China smog emergency shuts city of 11 million people

BEIJING | Mon Oct 21, 2013 1:57am EDT

(Reuters) - Choking smog all but shut down one of northeastern China's largest cities on Monday, forcing schools to suspended classes, snarling traffic and closing the airport, in the country's first major air pollution crisis of the winter.

An index measuring PM2.5, or particulate matter with a diameter of 2.5 micrometers (PM2.5), reached a reading of 1,000 in some parts of Harbin, the gritty capital of northeastern Heilongjiang province and home to some 11 million people.

A level above 300 is considered hazardous, while the World Health Organisation recommends a daily level of no more than 20.

The smog not only forced all primary and middle schools to suspend classes, but shut the airport and some public bus routes, the official Xinhua news agency reported, blaming the emergency on the first day of the heating being turned on in the city for winter. Visibility was reportedly reduced to 10 meters.

The smog is expected to continue for the next 24 hours.

Air quality in Chinese cities is of increasing concern to China's stability-obsessed leadership because it plays into popular resentment over political privilege and rising inequality in the world's second-largest economy.

Domestic media have run stories describing the expensive air purifiers government officials enjoy in their homes and offices, alongside reports of special organic farms so cadres need not risk suffering from recurring food safety scandals.

The government has announced plans over the years to tackle the pollution problem but has made little apparent progress.

Users of China's popular Twitter-like Sina Weibo microblogging site reacted with both anger and bitter sarcasm over Harbin's air pollution.

"After years of effort, the wise and hard-working people of Harbin have finally managed to skip both the middle-class society and the communist society stages, and have now entered a fairyland society!" wrote on user.

Other parts of northeastern China also experienced severe smog, including Tangshan, two hours east of Beijing, and Changchun, the capital of Jilin province which borders Heilongjiang.

Last week, Beijing city released a color-coded alert system for handling air pollution emergencies, to include the temporary halt of construction, factory production, outdoor barbeques and the setting off of fireworks.

Beijing suffered its own smog emergency last winter when the PM2.5 surpassed 900 on one particularly bad day in January.

More Democrats voice Obamacare concerns as website blame goes around

By David Morgan and Mark Felsenthal

WASHINGTON | Wed Oct 23, 2013 8:22pm EDT

(Reuters) - The contractors for the government's troubled healthcare website sought to deflect blame on Wednesday as more Democrats voiced concerns about the implementation of President Barack Obama's signature domestic policy.

Administration officials, in damage-control mode for nearly a week, held a closed-door briefing for Democrats in the U.S. House of Representatives and a private session with insurance company executives, who said they would assist in efforts to fix the Healthcare.gov website.

Websites are the primary vehicle for consumers to shop for insurance through exchanges set up under the healthcare program.

With the rocky launch of the "Obamacare" insurance exchanges entering its fourth week, additional Democrats came forward, some urging the president to extend the open-enrollment period for buying health insurance through the program beyond the existing March 31 deadline.

One Democrat, Senator Joe Manchin of West Virginia, said he would join a Republican effort to delay the so-called "individual mandate," that requires people to buy insurance or face a tax penalty.

Manchin, in a Fox News interview on the "The O'Reilly Factor," called for a transition year with no fines. "Let's work through the problems. We've got a lot of problems, they have been identified. I think everybody has recognized them. Let's fix it. Let's get together and fix things," he said.

White House officials said on Wednesday that enrollment requirements were being changed so that consumers could sign up for health insurance right up to the March 31 deadline and avoid penalties. Some people previously needed to be signed around February 15 to meet the end of March deadline.

A White House official said that pushing back the sign-up requirement was not related to glitches with Healthcare.gov, but was simply an effort to eliminate confusion over the two deadlines.

The comments from the handful of Democrats posed a new potential hazard for the White House and gave Republicans a chance to portray their efforts to derail the healthcare program as bipartisan.

Democratic Senator Mark Pryor of Arkansas, who faces a tough re-election race next year, said he agreed with fellow Democrat Jeanne Shaheen of New Hampshire that the open enrollment period to sign up for insurance should be extended beyond March 31, 2014.

Representative James Clyburn of South Carolina, the third-ranking House Democrat, criticized the website for forcing consumers to provide private information before deciding what kind of health insurance plan they want to buy.

"I've talked to too many people who tell me before they ever get around to figuring out what it is they want to buy, they're having to answer questions that they don't feel they should be answering," Clyburn said.

CONTRACTOR TESTIMONY

Republicans said they would intensify their investigations into the launch of the 2010 Affordable Care Act, known as "Obamacare."

"It is our job to hold them accountable, and when it comes to Obamacare clearly there is a lot to hold accountable," House of Representatives Speaker John Boehner told reporters.

The Republican-led House Energy and Commerce Committee on Thursday will hear from the top contractors responsible for the program. They included website developer CGI Federal, a unit of Canada's CGI Group Inc, which said in prepared testimony that the software from another contractor designed to allow users to create an account led to early bottlenecks.

But the other contractor, United Health Group unit Quality Software Services Inc (QSSI), said in prepared testimony that some of its problems stemmed from a late decision by the administration to require consumers to register for an account before browsing for insurance products.

"This may have driven higher simultaneous usage of the registration system that wouldn't have occurred if consumers could 'window shop' anonymously," said QSSI.

The company's software is now keeping pace with demand. Andrew Slavitt, executive vice president with QSSI's parent, said the software has had "error rates close to zero" since October 8.

Obama administration officials, including U.S. Health and Human Services Secretary Kathleen Sebelius, met with the chief executives of 14 leading insurance companies, including Aetna Inc, WellPoint Inc and Humana Inc.

The executives agreed to form new technical teams with the administration to help fix the website, which provide online access to the marketplaces designed to be the main way for millions of uninsured Americans to research and buy health insurance plans under the law.

"We had a candid discussion on the challenges facing the exchange, and the plan that is being put in place to get the program on track," Aetna Inc spokeswoman Cynthia Michener said.

The October 1 debut of the exchanges was marred by technical glitches that have kept many from signing on and making purchases. Those unable to sign up online can call a toll-free telephone number as an alternative.

The administration has so far declined to disclose the number of enrollments, either online or by telephone.

'WORKING HARD TO FIX THE PROBLEMS'

A prolonged delay in getting Healthcare.gov to work could jeopardize White House efforts to sign up as many as 7 million people in 2014, the first full year the law takes effect. The administration this week began what it called a "tech surge," bringing in experts led by the administration's top economic aide Jeffrey Zients to analyze and fix the problems.

"I think what we learned is they're working hard to fix the problems," Representative Sander Levin of Michigan, senior Democrat on the House Ways and Means Committee, said after Wednesday's briefing.

The U.S. Health and Human Services Department will begin regular news briefings on Thursday to provide updates on "the progress that's being made and on the efforts that are being undertaken, both to address the technical problems and to make the whole experience for American consumers better," White House spokesman Jay Carney said.

House Democrats said there was no discussion in the briefing about whether the problems should lead to a delay of the individual requirement that every American have insurance or pay a tax penalty. The Congressional Budget Office has estimated a delay would reduce enrollment significantly.

REPUBLICANS DEMAND DELAY

Republicans, who have fought the healthcare law as an unwarranted extension of the federal government, said the requirement should be delayed until the problems with the rollout are resolved.

"With so many unanswered questions and the problems arising around this rollout, it doesn't make any sense to impose this one percent mandate tax on the American people," House Majority Leader Eric Cantor told reporters on Wednesday.

Republicans have repeatedly tried to derail or delay the healthcare law since taking control of the House in the 2010 elections. They demanded more answers on Wednesday about the scope of the problems.

Female suicide bomber attacks Russian bus, kills six

By Alissa de Carbonnel

MOSCOW | Mon Oct 21, 2013 6:05pm EDT

(Reuters) - A female suicide bomber attacked a bus in southern Russia on Monday, authorities said, killing at least six people in the deadliest such blast outside the volatile North Caucasus region in nearly three years.

The bombing in Volgograd was likely to raise fears of further attacks by Islamist militants as Russia prepares to host the 2014 Winter Olympics in February in the Black Sea resort city of Sochi, not far from the mainly Muslim North Caucasus.

The attack, which investigators blamed on a 30-year-old woman from Dagestan - the North Caucasus province at the center of an insurgency - also wounded 28 people, of whom eight were in critical condition, the federal Investigative Committee said.

State television showed footage, taken from a camera mounted on a driver's dashboard, of an explosion ripping through the bus as it travelled along a tree-lined road, sending shards of metal and glass flying.

Passengers scrambled out of doors and windows as the bus came to a stop engulfed in a cloud of smoke.

"There was a blast - a bang - all the glass flew out of the windows," an eyewitness named Ivan, who had been driving behind the bus, told state-run Rossiya-24 television.

"The cloud of smoke quickly dissipated and then I saw people start to fall out and run out to escape the bus," he said. "It was a horrible sight."

Authorities named the suspect as Naida Asiyalova, 30, and state TV showed a passport picture of her in a black chador.

"This woman, in a hijab, got on the bus at one of the stops and the explosion occurred almost immediately afterwards," Investigative Committee spokesman Vladimir Markin said.

"BLACK WIDOWS"

A law enforcement source in Dagestan told Reuters that she had been the wife of Dmitry Sokolov, a man from the Moscow suburbs who joined an insurgent group in Dagestan last year.

The two met online, the police source said. Asiyalova then moved to Moscow to marry Sokolov, 20, ten years her junior. In July 2012, his parents put out a missing persons alert for him when he failed to come home from Arabic classes.

The source described Sokolov as an explosives expert, who is thought to have prepared a suicide belt used by a woman who blew herself up near federal police headquarters in Dagestan's capital Makhachkala in May, killing two people.

"By all appearances, he prepared Naida Asiyalova for her suicide bombing," the police source said.

Vladimir, a man who said his daughter survived the bombing, said many students were on the bus. "The blast was big, it was huge," he told Ekho Moskvy radio. "When I came to pick her up, half the bus was simply not there. It was scary. Very scary."

There was no immediate claim of responsibility.

Volgograd is a city of around 1 million people that lies 900 km (560 miles) southeast of Moscow and a few hundred kilometers north of the North Caucasus and Sochi, at the western end of the Caucasus range, where Russia will hold the Winter Olympics.

President Vladimir Putin has staked his reputation on the Games and ordered authorities to boost security in the North Caucasus, where the insurgency is rooted in two post-Soviet wars pitting Chechen separatists against the Kremlin.

Putin's spokesman conveyed his condolences to the wounded and relatives of the dead, but Putin made no public comment.

Insurgents who say they are fighting to create an Islamic state have claimed responsibility for a suicide bombing that killed 37 people at a Moscow airport in 2011 and twin suicide bombings that killed 40 people on the Moscow subway in 2010.

The latter attack was carried out female suicide bombers, dubbed "black widows" in Russia because their male relatives have often been killed by security forces.

In 2002, Chechen women wearing black chadors and suicide belts also took part in a three-day Moscow theatre hostage siege in which around 130 people were killed.

NATO, Russia could play role in eliminating Syrian chemical arms

By Adrian Croft and Phil Stewart

BRUSSELS | Wed Oct 23, 2013 11:40am EDT

(Reuters) - NATO and Russia could play a role in eliminating Syria's chemical weapons stockpiles if they were asked to do so by the United Nations, said U.S., NATO and Russian officials on Wednesday.

The destruction of Syria's chemical weapons was discussed at a meeting of NATO and Russian defense ministers in Brussels, the first such meeting in two years.

That raised the possibility that Russia and NATO, which usually regard each other with suspicion, could end up cooperating in tackling the problem.

NATO Secretary-General Anders Fogh Rasmussen said he expected NATO allies and Russia to respond positively if the United Nations asked them to help deal with the Syrian weapons.

"Whether that would be executed on an individual national basis or collectively, it's really premature to make any assessment on that at this stage," he told reporters.

U.S. Defense Secretary Chuck Hagel also foresaw a possible role for NATO.

"If we can continue to see progress made ... in destroying chemical weapons in Syria, then it seems to me that this is going to open opportunities for a lot of nations to play roles in Syria in order to accomplish the objective. It may well be that NATO will be asked for some assistance," he told a news conference after the meeting.

"Russia and NATO have many areas of common interest, including the destruction of Syria's chemical weapons stockpiles," he said.

But he stressed there were "no plans to have any U.S. forces in any way in Syria."

RUSSIAN STANCE

Russian Defence Minister Sergei Shoigu said that if Russia received a request for help with eliminating the Syrian weapons, it would consider it and was ready to discuss the issue with NATO countries.

Deputy Foreign Minister Sergei Ryabkov said last month Russia was ready to help guard Syrian chemical weapons sites and destroy Assad's stockpiles, but would not ship any of the chemical arms to Russia for destruction.

Russia and the United States are the only countries with industrial scale capacity to destroy mustard, VX, sarin or cyanide-armed munitions, but the import of chemical weapons is banned under U.S. law.

NATO has shunned any involvement in the Syrian conflict apart from sending Patriot missiles to protect neighboring Turkey.

After years of confrontation over Syria, Russia and the United States brokered a deal last month to put President Bashar al-Assad's chemical arms stockpiles under international control.

The agreement avoided possible U.S. military strikes that Washington said were intended to punish Assad for an August 21 poison gas attack.

In another sign of a thaw in relations between the United States and Russia, Hagel said he and Shoigu had agreed to hold regular video conferences to seek areas for cooperation.

Relations between Washington and Moscow have been chilled by the Syria conflict and Russia's granting of temporary asylum to former U.S. intelligence agency contractor Edward Snowden.

Despite cooperation in areas such as counter-terrorism exercises, Russian and NATO officials made clear there had been no progress on the main issue dividing them - NATO's plans to build an anti-missile system that Russia fears will weaken its nuclear deterrent.

New China H7N9 strain gives kick to mutant bird flu research

ROTTERDAM, Netherlands - Dutch scientists hidden away in a top-security laboratory are seeking to create mutant flu viruses, dangerous work designed to prepare the world for a lethal pandemic by beating nature to it.

Icahn family's House of Cards: Father-son drama over Netflix stake

By Jennifer Ablan

Wed Oct 23, 2013 8:56pm EDT

(Reuters) - Billionaire investor Carl Icahn is so convinced he was right to sell some of his Netflix Inc stake that he made a big bet - possibly worth hundreds of millions of dollars - with his son Brett, who disagreed with the decision.

Icahn, whose firm acquired Netflix shares for an average price of $58 against their current price at $330, cut his 9.4 percent stake by more than half to 4.5 percent, booking profits of around $800 million, he revealed on Tuesday.

His son Brett Icahn, 34, who came up with the idea to invest in Netflix, and Brett's investment partner David Schechter, said in a statement they believe the streaming video company is still undervalued. They said they did not want to reduce the stake in the company, which produced the Emmy Award-winning drama series "House of Cards."

So Icahn agreed to make up for any lost profits by injecting money into funds run by his son and Schechter if their views are proven right and it turns out he sold the Netflix shares too soon, according to a regulatory filing which details the agreement. If the shares climb further, then Icahn has committed to make "cash or cash equivalents" available to a new fund under Brett Icahn and Schechter's management, called the New Sargon Portfolio, it said.

Carl Icahn didn't return calls seeking comment. Brett Icahn responded to emailed questions by referring to the filing but declined to elaborate. Schechter couldn't be reached for comment.

The father-son agreement is one of the more unusual bets seen in the investment world. It exposes the dynamic between the corporate raider-turned-activist investor and a son who has been slowly cutting his teeth in money management.

It is unclear whether Carl Icahn needed the agreement of his son and Schechter to reduce the stake and the bet was the result, or whether it was a much more informal arrangement.

"NOTIONAL" VALUE

The payment to New Sargon will be based on a "notional" position in Netflix - as if the stake had not been reduced.

For example, if the Netflix shares, which Icahn sold at between $304.23 and $341.44 to reap a profit of about $800 million, continue to climb to say $500 then Icahn would have missed out on a much bigger potential gain of about $1.3 billion. He would pay the Sargon portfolio a large part of the difference - through a complex calculation that includes assumptions, a hurdle, and is also related to the shares' value at the end of March this year. The agreement expires in August 2016.

Netflix shares have dropped about 15 percent from an all-time high of $389.16 hit on Tuesday, before Carl Icahn did the bulk of his selling. They closed on Wednesday at $330.24.

It is unclear whether Brett Icahn and Schechter would personally take a slice of any payment from the older Icahn or just reinvest the money in the fund.

If Carl Icahn's decision to sell is proven to be the right investment call and Netflix's shares fall, both father and son will see their profits from the investment pared, given they still own 2.67 million shares, or a 4.5 percent stake. There will be no additional penalty for his son's funds if the share price falls below the Icahn selling price.

Such a decline in Netflix's shares would validate Carl Icahn's status as one of the world's savviest investors and dealmakers. In the filing, he said in reference to the Netflix investment that as a "hardened veteran of seven bear markets I have learned that when you are lucky and/or smart enough to have made a total return of 457 percent in only 14 months it is time to take some of the chips off the table."

The younger Icahn and Schechter, however, said Netflix "remains significantly undervalued" and "one of the great consumer bargains of our time."

The Sargon Portfolio, which the younger Icahn and Schechter co-manage and Carl Icahn supervises, has generated 37 percent annualized returns since its inception on April 1, 2010, through September 30, 2013, and currently manages in excess of $4.8 billion for Icahn Enterprises and Carl Icahn's own capital. Icahn Enterprises has assets of approximately $29 billion.

Carl Icahn has also credited his son for his $2 billion investment in Apple Inc, though Icahn himself has been communicating with Apple CEO Tim Cook. Icahn tweeted on Wednesday that he "just sent a letter to Tim Cook. Full letter will be disclosed on my website, the Shareholders' Square Table, which will be launched tomorrow."

Yellen's Senate hearing for Fed chair unlikely before mid-November

WASHINGTON | Wed Oct 23, 2013 6:03pm EDT

(Reuters) - Janet Yellen's Senate confirmation hearing to be the next chair of the Federal Reserve is not likely to get under way before the middle of next month, a Senate aide said on Wednesday.

President Barack Obama nominated Yellen, the Fed's current vice chair, on October 9 to replace Ben Bernanke when his term expires at the end of January, subject to Senate confirmation.

Her hearing before the banking panel is the next step in that process, but Senate staff are still waiting to receive the paperwork from the White House before scheduling a start date, the aide said.

The hearing is expected to be somewhat confrontational, with Republicans critical of the Fed's ultra-easy monetary policy using the opportunity to voice concerns that it risks financial instability and future inflation.

But Obama's Democrats control the Senate, including 12 seats on the 20-member banking panel. As a result, Yellen is expected to win confirmation fairly easily, and to take the helm of the U.S. central bank when Bernanke steps down on January 31.

The Fed has held interest rates near zero since late 2008 and quadrupled the size of its balance sheet through massive bond purchases, in an effort to boost economic recovery after a severe 2007-2009 recession and drive down lofty unemployment.

Yellen has been a stout supporter of this aggressive action and her appointment is viewed as likely to ensure policy continuity with the Bernanke era as policymakers weigh when to start scaling back bond buying and eventually raising rates.