Mexico City Journal: Mobile Factory With Hope for a Better Life – Mexico City Journal





MEXICO CITY — The sound of a surprising opportunity rose above the tumult of traffic. “Factory for electronic textiles offering work,” came the message, shouted from a megaphone that sat in the basket of a white bicycle pedaled by Amor Muñoz, an artist in a black jumpsuit. “One hundred pesos an hour!”




Even on the streets of this busy capital, where sales pitches flow from speakers attached to anything with wheels, the offer stood out. Work? For about $7.50 an hour, a little above the American minimum wage?


The rush was on. By the time Ms. Muñoz parked in her usual spot outside a hospital in one of Mexico City’s peripheral neighborhoods, a line had already formed. Women of all ages squeezed together — one held a baby, another was nearly too old to walk — as Ms. Muñoz opened up a white wooden box revealing thread, needles, cloth, timecards and employment contracts. The work involved creating interactive art pieces that combine the old craft of sewing with 20th-century electronics and 21st-century tags allowing smartphone users to look up who worked on a given piece.


“It’s about community,” Ms. Muñoz said. “I’m interested in sharing the experience of art.”


If that were her only interest, it would be enough to make alpha geeks swoon; a local glossy magazine and the revered Austrian technology festival, Ars Electronica, recently honored Ms. Muñoz with their annual awards. But behind her vintage glasses and dimpled smile, Ms. Muñoz has a sharper message.


Her maquiladora, or factory, she said, is a “fantasy” meant to condemn the harsh reality of a global economy that uses and discards poor workers, especially women, to keep prices low.


In Mexico these days the project amounts to artistic subversion. At a time when the country’s new president, Enrique Peña Nieto, is trying to recast Mexico as an economic marvel, with growth rates surpassing Brazil, Ms. Muñoz’s factory is a countervailing force — a mobile reality check highlighting Mexico’s darker economic truths.


Take wages. The minimum wage in Mexico is about 60 cents an hour, and while the average pay in manufacturing has grown over the past decade, it is still only about $3.50 an hour, according to government statistics. Even according to higher estimates by the Bureau of Labor Statistics in Washington, Mexico’s hourly compensation costs are still only two-thirds of those found in Brazil, where the benefits of economic growth have helped a larger share of workers rise from poverty.


Economists recognize the problem. “We need to increase wages to become a true modern country,” said Luis de la Calle, a former Mexican government official who helped negotiate the North American Free Trade Agreement. But as Mexico tries to improve its image and gloss over its violent drug war, government officials have mostly described Mexico’s low wages in positive terms, as a way to compete with China. The market, it is generally assumed, will eventually drive up wages.


Ms. Muñoz is unwilling to wait. She described Mexican wages as an insult to human dignity, and every time her mobile factory appears, the power of work for reasonable pay goes on display. The crowds that gather are typically large. Sometimes people push and shove for two hours of work and $15, though once the day’s employees are selected (first come first hired), a calm tends to follow.


Earlier this month, the team included nearly a dozen women and one young man, all that Ms. Muñoz could afford. Many, like Sara Peregrino, 50, were homemakers with sewing experience. Others, like David Quiróz, 18, a taxi dispatcher, struggled to thread a needle without drawing blood.


Nearly everyone said the money they earned would go to one of two things — food or Christmas presents. “For women, it’s very hard to find a good job,” said Patricia Zamora, 33, a mother of two who arrived with Ms. Peregrino, one of her neighbors. “There is a lot of work for not much pay.”


Many of the women seemed to appreciate a chance to be involved in an art project. María González, 75, smiled widely when handed a needle and adjusted her purple scarf, excited to be creating something rather than worrying about her husband in the hospital. “This,” she said, sewing without looking down, “is a wonderful distraction.”


Ms. Muñoz seemed to agree. She stood nearby, waiting for her favorite time of day — when she paid the workers and took their photographs, which she would post online, linked to the artwork. It is an effort to make the workers more visible, she said, but also hints at her working-class past.


She grew up playing among the hammers and nails of the hardware store her parents owned in a marginal neighborhood like the one with her factory. She said she always appreciated manual labor and never felt comfortable in an office, even after receiving a law degree.


Textiles had once been a hobby — she used to collect huipiles, the traditional woven tunics of Mexico and Central America — but when she decided to become an artist in 2006, she returned to cloth and sewing. Her work now involves a mixture of textiles and technology. Many of her pieces involve sewn images with circuits that let users push buttons for sounds or displays of light.


Completed works from the mobile maquiladora project, for example, will create the whine of an ambulance siren.


Like many other young artists in the capital, she is trying to push Mexico forward by combining older traditions with the interactivity of social media and open-source software development. She dreams of finding financing for more mobile factories, and her lack of faith in government and industry is matched only by the optimism she expresses when discussing the power of networked youth.


“With technology, everything can be democratized,” she said. “It’s fabulous.”


Still, the human interactions are what she values most, so when Ms. Peregrino suddenly appeared and presented her with a pink plastic bag after being paid, Ms. Muñoz was visibly touched. The two women hugged as Ms. Muñoz put the gift in into the bicycle basket with the megaphone. Only later did she look inside, finding a hand-sewn purple scarf that must have taken days to complete.


This article has been revised to reflect the following correction:

Correction: December 31, 2012

An earlier version of this story misstated an organization that gave an award to Amor Muñoz. It was Ars Electronica, not Ars Technica.



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Top 5 Kids Apps: Best Games






1. Bugs and Bubbles


Ages 3-up Overall rating: 5 out of 5 stars Why we like it: Fun, fast and good for building emerging math skills, Bugs and Bubbles contains 18 leveled sorting, classification games set in Uncle Bob’s Bubble Factory. The goal is to collect stickers by harvesting bubbles, requiring kids to apply skills of counting, sorting and remembering patterns in an elegant fashion. Need to know: The better you do, the greater the challenge, and progress can be saved over time on different devices. Watch a video review of this app here. Ease of use: 10/10 Educational: 10/10 Entertaining: 10/10 $ 2.99


Click here to view this gallery.






[More from Mashable: 7 Bad Moves That Hurt Facebook in 2012]


Chris Crowell is a veteran kindergarten teacher and contributing editor to Children’s Technology Review, a web-based archive of articles and reviews on apps, technology toys and video games. Download a free issue of CTR here.


While you’re at the grownup table this holiday season, the kids could be eating their vegetables and sitting quietly — what’s more likely is they’ll be playing on their smart devices.


[More from Mashable: 40 Digital Media Resources You May Have Missed]


So we’ve rounded up the best 5 games that were included in this year’s Top 5 Kids Apps. All these games are not only a lot of fun, they’re also educational for your kids. The top game, Bugs and Bubbles, got 5 stars out of 5 for its perfect mix of entertainment and math teaching. There’s also room for pure fun with games like Build and Play and Rush Hour.


SEE ALSO: Mobile Apps Under Scrutiny: Is Your Kid’s Privacy at Risk?


Our friends at Children’s Technology Review shared with us these 5 top apps from their comprehensive monthly database of kid-tested reviews. The site covers everything from math and counting to reading and phonics.


Check back next week for more Top Kids Apps from Children’s Technology Review


Photo via Christopher Furlong/Getty Images


This story originally published on Mashable here.


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Kim Kardashian and Kanye West Expecting a Child















12/31/2012 at 03:45 AM EST







Kim Kardashian and Kanye West


Splash News Online


Talk about onstage pyrotechnics!

Kanye West dropped a bombshell during an Atlantic City concert on Sunday night, revealing that he and girlfriend Kim Kardashian are expecting a child.

The news of the reality starlet's pregnancy was quickly followed by an outpouring of congratulatory Twitter messages from family members.

"Oh BABY BABY BABY!!" shouts Kim's mom Kris Jenner.

Adds sister Kourtney: "Been wanting to shout from the rooftops with joy and now I can! Another angel to welcome to our family. Overwhelmed with excitement!

Kardashian, 32, and West, 35, went public with their relationship last April, about six months after Kardashian filed for divorce from Kris Humphries. The divorce action is still pending.

During Sunday's concert at Revel Resort's Ovation Hall, West revealed his big news by singing, "Now you having my baby" to the roar from the crowd of 5,000, the Associated Press reports.

West asked concertgoers to congratulate his "baby mom" and called the pregnancy the "most amazing thing."

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Kenya hospital imprisons new mothers with no money


NAIROBI, Kenya (AP) — The director of the Pumwani Maternity Hospital, located in a hardscrabble neighborhood of downtown Nairobi, freely acknowledges what he's accused of: detaining mothers who can't pay their bills. Lazarus Omondi says it's the only way he can keep his medical center running.


Two mothers who live in a mud-wall and tin-roof slum a short walk from the maternity hospital, which is affiliated with the Nairobi City Council, told The Associated Press that Pumwani wouldn't let them leave after delivering their babies. The bills the mothers couldn't afford were $60 and $160. Guards would beat mothers with sticks who tried to leave without paying, one of the women said.


Now, a New York-based group has filed a lawsuit on the women's behalf in hopes of forcing Pumwani to stop the practice, a practice Omondi is candid about.


"We hold you and squeeze you until we get what we can get. We must be self-sufficient," Omondi said in an interview in his hospital office. "The hospital must get money to pay electricity, to pay water. We must pay our doctors and our workers."


"They stay there until they pay. They must pay," he said of the 350 mothers who give birth each week on average. "If you don't pay the hospital will collapse."


The Center for Reproductive Rights, which filed the suit this month in the High Court of Kenya, says detaining women for not paying is illegal. Pumwani is associated with the Nairobi City Council, one reason it might be able to get away with such practices, and the patients are among Nairobi's poorest with hardly anyone to stand up for them.


Maimouna Awuor was an impoverished mother of four when she was to give birth to her fifth in October 2010. Like many who live in Nairobi's slums, Awuor performs odd jobs in the hopes of earning enough money to feed her kids that day. Awuor, who is named in the lawsuit, says she had saved $12 and hoped to go to a lower-cost clinic but was turned away and sent to Pumwani. After giving birth, she couldn't pay the $60 bill, and was held with what she believes was about 60 other women and their infants.


"We were sleeping three to a bed, sometimes four," she said. "They abuse you, they call you names," she said of the hospital staff.


She said saw some women tried to flee but they were beaten by the guards and turned back. While her husband worked at a faraway refugee camp, Awuor's 9-year-old daughter took care of her siblings. A friend helped feed them, she said, while the children stayed in the family's 50-square-foot shack, where rent is $18 a month. She says she was released after 20 days after Nairobi's mayor paid her bill. Politicians in Kenya in general are expected to give out money and get a budget to do so.


A second mother named in the lawsuit, Margaret Anyoso, says she was locked up in Pumwani for six days in 2010 because she could not pay her $160 bill. Her pregnancy was complicated by a punctured bladder and heavy bleeding.


"I did not see my child until the sixth day after the surgery. The hospital staff were keeping her away from me and it was only when I caused a scene that they brought her to me," said Anyoso, a vegetable seller and a single mother with five children who makes $5 on a good day.


Anyoso said she didn't have clothes for her child so she wrapped her in a blood-stained blouse. She was released after relatives paid the bill.


One woman says she was detained for nine months and was released only after going on a hunger strike. The Center for Reproductive Rights says other hospitals also detain non-paying patients.


Judy Okal, the acting Africa director for the Center for Reproductive Rights, said her group filed the lawsuit so all Kenyan women, regardless of socio-economic status, are able to receive health care without fear of imprisonment. The hospital, the attorney general, the City Council of Nairobi and two government ministries are named in the suit.


___


Associated Press reporter Tom Odula contributed to this report.


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Global shares steady as fiscal cliff deadline nears


LONDON (Reuters) - World stocks were set to end the year up almost 13 percent on Monday but uncertainty loomed as U.S. politicians prepared for last-minute talks to avoid a fiscal crunch of spending cuts and tax hikes that could drag down the world economy in 2013.


In Washington, the two political parties are set to hold further talks later to try and avoid the $600 billion "fiscal cliff" kicking in from the start of January and which if left unchecked, would wipe around 4 percent off U.S. GDP.


Senate Majority Leader Harry Reid said the Senate would reconvene at 11 a.m. Washington time (1600 GMT), to continue discussions, but warned on Sunday there were still significant differences between the two sides.


While hope has largely evaporated for any sort of broad deal on Monday, a lack of panic on markets reflected expectations that U.S. politicians will find a solution early in the New Year. U.S. stock futures, notably, were up.


"It is still expected that a deal be reached in early January. That will probably be greeted positively by markets but it looks like it will be a very short-term fix rather than one that addresses the longer-term issues," said Bank of Tokyo-Mitsubishi currency analyst Lee Hardman.


"The Treasury have said they could hold out until February until they have to raise the debt ceiling so going into next year we are set for more of the same kind of political uncertainty."


After a subdued day in Asia, where Japan's Nikkei as well as a number of other indexes had already shut for the year, limited year-end European trading left the MSCI all-world index steady at 336.97 at 6:20 a.m. ET.


The pan-European FTSEurofirst 300 has risen roughly 13 percent this year, largely due to the European Central Bank's actions to stem the region's debt crisis, and recovered from an early morning dip to stand up 0.2 percent by mid-morning.


Falls on London's FTSE were outweighed by gains in Paris while German, Italian and Swiss were among a clutch of other European markets closed.


Many economists have forecast further steady gains in equities next year as central banks continue to provide large scale support to major economies.


CLIFF VIEW


In currency markets, the U.S. dollar last stood at 86.06 yen, having retreated from Friday's high of 86.64 yen, which was the greenback's strongest level versus the Japanese currency since August 2010.


As the year draws to a close, the dollar is up about 12 percent against the yen, putting it on track for its biggest percentage gain versus the Japanese currency since 2005.


With a new Japanese government led by Prime Minister Shinzo Abe expected to pursue a policy mix of aggressive monetary easing and heavy fiscal spending to beat deflation, analysts see the yen staying under pressure in 2013.


The euro was down 0.16 percent on Monday to $1.3192 but is up 2 percent for the year. An agreement on the U.S. budget would be viewed as positive for riskier currencies such as the euro and Australian dollar, while a deadlock is deemed positive for the haven and highly liquid dollar.


"If we come in on Wednesday and don't have a resolution I don't think we will see a big risk-off move," said Michael Sneyd, FX strategist at BNP Paribas.


"The market seems to have almost taken into account the U.S. fiscal cliff discussions will go into the new year and investors seem to have taken off any risk-on positions before the holiday period."


OIL SLIPS


Commodities have been finding some recent support as economic data in key emerging economies China have started point to a gradual pick-up in the pace of growth in 2013.


Gold was $1,664.10 an ounce by 6:15 a.m. ET, up around 6 percent for the year and on track for a 12th consecutive year of gains on rock-bottom interest rates, concerns over the financial stability of the euro zone, and diversification into bullion by central banks. Copper also rose, consolidating this year's 5 percent gain.


Oil prices bucked the trend, however, slipping for a third consecutive session, with failure to reach a solution in U.S. budget talks seen likely to cause a serious slowdown in the global economy and a large drop in fuel consumption.


Brent crude was down 40 cents to $110.22 a barrel by 6 a.m. ET. It is up 2.8 percent and averaged more than $111.65 this year, its fourth successive year of annual rises and above the previous 2011 record of $110.91.


"Significant market moves are likely when the deal gets done - or if no deal is done before the year-end ... In any case, neither outcome is fully priced in," Jason Schenker, president of U.S. consultancy Prestige Economics.


(Additional reporting by Francesco Canepa; Editing by Giles Elgood)



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To Save Wildlife, and Tourism, Kenyans Take Up Arms





ARCHER’S POST, Kenya — Julius Lokinyi was one of the most notorious poachers in this part of Kenya, accused of single-handedly killing as many as 100 elephants and selling the tusks by the side of the road in the dead of night, pumping vast amounts of ivory into a shadowy global underground trade.




But after being hounded, shamed, browbeaten and finally persuaded by his elders, he recently made a remarkable transformation. Elephants, he has come to believe, are actually worth more alive than dead, because of the tourists they attract. So Mr. Lokinyi stopped poaching and joined a grass-roots squad of rangers — essentially a conservation militia — to protect the wildlife he once slaughtered.


Nowadays he gets up at dawn, slurps down a cup of sugary tea, tightens his combat boots and marches off with other villagers, some who had never picked up a gun before and are little more than volunteers, to fight poachers.


“We got to protect the elephants,” said Mr. Lokinyi, whose hooded eyes now glow with the zeal of a convert.


From Tanzania to Cameroon, tens of thousands of elephants are being poached each year, more than at any time in decades, because of Asia’s soaring demand for ivory. Nothing seems to be stopping it, including deploying national armies, and the bullet-riddled carcasses keep stacking up. Scientists say that at this rate, African elephants could soon go the way of the wild American bison.


But in this stretch of northern Kenya, destitute villagers have seized upon an unconventional solution that, if replicated elsewhere, could be the key to saving thousands of elephants across Africa, conservationists say. In a growing number of communities here, people are so eager, even desperate, to protect their wildlife that civilians with no military experience are banding together, grabbing shotguns and G3 assault rifles and risking their lives to confront heavily armed poaching gangs.


It is essentially a militarized neighborhood watch, with loping, 6-foot-6 former herdsmen acting as the block captains, and the block being miles and miles of zebra-studded bush. These citizen-rangers are not doing this out of altruism or some undying love for pachyderms. They do it because in Kenya, perhaps more than just about anywhere else, wildlife means tourists, and tourists mean dollars — a lot of dollars.


It is not unusual here for a floppy-hatted visitor to drop $700 a night to sleep in a tent and absorb the sights, sounds and musky smells of wondrous game. Much of that money is contractually bound to go directly to impoverished local communities, which use it for everything from pumping water to college scholarships, giving them a clear financial stake in preserving wildlife. The safari business is a pillar of the Kenyan economy, generating more than a billion dollars a year and nearly 500,000 jobs: cooks, cleaners, bead-stringers, safari guides, bush pilots, even accountants to tally the proceeds.


Surprisingly, many jobs in the safari industry can pay as much as poaching. Though the ivory trade may seem lucrative, it is often like the Somali pirate business model, with the entry-level hijacker getting just a minuscule cut of the million-dollar ransoms. While a pound of ivory can fetch $1,000 on the streets of Beijing, Mr. Lokinyi, despite his lengthy poaching résumé, was broke, making it easier to lure him out of the business.


Villagers are also turning against poachers because the illegal wildlife trade fuels crime, corruption, instability and intercommunal fighting. Here in northern Kenya, poachers are diversifying into stealing livestock, printing counterfeit money and sometimes holding up tourists. Some are even buying assault rifles used in ethnic conflicts.


The conservation militias are often the only security forces around, so they have become de facto 911 squads, rushing off to all sorts of emergencies in areas too remote for the police to quickly gain access to and often getting into shootouts with poachers and bandits.


“This isn’t just about animals,” said Paul Elkan, a director at the Wildlife Conservation Society, who is trying to set up community ranger squads in South Sudan modeled on the Kenyan template. “It’s about security, conflict reconciliation, even nation building.”


The rangers tend to be hardened and uneducated, drawn from different ethnic groups and the surplus of unemployed youth. Gabriel Lesoipa was a goat herder; Joseph Lopeiyok, a cattle rustler; John Pameri won his coveted spot because he was fast — at the time he was selected, the first entry requirement was a grueling 11-mile race.


Many are considered warriors in their communities, experts in so-called bushcraft from years of grazing cattle and goats across the thorny savanna — and defending them against armed raiders. They can follow faint footprints across long, thirsty distances and instantly intuit when someone has trespassed on their land.


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Five-year-old finds porn on refurbished Nintendo 3DS from GameStop






Five-year-old Brandon Giles must have been excited to receive a Nintendo 3DS for Christmas — at least, he was until he turned it on. According to 9News, Giles’ father bought a refurbished 3DS from GameStop (GME) in Colorado for his son. However, when his son turned  it on and started poking around, he found nine pornographic images of two people in a bed and asked his brother to help him erase them. That’s when the father gave GameStop a call. GameStop’s response was that the images were most likely left over from its previous owner and an employee failed to properly wipe out the data on the 3DS before re-stocking it. “We have a rigorous quality control process in place to ensure that existing content is removed from all devices before they are re-sold,” GameStop said in a statement issued from its corporate office. “Out of millions of transactions each year, ones like this happen very rarely. Our number one priority is to make this right for our customer.”


[More from BGR: Samsung could face $ 15 billion fine for trying to ban iPhone, other Apple devices]






The bigger question many people are asking is, why would anyone take pornographic photos with the 3DS’s terrible low-res cameras? We may never know the answer.


This article was originally published by BGR


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Matthew & Camila McConaughey Name Their Son Livingston















12/29/2012 at 09:15 PM EST







Camila and Matthew McConaughey


Gary Miller/FilmMagic


Matthew McConaughey has spilled the beans about his new baby!

"Camila gave birth to our third child yesterday morning. Our son, Livingston Alves McConaughey, was born at 7:43 a.m. on 12.28.12," he wrote on his Whosay page Saturday night.

"He greeted the world at 9 lbs., and 21 inches. Bless up and thank you for your well wishes."

Camila, 29, and her actor husband, 43, welcomed their third child in Austin, Texas, Friday, PEOPLE previously confirmed.

The couple – also parents to Vida, almost 3, and Levi, 4 – announced the pregnancy in July, just one month after they wed in Texas.

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Kenya hospital imprisons new mothers with no money


NAIROBI, Kenya (AP) — The director of the Pumwani Maternity Hospital, located in a hardscrabble neighborhood of downtown Nairobi, freely acknowledges what he's accused of: detaining mothers who can't pay their bills. Lazarus Omondi says it's the only way he can keep his medical center running.


Two mothers who live in a mud-wall and tin-roof slum a short walk from the maternity hospital, which is affiliated with the Nairobi City Council, told The Associated Press that Pumwani wouldn't let them leave after delivering their babies. The bills the mothers couldn't afford were $60 and $160. Guards would beat mothers with sticks who tried to leave without paying, one of the women said.


Now, a New York-based group has filed a lawsuit on the women's behalf in hopes of forcing Pumwani to stop the practice, a practice Omondi is candid about.


"We hold you and squeeze you until we get what we can get. We must be self-sufficient," Omondi said in an interview in his hospital office. "The hospital must get money to pay electricity, to pay water. We must pay our doctors and our workers."


"They stay there until they pay. They must pay," he said of the 350 mothers who give birth each week on average. "If you don't pay the hospital will collapse."


The Center for Reproductive Rights, which filed the suit this month in the High Court of Kenya, says detaining women for not paying is illegal. Pumwani is associated with the Nairobi City Council, one reason it might be able to get away with such practices, and the patients are among Nairobi's poorest with hardly anyone to stand up for them.


Maimouna Awuor was an impoverished mother of four when she was to give birth to her fifth in October 2010. Like many who live in Nairobi's slums, Awuor performs odd jobs in the hopes of earning enough money to feed her kids that day. Awuor, who is named in the lawsuit, says she had saved $12 and hoped to go to a lower-cost clinic but was turned away and sent to Pumwani. After giving birth, she couldn't pay the $60 bill, and was held with what she believes was about 60 other women and their infants.


"We were sleeping three to a bed, sometimes four," she said. "They abuse you, they call you names," she said of the hospital staff.


She said saw some women tried to flee but they were beaten by the guards and turned back. While her husband worked at a faraway refugee camp, Awuor's 9-year-old daughter took care of her siblings. A friend helped feed them, she said, while the children stayed in the family's 50-square-foot shack, where rent is $18 a month. She says she was released after 20 days after Nairobi's mayor paid her bill. Politicians in Kenya in general are expected to give out money and get a budget to do so.


A second mother named in the lawsuit, Margaret Anyoso, says she was locked up in Pumwani for six days in 2010 because she could not pay her $160 bill. Her pregnancy was complicated by a punctured bladder and heavy bleeding.


"I did not see my child until the sixth day after the surgery. The hospital staff were keeping her away from me and it was only when I caused a scene that they brought her to me," said Anyoso, a vegetable seller and a single mother with five children who makes $5 on a good day.


Anyoso said she didn't have clothes for her child so she wrapped her in a blood-stained blouse. She was released after relatives paid the bill.


One woman says she was detained for nine months and was released only after going on a hunger strike. The Center for Reproductive Rights says other hospitals also detain non-paying patients.


Judy Okal, the acting Africa director for the Center for Reproductive Rights, said her group filed the lawsuit so all Kenyan women, regardless of socio-economic status, are able to receive health care without fear of imprisonment. The hospital, the attorney general, the City Council of Nairobi and two government ministries are named in the suit.


___


Associated Press reporter Tom Odula contributed to this report.


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Wall Street Week Ahead: Cliff may be a fear, but debt ceiling much scarier


(Reuters) - Investors fearing a stock market plunge - if the United States tumbles off the "fiscal cliff" next week - may want to relax.


But they should be scared if a few weeks later, Washington fails to reach a deal to increase the nation's debt ceiling because that raises the threat of a default, another credit downgrade and a panic in the financial markets.


Market strategists say that while falling off the cliff for any lengthy period - which would lead to automatic tax hikes and stiff cuts in government spending - would badly hurt both consumer and business confidence, it would take some time for the U.S. economy to slide into recession. In the meantime, there would be plenty of chances for lawmakers to make amends by reversing some of the effects.


That has been reflected in a U.S. stock market that has still not shown signs of melting down. Instead, it has drifted lower and become more volatile.


In some ways, that has let Washington off the hook. In the past, a plunge in stock prices forced the hand of Congress, such as in the middle of the financial crisis in 2008.


"If this thing continues for a bit longer and the result is you get a U.S. debt downgrade ... the risk is not that you lose two-and-a-half percent, the risk is that you lose ten and a half," said Jonathan Golub, chief U.S. equity strategist at UBS Equity Research, in New York.


U.S. Treasury Secretary Tim Geithner said this week that the United States will technically reach its debt limit at the end of the year.


INVESTORS WARY OF JANUARY


The White House has said it will not negotiate the debt ceiling as in 2011, when the fight over what was once a procedural matter preceded the first-ever downgrade of the U.S. credit rating. But it may be forced into such a battle again. A repeat of that war is most worrisome for markets.


Markets posted several days of sharp losses in the period surrounding the debt ceiling fight in 2011. Even after a bill to increase the ceiling passed, stocks plunged in what was seen as a vote of "no confidence" in Washington's ability to function, considering how close lawmakers came to a default.


Credit ratings agency Standard & Poor's lowered the U.S. sovereign rating to double-A-plus, citing Washington's legislative problems as one reason for the downgrade from triple-A status. The benchmark S&P 500 dropped 16 percent in a four-week period ending August 21, 2011.


"I think there will be a tremendous fight between Democrats and Republicans about the debt ceiling," said Jon Najarian, a co-founder of online brokerage TradeMonster.com, in Chicago.


"I think that is the biggest risk to the downside in January for the market and the U.S. economy."


There are some signs in the options market that investors are starting to eye the January period with more wariness. The CBOE Volatility Index, or the VIX, the market's preferred indicator of anxiety, has remained at relatively low levels throughout this process, though on Thursday it edged above 20 for the first time since July.


More notable is the action in VIX futures markets, which shows a sharper increase in expected volatility in January than in later-dated contracts. January VIX futures are up nearly 23 percent in the last seven trading days, compared with a 13 percent increase in March futures and an 8 percent increase in May futures. That's a sign of increasing near-term worry among market participants.


The CBOE Volatility Index closed on Friday at 22.72, gaining nearly 17 percent to end at its highest level since June as details emerged of a meeting on Friday afternoon of President Barack Obama with Senate and House leaders from both parties where the president offered proposals similar to those already rejected by Republicans. Stocks slid in late trading and equity futures continued that slide after cash markets closed.


"I was stunned Obama didn't have another plan, and that's absolutely why we sold off," said Mike Shea, a managing partner and trader at Direct Access Partners LLC, in New York.


Obama offered hope for a last-minute agreement to avoid the fiscal cliff after a meeting with congressional leaders, although he scolded Congress for leaving the problem unresolved until the 11th hour.


"The hour for immediate action is here," he told reporters at a White House briefing. "I'm modestly optimistic that an agreement can be achieved."


The U.S. House of Representatives is set to convene on Sunday and continue working through the New Year's Day holiday. Obama has proposed maintaining current tax rates for all but the highest earners.


Consumers don't appear at all traumatized by the fiscal cliff talks, as yet. Helping to bolster consumer confidence has been a continued recovery in the housing market and growth in the labor market, albeit slow.


The latest take on employment will be out next Friday, when the U.S. Labor Department's non-farm payrolls report is expected to show jobs growth of 145,000 for December, in line with recent growth.


Consumers will see their paychecks affected if lawmakers cannot broker a deal and tax rates rise, but the effect on spending is likely to be gradual.


PLAYING DEFENSE


Options strategists have noted an increase in positions to guard against weakness in defense stocks such as General Dynamics because those stocks would be affected by spending cuts set for that sector. Notably, though, the PHLX Defense Index is less than 1 percent away from an all-time high reached on December 20.


This underscores the view taken by most investors and strategists: One way or another, Washington will come to an agreement to offset some effects of the cliff. The result will not be entirely satisfying, but it will be enough to satisfy investors.


"Expectations are pretty low at this point, and yet the equity market hasn't reacted," said Carmine Grigoli, chief U.S. investment strategist at Mizuho Securities USA, in New York. "You're not going to see the markets react to anything with more than a 5 (percent) to 7 percent correction."


Save for a brief 3.6 percent drop in equity futures late on Thursday evening last week after House Speaker John Boehner had to cancel a scheduled vote on a tax-hike bill due to lack of Republican support, markets have not shown the same kind of volatility as in 2008 or 2011.


A gradual decline remains possible, Golub said, if business and consumer confidence continues to take a hit on the back of fiscal cliff worries. The Conference Board's measure of consumer confidence fell sharply in December, a drop blamed in part on the fiscal issues.


"If Congress came out and said that everything is off the table, yeah, that would be a short-term shock to the market, but that's not likely," said Richard Weiss, a Mountain View, California-based senior money manager at American Century Investments.


"Things will be resolved, just maybe not on a good time table. All else being equal, we see any further decline as a buying opportunity."


(Wall St Week Ahead runs every Friday. Questions or comments on this column can be emailed to: david.gaffen(at)thomsonreuters.com)


(Reporting by Edward Krudy and Ryan Vlastelica in New York and Doris Frankel in Chicago; Writing by David Gaffen; Editing by Martin Howell, Steve Orlofsky and Jan Paschal)



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