured after 57 days.

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US hits borrowing limit, moves to avoid default

The U.S. government is running up against its $16.4 trillion borrowing limit and is taking steps to avoid default.
Reaching the limit Monday sets up another dispute between the White House and Congress over taxes and spending in the new year.
Treasury Secretary Timothy Geithner says the government will take a series of accounting measures to avoid defaulting on its debt. On Monday, it suspended the issuance of new debt for two government retirement funds. That step won't impact current retirees.
Last week, Geithner said the measures would save about $200 billion. That would typically avoid default for about two months. But Geithner said it is difficult to predict how long default can be avoided this time because of ongoing budget talks.

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Deal will prevent spike in milk prices

A potential doubling of milk prices will be averted as part of the compromise that White House and congressional bargainers reached on wide-ranging legislation to avert the "fiscal cliff," a leading senator said late Monday.
Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., told reporters that negotiators had agreed to extend portions of the expired 2008 farm bill through September. She said that includes language keeping milk prices from rising, but excludes other provisions like energy and disaster aid for farmers.
Stabenow said she considers the slimmed-down extension to be "Mitch McConnell's version of a farm bill." She was referring to the Senate Republican leader from Kentucky, who she said forced bargainers to accept the version of the farm bill that appeared in the deal.
McConnell spokesman Michael Brumas responded: "Sen. McConnell put forward a bipartisan, responsible solution that averted the dairy cliff and provided certainty to farmers for the next year without costing taxpayers a dime."
Just a day earlier, Stabenow said leaders from both parties on the House and Senate agriculture committees had agreed to extend the entire farm bill.
Stabenow and House Agriculture Chairman Frank Lucas, R-Okla., announced Sunday that they had agreed on a last-minute move that would extend the entire farm bill and replace dairy programs that expire at midnight Tuesday. Expiration of those dairy programs could mean higher milk prices at the grocery store within just a few weeks.
But the House GOP had not endorsed the committees' extension agreement.
The nonpartisan Congressional Budget Office estimated Sunday that extending the entire bill through September, including disaster assistance for farmers affected by drought, could cost more than $1 billion this budget year.
House Speaker John Boehner, R-Ohio, has pushed back on passage of a new five-year farm bill for months, saying there were not enough votes to bring it to the House floor after the House Agriculture Committee approved it in July. The Senate passed its version of a farm bill in June. The bill, generally passed every five years, includes food stamps, farm subsidies and other help for rural areas.
But the prospect of higher milk prices prompted some action. Agriculture Secretary Tom Vilsack has said Americans face the prospect of paying $7 for a gallon of milk if the current dairy program lapsed and the government returned to a 1948 formula for calculating milk price supports.
Extending the entire agriculture bill would have included an overhaul of dairy programs that was included in both the Senate and House committee bills. The new dairy programs include a voluntary insurance program for dairy producers, and those who choose that new program also would have to participate in a market stabilization program that could dictate production cuts when oversupply drives down prices — an idea that hasn't gone over well with Boehner.
In July, he called the current dairy program "Soviet-style" and said the new program would make it even worse. Large food companies that process and use dairy products have backed Boehner, saying the program could limit milk supplies and increase their costs.
One of the reasons Boehner has balked at bringing up a farm bill is disagreement among House Republicans over how much money should be cut from food stamps, which make up roughly 80 percent of the half-trillion-dollar bill's cost over five years. Lucas has unsuccessfully pushed his leadership for months to move on the legislation despite the disagreement over food aid.

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Insight: How Colombian drug traffickers used HSBC to launder money

 When several Colombian men were indicted in January 2010 on money-laundering charges, the case in Brooklyn federal court drew little attention.
It looked like a bust of another nexus of drug traffickers and money launderers, with mainly small-time operatives paying the price for their crimes.
One of the men was Julio Chaparro, a 48-year-old father of four who owned three factories that made children's clothing in Colombia.
But to U.S. authorities the case was anything but ordinary. Chaparro, prosecutors alleged, helped run a money-laundering ring for drug traffickers that took advantage of lax controls at UK-based international banking group HSBC Holdings Plc. It was one of the most important leads for U.S. investigators pursuing a case against the bank that eventually led to a $1.9 billion settlement on December 11.
Chaparro was "basically putting the orchestra together" and investigators saw "him as a major player in terms of cleaning a lot of money," said James Hayes, special agent in charge of Homeland Security Investigations at U.S. Immigration and Customs Enforcement in New York. Known as ICE, the agency and its task force led the probe.
The Colombian's lawyer, Ephraim Savitt, said Chaparro was a middleman in the operation, but disputed the extent of his client's role, saying he was the "page turner of sheet music for the conductor."
Chaparro, who was arrested in Colombia in 2010 and extradited to the United States in 2011, pleaded guilty to a money-laundering conspiracy count in May and is awaiting sentencing in 2013.
An HSBC spokesman declined comment.
Much about the trail that drug traffickers used to move U.S. dollars - the proceeds from drug sales - through HSBC and other banks remains unclear. By design, the process is layered to evade detection.
But a review of confidential investigative records that originate from two U.S. Attorney office probes and federal court filings in New York and California, as well as interviews with senior law-enforcement officials, shows how investigators tracing the activities of people who allegedly worked with Chaparro were able to expose large-scale money laundering at one of the world's biggest banks.
The federal law-enforcement task force - named after El Dorado, the mythical city of gold in South America - used wire taps, email and computer searches, information from at least one inside source, and old-fashioned surveillance, to piece together the ring's operations.
SMUGGLED ACROSS BORDER
Drug cartels sold narcotics in the United States and routed the cash to Mexico, often using couriers to smuggle it across the border. That cash would then be put into bank accounts at HSBC's Mexico unit, where large deposits could be made without arousing suspicion, according to U.S. Department of Justice documents.
In one filing, U.S. prosecutors said, Chaparro and others allegedly utilized accounts at HSBC Mexico to deposit "drug dollars and then wire those funds to ... businesses located in the United States and elsewhere. The funds were then used to purchase consumer goods, which were exported to South America and resold to generate ‘clean' cash."
In a typical transaction, a middleman in a drug cartel would offer to deliver consumer goods, such as computers or washing machines, to Colombian businesses on favorable terms. Another person in the United States would buy the goods from firms using funds from drug trafficking, and fulfill those orders.
Money launderers exploited the laxness of HSBC in policing shadowy money flows, the Department of Justice said earlier this month. Failures included not conducting due diligence on customers, not adequately monitoring wire transfers or cash shipments and not having enough employees to run anti-money laundering systems. U.S. Assistant Attorney General Lanny Breuer called the lapses "stunning failures of oversight."
The situation was so bad, according to the Department of Justice, that in 2008, the head of HSBC's Mexican operations was told by Mexican regulators that a local drug lord described the bank as "the place to launder money."
The Chaparro probe, led by ICE and the Justice Department, converged over the past two years with two other investigations - led by federal prosecutors and investigators in West Virginia and by the Manhattan district attorney - resulting in this month's settlement with HSBC.
HSBC and its employees avoided criminal indictments, as the bank agreed instead to a deferred-prosecution deal that forces it to strengthen controls and accept a compliance monitor.
Today, Chaparro sits in a federal detention center in Brooklyn, reading the Bible and awaiting sentencing, said Savitt, a former U.S. prosecutor in Brooklyn, who submitted a list of questions to Chaparro for Reuters.
"He is contrite, regretful and ashamed about his crimes," Savitt said. "He wants to serve his time and rejoin his family. He understands that a prison term could prevent that from happening for many years."
Under federal guidelines, he could face 15 to 18 years in prison.
ON CHAPARRO'S TRAIL
The El Dorado federal task force, based in a building on the west side of Manhattan near Chelsea Piers, serves as an umbrella organization for some 250 law-enforcement officials from state, local and federal agencies.
One of the task-force supervisors is Lieutenant Frank DiGregorio, a former New York detective who spent years tracking the so-called Black Market Peso Exchange, which is used to convert dollars to Colombian pesos through trading in goods. DiGregorio along with two younger investigators - Graham Klein and Carmelo Lana - led the HSBC case.
The overall probe began in 2007 when investigators analyzed how courier companies ferried cash through airports in Miami and Houston, a person familiar with the case said. They ultimately tracked that to HSBC's operations in Mexico and then connected it to funds moving through New York.
A tipping point in the investigation came in 2009 when El Dorado agents arrested a man named Fernando Sanclemente. Two sources familiar with the case say Sanclemente was an operative in Chaparro's network.
Sanclemente, who was charged with allegedly conducting financial transactions tied to narcotics trafficking, is free on bail with a $200,000 bond, according to the latest court docket entry, which dates to January 2012. His lawyer, James Neville, declined to discuss the status of the case.
According to a criminal complaint filed against him by Lana, the El Dorado agent, on June 30, 2009, task force agents followed Sanclemente for more than two hours as he drove around Queens in New York to ferry cash from drug sales.
Sanclemente first met with a person for about "30 seconds" on one street corner, and left with a yellow plastic bag. Later that night, he drove to a Dunkin' Donuts near LaGuardia Airport, where a black livery cab pulled up and the driver handed him a black bag.
The El Dorado team followed Sanclemente to Laurel Hollow, New York, some 40 minutes away, where the investigators stopped and searched him, finding about $153,000 in the two bags. At Sanclemente's apartment, investigators said they found ledgers and documents consistent with money laundering.
With the arrest, investigators gained insight into Chaparro's alleged transactions. At one point, investigators set up undercover bank accounts where they were able to get Chaparro's network to wire proceeds that could be traced back to HSBC's Mexico operations, according to people familiar with the situation and a Department of Justice filing in the HSBC case.
Federal agents would ultimately home in on $500 million that had moved from HSBC Mexico to HSBC's operations in the United States, according to the confidential investigative records.
Between October 6, 2008 and April 13, 2009, Chaparro and others conducted money laundering transactions totaling $1.1 million tied to narcotics trafficking, the indictment against Chaparro alleged.

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