DC police investigating ‘Meet the Press’ incident






WASHINGTON (AP) — District of Columbia police say they are investigating an incident in which NBC News journalist David Gregory displayed what he described as a high-capacity ammunition magazine on “Meet the Press.”


Gun laws in the nation’s capital generally restrict the possession of high-capacity magazines, regardless of whether the device is attached to a firearm. Gregory held up the magazine as a prop for Sunday’s segment, apparently to make a point during an interview, even though D.C. police say NBC had already been advised not to use it in the show.






“NBC contacted (the Metropolitan Police Department) inquiring if they could utilize a high capacity magazine for their segment. NBC was informed that possession of a high capacity magazine is not permissible and their request was denied. This matter is currently being investigated,” police spokeswoman Gwendolyn Crump said in a written statement. She declined to comment further.


While interviewing National Rifle Association CEO Wayne LaPierre for Sunday’s program, Gregory held up an object that he said was a magazine that could hold 30 rounds.


“Here is a magazine for ammunition that carries 30 bullets. Now, isn’t it possible that if we got rid of these, if we replaced them and said, ‘Well, you can only have a magazine that carries five bullets or ten bullets,’ isn’t it just possible that we could reduce the carnage in a situation like Newtown?’” Gregory asked, referring to the December 14 shooting in which a gunman massacred 20 children and 6 adults at Sandy Hook Elementary School in Connecticut.


LaPierre replied: “I don’t believe that’s going to make one difference. There are so many different ways to evade that even if you had that” ban.


It was not clear how or where Gregory obtained the magazine, and an NBC News spokeswoman declined to comment Wednesday.


“Meet the Press” is generally taped in Washington.


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British Frozen Dinners Beat TV Chefs’ Recipes For Nutrition









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Washington stirs for “fiscal cliff” talks as Obama heads home






WASHINGTON/HONOLULU (Reuters) – Efforts to prevent the U.S. economy from going over a “fiscal cliff” stirred back to life on Wednesday with less than a week to go before potentially disastrous tax hikes and spending cuts kick in at the New Year.


In a sign that there may be a way through deadlock in Congress, Republican House of Representatives Speaker John Boehner urged the Democrat-controlled Senate to act to pull back from the cliff and offered to at least consider any bill the upper chamber produced.






President Barack Obama will try to revive budget crisis talks – which stalled last week – when he returns to Washington on Thursday after cutting short his Christmas holiday in Hawaii.


But the White House and Republicans are still far apart, as hopes for legislation to prevent the economy from tumbling off the fiscal cliff switch to the Senate.


Democrats control a majority in that chamber but still need some support from Republicans across the aisle for a likely attempt to raise taxes on the wealthy.


A senior administration official told reporters traveling with Obama in Hawaii that senior Republican leaders in Congress, Senator Mitch McConnell and Boehner, should step up to head off the looming tax and spending hit.


“It’s up to the Senate Minority Leader not to block a vote, and it’s up the House Republican leader, the Speaker of the House … to allow a vote,” the official said.


Months of congressional gridlock on how reduce the deficit and rein in the nation’s $ 16 trillion federal debt have begun to affect ordinary Americans.


Shoppers might have spent less this holiday season for fear of looming income tax increases and reports of lackluster retail holiday sales added to the urgency for a deal. U.S. stocks fell on Wednesday, dragged lower by shares of retail companies.


TREASURY BUYING TIME


To avoid defaulting on the national debt if the budget crisis spins out of control, the Treasury Department announced measures essentially designed to buy time to allow Congress to resolve its differences and raise the debt borrowing limit.


Obama flies back from Hawaii overnight and is due in the White House on Thursday morning.


Starbucks Chief Executive Howard Schultz is urging workers in the company’s roughly 120 Washington-area coffee shops to write “come together” on customers’ cups on Thursday and Friday to tell politicians to end the crisis.


“We’re paying attention, we’re greatly disappointed in what’s going on and we deserve better,” Schultz told Reuters.


Boehner and his House Republican leadership team said in a statement that “the Senate must act first.”


That puts the ball in the court of the Democrats in the Senate, which is likely to base any legislation on a bill it passed earlier this year to continue tax breaks for households with incomes below $ 250,000.


A spokesman for Senate Majority Leader Harry Reid issued a strongly worded statement calling on Republicans to “drop their knee-jerk obstruction.”


“The Senate bill could pass tomorrow if House Republicans would simply let it come to the floor,” the spokesman said.


A Senate bill would likely contain an extension of expiring unemployment benefits for those who have been out of work for extended periods.


With the 435 members scattered throughout the country because the House is in recess, House Republican leaders scheduled a conference call for Thursday with members to possibly discuss bringing the chamber back into session to deal with the fiscal cliff.


The budget fight is not just about taxes, however.


The country faces $ 109 billion in across-the-board spending cuts starting in January unless a deal is reached to either replace or delay them. Democrats want to switch the spending cuts to tax increases for the most part.


House Republicans have passed a bill to stop the military portion of the spending cuts and place the entire burden on domestic activities, including some social safety net programs.


But the main focus is on how to stop tax hikes on January 1.


“This is the (emergency) scenario that we have long believed would rise in probability the closer we go to December 31, which essentially calls for extending all the rates for those individuals making under $ 200K and households under $ 250K and does not address the debt ceiling or the deficit,” analyst Chris Krueger of Guggenheim Securities wrote in a research note.


Republican Senator Kay Bailey Hutchison of Texas, who is retiring at year’s end, told MSNBC that $ 250,000 “is too low of a threshold” for raising income taxes.


RAISING TAX THRESHOLD


She said that in conversations she has had with some Senate Democrats, “they are saying maybe more in the $ 400,000 to $ 500,000 category.”


Obama himself recently offered to raise the threshold to $ 400,000, before negotiations with Boehner broke off.


Boehner and other Republican leaders said in a statement that if the Senate sends the House new fiscal cliff legislation, “The House will then consider whether to accept the bills … or to send them back to the Senate with additional amendments.


“The House will take this action on whatever the Senate can pass, but the Senate first must act.”


But even if a handful of Senate Republicans support Democrats on a measure to avoid the worst of the fiscal cliff, time is short. When the Senate returns on Thursday it is due to work on a disaster aid bill to help New York and New Jersey recover from Superstorm Sandy and other measures.


All 191 House Democrats might have to team up with at least 26 Republicans to get a majority if the bill included tax hikes on the wealthiest Americans, as Obama is demanding.


Some of those votes could conceivably come from among the 34 Republican members who are either retiring or were defeated in the November elections and no longer have to worry about the political fallout.


An alternative is for Congress to let income taxes go up on everyone as scheduled. Then, during the first week of January, lawmakers would strike a quick deal to reduce them except on people in the highest brackets.


They could also pass a measure putting off the $ 109 billion in automatic spending cuts that most lawmakers want to avoid.


Once the clock ticks past midnight on December 31, no member of Congress would have to vote for a tax increase on anyone – taxes would have risen automatically – and the only votes would be to decrease tax rates for most Americans back to their 2012 levels.


(Additional reporting by Thomas Ferraro in Washington and Lisa Baertlein in Los Angeles, Writing by Alistair Bell)


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Afghan bomber attacks near major US base






KABUL, Afghanistan (AP) — A vehicle driven by a suicide bomber exploded at the gate of a major U.S. military base in eastern Afghanistan on Wednesday, killing the attacker and three Afghans, Afghan police said. The Taliban claimed responsibility for the attack.


Police Gen. Abdul Qayum Baqizai said a local guard who questioned the vehicle driver at the gate of Camp Chapman was killed along with two civilians and the assailant. The camp is located adjacent to the airport of the capital of Khost province, which borders Pakistan. Chapman and nearby Camp Salerno had been frequently targeted by militants in the past, but violent incidents have decreased considerably in recent months.






Taliban spokesman Zabihullah Mujahid said in an email that the bomber targeted Afghan police manning the gate and Afghans working for the Americans entering the base. He claimed high casualties were inflicted.


NATO operates with more than 100,000 troops in the country, including some 66,000 American forces. It is handing most combat operations over to the Afghans in preparation for a pullout from Afghanistan in 2014. Militant groups, including the Taliban, rarely face NATO troops head-on and rely mainly on roadside bombs and suicide attacks.


NATO forces and foreign civilians have also been increasingly attacked by rogue Afghan military and police, eroding trust between the allies.


On Tuesday, the Interior Ministry said a policewoman who killed an American contractor in Kabul a day earlier was a native Iranian who came to Afghanistan and displayed “unstable behavior” but had no known links to militants.


The policewoman, identified as Sgt. Nargas, shot 49-year-old Joseph Griffin, of Mansfield, Georgia, on Monday, in the first such shooting by a woman in the spate of insider attacks. Nargas walked into a heavily-guarded compound in the heart of Kabul, confronted Griffin and shot him once with her pistol.


The U.S-based security firm DynCorp International said on its website that Griffin was a U.S. military veteran who earlier worked with law enforcement agencies in the United States. In Kabul, he was under contract to the NATO military command to advise the Afghan police force.


The ministry spokesman, Sediq Sediqi, told a news conference that Nargas, who uses one name like many in the country, was born in Tehran, where she married an Afghan. She moved to the country 10 years ago, after her husband obtained fake documents enabling her to live and work there.


A mother of four in her early 30s, she joined the police five years ago, held various positions and had a clean record, he said. Sediqi produced an Iranian passport that he said was found at her home.


No militant group has claimed responsibility for the killing.


The chief investigator of the case, Police Gen. Mohammad Zahir, said that during interrogation, the policewoman said she had plans to kill either the Kabul governor, city police chief or Zahir himself, but when she realized that penetrating the last security cordons to reach them would be too difficult, she saw “a foreigner” and turned her weapon on him.


There have been 60 insider attacks this year against foreign military and civilian personnel, compared to 21 in 2011. This surge presents another looming security issue as NATO prepares to pull out almost all of its forces by 2014, putting the war against the Taliban and other militant groups largely in the hands of the Afghans.


More than 50 Afghan members of the government’s security forces also have died this year in attacks by their own colleagues. The Taliban claims such incidents reflect a growing popular opposition to the foreign military presence and the Kabul government.


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Analysis: Amazon’s Christmas faux pas shows risks in the cloud






(Reuters) – A Christmas Eve glitch traced to Amazon.com Inc that shuttered Netflix for users from Canada to South America highlights the risks that companies take when they move their datacenter operations to the cloud.


While the high-profile failure – at least the third this year – may cause some Amazon Web Services customers to consider alternatives, it is unlikely to severely hurt a fast-growing business for the cloud-computing pioneer that got into the sector in 2006 and has historically experienced few outages.






“The benefits still outweigh the risks,” said Global Equities Research analyst Trip Chowdhry.


“When it comes to the cloud, Amazon has got it right.”


The latest service failure comes at a critical time for Amazon, which is betting that AWS can become a significant profit generator even if the economy continues to stagnate. Moreover, it is increasingly targeting larger corporate clients that have traditionally shied away from moving critical applications onto AWS.


AWS, which Amazon started more than six years ago, provides data storage, computing power and other technology services from remote locations that group thousands of servers across areas than can span whole football fields. Their early investment made it a pioneer in what is now known as cloud computing.


Executives said last month at an Amazon conference in Las Vegas they could envision the division, which lists Pinterest, Shazam and Spotify among its fast-growing clients, becoming its biggest business, outpacing even its online retail juggernaut. Evercore analyst Ken Sena expects AWS revenue to jump 45 percent a year, from about $ 2 billion this year to $ 20 billion in 2018.


The service has boomed because it is cheap, relatively easy to use, and can be shut off, scaled back or ramped up quickly depending on companies’ needs. As the longest-running player in the game, Amazon now boasts the widest array of datacenter products and services, plus a broader stable of clients than rivals like Google Inc, Rackspace Inc and Salesforce.com Inc.


Outages such as the one that took down Netflix and other websites on the eve of one of the biggest U.S. holidays are part and parcel of the nascent business, analysts say. Moreover, outages have been a problem long before the age of cloud computing, with glitches within corporate datacenters and telecommunications hubs triggering myriad service disruptions.


COMING SOON: POST-MORTEM


Amazon’s latest service failure comes months after two high-profile outages that hit Netflix and other popular websites such as photo-sharing service Instagram and Pinterest. Industry executives, however, say its downtimes tend to attract more attention because of its outsized market footprint.


Netflix – which CEO Reed Hastings said relies on AWS for 95 percent of its datacenter needs – would not comment on whether they were pondering alternatives. Analysts say the video streaming giant is unlikely to try a large-scale switch, partly because all cloud providers experience outages.


“Despite a steady stream of these service outages, the demand for cloud services offered by AWS, Google, etc. continues to escalate because these services are still reliable enough to satisfy customer expectations,” said Jeff Kaplan, managing director of consultancy ThinkStrategies Inc.


“They offer cost-savings and elasticities that are too attractive for companies to ignore.”


But “Netflix and other organizations which rely on AWS will have to reexamine how they configure their services and allocate their service requirements across multiple providers to mitigate over-dependency and risks.”


AWS spokeswoman Rena Lunak said the outage was traced to a problem affecting customers at its oldest data center, run out of northern Virginia, which was linked also to the June failure.


The latest glitch involved a service known as Elastic Load Balancing, which automatically allocates incoming Web traffic across multiple servers in order to boost the performance of a website. She declined to provide further details about the outage, saying the company would be publishing a full post-mortem within days.


AWS has traditionally been used by start-up tech companies and smaller businesses that anticipate rapid growth in online traffic but are unwilling or unable to shell out on IT equipment and management upfront.


The company has more recently started winning more and more business from larger corporations. It has also set up a unit that caters to government agencies.


Regardless, Amazon’s clientele would do well not to put all their eggs in one basket, analysts say.


Service outages do occur, but they are not common enough to cause users of these services to abandon today’s Cloud service providers at significant rates. In fact, every major Cloud service provider has experienced outages,” Kaplan said.


“Therefore, organizations that rely on these services are putting backup and recovery systems and protocols in place to mitigate the risks of future outages.”


(Additional reporting; editing by Edwin Chan and Richard Chang)


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NORAD says record number of calls to track Santa






PETERSON AIR FORCE BASE, Colo. (AP) — Most of the thousands of children who call the annual Santa-tracking operation at a Colorado Air Force Base on Christmas Eve ask the usual questions: “Where’s Santa, and when will he get here?”


So volunteer Sara Berghoff was caught off-guard Monday when a child called to see if Santa could be especially kind this year to the families affected by the Connecticut school shooting.






“I’m from Newtown, Connecticut, where the shooting was,” she remembers the child asking. “Is it possible that Santa can bring extra presents so I can deliver them to the families that lost kids?”


Sara, just 13 herself, was surprised but gathered her thoughts quickly. “If I can get ahold of him, I’ll try to get the message to him,” she told the child.


Sara was one of hundreds of volunteers at NORAD Tracks Santa who answered thousands of calls, program spokeswoman Marisa Novobilski said. Spokeswoman 1st Lt. Stacey Fenton said that as of midnight Tuesday, trackers answered more than 111,000 calls, breaking last year’s record of 107,000.


First lady Michelle Obama, who is spending the holidays with her family in Hawaii, also joined in answering calls as she has in recent years. She spent about 30 minutes talking with children from across the country, telling some who asked that her favorite toys growing up were Barbie dolls and an Easy Bake oven.


She also received an invitation to visit an 11-year-old boy in Fort Worth, Texas, and a request to put her husband on the phone. “He’s not here right now. But you know what, I will tell him you asked about him. OK?” she replied.


The North American Aerospace Defense Command, a joint U.S.-Canada command responsible for protecting the skies over both nations, tracks Santa from its home at Peterson Air Force Base.


NORAD and its predecessor have been fielding Christmas Eve phone calls from children — and a few adults — since 1955. That’s when a newspaper ad listed the wrong phone number for kids to call Santa. Callers ended up getting the Continental Air Defense Command, which later became NORAD. CONAD commanders played along, and the ritual has been repeated every year since.


After 57 years, NORAD can predict what most kids will ask. Its 11-page playbook for volunteers includes a list of nearly 20 questions and answers, including how old is Santa (at least 16 centuries) and has Santa ever crashed into anything (no).


But kids still manage to ask the unexpected, including, “Does Santa leave presents for dogs?”


A sampling of anecdotes from the program this year:


___


THE REAL DEAL: A young boy called to ask if Santa was real.


Air Force Maj. Jamie Humphries, who took the call, said, “I’m 37 years old, and I believe in Santa, and if you believe in him as well, then he must be real.”


The boy turned from the phone and yelled to others in the room, “I told you guys he was real!”


___


DON’T WORRY, HE’LL FIND YOU: Glenn Barr took a call from a 10-year-old who wasn’t sure if he would be sleeping at his mom’s house or his dad’s and was worried about whether Santa would find him.


“I told him Santa would know where he was and not to worry,” Barr said.


Another child asked if he was on the nice list or the naughty list.


“That’s a closely guarded secret, and only Santa knows,” Barr replied.


___


TOYS IN HEAVEN: A boy who called from Missouri asked when Santa would drop off toys in heaven.


His mother got on the line and explained to Jennifer Eckels, who took the call, that the boy’s younger sister died this year.


“He kept saying ‘in heaven,’” Eckels said. She told him, “I think Santa headed there first thing.”


___


BEST OF: Choice questions and comments wound up posted on a flip chart.


“Big sister wanted to add her 3-year-old brother to the naughty list,” one read.


“Are there police elves?” said another.


“How much to adopt one of Santa’s reindeer?”


“What’s the best way to booby-trap the living room to trap Santa?”


“When you see Santa, tell him hello for me, I never see him.”


“How does Santa make iPads?”


____


INTERNATIONAL FLAVOR: NORAD got calls from 220 countries and territories last year, and non-English-speakers called this year as well.


Volunteers who speak other languages get green Santa hats and a placard listing their languages so organizers can find them quickly.


“Need a Spanish speaker!” one organizer called as he rushed out of one of three phone rooms.


___


HE KNOWS WHEN YOU’RE AWAKE: At NORAD’s suggestion, volunteers often tell callers that Santa won’t drop off the presents until all the kids in the home are asleep.


“Ohhhhhhh,” said an 8-year-old from Illinois, as if trying to digest a brand-new fact.


“I’m going to be asleep by 4 o’clock,” said a child from Virginia.


“Thank you so much for that information,” said a grateful mom from Michigan.


___


CHRISTMAS EVE IN AFGHANISTAN: Five U.S. service personnel answered calls from Afghanistan for about 90 minutes through a conferencing hookup.


“They had a great time,” said Novobilski, the program spokeswoman.


NORAD wanted to set up a call center in Afghanistan but that proved too complex, she said.


___


HEY, MR. ELF: “Mr. Elf,” said one caller, “This is Adam, and I’ve been really good this year.”


___


FOR GEARHEADS: For people who want to know the specs of Santa’s sleigh, NORAD offers a trove of tidbits, including:


Weight at takeoff: 75,000 GD (gumdrops).


Propulsion: 9 RP (reindeer power).


Fuel: Hay, oats and carrots (for reindeer).


Emissions: Classified.


___


Online:


Track Santa online at http://www.noradsanta.org


___


Follow Dan Elliott at http://twitter.com/DanElliottAP


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Early Childhood Obesity Rates Might Be Slowing Nation-Wide






About one in three children in the U.S. are now overweight, and since the 1980s the number of children who are obese has more than tripled. But a new study of 26.7 million young children from low-income families shows that in this group of kids, the tidal wave of obesity might finally be receding.Being obese as a child not only increases the risk of early-life health problems, such as joint problems, pre-diabetes and social stigmatization, but it also dramatically increases the likelihood of being obese later in life, which can lead to chronic diseases, including cancer, type 2 diabetes and heart disease. Children as young as 2 years of age can be obese–and even extremely obese. Early childhood obesity rates, which bring higher health care costs throughout a kid’s life, have been especially high among lower-income families.”This is the first national study to show that the prevalence of obesity and extreme obesity among young U.S. children may have begun to decline,” the researchers noted in a brief report published online December 25 in JAMA, The Journal of the American Medical Association. (Reports earlier this year suggested that childhood obesity rates were dropping in several U.S. cities.)The study examined rates of obesity (body mass index calculated by age and gender to be in the 95th percentile or higher–for example, a BMI above 20 for a 2-year-old male–compared with reference growth charts) and extreme obesity (BMI of more than 120 percent above that of the 95th percentile of the reference populations) in children ages 2 to 4 in 30 states and the District of Columbia. The researchers, led by Liping Pan, of the Division of Nutrition, Physical Activity and Obesity at the U.S. Centers for Disease Control and Prevention, combed through 12 years of data (1998 to 2010) from the Pediatric Nutritional Surveillance System, which includes information on roughly half of all children on the U.S. who are eligible for federal health care and nutrition assistance.A subtle but important shift in early childhood obesity rates in this low-income population seems to have begun in 2003. Obesity rates increased from 13.05 percent in 1998 to 15.21 percent in 2003. Soon, however, obesity rates began decreasing, reaching 14.94 percent by 2010. Extreme obesity followed a similar pattern, increasing from 1.75 percent to 2.22 percent from 1998 to 2003, but declining to 2.07 percent by 2010.Although these changes might seem small, the number of children involved makes for huge health implications. For example, each drop of just one tenth of a percentage point represents some 26,700 children in the study population alone who are no longer obese or extremely obese. And if these trends are occurring in the rest of the population, the long-term health and cost implications are massive.Public health agencies and the Obama Administration have made battling childhood obesity a priority, although these findings suggest that early childhood obesity rates, at least, were already beginning to decline nearly a decade ago. Some popular prevention strategies include encouraging healthier eating (by reducing intake of highly processed and high-sugar foods and increasing fruit and vegetable consumption) and increased physical activity (both at school and at home).The newly revealed trends “indicate modest recent progress of obesity prevention among young children,” the authors noted. “These finding may have important health implications because of the lifelong health risks of obesity and extreme obesity in early childhood.”


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Early Childhood Obesity Rates Might Be Slowing Nation-Wide






About one in three children in the U.S. are now overweight, and since the 1980s the number of children who are obese has more than tripled. But a new study of 26.7 million young children from low-income families shows that in this group of kids, the tidal wave of obesity might finally be receding.Being obese as a child not only increases the risk of early-life health problems, such as joint problems, pre-diabetes and social stigmatization, but it also dramatically increases the likelihood of being obese later in life, which can lead to chronic diseases, including cancer, type 2 diabetes and heart disease. Children as young as 2 years of age can be obese–and even extremely obese. Early childhood obesity rates, which bring higher health care costs throughout a kid’s life, have been especially high among lower-income families.”This is the first national study to show that the prevalence of obesity and extreme obesity among young U.S. children may have begun to decline,” the researchers noted in a brief report published online December 25 in JAMA, The Journal of the American Medical Association. (Reports earlier this year suggested that childhood obesity rates were dropping in several U.S. cities.)The study examined rates of obesity (body mass index calculated by age and gender to be in the 95th percentile or higher–for example, a BMI above 20 for a 2-year-old male–compared with reference growth charts) and extreme obesity (BMI of more than 120 percent above that of the 95th percentile of the reference populations) in children ages 2 to 4 in 30 states and the District of Columbia. The researchers, led by Liping Pan, of the Division of Nutrition, Physical Activity and Obesity at the U.S. Centers for Disease Control and Prevention, combed through 12 years of data (1998 to 2010) from the Pediatric Nutritional Surveillance System, which includes information on roughly half of all children on the U.S. who are eligible for federal health care and nutrition assistance.A subtle but important shift in early childhood obesity rates in this low-income population seems to have begun in 2003. Obesity rates increased from 13.05 percent in 1998 to 15.21 percent in 2003. Soon, however, obesity rates began decreasing, reaching 14.94 percent by 2010. Extreme obesity followed a similar pattern, increasing from 1.75 percent to 2.22 percent from 1998 to 2003, but declining to 2.07 percent by 2010.Although these changes might seem small, the number of children involved makes for huge health implications. For example, each drop of just one tenth of a percentage point represents some 26,700 children in the study population alone who are no longer obese or extremely obese. And if these trends are occurring in the rest of the population, the long-term health and cost implications are massive.Public health agencies and the Obama Administration have made battling childhood obesity a priority, although these findings suggest that early childhood obesity rates, at least, were already beginning to decline nearly a decade ago. Some popular prevention strategies include encouraging healthier eating (by reducing intake of highly processed and high-sugar foods and increasing fruit and vegetable consumption) and increased physical activity (both at school and at home).The newly revealed trends “indicate modest recent progress of obesity prevention among young children,” the authors noted. “These finding may have important health implications because of the lifelong health risks of obesity and extreme obesity in early childhood.”


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Visa and MasterCard Face a Fierce Rival in China






Among the myriad designer brands at the Harrods flagship store in London, Chinese housewife Li Yafang spotted a corporate logo she knows from back home: the red, blue, and green of UnionPay cards. “It’s very convenient,” said Li, 39, as a salesperson rang up a £1,190 ($ 1,920) Prada Saffiano Lux handbag.


With 2.9 billion cards in circulation—equal to 45 percent of the world’s total last year—UnionPay has grown into a payments processing colossus just 10 years after the company was founded. Now accepted in 135 countries, its share of global credit- and debit-card transaction volume for the first half of 2012 rose to 23.8 percent, propelling it to No. 2 behind Visa International (V), according to the Nilson Report, an industry newsletter. “UnionPay has absolute dominance in China, and it’s now expanding beyond that to become a top global player,” says James Friedman, an analyst at Susquehanna International Group. “Their numbers show they are already in the league of Visa and MasterCard (MA).”






2a523  mf unionpay52  01  405inline Visa and MasterCard Face a Fierce Rival in China


Yin Lian, UnionPay’s name in Mandarin, means “banks united,” which reflects its ownership structure. Its founding shareholders were 85 Chinese banks, led by the five biggest state-owned lenders. UnionPay’s top managers are former senior officials at the People’s Bank of China, the nation’s central bank. (The company would not make executives available for interviews.)


At home, the Shanghai-based firm enjoys a big competitive edge: The government requires that all automated teller machines and Chinese merchants use UnionPay’s electronic payments network to process payments in the local currency. The rule extends to Visa, MasterCard, and American Express (AXP), which typically give UnionPay a cut of each transaction. “We compete vigorously,” Jeff Liao, head of Visa China, wrote in an e-mail, though he noted that there has been cooperation on issues that affect the entire industry.


Taking up a trade complaint filed by the U.S., the World Trade Organization in July ordered China to stop discriminating against foreign payment companies, yet fell short of spelling out specific remedies. Says Susquehanna’s Friedman: “It’s difficult to say which side won after reading the WTO ruling, as you basically can’t tell what’s actually going to happen.”


China’s receivables from credit cards could rise 40 percent annually to reach 2.5 trillion yuan ($ 397 billion) by 2015, according to a 2011 report from Boston Consulting Group. Citing data presented at a UnionPay shareholders meeting, China Business News reported in April that the company’s revenue has more than tripled over the past four years, reaching 6 billion yuan in 2011, while profit increased almost elevenfold, to $ 1.07 billion yuan. The main driver of revenue growth has been debit cards: UnionPay had $ 2.1 trillion in debit-card transactions and credit-card volume of $ 660 billion last year, according to Nilson Report. UnionPay does not publish financial statements.


Outside China, UnionPay now reaches about the same number of U.S. merchants as Visa and MasterCard, thanks to a 2005 network-sharing agreement with Discover Financial Services. More than 10 million UnionPay cards have been issued by 65 lenders in 17 countries in overseas markets, according to the company’s website.


UnionPay’s growing global reach has been a boon for purveyors of high-end merchandise, whether it’s Italian leather handbags or French perfume. Chinese shoppers this year displaced Americans as the No. 1 consumers of luxury goods, according to a recent Bain & Co. report. Some 60 percent of Chinese purchases happened outside the mainland, the report found.


At Harrods, where UnionPay has been accepted since February 2011, “a large majority of Chinese customers are now taking advantage” of the option, Katharine Witty, group director of corporate affairs at the British department store, wrote in an e-mail. “I don’t have a card issued by foreign banks,” said Li, who was visiting London with her family from the port city of Ningbo. “It’s too much of a hassle to get one.”


The bottom line: China’s UnionPay dominates in a market where credit- and debit-card receivables are forecast to rise to $ 397 billion by 2015.


Businessweek.com — Top News





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