Obama faces new obstacles in high-stakes debt talks

(Reuters) - President Barack Obama will seek "the biggest deal possible" in talks on Sunday aimed at averting a debt default after Republicans shied away from a $4 trillion deficit-reduction deal because it would raise taxes.

Obama and the top U.S. Republican, House of Representatives Speaker John Boehner, are to meet with other congressional leaders at 6 p.m. EDT (2200 GMT) at the White House for high-stakes deliberations with an August 2 deadline looming larger.

Failure to seal a deal by August 2 could mean the first-ever default on the nation's financial obligations, which the White House and private economists warn could push the United States back into recession and trigger global financial chaos.

Boehner, facing stiff opposition from fellow Republicans over the prospects of higher taxes as part of a large-scale $4 trillion budget deal, told the Democratic president on Saturday he would only pursue a smaller, $2 trillion package.

The move threatened to throw Sunday's meeting into disarray. It followed Democratic complaints to Obama -- whose 2012 re-election prospects are tightly linked to U.S. economic health -- that he should not agree to any reforms of popular entitlement programs that would lead to benefit cuts.

Calling it a "grave moment for the country," Treasury Secretary Timothy Geithner told NBC's "Meet the Press" that Obama and the Democrats would try to get the "biggest deal possible" and that failure to act could lead to catastrophic damage to the fragile U.S. economy.

"It's going to require both sides to compromise. The president's bringing both sides together again at the White House this evening to try to figure out how to move forward," he said.

White House chief of staff William Daley told ABC's "This Week With Christiane Amanpour" that "there's no question in my mind" that a default will be avoided. "I'm confident of that."

Daley said the White House believed a deal of around $4 trillion was needed to "send a statement to the world that the U.S. has gotten hold of their ... fiscal problems."

Aides to Obama and Boehner had been working on a far-reaching package of spending cuts and new revenue that would have reduced deficits by $4 trillion over 10 years and cleared the way for lifting the $14.3 trillion cap on the government's borrowing capacity.

DAMPENED HOPES

But Boehner's move dampened hopes of any immediate compromise and raised doubts about the chances that Sunday's talks would start moving the budget debate toward an end-game.

"Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes," Boehner, the top Republican in Congress, said in a statement. "I believe the best approach may be to focus on producing a smaller measure."

Senate Republican leader Mitch McConnell, appearing on "Fox News Sunday," said, "Nobody's talking about not raising the debt ceiling," and said he was "for the biggest deal possible too. It's just that we're not going to raise taxes in the middle of this horrible economic situation."

McConnell said he believed the sweeping $4 trillion package was off the table and suggested Republicans have an alternative idea to avoid a default up their sleeves.

Asked if there was a contingency plan to avoid a default, McConnell said with a smile: "There's always a contingency plan."

Conservatives believe deep spending cuts are needed to get the budget under control and are urging congressional Republicans not to bow to pressure for tax increases on the wealthy from Democrats, who want to shield popular domestic programs from huge cuts.

"This debt ceiling debate is the perfect time to do what must be done. We must cut," said former Alaska Governor Sarah Palin, the Republican vice presidential nominee in 2008.

Democratic Representative Chris Van Hollen, on CNN's "State of the Union," accused Republicans of taking an uncompromising stance -- "essentially providing a form of extortion, 'if you don't agree to deficit reduction the way we want it.'"

Republicans -- under pressure from Tea Party conservatives -- reject any increased taxes and want curbs on popular benefit programs such as Medicare, Medicaid and Social Security.

Republican Senator Jim DeMint, a Tea Party favorite, told Fox he believed Geithner was "playing Chicken Little here" with the default deadline. "The fact is, we will pay our debts if it's the last dollar we have."

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Royal British Legion suspends NoW ties over 'hacking'

The Royal British Legion (RBL) has cut ties with the News of the World as its campaigning partner amid claims the paper may have hacked into the mobile phones of bereaved military families.

The charity said it was "shocked" to the core by the allegations.

Chief of the Defence Staff Gen Sir David Richards said the claims were "disgusting" and he was "appalled".

The paper's owner, News International, said it would be "horrified" if the reports turned out to be true.

According to the Daily Telegraph, the phone numbers of relatives of service personnel killed in Iraq and Afghanistan were found in the files of private investigator Glenn Mulcaire, who had been working for the News of the World.

Police have not approached relatives of the soldiers but some families say a newspaper has contacted them suggesting they were victims of phone-hacking.

The Royal British Legion also said it was reviewing its advertising with News International, which publishes the Sun and The Times, as well as the NoW, the UK's top-selling newspaper.

In other developments:

• Prime Minister David Cameron is consulting MPs about the nature of a public inquiry into the phone-hacking claims, amid support by the deputy prime minister and the Labour leader for a judge-led hearing, with powers to call evidence and examine witnesses under oath
• Shares in BSkyB fall 2% on fears that the News of the World phone-hacking scandal could hinder parent company News Corp's bid for the broadcaster
• Culture Secretary Jeremy Hunt is set to delay his decision on whether to allow News Corp's bid for BSkyB after receiving 100,000 submissions on the issue
• Michael Mansfield QC, who represented Mohamed Al Fayed at the Princess Diana inquest, has been told his phone may have been hacked
• The Crown Office say Strathclyde Police have been asked to look at evidence given by witnesses during the Tommy Sheridan perjury trial, in light of recent allegations
• Sainsbury's supermarket and O2 follow the example of other companies including Ford and Npower by suspending advertising in the NoW
• The government is to urgently review its advertising contracts with the News of the World
• Peter Ridsdale, chairman of Plymouth Argyle, tells BBC Radio Devon, his emails were hacked into and he is seeking damages from the News of the World following an article published by the paper when he was chairman of Cardiff City

The Royal British Legion campaigned with the News of the World on Military Covenant issues and was set to mount another initiative with the paper to save the Chief Coroner's Office from abolition.

The charity's adverts have also appeared in the Sun and on the Sun's Forces Channel online to promote its welfare services for serving and former military personnel and their relatives.

A spokesman for the charity said: "We can't with any conscience campaign alongside News of the World on behalf of Armed Forces families while it stands accused of preying on these same families in the lowest depths of their misery.

"The hacking allegations have shocked us to the core."

He added: "Clearly, it would make a mockery of that campaign to go hand-in-hand with News of the World. We think we'll do better without them."

Outrageous breach

News International is co-operating with a police inquiry into hacking at the News of the World and is conducting its own investigation into the claims.

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Lord Dannatt told the BBC the claims were "shocking, it's appalling, it's beyond terrible"

"If these allegations are true we are absolutely appalled and horrified," the company said in a statement, adding that its "record as a friend of the armed services and of our servicemen and servicewomen, is impeccable".

The latest developments come after reports claimed the paper hacked into the mobile phone of murdered schoolgirl Milly Dowler, the families of 7/7 bombing victims and the parents of murdered Soham schoolgirls Holly Wells and Jessica Chapman.

Defence Secretary Liam Fox said: "If these claims prove to be true then the intrusion into the private lives of bereaved families would be an outrageous breach of trust and I would strongly condemn anyone involved.

"Our Armed Forces and their families rightly deserve the respect and support of the nation particularly when their loved ones have made the ultimate sacrifice."

The former head of the Army, Lord Dannatt, told BBC Radio 4's Today: "It is really touching the sensitivity of families who have been through a tremendous amount - then to suddenly find what they thought was a closed issue after the death, the knock on the door, the repatriation and inquest, then suddenly gets opened again in this horrible way."

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France’s Lagarde Named New Head of I.M.F.

PARIS — Christine Lagarde was named Tuesday as the new managing director of the International Monetary Fund, taking on one of the most powerful positions in global finance as a worsening debt crisis in Greece rattles financial markets worldwide.

Treasury Secretary Timothy F. Geithner had announced earlier Tuesday that the United States would back Ms. Lagarde, France’s influential finance minister, over the Mexican central bank governor, Agustín Carstens, her only competitor for the job, a move that all but sealed her victory.

“Minister Lagarde’s exceptional talent and broad experience will provide invaluable leadership for this indispensable institution at a critical time for the global economy,” Mr. Geithner said in his statement. “We are encouraged by the broad support she has secured among the Fund’s membership, including from the emerging economies.

The I.M.F. executive board met Tuesday in Washington to decide between Ms. Lagarde and Mr. Carstens. But having secured the backing of China, most countries in Europe and then the United States — which holds the largest number of votes at the fund — Ms. Lagarde’s appointment for a five-year term was effectively a foregone conclusion.

Ms. Lagarde will be taking over at a delicate time, following the resignation last month of Dominique Strauss-Kahn after his indictment on charges of the attempted rape of a hotel maid in New York.

As the finance minister of one of Europe’s most powerful economies, she has been at the forefront of efforts to contain the European debt crisis, which has led Greece, then Ireland and Portugal, to seek bailouts to help them pay their huge sovereign debts.

But a year after Greece secured a €110 billion, or $140 billion, rescue package from the I.M.F., the European Union and the European Central Bank, the country’s debt problems have now re-emerged with a vengeance.

Financial markets have see-sawed in recent weeks as the Greek government was buffeted by widespread social unrest stemming in part from the I.M.F.’s demands for greater austerity measures as a condition of releasing more aid. The Greek Parliament is to vote on the measures Wednesday.

Although emerging markets fought to claim the I.M.F. leadership from Europe, which has produced every managing director since the fund’s inception more than 40 years ago, Ms. Lagarde received substantial backing from Europe, the United States and China. Her key argument was that only another European could continue the I.M.F.’s leadership in managing Europe’s deepening debt crisis.

Yet Ms. Lagarde also came under fire from critics who say she and other top European policy makers mishandled the crisis from the beginning and are now having to scramble to clean up problems of their own making.

“For the I.M.F. to be devoting so much financial and human capital to try to combat a problem in Europe which is largely political in origin and can only be solved by political agreement is controversial,” said Simon Tilford, the chief economist of the Center for European Reform in London. “It threatens the I.M.F.’s credibility.”

What is more, French banks have the largest exposure of any in Europe to Greece, having loaded up on sovereign debt over the years, while Ms. Lagarde has been a major player in negotiating the bailout for Greece. She has adamantly opposed a full-blown debt restructuring or any solution other than a voluntary restructuring by banks.

That has led some analysts to raise questions about whether her impartiality on the issue would be clouded as she leads the fund.

“There is a risk that her perceived objectivity will be brought into question because of this,” Mr. Tilford said. On the other hand, “it’s possible she will come to believe debt restructuring could be in France’s interest, and that kicking the can down the road could ultimately cost the French more than an earlier move to lance the boil.”

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TechBytes: Microsoft Expands Cloud Offerings

In today's TechBytes, Microsoft Office is heading for the clouds. Microsoft Office 365 launches on Tuesday.

It uses cloud technology, providing a virtual environment for various devices to store and share software.

It's a risky move because nearly nine of 10 workplace computers use Office. For the product to succeed, Microsoft must convince some companies to switch.

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LulzSec's Last Hack?

LulzSec's reign of terror appears to be over. The group that claimed responsibility for hacking into major corporate and government databases worldwide announced over the weekend that it has disbanded.

Members claimed they'd gotten bored.

Cars Go Driverless

Driverless cars are becoming a reality. Nevada is the first state to make it legal for drivers to travel in Google's automated Priuses and Audi TT's.

Proponents of the technology argue that driverless cars are safer than traditional cars because the drivers won't be distracted.

Also, no need to find a designated driver.

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Boeing begins final phase of 787 flight testing

EVERETT, Wash. - Boeing yesterday started Function & Reliability (F&R) testing and extended operations (ETOPS) demonstrations on the 787 Dreamliner. This is the final phase of flight testing prior to certification of the airplane.

"We are ready for this final phase of flight testing," said Scott Fancher, vice president and general manager of the 787 program. "The team has created a solid plan for accomplishing the hours and test points required for F&R and ETOPS testing in support of delivery to our customer ANA in the August to September time period."

F&R testing simulates various normal and non-normal operations for the airplane, in a realistic airline-like flight environment. ETOPS refers to extended operations – for twin jets, flights that are more than 60 minutes away from a suitable landing field. During ETOPS demonstrations the company validates the airplane's ability to safely divert for a variety of reasons, including long diversions with one engine shut down.

In addition to F&R and ETOPS testing for the 787 with Rolls-Royce engines, Boeing continues certification testing on 787s with General Electric engines and will conduct a separate F&R/ETOPS test program for that version of the airplane. Other activities will continue on the flight test fleet to support Boeing objectives including examining potential technologies for the 787-9 and testing engine improvement packages.

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French banks agree to Greek debt rollover

By Harry Papachristou and Emmanuel Jarry

ATHENS/PARIS | Tue Jun 28, 2011 5:17am IST

ATHENS/PARIS (Reuters) - France offered a radical solution Monday for banks to roll over some Greek debt for 30 years as the Greek government fought for political support of its five-year austerity plan to avert bankruptcy.

With depositors fleeing Greek banks in growing numbers and financial markets watching anxiously, President Nicolas Sarkozy told a news conference in Paris that French banks had reached a draft agreement with the authorities on a voluntary rollover of maturing bonds.

"We concluded that by stretching out the loans over 30 years, putting (interest rates) at the level of European loans, plus a premium indexed to future Greek growth, that would be a system that each country could find attractive," he said.

The plan was put to a meeting of international bankers and European Union officials with the International Institute of Finance (IIF) in Rome Monday but no decision was taken, an Italian Treasury official said.

In a sign of ebbing confidence that Greece can avoid default on its 340 billion euro debt mountain, Moody's said Greek banks had lost about 8 percent of private sector deposits so far this year as customers burned their savings due to unemployment, transferred funds abroad or bought gold.

French government sources said under an outline deal, banks would reinvest 70 percent of the proceeds when Greek bonds fall due in 2011-14 and cash out the rest. Of the amount reinvested, 50 percent would go into the new 30-year bonds and 20 percent would go into zero-coupon AAA bonds with deferred interest.

The new bonds would be placed in a Special Purpose Vehicle, effectively removing Greek debt from the balance sheets of participating banks, the source said. Banks would hold equity in the SPV instead.

Private banking sources said the new bonds could be guaranteed by the euro zone's rescue fund (EFSF) or the European Investment Bank.

A French government source described the solution, proposed by French bankers, as "a sort of private Brady bond without a public guarantee," referring to a 1989 swap of Latin American debt for tradable securities, some of them guaranteed, proposed

by then U.S. Treasury Secretary Nicholas Brady.

German banks voiced interest in the "French model" although Deutsche Bank chief Josef Ackermann said it was only one of several solutions being considered and it was unclear whether any satisfactory proposal could be found.

"Political leaders expect a solution by the end of the week but we should not rush it," Ackermann told Reuters Television in an interview. "It is important to have a good solution. The issues are complex and need to be discussed."

Graphics on Europe's struggle with debt, click r.reuters.com/hyb65p

REBELS PRESSED

Any new financial rescue for Athens, including official lending and private sector participation, depends on the Greek parliament approving this week a five-year austerity plan and legislation to implement structural reforms and privatization.

"Our vote is the only chance for the country to get back on its feet," Greek Prime Minister George Papandreou told legislators at the beginning of a parliamentary debate.

Greek Finance Minister Evangelos Venizelos met ruling socialist party (PASOK) rebels in Athens to push them to toe the line in parliamentary votes Wednesday and Thursday, where a defeat could plunge the country into default.

Greece's conservative opposition has rejected calls for national unity, forcing Papandreou to rely on his slim parliamentary majority to push through a painful mix of spending cuts, tax hikes and state sell-offs .

However with Greece stuck in deep recession, at least three PASOK deputies have expressed serious reservations or outright opposition to a plan they say will crush any hope of growth for years to come and it is unclear how the numbers will play out.

Venizelos acknowledged the plan was painful but said it would win time to negotiate more favorable terms later, an attitude which risks irritating some euro zone partners.

"The strategy is to vote on the two pieces of legislation, to be able to face the euro zone and the IMF to obtain the fifth tranche, and until the end of the summer we seriously negotiate a new loan program," he said. "That's your renegotiation."

Without parliamentary approval for the measures, which have caused a wave of strikes and demonstrations, the European Union and International Monetary Fund say they will not release the fifth tranche of the 110 billion-euro bailout agreed last year.

If the loans are not forthcoming, the Greek government, which has been shut out of financial markets because of the ruined state of its public finances, will run out of money within weeks, probably triggering a Europe-wide crisis.

"If it is Greece alone, that's already big," Deutsche Bank's Ackermann said. "But if other countries are drawn in through contagion, it could be bigger than Lehman," he said, referring to the disastrous 2008 collapse of Wall Street investment bank Lehman Bros.

PLAN B

Three euro zone sources in Brussels said EU officials were working on a contingency plan for Greece if its parliament rejects an austerity program and the country cannot receive the next instalment of EU/IMF emergency loans.

The fallback plan, distinct from the French rollover ideas, involves ways to ensure Greece gets the liquidity needed to avoid default if the next aid tranche cannot be paid out by mid-July, the sources said.

An initial Greek vote on the framework austerity package is due on Wednesday, and lawmakers then vote Thursday on a separate bill containing specific steps to implement it.

Defections over the past 13 months have cut Papandreou's support in the 300-member parliament to 155 seats, meaning a handful of votes could decide the issue, which may be further complicated if one bill passes and the other does not.

In an interview with Spanish daily El Mundo Sunday, Deputy Prime Minister Theodore Pangalos said he believed the first vote would pass but he was less confident about the second implementation bill.

"That's where we may have problems," he said. "I don't know whether some of our legislators will vote against it."

Progress in the rollover talks cooled demand for safe-haven bonds Monday but the premium investors demand to hold Greek debt rather than benchmark German Bunds widened by a further 20 basis points to 1,432 basis points.

(Additional reporting by Stephen Slater in London, Luke Baker and Julien Toyer in Brussels, Nick Vinocur in Paris, Harry Papachristou and Renee Maltezou in Athens, Stefano Bernabei and Gavin Jones in Rome; Writing by James Mackenzie and Paul Taylor, editing by Paul Taylor/Janet McBride)

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Greece: The moment of truth

For months there have been protests in Greece. Hardly a day has passed without strikes.

There is rising resentment at a recession that only seems to deepen. They have had a year of austerity and now the Greek people are being asked to endure a second of cuts and tax increases. All the signs are that the Greeks have reached a limit.

Last year 400,000 jobs were lost. Almost every street in Athens has boarded-up shops where owners cannot pay their loans. The despair and bitterness are palpable.

For this year an extra 6.5bn euros (£5.8bn) in cuts needs to be found. The middle class will face a solidarity tax. The threshold at which Greeks start paying tax will drop from 12,000 euros to 8,000 euros. The self-employed will be hit with a tax levy.

By 2015 a total of 28bn euros of savings have been earmarked. A fifth of civil service jobs are set to disappear and 50bn euros must be found from privatisations.

Over the next two days MPs are to debate and vote on these austerity measures. If they vote "yes" then Greece will qualify for an emergency loan of 12bn euros (£10.7bn) from the EU and the IMF.

“Start Quote

Everything hangs in the balance. In the meantime much of the economy - with the exception of tourism and some exports - is unravelling”

End Quote

One bit of good news for Greece is that French banks have agreed to roll over some of Greek debt. Other banks may follow.

If the MPs vote "no" then Greece is heading for bankruptcy in mid-July and the eurozone will be thrown into turmoil. George Soros warned the other day: "Let's face it, we're on the edge of an economic collapse."

The Greek people have been told this is a historic decision. The future of the country is at stake. On the eve of the debate the Greek Prime Minister George Papandreou said it was a "unique opportunity to keep the country on its feet".

But the people no longer seem to see it that way. Polls suggest that between 70% and 80% oppose the austerity plan.

So does the opposition. They have said "we cannot support a policy that deepens the recession". Indeed the government has not answered the question as to why more austerity will work when it failed the first time round.

Even the new Finance Minister, Evangelos Venizelos, described the new measures as "tough and in many respects unfair", but he added that was the only way to complete negotiations with the country's new paymasters - the EU and the IMF.

The unions have called a 48-hour general strike. This is a now or never moment for them and they have called hundreds of thousands of activists on to the streets.

Police from all over Greece have been summoned to the capital. On Wednesday protesters threaten to encircle parliament to prevent the deputies from voting. Quite simply this is a trial of strength played out on the streets of Athens.

On paper the prime minister should win.

Greek economic hardship is reflected in the rising numbers of boarded-up shops

He has a majority in the parliament but he has doubts. Several deputies have come under fierce pressure in their constituencies to vote no.

That uncertainty has been communicated to Europe's capitals.

When I asked UK Prime Minister David Cameron at a press conference last week whether he believed in giving more money to Greece he said it was wise - particularly for banks - "to prepare for all eventualities".

German Finance Minister Wolfgang Schaeuble has sounded a similar note. In Brussels there is talk of officials working on emergency funding that might help Greece get through July whilst further negotiations take place. If correct, it would be a classic EU fudge.

Everything hangs in the balance. In the meantime much of the economy - with the exception of tourism and some exports - is unravelling.

Greek banks lost 8% of their private sector customer deposits this year. I have met several people who are moving their funds outside Greece.

Even with a "yes" vote in the parliament there have to be doubts whether all these measures - particularly the privatisations - will be implemented.

It is difficult to see how the debt mountain will be reduced. That is why most economists believe a default is inevitable - further down the road.

That is perhaps the real game here. Play for a delay, a postponement in the hope that Europe's banks will be healthier and more able to take a hit

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5 wounded by gunfire near San Francisco Pride fest

SAN FRANCISCO (KABC) -- Police are searching for a gunman believed to be responsible for shooting and injuring five people in San Francisco on Saturday night.

The shooting happened shortly after 6 p.m. near Market and Seventh streets, just a few blocks from the city's gay pride celebration at the Civic Center.

Investigators said they believe the gunfire was gang-related and was not connected to the festivities.

Two people were hospitalized with serious injuries while three others were treated for minor injuries. Two people were shot in the leg and one was shot in the buttocks, according to KGO-TV in San Francisco.

The suspect was described as a black male in his 20s, about 6 feet tall with dreadlocks. It was not clear as to what direction he fled.

(Copyright ©2011 KABC-TV/DT. All Rights Reserved.)

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Mob boss brought back to Boston; will he sing?

BOSTON — James "Whitey" Bulger's capture could cause a world of trouble inside the FBI.

The ruthless Boston crime boss who spent 16 years on the lam is said to have boasted that he corrupted six FBI agents and more than 20 police officers. If he decides to talk, some of them could rue the day he was caught.

"They are holding their breath, wondering what he could say," said Robert Fitzpatrick, the former second-in-command of the Boston FBI office.

The 81-year-old gangster was captured Wednesday in Santa Monica, Calif., where he apparently had been living for most of the time he was a fugitive. He appeared Friday afternoon inside a heavily guarded federal courthouse in Boston to answer for his role in 19 murders.

Bulger, wearing jeans and a white shirt, looked tan and fit and walked with a slight hunch at back-to-back hearings on two indictments. He asked that a public defender be appointed to represent him, but the government objected, citing the $800,000 seized from his Southern California apartment and his "family resources."

"We think he has access to more cash," said prosecutor Brian Kelly.

At the second hearing, Bulger took a swipe at prosecutors after Magistrate Judge Marianne Bowler asked him if he could afford to pay for an attorney.

"Well, I could, if they would give me my money back," he replied in his unmistakable Boston accent, prompting laughter in the courtroom.

Kelly implied that Bulger's cash came from illegal activities.

"He clearly didn't make that on a paper route on Santa Monica Boulevard," he said.

Prosecutors asked that Bulger be held without bail, saying he is danger to the community and may try to threaten witnesses.

"He's also, quite obviously, a risk of flight," Kelly said.

Kelly also said Catherine Greig, Bulger's longtime girlfriend who was arrested with him, told court officials that Bulger's brother may be willing to assist him in posting bail.

Bulger did not ask for a detention hearing, but his lawyer said he may later make an argument that Bulger should be released on bail while awaiting trial.

The amount of money found in Bulger's apartment confirmed a longheld belief by investigators that he kept large stashes of cash for a life on the run.

"We clearly don't think this is his last stash," Kelly said.

When Bulger walked into the courtroom, he saw his brother William, the former powerful leader of the state Senate, seated in the second row. Whitey Bulger smiled at him and mouthed, "Hi." His brother smiled back.

Greig appeared in court a few minutes later on charges of harboring a fugitive. She asked for a hearing to determine whether she can be released on bail, and one was scheduled for next week.

Bulger, the former boss of the Winter Hill Gang, Boston's Irish mob, embroiled the FBI in scandal after he disappeared in 1995. It turned out that Bulger had been an FBI informant for two decades, feeding the bureau information on the rival New England Mafia, and that he fled after a retired Boston FBI agent tipped him off that he was about to be indicted.

The retired agent, John Connolly Jr., was sent to prison for protecting Bulger. The FBI depicted Connolly as a rogue agent, but Bulger associates described more widespread corruption in testimony at Connolly's trial and in lawsuits filed by the families of people allegedly killed by Bulger and his gang.

Kevin Weeks, Bulger's right-hand man, said the crime lord stuffed envelopes with cash for law enforcement officers at holiday time. "He used to say that Christmas was for cops and kids," Weeks testified.

After a series of hearings in the late 1990s, U.S. District Judge Mark Wolf found that more than a dozen FBI agents had broken the law or violated FBI regulations.

Among them was Connolly's former supervisor, John Morris, who admitted he took about $7,000 in bribes and a case of expensive wine from Bulger and henchman Stephen "The Rifleman" Flemmi. Morris testified under a grant of immunity.

In addition, Richard Schneiderhan, a former Massachusetts state police lieutenant, was convicted of obstruction of justice and conspiracy for warning a Bulger associate that the FBI had wiretapped the phones of Bulger's brothers.

Edward J. MacKenzie Jr., a former drug dealer and enforcer for Bulger, predicted that Bulger will disclose new details about FBI corruption and how agents protected him for so long.

"Whitey was no fool. He knew he would get caught. I think he'll have more fun pulling all those skeletons out of the closet," MacKenzie said. "I think he'll start talking and he'll start taking people down."

A spokesman for the Boston FBI did not return calls seeking comment. In the past, the agency has said that a new generation of agents has replaced most or all of the agents who worked in the Boston office while Bulger was an informant.

A law enforcement official who requested anonymity because of the ongoing investigation told The Associated Press on Friday that FBI agents lured Bulger out of his., apartment earlier this week by telling him someone had broken into his on-site storage unit. The official said Bulger walked out of the apartment, was arrested without incident and consented to a search of the premises.

Some law enforcement officials said they doubt Bulger will try to cut a deal with prosecutors by exposing corruption, in part because he will almost certainly be asked to reveal what contact he had with his brothers while he was a fugitive and whether they helped him in any way.

"If Bulger talks, he would have to talk about his brothers, and I can't see that happening, said retired state police Detective Lt. Bob Long, who investigated Bulger in the 1970s and '80s."They are not going to take selective information from him -- it's either full and complete cooperation or nothing."

Criminal defense attorney and former Drug Enforcement Administration agent Raymond Mansolillo said Bulger may not have any incentive to talk. "The FBI may say, 'You're going to jail or you're going to be killed. We're not offering you anything,'" said Mansolillo, who once represented New England crime figure Luigi "Baby Shacks" Manocchio.

But retired Massachusetts state police Maj. Tom Duffy, one of the lead investigators in the Bulger case, said Bulger may agree to talk if he thinks it could help his girlfriend.

"It's very possible he's concerned about her well-being -- she was with him for 16 years and was very loyal to him," Duffy said. "That may be a bargaining chip for the government during negotiations."

The question of whether Bulger will be given a public defender will be decided later. A hearing was scheduled for Tuesday. He did not enter a plea.

Bulger is "looking forward to facing the charges against him," said Peter Krupp, a lawyer assigned to represent Bulger for purposes of Friday's hearing only.

Among the onlookers at the courthouse was Margaret Chaberek, who grew up in Bulger's home turf of South Boston. "I'm here to see him get what he deserves," she said.

Ina Corcoran of suburban Braintree came on her day off to witness a piece of history and sat on a bench outside the fifth-floor courtroom, saying it was like being there to see Al Capone.

"If you could go back in time to be in that courtroom, wouldn't you?" she said.

___

Associated Press writers Johanna Kaiser, Laura Crimaldi in Providence, R.I., Curt Anderson in Miami and Greg Risling in Los Angeles contributed to this report.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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STORY HIGHLIGHTS * Experts question why black box data isn't uploaded to satellites * Critics: It's expensive and needs too much bandwidth

STORY HIGHLIGHTS

• Experts question why black box data isn't uploaded to satellites
• Critics: It's expensive and needs too much bandwidth
• Advocates: It would have eased grief for Air France crash victims
• Search for Flight 447 black boxes cost $40 million

(CNN) -- It was both painful and strange for Robert Soulas and his wife, Corinne, as they stared across the Atlantic. The ocean still held the bodies of their daughter and son-in-law, three months after the crash of Air France Flight 447.

That day in 2009, standing along the shoreline of Brazil's festive Ipanema Beach was as close as the Soulases could come to the spot hundreds of miles offshore where 24-year-old Caroline Marie and Sebastian Vedovati, 34, had taken their last breaths.

"You are crying, you are praying, you are thinking about your child, while beside you, you can hear people laughing and playing," said Robert Soulas on the phone Wednesday from his home outside Paris. "It was not a good country for grieving -- for crying."

The Soulases' daughter and her flight attendant husband were among the 228 victims aboard the Airbus A330 which disappeared from radar between South America and Africa en route from Rio de Janeiro to Paris. In the two years since the crash, the Soulases say they've been haunted by the pain of not knowing why the plane went down.

Map of Flight 447's route

What caused the Air France crash?

Gallery: Air France 447

Map: Air France Flight 447

It was only this month that searchers were able to find the aircraft's flight data recorder and cockpit voice recorder -- the so-called black boxes -- in mountainous terrain under 13,000 feet of ocean.

The first information from that data is expected to be made public on Friday.

Investigators will be able to ID bodies, official says

But if data from those devices had been uplinked from the plane to satellites immediately before the crash, would hundreds of victims' loved ones have been spared some anguish?

"If we'd had the technology before, we would now have the causes of the crash and it would be less painful," said Robert Soulas, a 59-year-old electrical engineer who works in the French defense industry. He helps lead a group of more than 300 others who also lost loved ones aboard Flight 447, all of whose grief would be less intense, he said, if they could only know why.

Did the plane crash because of pilot error or bad weather or equipment malfunction? Speculation has been easy to come by, but answers have been elusive.

What caused the crash?

Two years ago in Washington, the Air France crash spurred U.S. aviation safety officials to look into uplinking critical flight data to orbiting satellites from airplanes flying across vast oceans.

Here's how advocates say such a system would work: Currently flight data recorders use computer chips to record information about how the plane is working in flight. Another device, the cockpit voice recorder, records audio from crew members including pilots. If the plane crashes over a large body of water, the devices can't be retrieved without help from special recovery teams.

See photos of Flight 447 black boxes and wreckage

A new system being researched by the National Transportation Safety Board would uplink airplane data about its location, direction, equipment functions and about 30 other parameters to orbiting satellites, which would then beam the data back to the ground for storage. In the event of a crash, that data could be easily accessed from the storage sites and then analyzed for clues to what caused the disaster.

Caroline Marie Vedovati, 24, and her husband Sebastian Vedovati, 34, were lost in the 2009 crash over the Atlantic.

Advocates say such a system -- although pricey -- could save millions of dollars in operations to recover on-board flight data devices. Searching for the Air France devices and aircraft wreckage cost $40 million, according to a report by France's aviation investigation agency, the Bureau d'Enquetes et Analyses. "Fortunately they found these boxes," said Greg Feith, a former NTSB investigator, "but who knows, tomorrow we could lose another airplane and not be so lucky."

The time saved by having immediate access to aircraft data offers critical safety benefits, said Feith, because experts could warn airlines sooner about potential equipment problems blamed for the crash.

But skeptics cite several reasons why in-flight data uplinks might not work, including high costs, limited bandwidth, security concerns, privacy issues, and cumbersome aviation bureaucracies.

In fact, two powerful government bureaucracies with oversight of the U.S. aviation industry -- the National Transportation Safety Board and the Federal Aviation Administration -- disagree about the promise of in-flight uplinks.

"While the technology may exist, the use of telemetry for commercial airplanes is not currently practical due to bandwidth issues," said an FAA spokeswoman.

Tomorrow we could lose another airplane and not be so lucky.
--Greg Feith, former NTSB investigator

Jim Cash, the NTSB's chief technical adviser for vehicle recorders, who's been studying flight recorder technology for decades, is optimistic about a solution.

Bandwidth issues can be beat, Cash says, by limiting data and only uploading it to satellites when necessary. The data upload would begin automatically if the plane shows signs of distress during flight. "You wouldn't get a continuous data stream -- it would be activated by an automatic trigger -- but at least you would get the data when it counts," said Cash. The NTSB and France's BEA are asking the industry for data from past accidents to help design "trigger criteria" that would be used to activate the uplink system.

Flight 447's flight data recorder was recovered after a $40 million search.

"Airbus is seriously looking at providing that triggering criteria technology as standard equipment on large aircraft," said Cash. A BEA report on the crash of Flight 447 said uplink technology would cost more than $10,000 to retrofit each airliner. However, Cash says much of the satellite uplink technology already exists aboard many of the world's newer airliners as part of a ground-to-plane messaging technology called the Aircraft Communications Addressing and Reporting System.

Sarasota, Florida-based L-3 Communications Aviation Recorders makes about 60% of flight data recorder and cockpit voice recorders used on U.S. aircraft, according to vice president of engineering Tom Schmutz. "People can't understand why we can't simply strap a cell phone onto an airplane and move a bunch of data around," said Schmutz. "This is a complicated system. Complicated systems cost a lot of money. They don't always work right. I'm a little skeptical about, one, how necessary it is right now, and two, how realistic it is that somebody's going to foot the bill for this in the short term."

We ought to just do it. There's no reason not to.
--Peter Goelz, former chief NTSB administrator

Representing the airline industry, the Air Transport Association says it's concerned about the potential cost and wants to assess the overall need for such a system within the aviation community.

But Peter Goelz, former top NTSB administrator, says an uplink system "ought to be ordered immediately for all extended range aircraft right away. We ought to just do it. There's no reason not to."

"The aviation industry historically fights what they consider to be extraneous safety mandates, particularly if it costs them money that they cannot immediately recover," said Goelz, who compared the situation to the cargo hold fire that led to the 1996 Florida crash of ValuJet Flight 592, which killed all 110 passengers and crew.

Goelz said he and his NTSB colleagues fought industry push-back for their recommendation that smoke detectors and fire suppression systems be mandatory equipment in airplane cargo holds. "It cost about 10% of what they thought it was going to be, and we haven't had any fires in cargo holds since then," he said. "There's always an opposition."

I will be in peace when I know the truth. I need to know exactly what happened.
--Robert Soulas, father of Air France crash victim

RELATED TOPICS

• Accidents and Disasters
• Air Travel
• France

Industry figures worry about other questions that may trouble developers of the uplink system, including how to protect the data from hackers. Uplinked audio likely would have to be encrypted, experts say, because privacy laws protect audio from cockpit voice recorders from being released to the public.

The NTSB considered other methods of collecting data from troubled aircraft, including "deployable" systems that would eject from distressed planes to be picked up later by search teams. Researchers determined satellite uplinks to be the most promising. The Transportation Security Administration is looking into the possibility of using similar technology to monitor hijacked aircraft, said Cash.

At their home in France, the Soulases hope clues from the newly found data recorders will shed some light on why their loved ones died, two long years ago. "I will be in peace when I know the truth," Robert Soulas said. "I need to know exactly what happened."

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Meet your merchant: Alta Sierra Pizza and Grill

http://www.theunion.com/

via CAAI

Whole Heng clan chips into keep customer's happy, full


By Angela Diaz
Staff Writer

Alta Sierra Pizza and Grill off Alta Sierra Drive is run by a close-knit Cambodian family. From left are owner Ath Heng, Chakriya Heng, owner Sovannavy Aing, and manager Sophanna Chev.
Photo for The Union by John Hart

For Sovannavy Aing, customer service always comes first.

“Everything is the customer,” she said. “Keeping and making them happy, and making good food.”

Aing and her close-knit family run Alta Sierra Pizza and Grill, formerly Larry and Lena's Pizza, offering freshly baked pizza, hot sandwiches and salad. All six employees are family members, including Aing's co-owner and husband Ath Heng and daughters Chakriya “Riya” Heng and Chornay Heng.

Customers are referenced by name during the busy lunch rush; on-the-house drinks are offered to a waiting couple. Televisions flank arcade games and an adjacent banquet room waits for birthday parties and group meetings.

“Customer satisfaction is our priority,” Riya Heng reiterates as she stresses the importance that the restaurant be a family-friendly gathering place.

The family bought the establishment two years ago and recently changed the name, feeling like they'd built a strong enough reputation on their own.

“We changed the name to make it specific for Alta Sierra,” said Sophanna “Phanna” Chev, Ang's nephew and store manager.

The new name eliminates confusion with the take and bake pizzeria in Penn Valley, which is unrelated to their store.

Family business

Running a business is natural for the family –– they owned a jewelry store in their native Cambodia and worked for Ath Heng's brother's doughnut shop in Los Angeles when they first came to this country.

Ath Heng immigrated in 2003 and his wife and daughters followed in 2006.

In Cambodia, education is costly, Riya Heng explained. “We came to live the dream, for our dreams,” the Sierra College student said.

Chev, who moved to Nevada County in 2004, learned of the opportunity to buy Larry and Lena's Pizza. He shared the information with the family, who packed up their things, moved to Alta Sierra and bought the business and a house.

“Everything started rushing,” remembered Riya Heng. “It was a big change.”

Both she and her mother love to cook and combined the interest with their business knowledge.

“The skills you have are still your skills,” said Chev of the change from retail to food. “It's just a different point of view.”

What the family likes best about being business owners is the opportunity to meet people.

Plus, “we always want to be our own boss,” Riya Heng said.

The family keeps in touch with relatives in Cambodia through weekly phone calls.

Hard work, great location

Tenacity has allowed the family to thrive in a difficult economy.

“Everybody works hard,” Riya Heng said, while noting the economy has affected all businesses, including theirs.

“The economy will grow,” she added.

Aing thinks a clean environment with fresh products is key to success, while Chev credits word of mouth from satisfied customers.

A great location doesn't hurt.

“We love this place. Every neighbor is so friendly and nice,” said Aing.

In some places, the family gets funny looks because they are Asian, but not here, Riya Heng noted.

“A small town is a good place to live, a good neighborhood, what else do you want?” asked Chev.

To Aing, keeping the business in the family is a high priority.

“Family comes first, no matter what,” Riya Heng agreed.

The family is not opposed to opening another business in the future; for now, they want to continue to focus on education, each other and providing high quality product and great customer service.

“It's not just business, we have it here also,” said Chev, touching his heart.

To contact Reader Liaison Angela Diaz, e-mail adiaz@theunion.com or call (530) 477-4203 begin_of_the_skype_highlighting (530) 477-4203 end_of_the_skype_highlighting.

Read More

Meet your merchant: Alta Sierra Pizza and Grill

http://www.theunion.com/

via CAAI

Whole Heng clan chips into keep customer's happy, full


By Angela Diaz
Staff Writer

Alta Sierra Pizza and Grill off Alta Sierra Drive is run by a close-knit Cambodian family. From left are owner Ath Heng, Chakriya Heng, owner Sovannavy Aing, and manager Sophanna Chev.
Photo for The Union by John Hart

For Sovannavy Aing, customer service always comes first.

“Everything is the customer,” she said. “Keeping and making them happy, and making good food.”

Aing and her close-knit family run Alta Sierra Pizza and Grill, formerly Larry and Lena's Pizza, offering freshly baked pizza, hot sandwiches and salad. All six employees are family members, including Aing's co-owner and husband Ath Heng and daughters Chakriya “Riya” Heng and Chornay Heng.

Customers are referenced by name during the busy lunch rush; on-the-house drinks are offered to a waiting couple. Televisions flank arcade games and an adjacent banquet room waits for birthday parties and group meetings.

“Customer satisfaction is our priority,” Riya Heng reiterates as she stresses the importance that the restaurant be a family-friendly gathering place.

The family bought the establishment two years ago and recently changed the name, feeling like they'd built a strong enough reputation on their own.

“We changed the name to make it specific for Alta Sierra,” said Sophanna “Phanna” Chev, Ang's nephew and store manager.

The new name eliminates confusion with the take and bake pizzeria in Penn Valley, which is unrelated to their store.

Family business

Running a business is natural for the family –– they owned a jewelry store in their native Cambodia and worked for Ath Heng's brother's doughnut shop in Los Angeles when they first came to this country.

Ath Heng immigrated in 2003 and his wife and daughters followed in 2006.

In Cambodia, education is costly, Riya Heng explained. “We came to live the dream, for our dreams,” the Sierra College student said.

Chev, who moved to Nevada County in 2004, learned of the opportunity to buy Larry and Lena's Pizza. He shared the information with the family, who packed up their things, moved to Alta Sierra and bought the business and a house.

“Everything started rushing,” remembered Riya Heng. “It was a big change.”

Both she and her mother love to cook and combined the interest with their business knowledge.

“The skills you have are still your skills,” said Chev of the change from retail to food. “It's just a different point of view.”

What the family likes best about being business owners is the opportunity to meet people.

Plus, “we always want to be our own boss,” Riya Heng said.

The family keeps in touch with relatives in Cambodia through weekly phone calls.

Hard work, great location

Tenacity has allowed the family to thrive in a difficult economy.

“Everybody works hard,” Riya Heng said, while noting the economy has affected all businesses, including theirs.

“The economy will grow,” she added.

Aing thinks a clean environment with fresh products is key to success, while Chev credits word of mouth from satisfied customers.

A great location doesn't hurt.

“We love this place. Every neighbor is so friendly and nice,” said Aing.

In some places, the family gets funny looks because they are Asian, but not here, Riya Heng noted.

“A small town is a good place to live, a good neighborhood, what else do you want?” asked Chev.

To Aing, keeping the business in the family is a high priority.

“Family comes first, no matter what,” Riya Heng agreed.

The family is not opposed to opening another business in the future; for now, they want to continue to focus on education, each other and providing high quality product and great customer service.

“It's not just business, we have it here also,” said Chev, touching his heart.

To contact Reader Liaison Angela Diaz, e-mail adiaz@theunion.com or call (530) 477-4203 begin_of_the_skype_highlighting (530) 477-4203 end_of_the_skype_highlighting.

Read More